Reed Smith Client Alerts

Authors: Richard M. Gunn

Executive Summary The Lloyd’s Standard Salvage and Arbitration (“LSSA”) Clauses have recently been amended to account for problems arising from previous salvage arbitrations and to further reduce the costs of arbitration.

Introduction Following the meetings and consultations by the Lloyd’s Salvage Group Sub-Group, the Lloyd’s Standard Salvage and Arbitration (“LSSA”) Clauses have been amended to provide more transparency in relation to fees and to update the clauses in relation to container vessels.

Clause 1.3

“Details of the fees currently payable for an Arbitrator’s services, together with applicable booking and cancellation charges, may be found at or will be provided on application to Lloyd’s Salvage Arbitration Branch at the address set out in Clause 1.2 above.”

LSSA Clause 1.3 was added to provide more transparency by specifying where the fees for arbitration services may be found. The Clause directs the parties and/or their representatives to the Salvage Arbitration Branch website or the branch directly, where the fee details can be requested.

Clause 13

“Where an Owner of salved cargo has not appointed an agent or representative on his behalf to receive correspondence and notices but security has been put up on behalf of that Owner of salved cargo, service of correspondence and notices upon the party or parties who have provided such salvage security shall be deemed to constitute proper notification to such Owner of salved cargo.”

LSSA Clause 13 has been completely revised and replaced by a new version with clearer and simplified wording. The new version continues to make the notification process for unrepresented cargo owners easier, where security has already been put up on the owners’ behalf. It allows for service of correspondence and notices on the security provider and deems such service as proper notification to the cargo owners. This means that the volume of correspondence and notices that need to be sent should be significantly reduced, as one security provider often represents several cargo owners. In turn, this should reduce the costs incurred during arbitration.

Clause 14

“Where any agreement(s) is/are reached between the Contractors and Owners of salved cargo comprising at least 75% by value of salved cargo represented in accordance with Clause 7 of these Rules, the Arbitrator shall have the power to take into account the terms of any such agreement(s) and to give to it or them such weight as seems to him to be appropriate as regards the Owners of all salved cargo who were not represented at the time of the said approval.”

The most significant amendment is to LSSA Clause 14 which deals with the settlements between cargo owners and contractors. The previous clause assumed that all settlements will be on the same terms and provided that the same agreement would be binding on all owners who were not represented. However this is not always the case.

The new version therefore departs from the previous clause and takes into account the fact that settlements may be on different terms. It gives the arbitrator the power to consider the settlements which were concluded with more than 75% of the cargo owners represented, but it allows the arbitrator to place as much weight on them as he feels is appropriate. The arbitrator can for instance take an arithmetical mean of all the settlements or can exclude any settlements which are too high or too low. This provides the arbitrator with more flexibility and should reduce the costs incurred in arbitration by ensuring a settlement with unrepresented cargo interests is reached more quickly.


Client Alert 2016-086