The Salvage Convention 1989 (Salvage Convention) came into force internationally on 1st July 1995, and in Brazil on 18th July 2016 through the Decree N 8.814.

For the purposes of the Salvage Convention, “salvage operation means any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever”.

The Salvage Convention made profound changes in the nature of salvage and introduced important elements that must be considered by those operating in this sector. This article will focus on the application of the “no cure no pay” rule and the different types of salvage awards available to salvors.

The Rome Statute, enacted in Brazil by Decree no. 4.388/02, defined that the International Criminal Court, has jurisdiction over the most serious crimes affecting the international community, meaning it may act on Crimes of Genocide, Crimes Against Humanity, War Crimes, and Crimes of Aggression.

The traditional principle of “no cure no pay” adopted in the previous Salvage Convention meant that salvage awards were to be paid pro-rata by hull and cargo insurers and would be completely dependent on the success of the operation. P&I Clubs were not involved at any stage.

The “no cure no pay” rule is still applicable under the Salvage Convention 1989, but the approach adopted under this Convention seems to be wider and fairer. The basic “no cure no pay” award is dealt with under article 13 and will take into account factors such as the value of the maritime property salved, the nature and degree of danger, success of the operation, time and expenses incurred, skill and efforts made by the salvor etc.

Article 14 adopts the concept of special compensation and entitles the salvor to rewards whenever they successfully prevent or minimize environmental damage, even though the vessel and her cargo might be entirely lost. Awards under article 14 take into account “the skill and efforts of the salvors in preventing ot minimising damage to the environment”, providing a safety net for a salvor who engaged in salvage operations to salve a ship or cargo that threatens the environment and fails to earn a sufficient reward under article 13. The criteria for fixing the award, however, will be the same as those provided by article 13.

Only the shipowners will be liable for paying the special compensation, and therefore P&I Clubs will normally extend their cover to provide reimbursement of a shipowner’s liability under article 14. Awards under article 13, however, will normally fall under the hull and machinery or cargo insurance cover, even if they are increased by environmental factors.

It must be noted that the special compensation under article 14 will be paid only if and to the extent that such compensation is greater than any reward recoverable by the salvor under article 13.

If the salvor has acted negligently and fails to prevent or minimise damage to the environment, he may be deprived of the whole or part of any award under article 14.

The concept of special compensation was first introduced by the 1980 LOF1 and included in the 1989 Salvage Convention with the scope of encouraging salvage operations in cases where there was a threat to the environment.

The application of articles 13 and 14 has given rise to a few disputes over the years, causing some discontentment amongs salvors. These problems lead to the creation of the SCOPIC clause, now normally incorporated into the recent versions of LOFs. The SCOPIC clause provides an alternative basis of remuneration and will only apply after being invoked by salvors.

The main reason behind the special compensation provided by article 14 or the SCOPIC clause is to provide salvors with sufficient encouragement to engage in salvage operations in times where there has been a decline for their services, mainly due to the modernisation of vessels and increase in safety. Salvage, however, still plays a vital part in the maritime industry and must always be properly encouraged, specially to prevent incidents at sea from becoming fatal either to human lives or to the environment.

A Lloyd's Open Form, formally Lloyd's Standard Form of Salvage Agreement, is commonly referred to as LOF. It is a standard legal document that sets the conditions for a proposed marine salvage operation. This document is published by Lloyd's of London.

* Renata Veras Fontes Benning is lawyer at Trigueiro Fontes Advogados in São Paulo/SP

“This paper does not necessarily represent the opinion of the Office, serving only as a basis for discussion among scholars of the matter. All rights reserved.”