Circular 6/01: Revisions to the LOF contract and the Special Compensation P&I Clause (SCOPIC)

Revisions to the LOF contract and the Special Compensation P&I Clause (SCOPIC)

November 1999 (22/99). This circular included a recommendation that SCOPIC should be incorporated into all future LOF contracts and indicated that the International Group, in conjunction with the ISU and UK property underwriters had agreed that this change would be reviewed after an initial two year trial period.

Since 1997, the Lloyd's Form Working Party, comprising representatives of all sections of the industry, have been working on a new version of Lloyd's Open Form (LOF) with a view to producing a simpler, more concise document. The intention has been to produce a new version of LOF, to be named LOF 2000, which only contains those provisions which relate to the services themselves and the rights and obligations of the parties. Provisions relating to procedural and administrative matters are contained in a set of standard clauses which are to be incorporated into the contract by reference. As such, the changes are cosmetic rather than substantive.

It will be recalled that the amendment to Lloyds Open Form consequent upon the introduction of the Special Compensation P&I Clause (SCOPIC) was the subject of the Association's circular of

A final draft of the LOF 2000 contract, limited to a single sheet, double-sided document, has now been produced. The subordinate provisions being contained in the LSSA Clauses and Lloyd's Procedural Rules.

In view of the amendments to the LOF contract, it was decided to revise the SCOPIC clause, despite the fact that less than half of the two year trial period had expired.

The principal reason for this was that SCOPIC specifically referred to LOF 95 and therefore needed amendment to take LOF 2000 into account. This provided an opportunity to make certain clarificatory changes to answer criticisms that parts of the SCOPIC clause mechanism are unclear.

The amended version of SCOPIC will be marked "SCOPIC 2000" and the principal amendments to it are :-

- sub-clause 1 has been amended such that SCOPIC can now apply to any LOF agreement which incorporates the provisions of Article 14 of the International Convention on Salvage 1989. Thus, it can now be used in conjunction with LOF90, LOF95 or LOF2000;

- sub-clause 1 has been further amended to make it clear that, if a salvage operation is undertaken on the basis of an LOF agreement incorporating SCOPIC, the traditional Article 14 "safety net" will not apply, even if the provisions of SCOPIC have not been invoked;

- sub-clause 4 has been amended such that the salvor's right of withdrawal from the SCOPIC provisions for failure to provide SCOPIC security within 2 working days does not apply if SCOPIC security is provided before notice of such withdrawal is given;

- sub-clause 6 has been amended to make it clear that SCOPIC remuneration is only payable in excess of any potential Article 13 award, even if no Article 13 award is actually sought or paid. It also now clarifies how currency should be adjusted in the event that the currency applying to the main salvage agreement differs from that of the SCOPIC clause;

- the termination provisions detailed in sub-clause 9 have been amended to make it clear that the salvor has the right to terminate his services under both SCOPIC and the main salvage agreement in certain specified circumstances;

- paragraphs 1(d) and 1(e) of Appendix A (the SCOPIC tariff) have been amended to define the periods for which SCOPIC remuneration applies to personnel engaged in a salvage operation;

- paragraphs 2(a)(i) and 2(a)(iv) of Appendix A have been amended to clarify how SCOPIC rates apply to tugs and other craft during mobilisation to and demobilisation from the casualty and when taking on any necessary additional personnel or equipment;

- paragraph 2(e) of Appendix A has been amended to explain that the use of portable salvage equipment normally on board the tug shall be remunerated in the same manner as all other portable salvage equipment;

- paragraphs 2(f), 3(d), 3(g) and 4 of Appendix A clarify how tugs or portable salvage equipment lost or damaged during the operation will be treated for the purposes of SCOPIC remuneration;

- paragraph 3(c) of Appendix A has been amended to clarify how the "cap" on the hire of portable salvage equipment operates;

- paragraphs 3(f) and 4 of Appendix A introduce a 50% stand-by rate for "down-time" on tugs and equipment and on portable salvage equipment reasonably mobilised but not used during the salvage operation;

- paragraph 6 of Appendix B (The Special Casualty Representative) has been added to clarify the circumstances in which an SCR can be replaced

A set of guidelines have also been produced in order to clarify to the SCR his role in a casualty. LOF 2000 and the revised SCOPIC wording came into force with effect from 1st September 2000.

These documents can be found in the following three sections of the attached PDF file:

I. SCOPIC 2000 and its Appendices

II. Guidelines for Shipowners Casualty Representatives

III. LOF 2000 and the subordinate provisions