14 February 2023 Executive Summary of the Group’s Review into the Potential for Delays in the Contracting and Engagement of Salvage Services in Marine Casualties Background In 2020, the use of traditional LOF contracts was reported to be at a historic low confirming a continued decline in its use over recent decades. There was also evidence of parties entering into alternative contractual arrangements leading to delays in the engagement of salvage services and, in some cases, pollution and wreck liabilities that might otherwise have been avoided. In light of this concern, the Group commissioned the former SOSREP, Hugh Shaw, to conduct an independent, neutral and objective review that investigated the possible direct and root causes for delay in these circumstances and what changes might be made to improve use of LOF. Hugh Shaw’s final full report was presented to the Group and subsequently published in July 2022. It can be freely downloaded by clicking here. A presentation was made at Lloyd’s by Hugh in September 2022 and the findings are being considered in conjunction with Lloyd’s own review of LOF. Key Findings In summary the review carried out found that: 1. Delays in the contracting and engagement of salvage services are on the increase and might lead to an escalation of a situation to a point where a significant loss and/or danger to life might occur. 2. The unfettered authority of the Master or Designated Person Ashore (DPA), and their timely response to an incident, are critical. 3. Some of the key stakeholders in a maritime incident seek greater certainty over costs and often opt for a non-LOF contract that can cause delays whilst parties engage in negotiations for a less expensive option. Some maritime authorities confirmed that, in circumstances where delays are unreasonable, they will be entitled to use their powers to select a salvor and an appropriate contract at the shipowner’s expense. 4. Where time is of the essence or there is an emergency, LOF remains the ‘contract of preference’ for stakeholders. The ‘no cure-no pay’ principle provides additional incentive, and LOF is simple, effective and straightforward to use. However, there are concerns over alleged ‘historic’ abuse/misuse, the time taken for the process of assessing the salvage award, and uncertainty over the award and costs. 5. The use of “side letters” can lead to further delays. 6. Fewer LOF contracts might disincentivise salvors to continue to invest in new technology and/or new equipment and these costs may eventually shift to the shipowners and their insurers. 7. Coastal State ‘intervention’, or the threat of intervention, was recognised to have a positive effect in influencing ‘faster or rapid’ decision making, when lengthy contractual negotiations were ongoing. 8. Education and training must be targeted at the appropriate individuals. 9. The lack of agreed practices and procedures does not mitigate, and even contributes towards, the likelihood of delays. 10. There needs to be effective communication and collaboration between all stakeholders who will have a key role in casualty response. In light of the above findings, the Report’s main recommendations are as follows: 1. The International Chamber of Shipping (ICS), supported by H&M and P&I underwriters, should remind their members of the need to ensure that, in compliance with ISM, their Masters, DPA, or other nominated person(s), as named in the SMS, have the appropriate knowledge and experience with re