Definition of an SCR The role of the Special Casualty Representative (SCR) is to monitor the salvage services and operation then provide a final salvage report, which forms the basis for the settlement of any claim for SCOPIC remuneration (under the Special Compensation P&I Clause) that the salvor might have with the shipowner. Whilst usually appointed by the shipowner and/ or its P&I club, the SCR performs this role on behalf of all parties and their insurers, including all property interests.
Salvage operations generally operate on a ‘no cure no pay’ basis so a salvage reward will only be payable where there is sufficient value in the property salved. As transportation of the quantities of oil and other potential pollutants has increased over the years, so too has the potential for damage to the environment. In order to properly incentivise and remunerate salvors for actions and steps taken to prevent damage to the environment, the 1989 Salvage Convention introduced special compensation under Article 14.
Article 14 allows salvors to receive special compensation for their expenses and equipment where salvors assist ships in situations where there is a threat of damage to the environment. Under Article 14, salvors can recover their expenses and with the possibility of an uplift where environmental damage was prevented. However, such payment is only payable under Article 14 to the extent it exceeds the traditional Article 13 property based salvage award.
Concerns in respect of Article 14 being overly cumbersome and whether it was in fact disincentivising
salvors were raised. Accordingly, in 1999 the Special Compensation P&I Clause (SCOPIC) was introduced into the LOF contract. SCOPIC sought to simplify matters by introducing a tariff to calculate the salvor’s special compensation together with an uplift fixed at 25%. Article 13 awards will be discounted by 25% of the amount by which any Article 13 award exceeds the SCOPIC remuneration.
It is important to note that the incorporation of the SCOPIC clause is optional under the LOF contract and must be incorporated by way of reference. If SCOPIC is not incorporated, Article 14 will apply, if relevant. If SCOPIC is incorporated but not invoked, Article 14 will not apply.
Once SCOPIC is invoked, an owner must provide SCOPIC security in the sum of $3m within 2 working days of the clause being invoked. SCOPIC remuneration is payable for the sum in excess of the traditional salvage award under Article 13. As it is assessed by reference to an agreed tariff of daily hire rates for equipment and personnel, it is essential that a Special Casualty Representative (SCR) is appointed in order to monitor operations and costs.
The Report • September 2019 • Issue 89 | 79
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