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ASA Assessment in Response to Lloyd's Salvage Arbitration Branch
American Salvage Association
107 South West Street, Suite 743, Alexandria, Virginia 22314 USA www.americansalvage.org / info@americansalvage.org Tel: 1-703-373-2267 / Fax: 1-703-373-2036
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Lindsay Malen-Habib President
Mike Jarvis Vice President
Jim Elliott Immediate Past President
May 20th, 2021
Chairman of the Council of Lloyd’s Mr. Bruce Carnegie-Brown Bruce.Carnegie-Brown@lloyds.com
Chief Executive of Lloyd’s Mr. John Neal John.Neal@lloyds.com
Dear Sirs,
On behalf of the American Salvage Association, I am writing to express the Association’s support for the International Salvage Union’s position in opposition to the proposed closure of the Lloyd’s Salvage Arbitration Branch.
The ASA numbers some 103 members from the United States, Caribbean, and Latin America. The ASA is itself a member of the ISU.
With its infrastructure such as a mechanism for posting of security and a forum for arbitration of disputes before experienced salvage arbitrators, the LOF remains a significant tool for our members whether engaged in work in domestic or foreign waters.
For purposes of this letter particularly, we think our Mission Statement captures the very essence of our objectives. The Mission Statement provides:
“The mission of the ASA is to be a unifying association of the commercial marine salvage industry, serving as the definitive spokesman for this industry in Washington D. C. and elsewhere in North, Central, and South America as well as the Caribbean Sea.”
In furtherance of this mission, one of our objectives, which again is particularly relevant to the ongoing support of the LOF, is: “To work towards the improvement and, where, applicable, the standardization of contracts and other documentation relevant to the Marine Salvage industry.”
Because of the breadth of our membership, we can consider ourselves the primary advocate for the salvage industry in our part of the world, Members are listed on our website, www.americansalvage.org.
We fully concur with the view that closure of the Lloyd’s Salvage Branch will negatively affect Lloyd’s Standard Form of Salvage Agreement (Lloyd’s Open Form – LOF) in substantial ways because the contract will no longer enjoy the support and expertise found within the Lloyd’s Salvage Arbitration Branch, and the association with Lloyd’s.
Our members operate as main contractors in marine salvage cases globally and greatly value the LOF. We believe that to discontinue the support and endorsement of Lloyd’s for LOF would have a serious impact on safety at sea and a potentially significant impact on the environment as well as the possibility of catastrophic losses to communities reliant on the sea for their livelihoods. There would be increased danger to seafarers and an inevitable increase in loss of property such as hull, cargo, and in businesses affected ashore.
The Lloyd’s Open Form has had a truly global, recognizable identity in the maritime sector for more than 100 years and is the “contract of choice” for emergency response where those at sea face imminent peril. It was designed by Lloyd’s insurance market specifically for the benefit of the market and its success is based on worldwide understanding and acceptance of it by shipowners, insurers, and salvors as the “go to” contract. Moreover, the LOF has remained relevant over this long period of time because Lloyd’s has exercised great vigilance in making sure that the form agreement is amended in a timely way to reflect the changing circumstances under which salvors carry out their work. Witness the advent of SCOPIC when environmental concerns began to play an ever-greater role in the efforts required of salvors. The ongoing acceptance and vitality of this contract form should not be left to wither on the vine.
The marine business of Lloyd’s may have diminished over the years but, at the same time, values of ship, cargo, and bunkers - and importantly the complexity of many cases - has increased significantly. Indeed, over the past 10 years, the average total salved values of ISU members’ LOF cases is more than US$1 billion each year. This increasing complexity of salvage work requires equal sophistication on the part of the salvors and the structure supporting them. Against this background, the knowledge and support behind LOF should not be put to pasture. And, of course, there can also be much greater financial exposure beyond the immediate casualty, as the world saw clearly in the recent case of the containership Ever Given, grounded in the Suez Canal, and refloated by an ASA general member and ISU member company, which disrupted trade globally. Successful salvage mitigates those losses as well.
We, and other ISU members, have been tireless in our support for Lloyd’s and the use of Lloyd’s Open Form. We urge you to continue to provide the services of the Lloyd’s Salvage Arbitration Branch and support for Lloyd’s Open Form because the entirety of the global shipping emergency response industry is based upon, and relies upon LOF.
We recognize that Lloyd’s must be mindful of costs and that the use of LOF has declined. We also know that history alone fails to provide enough reason for persisting with an activity that otherwise cannot stand on its own. However, LOF retains its vitality and place in the world of salvage, and the implications for the shipping industry, coastal states, local and international business, and loss prevention if Lloyd’s withdraws of its support would go far beyond the place of the LSAB within Lloyd’s.
The association with Lloyd’s - a world-scale insurance market and a brand trusted implicitly by all connected with shipping - assures the fairness and integrity of Lloyd’s Open Form contract and cannot be replaced.
In closing, the American Salvage Association, and its members, urge you to strongly reconsider the closure of the LSAB.
Yours sincerely,
Micheal Jarvis Vice President American Salvage Association
