Salvage and P&I cross paths in marine casualties

Article 13 sets criteria for payment to salvors “based on factors like salved values, skill and effort, measure of success, nature and degree of danger, time used and expenses incurred, to encourage maritime rescue operations,” said Mr Samaritis.

If the Article 13 award is greater than SCOPIC, the award will be discounted by 25% to avoid the special compensation mechanism being misused.

Outside of SCOPIC, Article 14 of the Salvage Convention covers special compensation and “provides that the salvor will, subject to certain conditions, recover its expenses whenever there is a threat of damage to the environment,” he explained.

“That said, the salvors decide whether to invoke SCOPIC, but cannot claim under Article 14 in that case. As regards who is responsible for what, an Article 13 award would be paid by H&M insurers, whereas SCOPIC or Article 14 special compensation would be covered under an owners’ P&I insurance.”

Once invoked, SCOPIC allows owners to appoint a special casualty representative (SCR) to monitor the salvage operations and associated costs.The SCR is typically appointed by the P&I Club on behalf of shipowners.

“The SCR will determine whether the expenses generated are reasonable under the circumstances and ensures that the remediation measures are appropriately implemented,” said Mr Samaritis.

“In many marine casualties, the competent authorities will issue an order requiring bunker removal. If this is ordered for environmental protection rather than as a necessary part of salvage operations, the relevant cost would generally be covered under P&I.”

If the salvage efforts are abandoned because the asset in peril becomes a constructive total loss, salvage may well develop into a wreck-removal situation. “In that case, P&I insurance comes into play,” he said.

“Handling a marine casualty can be extremely challenging and complex”

The Nairobi Wreck Removal Convention 2007, which entered into force in 2015, provides a legal framework for states to remove shipwrecks that may adversely affect the safety of lives, goods and property at sea and the marine environment, and introduces the concept of reasonableness into wreck removal requirements and efforts.

“Other claims and liabilities dealt with by P&I in a marine casualty incident would often include pollution clean-up costs and environmental damage, death, personal injury and repatriation of crew, loss or damage to cargo, damage to another vessel, fixed floating object or other property,” said Mr Samaritis.

“Handling a marine casualty can be extremely challenging and complex. Effective co-operation between shipowners and their property and liability insurers throughout the casualty response is essential with a view to increasing the likelihood of the operation being successful.”

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