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Agreement Breaks Scopic Rates Deadlock

01 Jan 2006

The International Salvage Union (ISU) and the International Group of P&I Clubs have reached a New Year agreement which has cleared the way for an increase in the tariff rates for personnel engaged in salvage operations under Lloyds Form where the SCOPIC Clause (Special Compensation P&I Club) has been incorporated and invoked. This agreement is supported by the organisations representing shipowners and property insurers.
When the chemical tanker Accord grounded in the East China Sea, an LOF/SCOPIC operation by China Salvage transferred the cargo, raised the casualty and towed it to shelter.
When the chemical tanker Accord grounded in the East China Sea, an LOF/SCOPIC operation by China Salvage transferred the cargo, raised the casualty and towed it to shelter.

SCOPIC was introduced in 1999, following lengthy negotiations between the ISU, the P&I Clubs, shipowners and property insurers. SCOPIC has largely superseded the 1989 Salvage Convention Article 14 Special Compensation provisions, which were found to be unworkable. The Special Compensation provisions were originally introduced to encourage salvors to respond to maritime casualties in low value or high risk situations where a conventional no cure - no pay salvage contract might fail to produce an appropriate reward.

SCOPIC remuneration is based on pre-agreed tariff rates.

These rates have not been increased since the introduction of the SCOPIC Clause. The ISU and the P&I Clubs found it difficult to reach agreement on a change in the tariff rates but the negotiations have now resulted in an agreement which provides for a 10% increase in personnel rates, in respect of Lloyds Form contracts agreed on or after January 1 2006 where the SCOPIC clause is invoked.

The tariff rates for vessels and equipment will remain unchanged until at least September of this year, pending the completion of an ISU-led costs survey. The survey results will be considered by the SCR Committee, the joint industry body administering SCOPIC.

ISU President Hans van Rooij said, 'I am pleased we have reached this understanding with the Clubs. The ISU and the International Group also agreed that future reviews of SCOPIC rates should be carried out on a triennial basis, unless the SCR Committee is satisfied that circumstances warrant an earlier review. This should ensure we do not encounter such difficulties in the future.'

MJ Information No: 21420

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