No room for nasty salvage surprises

One of the most commonly used salvage contracts is the Lloyd’s Open Form (LOF). Its great benefit is that it allows for that rapid intervention. It is a simple pro-forma contract which enables the salvor to go to work on the casualty without having to negotiate the fees “upfront”.

It is based on the fundamental principle of salvage: “no cure, no pay”. If the services provided are not successful there is no reward.

If a casualty is beyond economic recovery it may become the subject of a wreck removal operation. These are often conducted under BIMCO contracts such as Wreckfixed (a fixed price for the job); Wreckhire (a daily rate contract) and Wreckstage (staged payments according to progress). It is usually a matter for the owner and insurers to determine the wreck removal arrangements in close co-operation with the shore-based authorities.

Port authorities will also be interested in a recent International Maritime Organization initiative which will have a bearing on some salvage operations.

The Nairobi International Convention on the Removal Wrecks will enter into force on April 14, 2015 following the deposit, on April 14, 2014, of an instrument of ratification by Denmark.

Among several provisions, the convention will place financial responsibility for the removal of certain hazardous wrecks on shipowners, making insurance, or some other form of financial security, compulsory.