SCOPIC on salvage

The positive impact of SCOPIC on salvage

Mark Hoddinott, Senior Adviser, brand MARINE CONSULTANTS, explains the benefits brought by the SCOPIC Clause for the whole salvage market

Prior to the introduction of the SCOPIC Clause into Lloyd’s Open Form (LOF) contracts, the role of the marine consultant was very singular. Every party involved in a collision, salvage and/ or pollution case was entitled to appoint its own representative, a marine consultant, which led to numerous appointments for a single incident.

Each marine consultant acted in the best interests of their client, whether the client was the shipowner, hull insurer, charterer, P&I insurer, or cargo owner. In cases where there were numerous cargo owners, the number of cargo representatives could, and did, become unmanageable. The large number of representatives inevitably led to disagreements and disputes amongst the various parties involved which often hindered operational progress and put the success of the operation at risk.

The incorporation of the SCOPIC Clause into Lloyd’s Open Form in August 1999 introduced a fundamental shift in the way in which salvage cases were represented. Where SCOPIC cover is provided by or agreed with the P&I insurer, a special casualty representative (SCR) is usually appointed. In practice, this appointment is normally made by the P&I insurer, who pays the SCOPIC costs, on behalf of the shipowner. The primary role of the SCR is the same as that of the salvage master ie to use their best endeavours to salvage the property and to prevent or minimise damage to the environment. Essentially, the salvage master and the SCR are on the same side with broadly the same contractual obligations. The SCR represents all salved interests, namely, shipowner, cargo owner(s), charterers and their insurers, but does not represent the salvor. In summary, SCOPIC drastically reduces the number of representatives involved with a salvage operation, although only when SCOPIC is invoked as part of an LOF contract.

RIGOROUS PROCESS

For a marine consultant to become an SCR he or she must apply to Lloyd’s to be added to the list of approved SCRs. There is a rigorous approval process whereby the marine consultant must demonstrate relevant, recent experience, medical fitness and proper insurance cover. The SCR list consists of about 50 marine consultants, all leaders in the field of marine salvage consultancy.

Since 1999, SCRs have developed and honed their skills in being the single representative for multiple interests. They have also gained experience in working more closely with salvors, particularly with the salvage master and have embraced the concept of a collaborative working relationship in order to achieve contractual success. That is not to say that there are not disagreements between the salvage master and the SCR, human nature dictates that there will be from time to time, however, the good SCR will resolve disagreements on site rather than refer them back to their client(s) for action.

What SCOPIC has done is to develop a culture of cooperation, rather than confrontation, between the salvor and the various parties involved, and between the various parties themselves. This culture has, in my view, been carried over into other, non-LOF salvage cases and wreck removal.

For a marine consultant to become an SCR he or she must apply to Lloyd’s to be added to the list of approved SCRs. There is a rigorous approval process whereby the marine consultant must demonstrate relevant, recent experience.

Inset: Captain Dennis Brand – Co-founder brand MARINE CONSULTANTS

The SCR list has become the ‘go to’ list for property owners and insurers when seeking an experienced marine salvage consultant, not just for LOF cases but for all other non-LOF salvage cases and for wreck removal. There is a choice of around 50 SCRs, from a variety of geographical locations and, although a small number have yet to receive an SCR appointment, they all have salvage experience.

The use of modern technology has considerably improved reporting and communication during salvage cases. Strangely there is an obligation on the salvor working under SCOPIC to provide a daily salvage report (DSR) but there is no such obligation when working under LOF without SCOPIC invoked. In practice the vast majority of salvors provide a DSR regardless of the contract. The DSR is submitted to Lloyds and distributed to all salved interests. For many years, cargo owners and their insurers have complained about lack of information during a salvage case, however, once cargo owners have registered their interest with Lloyds they receive the DSR. The secondary role of the SCR on a SCOPIC case is cost control, monitoring the daily ‘burn rate’ of the salvor and the cumulative costs. All SCRs use spreadsheets which are forwarded to the P&I Club. The discipline in cost control introduced through SCOPIC has also carried over into non-LOF and wreck removal cases, a welcome bonus for insurers. The use of a spreadsheet in order to forecast future daily ‘burn rates’ and final costs is very limited. My own company has spent considerable time and money on developing a solution to assist owners and insurers to predict final costs of a salvage case with greater accuracy. Earlier this year bMC launched its SalvageApp (www.salvageapp.com), a web-based software package dedicated to salvage and wreck removal operations’ cost control and forecasting, also incorporating reporting and risk assessment elements. SalvageApp is managed by one of bMC’s consultants during a salvage case and will provide detailed actual and forecast costs. SalvageApp can run multiple ‘what if’ scenarios to cover all possible routes of progress and final outcomes. It is proving to be very accurate and of considerable help to insurers when making provisions for the cost of a particular case. During an LOF / SCOPIC salvage case, SalvageApp can be viewed by the interested parties online on a 24 hour basis giving all parties easy access to the latest reporting.

In summary, what SCOPIC has done for all salvage and wreck removal cases is introduce a culture of cooperation between those tasked with successfully resolving a salvage case, establish standard reporting to all salved interests and with the aid of modern technology greatly improve communication and cost control.

“What SCOPIC has done is to develop a culture of cooperation, rather than confrontation, between the salvor and the various parties involved, and between the various parties themselves.’’

COMPREHENSIVE FORMAT

SCOPIC recommends a standard DSR format, a comprehensive format that obliges the salvor to produce reasonably detailed information on the state of the casualty, changes in condition, progress to date, key events, sea and weather conditions and forecasts to name but a few. The format is now used in non-LOF and wreck removal cases and has been well received by property owners and their insurers.