ICS “Deeply Skeptical” About New Environmental Salvage Award

MV Rena salvage. Image: Maritime New Zealand

Following a meeting of its Insurance Committee on Tuesday, the International Chamber of Shipping (ICS), which represents over 80% of the world’s merchant fleet, has reiterated its firm opposition to proposals from the International Salvage Union (ISU) calling for a new, separate award for ‘environmental salvage’, in cases where salvors have carried out operations in respect of a ship or cargo which has presented a threat of damage to the environment.

ICS is also very concerned about controversial proposals with respect to the future for the York Antwerp Rules on General Average, which establish the rights and obligations of the parties when cargo must be jettisoned from a ship.

Both topics will be considered by the international association for maritime lawyers, known as Comité Maritime International (CMI), which is holding a conference in Beijing next week.

“ICS remains deeply skeptical about the proposal for a separate environmental salvage award, especially as salvage services are already generously rewarded under the present system.” said the ICS Insurance Committee Chairman, Matheos Los.

ICS, along with help from the International Group of P&I Clubs, leads shipowner representation on salvage issues, particularly in relation to the smooth operation of  the Lloyd’s Open Form (LOF), or the standard legal document for a proposed salvage operation.

ISU, however, maintains that its proposal will allow for a “merit” based award for salvors’ services to avoid or minimize damage to the environment which, they say, the present system with SCOPIC does not provide.

ICS, on the other hand, contends that the IMO Salvage Convention, and of course Lloyd’s Open Form which is based on the Convention, already provides for a system that allows for recognition of environmental benefit and, with SCOPIC, provides for a generous financial reward to salvors.

ISU wishes to have a stand-alone environmental award in addition to the traditional property award. This would apparently be based on an assessment of the theoretical benefits of savings made to the environment.

However, the concern of ICS is that, inevitably, such an award would require the introduction of expert evidence with complicated tools, as has been seen in the US Natural Resource Damage Assessment cases. Such an assessment would not only prove complicated and costly but would ultimately prolong the awards process.

“Such a complicated and drawn out process would be in no one’s interest, not least the salvors, who in any event have previously expressed great satisfaction with the current SCOPIC regime.” said Mr Los.

A working group established by the Lloyd’s Salvage Group, in which ICS participates, reached a stalemate following the ISU’s inability to demonstrate that its proposal would improve salvage response, or indeed deliver cost savings to those paying for salvage services. Somewhat surprisingly however, in view of the generally unenthusiastic response from interested parties in the industry, the ISU succeeded in persuading the CMI to give consideration to its proposals for a revision of the IMO Salvage Convention and to amend the Lloyd’s Open Form.

Mr Los remarked “Given this lack of consensus – or indeed consensus among national maritime law associations, many of whom seem to share ICS’s and insurers’ doubts – ICS very much hopes that CMI will take proper account of shipowners’ views at its important meeting in Beijing.”

At the CMI Conference, ICS will also be resisting changes proposed to the York Antwerp Rules governing General Average, following discussions initiated within CMI.

As with the CMI discussion about possible amendment of the Salvage Convention, there are some serious concerns about the need for a revision at all, particularly in the present economic situation when shipowners are facing strong pressures.

“ICS is particularly concerned that any revision could destroy the uniform global regime that has developed and is presently provided very effectively by the 1994 York Antwerp Rules.” said Mr Los.

ICS notes that the International Union of Marine Insurance (IUMI) also believes that the proposals require further detailed consideration, not least to make sure shipowners’ agreement, and that the discussion should be put back until 2016.