GIVEN how painstakingly slow has been the evolution of the legal and administrative framework for marine salvage, it was dizzying to witness not one but two important initiatives in this field unveiled at a recent colloquium of the Comité Maritime International in Gothenburg.

Certainly, it will have spun the heads of a few in the salvage fraternity, which was given little, if any, forewarning of one of the new developments.

Never mind, a ravaged salvage industry that has seen the departure of almost all its most illustrious names in the past few decades has by now very low expectations of these initiatives that, ostensibly, are intended to make salvage a more viable business.

The wider picture, of course, is that a healthy and adequate salvage industry is in the public good and in principle, as enshrined in the Salvage Convention and confirmed by many public reports since, the financial rewards for salvors should be sufficient to encourage them to stick with a difficult game.

However, for many years now, a large chunk of the marine insurance industry has been fixated on the costs of salvage rather than the value of what is saved and preserved by salvage operations.

It has been common for underwriters to publicly declare their support for the salvage profession and its key emergency contractual tool, the Lloyd’s Open Form, while individually doing their utmost to chisel away at salvage costs, leaving quaint concepts such as the bigger picture and the longer term to look after themselves.

If you set insurers’ long-standing vocal recognition of the importance of LOF against the steady 20- to 30-year decline in LOF usage, it’s hard not to suspect that a certain amount of gaslighting has been going on.

Once again, the presentation in Gothenburg was framed as positive for salvage and yet another attempt to throw a lifeline to LOF, which has the solid support of the International Salvage Union representing the marine salvage sector.

The development in which the ISU had been heavily involved is the revised Lloyd’s Open Form 2024 that is being published at the weekend.

The main new feature appears to be the launch of a fast-track, documents-only arbitration route that is designed to avoid expensive oral hearings in London.

This procedure is now tipped to capture virtually all future LOF cases that go to arbitration, bearing in mind that three quarters of cases nowadays are settled without needing arbitration.

While salvors will want to see how the new procedure pans out in practice, some are already admitting their frustration at what they see as a further erosion of their status. In the past, if the case warranted, they had an automatic right to a full hearing. Under the new system, they will only be able to apply and the decision will be taken by the Lloyd’s arbitrator.

Default clause

Possibly the more consequential of the two initiatives is a separate new “default clause” over LOF use agreed between the Lloyd’s Market Association and the International Chamber of Shipping.

It is not immediately clear what further consultations or approvals the draft clause may be scheduled to undergo, but it is said that it may be incorporated into marine insurance policies from next year.

The clause advances a well-established position of many underwriters — that use of LOF should be reserved for the most severe casualties and riskiest situations.

The backers of the new clause are pitching it as “embedding” the use of LOF in the contract, the key condition being that an owner can proceed to sign a LOF contract 48 hours after initial notification of the casualty if no other “most appropriate” form of contract or choice of contractor has been agreed between owner and insurer.

This also places the clause within a modern trend for insurers seeking to exert ever-greater control over the handling of a casualty, sometimes at apparent odds with maritime safety traditions.

“It is concerning as I believe it will create more confusion, if adopted, to owners and masters in terms of their decision-making process in a casualty situation,” says Martin Hall, a longstanding casualty expert, previously with Clyde & Co. and now a partner equivalent with Hill Dickinson.

“While I expect it is designed to promote LOF it could also lead to owners and salvors being left in limbo in terms of whether securities will be provided or awards paid if insurers take the view the wrong decision was taken and insurers invoke an entirely separate dispute resolution procedure from the standard clauses. In my personal view it opens the door to more disputes.”

A question that has often been framed with reference to the Scandinavian insurance market, that is seen as a forerunner of greater underwriter involvement in salvage operations, may now be applied to the London market: are underwriters geared up to making decisions with owners in emergency situations unfolding in real time and at any time?

The net effect of the most recent initiatives in terms of providing LOF and the salvage sector at large with a much-needed shot in the arm is likely to be underwhelming if not actually undermining.

Most underwriters and most salvors are professionals who want to do a good job for the shipowner.

So it also seems well past time for them to grasp the truth that they serve the same client, not to mention serving the same overriding cause: protecting life, property and the environment.