A career in salvage and wreck removal….

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John M. Noble

John M. Noble

A career in salvage and wreck removal with a look at some current issues,  By John M Noble

Introduction

My path to the world of salvage and wreck removal started in a most conventional manner.  After two years at HMS Conway, I served in Alfred Holt and Co (Blue Funnel) as a Midshipman until obtaining my Second Mate’s certificate in Liverpool.  Following a short interlude as mate on a coaster (Albatross of GSNC), I then spent time with United Baltic Corporation before studying for my 1st Mate certificate at Warsash.  As marriage approached and the attraction of shorter voyages prevailed, I joined Palm line and served with them until I attained my Master’s certificate, again at Warsash!  It was while studying at Warsash I was encouraged to think about qualifying to join the BSc course held jointly at Warsash and the University of Southampton.  With Roger Cook’s expert assistance, I passed the required maths exam and began my degree course in October 1974.  Three years of hard work began and during the then long university vacation periods I went back to sea and undertook a number of interesting jobs; time well spent, as it turned out. Eighteen months in a P & I Club was followed by two years back at Warsash lecturing.  It was during this period that I started as a makee-learnee surveyor in Dubai during the long breaks.  In 1980 I opened the London office of Murray Fenton & Associates, initially to provide a cargo surveying service.  Soon the work developed into a range of surveying related activities.  In this article I look at some interesting activities in salvage and wreck and examine briefly the recent developments in the LOF!

The early days

Looking back; at the age of 34, it seems a bit brazen to offer expertise in a field where my experience was limited, but it was a matter of seizing the opportunities as they arose.  In the early 1980s the P & I clubs would not become involved in cases of salvage at the time of salvage operations, but rather usually waiting until claims of causational unseaworthiness came to the surface.  P & I Clubs did get involved where a wreck removal was contemplated and the circumstances fell within the Clubs’ rules.  Put simply, wreck removal would only apply once the Hull and Machinery Underwriters had paid in full the claim for a total loss.  A Club might accept a guarantee from the H & M underwriters that a claim would be paid to allow wreck removal activities to start.  An important element at the time was that there had to be a legal liability on the owner to remove the wreck.  Now-a-days this might seem obvious, but back in the early 1980s relatively few countries had such provisions in their laws.  In the UK for example, often as not the responsibility of keeping a port open and free from wreck lay with the Harbour Master, not the owner.

Countries that had Napoleonic laws as their foundation often did have specific provision that the responsibility for removing wreck lay with the owner.  Where that was the case the requirement could not be ignored.  Arguments were often put forward that a wreck was not obstructing a fairway, or causing a navigational hazard, thus the “requirement” was watered down and wreck removal avoided.

My first appointment came in late 1981 when I was to share attendance at the scene with a senior surveyor on a two weeks per month basis each.  Unfortunately that surveyor suffered a serious accident and had to drop out, leaving me to hold the baby.  The case stemmed round a ship that struck and demolished a small light tower on the edge of the navigational channel into Tripoli port in bad weather.  Lybia was not the most accessible or popular country to work in at the time, so yours truly was asked to cover the whole job. An opportunity that could not be refused.  Preparations to remove the wreck started in the spring of 1982 and operations began in the late spring.  Not an easy time as Lybia had more sympathy with the Argentinians during the 1982 Falklands war! It proved to be a difficult task as the ships number 5 hold had been punctured and the cargo of cement hardened during the interval between the incident and start of removal operations.  There was a Warsash connection, however.  During operations at the wreck, a quantity of oil entered the water, just at the time when the authorities decided to conduct an on-site inspection.  As the link between contractors and the authorities, I was duly summonsed to appear before the Harbour Master to explain what had happened.

Perhaps fortunately for me the Harbour Master had attended Warsash and attained his UK Master’s ticket.  I had to explain that the oil spill had been a bona fide accident.  Jail loomed!  Once the Warsash connection had been established and stories exchanged, my word was accepted and jail avoided!

The total cost of this wreck removal operation was US$ 5 million, thought to be very high at the time, but now put into perspective by current activities at the Costa Concordia.

The Lybia case proved to be the first of many where usually the continuous attendance was provided by the surveyor!  Any lawyers in attendance would keep their activities brief and low-key and the presence on site of P & I or owners representatives was rare indeed!  Not without some justification, there was a feeling that any person representing the owner at an incident was jail fodder!

While generally in pre-SCOPIC (see below) days the transition from salvage to wreck removal could take months or years, but here were exceptions to the rule.  In Bermuda in 1984 a tanker in ballast ran aground on the reef just off the entrance to St Georges on the North of the island.  It was clear that she would be a Constructive, if not Actual Total Loss.  Very soon the salvors decided there was no hope of a Lloyds Open Form salvage award (the tanker was in ballast, so no safety net provisions applied) and decided to demobilise.  All of a sudden the authorities in Bermuda were contemplating being left with a 120, 000 ton tanker aground on the reef.  The environmental groups were aghast at being left with the wreck firmly attached to the reef.  The Club people said they could do nothing immediately, until due underwriting process had been gone through.  Yours truly was caught in the middle.  One other factor was that many P & I Clubs were actually based in Bermuda.  No pressure there, then!

The solution was simple.  The Government Minister in charge summonsed all active parties to a meeting; so we had salvors, environmentalists, agents, police in attendance, in all about 30 individuals, with the Minister in the Chair.  The first thing that happened (at about 2100 hours) was the policeman was sent outside to guard the door and nobody was to leave until the problem was solved!  Almost immediately the minister turned to the salvor and asked for an explanation why work had stopped.  The salvor’s representative explained that the contract to salve the ship had been on LOF “No Cure- No Pay” terms and as the tanker was clearly a total loss there was no point in the salvors remaining on site as there would be an insufficient salved fund available.  Demobilisation was to begin at first light next morning.  In other words, the ship was now a “wreck” with due processes to be gone through before any wreck removal could begin.  All of a sudden all eyes turned to the P & I representative – me!  The Minister asked what the Club was going to do seeing as now the ship was a wreck. By this time it was about 2300 and tempers were becoming very short.  The Minister held his ground.  The salvage representative said he was prepared to defer demobilisation for 24 hours, to buy time, if the P & I Club agreed to pay $120, 000 hire for the tugs and equipment on site.

Again all eyes turned to me.  I simply did not have the authority to commit that sort of money without reference and given that it was 0300 in London there was nothing I could immediately do to prevent demobilisation from starting.  I knew who did have the authority to commit such funds, a Partner of the Club’s managers.  In an apprehensive state of mind I was allowed to leave the room and make a phone call.  The Partner’s wife answered the phone and asked “is this call really necessary at 3 in the morning?”  I was able to hear the exchanges while the wife woke her slumbering husband and then explained the purpose of the call – the resultant language was not encouraging!!  However, after I had given the husband a brief explanation why I needed $120, 000 and now, his response was highly encouraging – “John, if you say you need the money now, you have got it!”

On returning to the meeting I was able to satisfy the salvors and the Minister that the Club would pay for operations at the site for 24 hours in the hope that all the other issues could be sorted out once London and New York opened.  Indeed that’s what did happen; the Club received assurances from underwriters that the loss would be paid and the salvors agreed a wreck removal contract based on the template of a recently completed job with the same club!  The operation continued as a wreck removal; possibly a record at the time, LOF to Wreck Removal in less than 24 hours!  Incidentally, the cost of the operation, while still high, was nowhere near as high as it might have been had the traditional wreck removal approach been taken by abandoning the casualty for some time, leaving it to the elements and returning to a much changed situation.

The development of Lloyds Open Form and introduction of the SCOPIC clause

At a time when salvors were willing to “walk away” from a casualty without any repercussions, the second incident outlined above represented a truly revolutionary approach to casualty response.  With hind sight it is possible to look at the Bermuda incident and reflect on the present day practice of salvors remaining on site when the salvage contract includes the SCOPIC (Ship Owners’ Casualty P & I Club) clause.  Implementation of the SCOPIC clause when it is incorporated in a LOF allows salvors to remain at the casualty in certain circumstances.  Essentially, if the salvor does not think the normal salvage award will generate sufficient reward, SCOPIC may be invoked to allow salvors to be reassured that their efforts will be compensated at the agreed rates that are published as Appendix A.  This allows contractors to remain working at the casualty whilst wreck removal and other issues are dealt with.  In effect, this is what happened back in 1984 off Bermuda; salvors remained on site, being paid while wreck removal issues were resolved!

Pre- SCOPIC

Looking back to the early/mid 1990s a few experienced salvage individuals drew up an idea regarding the pre-placement of salvage equipment at strategic locations across the world. The suggested name for this initiative was to have been the Global Response Network, GRN for short. The concept mirrored the oil industry strategy of placing oil response equipment at strategic locations.

The GRN had been well thought through and by placing equipment in depots at well recognised strategic locations the system offered subscribers immediate access to a variety of equipment suited to salvage operations.  Just as OSR is supported through subscription from the oil industry, the GRN would be supported by ship owners, ideally through the P & I Clubs.  Perhaps sadly, the idea, though floated, fell at the first fence.

In September 1992 the tanker Nagasaki Spirit suffer a collision with the Ocean Blessing.  The litigation following this incident ended up in the UK House of Lords and in February 1997 the Law Lords gave the ruling that effectively signalled the end of “Article 14”.  Instead of encouraging the salvage industry by allowing an element of profit when working on site, when it was apparent that the situation had gone beyond an Article 13 salvage award, they only allowed “expenses”, without profit.

SCOPIC development

The SCOPIC idea was drawn up directly following the Nagasaki Spirit ruling.  How could ship owners and their underwriters offer a system to salvors that might encourage them to remain with a casualty once the circumstances had changed and the possibility of a traditional salvage award (Article 13) had receded?

There were many issues to address.  Hull underwriters, once the casualty had been determined as an Actual or a Constructive Total Loss, would be quite happy to pay up.  At the casualty, meantime, the salvors, realising the “no pay” element of the LOF was likely to kick in, were faced with a casualty where further work might be necessary, but no means of profitable payment was available, given the effect of the Nagasaki Spirit decision.  There was a realisation that salvors had to be encouraged to stay on site.  The stage had been set in 1980 with “special Compensation” and again in 1989 with the introduction of the International Convention on Salvage that was readily adopted by the salvage industry and incorporated in the 1990 LOF.  The simple question posed was “What is needed to replace Article 14?”

The response from the salvage industry, through the International Salvage Union, the Hull and Machinery plus other property underwriters and the P & I Clubs, was to try and devise a simple and clear clause to offer an option to Article 14. The main aim was to encourage salvors, already on site, to remain at rates for their men and equipment that would be profitable, even generous!  A subcommittee was set up where lawyers representing the ISU, P&I Clubs, hull and property interests sat down and hammered out a Clause that would be mutually acceptable.  It had been realised from the start that any initiative to compensate salvors for their continuing efforts would have to come from the P & I Clubs in cash terms.  This was a new concept and would bring the Club system into salvage operation payment much sooner than hitherto.  Thus the SCOPIC clause was created.

The effect of SCOPIC on salvage

When the SCOPIC clause was introduced in 1999, there had been a considerable amount of discussion and preparation.  The intention was to offer salvors encouragement to remain on site in the form of financial compensation. For more detailed information go to www.lloyds.com or use a search engine under the term SCOPIC and you will be swamped with background and current information.

By offering salvors an incentive to remain on site and acknowledging the pre-arranged nature of the services now offered, the reality was that resources to deal with the casualty were immediately available and the transition from salvage to a potential wreck removal operation could begin without delay.

My own role in the development of SCOPIC started with me on one hand negotiating equipment rates on behalf of the International Group of P & I Clubs with the International Salvage Union (Mike Lacey) on the other.  After much to-ing and fro-ing an agreed scale of rates was published as Appendix A to SCOPIC and it remains widely used today.  During the Rate revision negotiations that took place in 2011, I was acting as negotiator for the salvors in my role as general manager of the ISU! Some might say gamekeeper turned poacher!

Whereas before the P & I Clubs were little involved in immediate casualty response activities, the implementation of the SCOPIC clause resulted in a complete volte-face in the role of the clubs.  For the first time, the salvors who had invoked SCOPIC, were able to receive funds without having to wait the termination of a LOF and associated negotiations.  Perhaps as important a factor, was the early involvement of the Clubs and the swift transition from salvage to wreck removal.  That is not to say that all is sweetness and light, but the level of cooperation between all the paying parties involved is now far greater than it used to be.

So what of the surveyor?  The traditional roles remain, dealing with issues arising as they crop up on behalf of the instructing party.  When an operation is being performed under a LOF, with SCOPIC activated by the salvor, there is likely to be on site a Special Casualty Representative.  Reams have been written on how the SCR should approach his job (see the Lloyds website).  The SCR is appointed by the Owners’ P & I Club, but he or she is there to monitor salvage operations and report back to all the interested parties through the Lloyds Salvage Arbitration branch.  For many surveyors being on the SCR panel is a “badge of honour” in that expertise in salvage matters is duly recognised.

My own role in shipping casualties has gradually shifted away from the beach and rather more into the classroom!  Climbing up ladders onto listing ships afire loses its attraction with age.  When at the International Salvage Union, I was asked to put together a book that would help those faced with having to deal with the issues arising from a major incident.  The result was a Nautical Institute publication entitled “Casualty Management Guidelines” (see www.nautist.org); the contributors to this publication have attended many major incidents and have passed on the benefit of their experience voluntarily.  Now a days, acting as a salvage company representative (Donjon Marine of New Jersey) keeps me well in touch with what is going on.  I have been fortunate in following a traditional training and certification path very well supported by the Warsash facilities that allowed me to achieve some success in parallel maritime sectors.

 

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