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Article: The role of the SCR in the salvage of mega box ships

11 July 2019

Author:

Nick Haslam
Principal Master Mariner, Brookes Bell
T +44 20 7403 3838
E nick.haslam@brookesbell.com

This article uses an SCR’s insight to consider the salvage priorities for a mega box ship casualty.

Salvage operations generally operate on a ‘no cure no pay’ basis so a salvage reward will only be payable where there is sufficient value in the property salved. As transportation of the quantities of oil and other potential
pollutants has increased over the years, so too has the potential for damage to the environment. In order to properly incentivise and remunerate salvors
for actions and steps taken to prevent damage to the environment, the 1989 Salvage Convention introduced special compensation under Article 14.

Article 14 allows salvors to receive special compensation for their expenses and equipment where salvors assist ships in situations where there is a threat of damage to the environment. Under Article 14, salvors can recover their expenses and with the possibility of an uplift where environmental damage was prevented. However, such payment is only payable under Article 14 to the extent it exceeds the traditional Article 13 property based salvage award.

Concerns in respect of Article 14 being overly cumbersome and whether it was in fact disincentivising salvors were raised. Accordingly, in 1999 the Special Compensation P&I Clause (SCOPIC) was introduced into the LOF contract. SCOPIC sought to simplify matters by introducing a tariff to calculate the salvor’s special compensation together with an uplift fixed at 25%. Article 13 awards will be discounted by 25% of the amount by which any Article 13 award exceeds the SCOPIC remuneration.

It is important to note that the incorporation of the SCOPIC clause is optional under the LOF contract and must be incorporated by way of reference. If SCOPIC is not incorporated, Article 14 will apply, if relevant. If SCOPIC is incorporated but not invoked, Article 14 will not apply. 

Once SCOPIC is invoked, an owner must provide SCOPIC security in the sum of $3m within 2 working days of the clause being invoked. SCOPIC  remuneration is payable for the sum in excess of the traditional salvage award under Article 13. As it is assessed by reference to an agreed tariff of daily hire rates for equipment and personnel, it is essential that a Special Casualty Representative (SCR) is appointed in order to monitor operations and costs.

Engaging an SCR

The SCR must be appointed from the SCR Panel. The SCR is normally
appointed by the P&I club on behalf of the owner of the ship. The SCR
performs this role on behalf of all parties and their insurers, including all property interests. Similar to the salvor, the SCR is to use their best endeavours to assist in the salvage of the ship and the property thereon,
and in so doing, to prevent and minimise damage to the  environment. However, the salvage master remains in overall charge of the operation, makes all final decisions as to what they think is best and remains responsible for the operation.

The role of the SCR is to monitor the salvage services and liabilities and
provide a final salvage report which forms the basis for settlement of any claim for SCOPIC remuneration which the salvor might have against the ship owner. Day to day the SCR will work with and scrutinise the salvage master’s plan and check the accuracy of the daily progress reports and the daily running cost sheet. An SCR should be appointed as soon as SCOPIC is invoked to ensure that they are present at the casualty from the outset. The
objective is for the SCR to be fully conversant with the operation and conditions; to be available to consult with the salvage master and to be able
to comment and assist as necessary. It is expected that the SCR will be aboard during any major salvage activity.

Manifests should be provided to them at the time of their appointment
so that analysis of the various International Maritime Dangerous Goods (IMDG) cargoes can commence whilst mobilising. The volatility of the various dangerous goods carried on board mega box ships can and does
cause serious problems for salvors. The SCR will work closely with the
salvage master to identify the potential risks from the various cargoes and
ensure that suitable measures and actions are promptly taken.

Parameters of the Role

The SCR has a duty to report, observe and consult with the salvage master
and to endorse and circulate the salvage master’s daily salvage reports to interested parties. If the SCR disapproves of the way the salvage operation is being conducted, or the type or number of craft, personnel and equipment being used, they should inform the salvage master in writing as soon as possible and, if not satisfied with the salvage master’s daily salvage report, publish a dissenting report to be issued to all parties. Likewise, the SCR should also endorse and circulate the final salvage report to interested parties.

However, the SCR has no power to direct the salvage master to employ
more or less resources in the salvage operation and this decision must
remain at the salvage master’s discretion. The SCR similarly cannot bind the owner of a ship or cargo to any particular course of action.

The SCR must not be requested by any party, nor volunteer themselves, to provide expert opinion either during the operation or subsequently which
would undermine the independence of the role. An SCR can give evidence of
fact with regard to salvage issues, but should not give evidence of opinion.

For queries please contact the author, or:

The role of the Special Casualty Representative (SCR) is to monitor the salvage services and operation then provide a final salvage report, which forms the basis for the settlement of any claim for SCOPIC remuneration (under the Special Compensation P&I Clause) that the salvor might have with the shipowner. Whilst usually appointed by the shipowner and/or its P&I club, the SCR performs this role on behalf of all parties and their insurers, including all property interests.