Lloyd’s Standard Form of Salvage Agreement(Approved and Published by the Council of Lloyd’s)

LLoyd’s Standard Salvage and Arbitration clauses
1

Introduction
1.1

These clauses (“the LSSA Clauses”) or any revision thereof which may be published with the approvalof the Council of Lloyd’s are incorporated into and form an integral part of every contract for the
performance of salvage services undertaken on the terms of Lloyd’s Standard Form of Salvage
Agreement as published by the Council of Lloyd’s and known as LOF 2000 (“the Agreement” which
expression includes the LSSA clauses and Lloyd’s Procedural Rules referred to in Clause 6).

1.2

All notices communications and other documents required to be sent to the Council of Lloyd’s should
be sent to:
Salvage Arbitration Branch
Lloyd’s
One Lime Street
London EC3M 7HA
Telephone +44 (0) 20 7327 5408/5407/5849
Fax +44 (0) 20 7327 6827/6777
Email lloyds-salvage@lloyds.com

2

Overriding Objective
In construing the Agreement or on the making of any arbitral order or award regard shall be had to theoverriding purposes of the Agreement namely:3ato seek to promote safety of life at sea and the preservation of property at sea and during the salvage
operations to prevent or minimise damage to the environment;b

to ensure that its provisions are operated in good faith and that it is read and understood to operate ina reasonably businesslike manner;cto encourage cooperation between the parties and with relevant authorities;dto ensure that the reasonable expectations of salvors and owners of salved property are met andeto ensure that it leads to a fair and efficient disposal of disputes between the parties whether amicably,by mediation or by arbitration within a reasonable time and at a reasonable cost.

Definitions
In the Agreement and unless there is an express provision to the contrary:
3.1“award” includes an interim or provisional award and “appeal award” means any award including any
interim or provisional award made by the Appeal Arbitrator appointed under clause 10.2.

3.2“personal effects or baggage” as referred to in Box 2 of the Agreement means those which thepassenger, Master and crew member have in their cabin or are otherwise in their possession, custodyor control and shall include any private motor vehicle accompanying a passenger and any personal
effects or baggage in or on such vehicle.

3.3“Convention” means the International Convention on Salvage 1989 as enacted by section 224,
Schedule II of the Merchant Shipping Act 1995 (and any amendment of either) and any term or
expression in the Convention has the same meaning when used in the Agreement.

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3.4

“Council” means the Council of Lloyd’s

3.5“days” means calendar days

3.6

“Owners” means the owners of the property referred to in box 2 of the Agreement

3.7“owners of the vessel” includes the demise or bareboat charterers of that vessel.

3.8“special compensation” refers to the compensation payable to salvors under Article 14 of theConvention.

3.9“Scopic Clause” refers to the agreement made between (1) members of the International Salvage
Union (2) the International Group of P&I Clubs and (3) certain property underwriters which firstbecame effective on 1st August 1999 and includes any replacement or revision thereof. All references
to the Scopic Clause in the Agreement shall be deemed to refer to the version of the Scopic Clausecurrent at the date the Agreement is made.

Provisions as to Security, Maritime Lien and Right to Arrest
4.1

The Contractors shall immediately after the termination of the services or sooner notify the Council
and where practicable the Owners of the amount for which they demand salvage security (inclusive ofcosts expenses and interest) from each of the respective Owners.

4.2

Where a claim is made or may be made for special compensation the owners of the vessel shall on
the demand of the Contractors whenever made provide security for the Contractors claim for special
compensation provided always that such demand is made within 2 years of the date of termination of
the services.

4.3

The security referred to in clauses 4.1. and 4.2. above shall be demanded and provided in thecurrency specified in Box 4 or in United States Dollars if no such alternative currency has
been agreed.

4.4

The amount of any such security shall be reasonable in the light of the knowledge available to theContractors at the time when the demand is made and any further facts which come to theContractors’ attention before security is provided. The arbitrator appointed under clause 5 hereof may,at any stage of the proceedings, order that the amount of security be reduced or increased as thecase may be.

4.5

Unless otherwise agreed such security shall be provided (i) to the Council (ii) in a form approved by
the Council and (iii) by persons firms or corporations either acceptable to the Contractors or resident
in the United Kingdom and acceptable to the Council. The Council shall not be responsible for thesufficiency (whether in amount or otherwise) of any security which shall be provided nor the default or
insolvency of any person firm or corporation providing the same.

4.6

The owners of the vessel including their servants and agents shall use their best endeavours toensure that none of the property salved is released until security has been provided in respect of thatproperty in accordance with clause 4.5.

4.7

Until security has been provided as aforesaid the Contractors shall have a maritime lien on theproperty salved for their remuneration.

4.8

Until security has been provided the property salved shall not without the consent in writing of theContractors (which shall not be unreasonably withheld) be removed from the place to which it has
been taken by the Contractors under clause A. Where such consent is given by the Contractors on
condition that they are provided with temporary security pending completion of the voyage theContractors maritime lien on the property salved shall remain in force to the extent necessary toenable the Contractors to compel the provision of security in accordance with clause 4.5.

4.9

The Contractors shall not arrest or detain the property salved unless:isecurity is not provided within 21 days after the date of the termination of the services orii
they have reason to believe that the removal of the property salved is contemplated contrary toclause 4.8. oriii any attempt is made to remove the property salved contrary to clause 4.8.

Appointment of Arbitrator
5.1

Whether or not security has been provided the Council shall appoint an arbitrator (“the Arbitrator”)
upon receipt of a written request provided that any party requesting such appointment shall if requiredby the Council undertake to pay the reasonable fees and expenses of the Council including those of
the Arbitrator and the Appeal Arbitrator.

5.2

The Arbitrator and the Council may charge reasonable fees and expenses for their services whether
the arbitration proceeds to a hearing or not and all such fees and expenses shall be treated as partof the costs of the arbitration.

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Arbitration Procedure and Arbitrators Powers
6.1

The arbitration shall be conducted in accordance with the Procedural Rules approved by the Council(“Lloyd’s Procedural Rules”) in force at the time the Arbitrator is appointed.

6.2

The arbitration shall take place in London unless (i) all represented parties agree to some other place forthe whole or part of the arbitration and (ii) any such agreement is approved by the Council on such terms
as to the payment of the Arbitrator’s travel and accommodation expenses as it may see fit to impose.

6.3

The Arbitrator shall have power in his absolute discretion to include in the amount awarded to theContractors the whole or part of any expenses reasonably incurred by the Contractors in:iascertaining demanding and obtaining the amount of security reasonably required in accordancewith clause 4.5
ii
enforcing and/or protecting by insurance or otherwise or taking reasonable steps to enforce
and/or protect their lien

6.4

The Arbitrator shall have power to make but shall not be bound to make a consent award between
such parties as so consent with or without full arbitral reasons

6.5

The Arbitrator shall have power to make a provisional or interim award or awards including payments
on account on such terms as may be fair and just

6.6

Awards in respect of salvage remuneration or special compensation (including payments on account)shall be made in the currency specified in Box 4 or in United States dollars if no such alternative
currency has been agreed.

6.7

The Arbitrator’s award shall (subject to appeal as provided in clause 10) be final and binding on all theparties concerned whether they were represented at the arbitration or not and shall be published by
the Council in London.

Representation of parties
7.1

Any party to the Agreement who wishes to be heard or to adduce evidence shall appoint an agent or
representative ordinarily resident in the United Kingdom to receive correspondence and notices forand on behalf of that party and shall give written notice of such appointment to the Council.

7.2

Service on such agent or representative by post or facsimile shall be deemed to be good service on
the party which has appointed that agent or representative.

7.3

Any party who fails to appoint an agent or representative as aforesaid shall be deemed to haverenounced his right to be heard or adduce evidence.

Interest
8.1

Unless the Arbitrator in his discretion otherwise decides the Contractors shall be entitled to interest on
any sums awarded in respect of salvage remuneration or special compensation (after taking into
consideration any sums already paid to the Contractors on account) from the date of termination of theservices until the date on which the award is published by the Council and at a rate to be determinedby the Arbitrator.

8.2

In ordinary circumstances the Contractors’ interest entitlement shall be limited to simple interest but
the Arbitrator may exercise his statutory power to make an award of compound interest if theContractors have been deprived of their salvage remuneration or special compensation for an
excessive period as a result of the Owners gross misconduct or in other exceptional circumstances.

8.3

If the sum(s) awarded to the Contractors (including the fees and expenses referred to in clause 5.2)
are not paid to the Contractors or to the Council by the payment date specified in clause 11.1 theContractors shall be entitled to additional interest on such outstanding sums from the payment dateuntil the date payment is received by the Contractors or the Council both dates inclusive and at a rate
which the Arbitrator shall in his absolute discretion determine in his award.

Currency correction
In considering what sums of money have been expended by the Contractors in rendering the services
and/or in fixing the amount of the award and/or appeal award the Arbitrator or Appeal Arbitrator shallto such an extent and insofar as it may be fair and just in all the circumstances give effect to theconsequences of any change or changes in the relevant rates of exchange which may have occurred
between the date of termination of the services and the date on which the award or appeal award
is made.

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Appeals and Cross Appeals
10.1

Any party may appeal from an award by giving written Notice of Appeal to the Council provided such
notice is received by the Council no later than 21 days after the date on which the award was
published by the Council.

10.2

On receipt of a Notice of Appeal the Council shall refer the appeal to the hearing and determination ofan appeal arbitrator of its choice (“the Appeal Arbitrator”).

10.3

Any party who has not already given Notice of Appeal under clause 10.1 may give a Notice of Cross
Appeal to the Council within 21 days of that party having been notified that the Council has received
Notice of Appeal from another party.

10.4

Notice of Appeal or Cross Appeal shall be given to the Council by letter telex facsimile or in any otherpermanent form. Such notification if sent by post shall be deemed received on the working day
following the day of posting.

10.5

If any Notice of Appeal or Notice of Cross Appeal is withdrawn prior to the hearing of the appeal
arbitration, that appeal arbitration shall nevertheless proceed for the purpose of determining any
matters which remain outstanding.

10.6

The Appeal Arbitrator shall conduct the appeal arbitration in accordance with Lloyd’s Procedural Rules
so far as applicable to an appeal.

10.7

In addition to the powers conferred on the Arbitrator by English law and the Agreement, the Appeal
Arbitrator shall have power to:iadmit the evidence or information which was before the Arbitrator together with the Arbitrator’s
Notes and Reasons for his award, any transcript of evidence and such additional evidence orinformation as he may think fit;ii
confirm increase or reduce the sum(s) awarded by the Arbitrator and to make such order as tothe payment of interest on such sum(s) as he may think fit;iii confirm revoke or vary any order and/or declaratory award made by the Arbitrator;
iv award interest on any fees and expenses charged under clause 10.8 from the expiration of 28days after the date of publication by the Council of the Appeal Arbitrator’s award until the datepayment is received by the Council both dates inclusive.

10.8

The Appeal Arbitrator and the Council may charge reasonable fees and expenses for their services inconnection with the appeal arbitration whether it proceeds to a hearing or not and all such fees andexpenses shall be treated as part of the costs of the appeal arbitration.

10.9

The Appeal Arbitrator’s award shall be published by the Council in London.

Provisions as to Payment
11.1

When publishing the award the Council shall call upon the party or parties concerned to pay all sums
due from them which are quantified in the award (including the fees and expenses referred to inclause 5.2) not later than 28 days after the date of publication of the award (“the payment date”)

11.2

If the sums referred to in clause 11.1 (or any part thereof) are not paid within 56 days after the dateof publication of the award (or such longer period as the Contractors may allow) and provided theCouncil has not received Notice of Appeal or Notice of Cross Appeal the Council shall realise orenforce the security given to the Council under clause 4.5 by or on behalf of the defaulting party or
parties subject to the Contractors providing the Council with any indemnity the Council may require
in respect of the costs the Council may incur in that regard.

11.3

In the event of an appeal and upon publication by the Council of the appeal award the Council shallcall upon the party or parties concerned to pay the sum(s) awarded. In the event of non-payment andsubject to the Contractors providing the Council with any costs indemnity required as referred to inclause 11.2 the Council shall realise or enforce the security given to the Council under clause 4.5 byor on behalf of the defaulting party.

11.4

If any sum(s) shall become payable to the Contractors in respect of salvage remuneration or special
compensation (including interest and/or costs) as the result of an agreement made between theContractors and the Owners or any of them, the Council shall, if called upon to do so and subject to
the Contractors providing to the Council any costs indemnity required as referred to in clause 11.2
realise or enforce the security given to the Council under clause 4.5 by or on behalf of that party.

11.5

Where (i) no security has been provided to the Council in accordance with clause 4.5 or (ii) no award
is made by the Arbitrator or the Appeal Arbitrator (as the case may be) because the parties have beenable to settle all matters in issue between them by agreement the Contractors shall be responsible forpayment of the fees and expenses referred to in clause 5.2 and (if applicable) clause 10.8. Payment ofsuch fees and expenses shall be made to the Council within 28 days of the Contractors or theirrepresentatives receiving the Council’s invoice failing which the Council shall be entitled to interest on
any sum outstanding at UK Base Rate prevailing on the date of the invoice plus 2% per annum until
payment is received by the Council.

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11.6

If an award or appeal award directs the Contractors to pay any sum to any other party or parties
including the whole or any part of the costs of the arbitration and/or appeal arbitration the Council may
deduct from sums received by the Council on behalf of the Contractors the amount(s) so payable by
the Contractors unless the Contractors provide the Council with satisfactory security to meettheir liability.

11.7

Save as aforesaid all sums received by the Council pursuant to this clause shall be paid by theCouncil to the Contractors or their representatives whose receipt shall be a good discharge to it.

11.8

Without prejudice to the provisions of clause 4.5 the liability of the Council shall be limited to theamount of security provided to it.

General Provisions
12

Lloyd’s documents: Any award notice authority order or other document signed by the Chairman of
Lloyd’s or any person authorised by the Council for the purpose shall be deemed to have been duly
made or given by the Council and shall have the same force and effect in all respects as if it had beensigned by every member of the Council.

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Contractors personnel and subcontractors.
13.1 The Contractors may claim salvage on behalf of their employees and any other servants oragents who participate in the services and shall upon request provide the owners with areasonably satisfactory indemnity against all claims by or liabilities to such employees servants oragents.
13.2 The Contractors may engage the services of subcontractors for the purpose of fulfilling their
obligations under clauses A and B of the Agreement but the Contractors shall neverthelessremain liable to the Owners for the due performance of those obligations.
13.3 In the event that subcontractors are engaged as aforesaid the Contractors may claim salvage on
behalf of the subcontractors including their employees servants or agents and shall, if called
upon so to do provide the Owners with a reasonably satisfactory indemnity against all claims byor liabilities to such subcontractors their employees servants or agents.

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Disputes under Scopic Clause.
Any dispute arising out of the Scopic Clause (including as to its incorporation or invocation) or theoperations thereunder shall be referred for determination to the Arbitrator appointed under clause 5
hereof whose award shall be final and binding subject to appeal as provided in clause 10 hereof.

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Lloyd’s Publications.
Any guidance published by or on behalf of the Council relating to matters such as the Convention
the workings and implementation of the Agreement is for information only and forms no part of
the Agreement.

1.9.2000

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