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ISU Review of 2012 and Looking Ahead

Pollution prevention

Members of the International Salvage Union are very proud of their record in averting environmental damage that might be caused by casualty vessels.

As in previous years, the ISU conducted a Pollution Prevention Survey for operations conducted in 2011. The results showed an increase in the number of services performed by ISU members compared with the previous year. However the quantity of pollutants salved overall was down on 2010 despite a significant rise in most categories. The overall decrease from the previous year is explained by the 2010 numbers including two large oil product tanker cargoes.

The total of all pollutants salved in 2011 was 496,331 tonnes in 221 services, compared with 574,386 tonnes in 2010. It is a fall of 14%. However, the average annual figure for the 17 years for which data is available continues to exceed one million tonnes of potential pollutants salved per year.

The ISU notes that not all of the potential pollutants were at imminent risk of leaking into the sea but there can be no doubt that its members’ actions have been of great benefit in helping to protect the marine environment from potential damage. Some context is given by the fact that in the United States’ worst environmental disaster, 700,000 tonnes of oil was released into the Gulf of Mexico in 2010.

Reward for environmental protection

The International Salvage Union has been concerned for a long time that the legal and regulatory framework under which its members conduct operations does not allow for proper recognition of their efforts to protect the environment. And the ISU was therefore disappointed that the recent Comité Maritime International Conference in Beijing did not support its proposals for modest change to the 1989 Salvage Convention. The proposals were intended to introduce a salvage award that recognises salvors’ efforts to protect the environment during salvage operations. ISU was, nevertheless, grateful to those countries which did support change. Despite the setback, ISU will continue to work with shipowners, the insurance community, maritime lawyers and others to ensure that salvors are properly rewarded and that the framework encourages innovation, investment and global readiness to intervene in casualty situations.

Bunker removal clause

During the year, the International Group of P&I Clubs suggested the introduction of a so-called “Bunker Removal Clause” as an option in the commonly-used Lloyd’s Open Form salvage contract. The intention is to enable liability insurers to have more influence over the process of removing bunker fuel from casualty vessels. The ISU did not greet the proposal warmly. Indeed, after preliminary and informal discussions with the Clubs and others, ISU said it had “serious concerns” about a Bunker Removal Clause. But ISU has agreed to give the idea more consideration before the end of this year.

Best practice in casualty management

Working jointly with the Nautical Institute the ISU this year published its “Casualty Management Guidelines”. They provide an easy-to-reference guide to the different roles, responsibilities and expectations of the numerous parties who have a stake in managing a casualty. The guidelines have proven to be popular with the first print-run being quickly sold. Copies may be obtained from: www.nautinst.org/pubs

Look ahead

Wreck removal costs

There are more than 400 shipping casualties globally each year. Many of those vessels are saved and returned to service but dozens are beyond help and become ship wrecks which the authorities require to be removed. The complexity and cost of these operations is increasing. The high profile case of the Costa Concordia offshore Italy will, for example, be the most expensive and complex operation of its kind. The job is expected to cost more than US$ 400 million.

Wreck removal is covered by an International Maritime Organisation’s (IMO) Nairobi Wreck Removal Convention of 2007. This Convention will enter into force one year after 10 IMO member states have ratified or acceded to the Convention. As at the end of October 2012 a total of 5 Member states have met this requirement. An average of one per year!! So at the present rate of progress it will be about 2018 when the Convention enters into force. Thereafter it will still be necessary in many countries for the Convention to be enacted into their domestic legislation. The intent of the Convention is to give more commonality internationally to the decision about whether a wreck should be removed. The presumption is that wrecks in coastal waters should be removed.

Coastal states increasingly adopt a “zero tolerance” attitude to marine pollution and this has made wreck removal operations more complicated. Contractors – usually from within the salvage industry – are often required safely to remove hazardous cargo and fuel before the main job can start. And the main wreck removal work must be carried out with great care. Parts of the container vessel Rena, wrecked offshore New Zealand in 2011, are, for example, being cut into sections small enough to be lifted away by helicopter in order not to damage the reef on which she lies. Undoubtedly the increasingly stringent requirements of coastal states is driving the rising cost.

A side issue, but, still of great importance to salvors is the cost of tendering for wreck removal contracts. As noted above, the increasing complexity of jobs and the requirements of the authorities mean that substantial preparatory work and engineering must be done. Unsuccessful contractors may then be left with a bill of hundreds of thousands of dollars which will not be defrayed by the income from the job. It is a real concern which ISU wants to work on with the P&I Clubs.

Recruitment, retention and training

There is no doubting that skilled and expert personnel in the salvage industry are ageing. ISU is conscious that its members’ capability is ultimately dependent on a cadre of experienced and able salvage masters and crews. We need to find ways to make the industry an attractive career proposition for mariners, especially in the face of demand from other similar sectors like the offshore support industry. Technological innovation and investment in the right equipment are undermined if there are not the right staff to use it for the benefit of ship and cargo owners. It is a topic for close attention.

Large casualties

At the most simple level it should seem obvious that the larger the vessel the greater the salvage challenge: greater weight of cargo; more boxes to deal with; more potential pollutants and bunkers to safely remove and, in the case of massive cruise liners, a bewildering number of passengers and crew to handle.

The Costa Concordia demonstrated to the watching world that disaster can befall large cruise liners. And the case of the Rena showed again the great difficulty in handling a container ship casualty. Like the MSC Napoli she was nothing like as large as they come. And we have also seen difficulties associated with the latest generation of ultra large ore carriers when the Vale Beijing experienced structural fractures late last year.

Container ships have posed special problems for salvors for many years. There are particular challenges in confronting serious fires on board container ships. There are also specific difficulties when faced with the task of refloating a heavily grounded container vessel at an exposed location. And challenges in moving and handling the boxes. In many cases the plan to refloat the casualty will require the discharge of possibly thousands of containers. This raises a great many practical problems. Suitable floating cranes must be located, as well as barges or vessels capable of receiving the off-loaded containers. Good weather is essential and a suitable location must be identified for receiving the containers.

Responder immunity

Criminalisation of well-intentioned responders is a real concern and is in direct conflict with the goals of safer ships and cleaner seas. There are close links between the issues of criminalisation and lack of responder immunity for salvors and other emergency responders. Set in the context of pollution prevention efforts it is particularly troubling.

In short, there has been no real progress on responder immunity in the past decade. For example, IMO member governments rejected responder immunity when adopting the Bunker Spills Convention. This is a concern for salvors, as the removal of bunkers is the first priority in many salvage operations. At that time, various IMO delegations admitted that they did not wish to rule out the possibility of prosecuting salvors.

Of course salvors are commercial and wish to earn income from their operations but they deal with problems that are not of their making. Lack of immunity does nothing to encourage the kind of swift, decisive response which can prevent pollution costing billions. Salvors accept that if they are negligent there should be consequences but that is very different from being strictly liable during what are necessarily uncertain and risky operations.

Lloyd’s Open Form

Decline in the use of the Lloyd’s Open Form (LoF) salvage contract is a further matter of concern and for consideration in 2013 and beyond. The contract’s great attraction lies in the way it facilitates rapid intervention unimpeded by the need for contractual negotiations when time is precious. However there has been a steady decline in use of the contract. Modern communications enabling quick and detailed discussion between ships’ masters and owners may play a part, as may insurers’ perception of rising costs. And yet salvors would argue that as the majority of cases are amicably settled without recourse to arbitration the cost of salvage services performed under LoF must be acceptable.

It is an inappropriate amble to trade speed of response with in the hope of cost savings when a vessel is at risk.

Amendment to SCOPIC

SCOPIC has worked very well since its introduction in 1999 but, as with all new concepts, some anomalies only become apparent through use. A new triennial review of SCOPIC rates has been agreed which will be linked to the US CPI All Items Index and will ensure that the rates maintain their value against inflationary pressure. The first review will see new rates introduced from 1st January 2014.

The clause itself has some aspects that the ISU would like to see modified. These include moving away from the requirement that a sub-contractor’s equipment and personnel, when he is also a member of the ISU, attract SCOPIC rates not market rates. In practice it does not work and there is often a compromise between the salvor and SCR to allow market rates because it is practical to do so.

The cap on salvor’s equipment was raised in 2011 but the ISU would like to see the cap removed altogether. In practice a salvor ends up with a large number of equipment items in use but being provided free of charge. There is no parallel in any other industry.

Finally, the ISU would like to address the issue of an early termination of SCOPIC by the ship owner that leads to the salvor being penalised because the Article 13 award exceeds the SCOPIC claim. It is an unfair situation when the salvor is penalised by an event which is not of his making.