ANNEX A

MARINE SALVAGE

General

A.1   Over the last three decades there has been a decline in the world's salvage capacity, especially in Northern Europe and the United Kingdom. This is due to a number of factors but primarily because it is perceived by those who invest in the industry that the financial returns fail to justify the capital outlay. The era when salvage tugs were maintained on station at strategic locations on the world's shipping routes in anticipation of a casualty occurring, has all but disappeared, due to escalating costs and poor returns.

A.2   The modern international salvor must have available an extensive range of vessels and equipment in order to handle diverse eventualities and, more importantly, must employ highly trained, experienced and motivated personnel to undertake salvage operations. Whilst there still remains a niche for the smaller salvage companies, because of the nature of the business, when they are in competition with the larger organisations they may not be so successful.

A.3   No company has ever remained viable on the proceeds of salvage alone. Traditionally salvors have undertaken activities such as ocean towage, the provision of harbour tugs and the undertaking of specialised heavy lifts in order to maintain their equipment and manpower for salvage operations. With the advent of the offshore industry some companies, especially those in Northern Europe, diversified into this field where they could obtain better long term returns on their capital and steady employment for their personnel.

A.4   Whilst there are some who have the opinion that the mere provision of a tug and other equipment is adequate for salvage services, it is the provision of experienced, knowledgeable and skilled personnel that is the essential element of the salvage industry. Without adequately trained and experienced manpower the commercial salvor is all but powerless to act. Today, very few operations are conducted solely using in-house resources, even the large international companies now sub-contract elements of a salvage. Given the changing pattern of the industry, salvors increasingly find it convenient and expedient to form consortia with other operators for specific operations in order to speedily fulfil their obligations; thus helping not only themselves but also some of the smaller companies.

A.5   Against this background of decline there has been a growth in public awareness of environmental matters and increasing demands for instant action, especially with respect to marine casualties which pose the threat of pollution. In an era when marine casualties rarely attracted attention outside the world of maritime affairs the salvor worked in relative isolation with only an Underwriters' surveyor and possibly a Harbour Master to satisfy, and his problems were primarily confined to the physical aspects of the salvage operation. Now the salvor works in the searchlight of publicity where environmental matters, especially those relating to the highly visible aspects of marine pollution, have become a mainstream political issue which has greatly increased the demands on the Salvage Master.

A.6   The Salvage Master must endeavour to satisfy the requirements of all interested parties. He must use his judgement in heeding or rejecting advice, much of which is unsolicited, whilst remaining aware that he is accountable for undertaking the task for which he is contracted. The Salvage Master is the key person in any salvage operation and is in overall charge of that operation while the salvors are custodians of the casualty. The Master, however, remains in overall command of his vessel notwithstanding the signature of a salvage agreement, and has ultimate power to dismiss the salvor, although this power is rarely exercised. The owner and his employees are required by Clause 3 of the LOF contract to co-operate fully with the salvors in relation to the salvage operation. There is, by implication, a reciprocal obligation on the salvors to co-operate with the owner and his staff. The success of the operation depends to a very large extent on the Salvage Master's ability to act decisively in what can be a rapidly changing and often dangerous situation. It is his knowledge, experience and skill which determine the conduct of the operation through all the phases of planning and implementation. Salvage is a risk business in which every operation is different and the Salvage Master not only has to cope constantly with commercial, bureaucratic and environmental pressures, but he must always be alert to the dangers of the operation. Salvage is an extremely physical occupation in which there are different levels of danger and it is the responsibility of the Salvage Master to determine to what degree of danger he and his team are prepared to be exposed. For example, in the case of a badly damaged tanker where some of the built-in safety systems may have been severely damaged or destroyed, particularly one with a cargo of crude oil, whilst the emotive pressures of the potential environmental damage and public disquiet are of concern, the paramount responsibility of the Salvage Master is for the safety of his own team and those on board who are working under difficult conditions in a high risk situation.

A.7  Marine salvage is a commercial enterprise subject to all the vagaries of the open market. The salvor's sole role is to provide the Owner of a casualty and his Underwriters with a service, within strict contractual terms, to the best of its ability in order to save the vessel and cargo. Recently this undertaking has been extended to the Owner's third party insurers to minimise or, where possible, prevent pollution. The salvor is under no obligation to accept a contract; gives no guarantee of success; nor is constrained by time, but undertakes to use his best endeavours to resolve a problem which is usually beyond the Owner's own capability. He undertakes the contract in the knowledge that if, after the event, he cannot come to an amicable settlement with the Owner/Underwriters the matter will be referred to Arbitration, overseen by an Arbitrator appointed by the Council of Lloyd's of London and governed by the law of England, including the English Law of Salvage. After an extremely close scrutiny of the salvor's actions the Arbitrator will make an Award for the services rendered, based upon the following ten points, set out in Article 13 of the International Convention on Salvage 1989, which indicate the salvor's aims and objectives:

- the salved value of the vessel and other property;

- the skill and efforts of the salvor in preventing or minimising damage to the environment;

- the measure of success obtained by the salvor;

- the nature and degree of danger;

- the skill and efforts of the salvor in salving the vessel, other property and life;

- the time used and expenses and losses incurred by the salvor;

- the risk of liability and other risks run by the salvor or their equipment;

- the promptness of the services rendered;

- the availability and use of vessels or other equipment intended for salvage operations;

- the state of readiness and efficiency of the salvor's equipment and the value thereof.

A.8   A salvage reward assessed under LOF95, or indeed by a court of competent jurisdiction such as the Admiralty Court in London, is usually expressed as a lump sum payable to the salvor, or separate sums to each salvor if there are more than one. It is not a percentage of the value of vessel and cargo as salved, but it cannot exceed those values. Where however, the vessel and/or her cargo threatens damage to the environment and the reward so assessed is insufficient to cover the salvor's expenses, the Special Compensation payable in accordance with the 1989 Salvage Convention (now incorporated into LOF95) will cover the shortfall, together, in appropriate cases with a "bonus" at the tribunal's discretion of up to 100% of those expenses if the salvors have in fact prevented or minimised environmental damage. It is by this mechanism that salvors are encouraged to act promptly and to use their best efforts to avert environmental damage.

The Contractual Agreement of Salvage Operations

A.9   The "Lloyd's Standard Form of Salvage Agreement" (LOF) has been the most frequently used and internationally accepted form of 'no cure, no pay' salvage agreement since it was first introduced in 1882. Since its inception the agreement has undergone a number of revisions in order to encompass the needs of the salvage industry and more especially the requirement to protect the environment from the results of marine casualties.

A.10   The LOF80 version of the agreement included one of the most significant developments in the law of salvage in that, for the first time, there was a departure from the traditional 'no cure, no pay' reward for the salvor's services in that it introduced, in certain circumstances, a safety net concept. This guaranteed a salvor, who responded to a pollution threat from a laden tanker casualty, his expenses plus a possible discretionary increment of up to 15% of those expenses, irrespective of whether his endeavours were successful or not. However LOF80 was solely confined to laden tankers and did not take account of the threat of pollution from other types of vessels, or indeed cargoes.

A.11   This anomaly was addressed in the International Convention on Salvage, developed by the International Maritime Organization (IMO) and adopted at a Diplomatic Conference in London in 1989, in which the importance of the salvor's role in preventing pollution from marine casualties was recognised. Also recognised was the need to recompense salvors with a special incentive when there was a threat of pollution occurring, even in those cases where there was little or no prospect of a satisfactory 'no cure - no pay' salvage award. The Convention therefore created a new concept of "Special Compensation" by which salvors can be encouraged to attend or continue an operation which has serious environmental consequences, but which would otherwise be unprofitable. This Convention was incorporated by Lloyd's into the 1990 edition of LOF, and therefore became immediately effective, although the ratification by 15 states necessary for entry into force of the Convention as International Law was not achieved until 1995.

A.12   The incorporation of the principal articles of the 1989 Salvage Convention, including the Special Compensation provisions, into LOF90 gave it immediate effect in those salvage services governed by that contract. In reality this applied to the majority of salvage services. However, the Government took the initiative of adopting the entire Salvage Convention as part of English Law from 1 January 1995 by the Merchant Shipping (Pollution and Salvage) Act 1994, despite the fact that the Convention itself did not come into force internationally until 14 July 1996. The Corporation of Lloyd's published a revised version of LOF to reflect these developments known as LOF95, and it is this form which was signed by the owners and salvors of SEA EMPRESS.

Tanker Salvage Operations

A.13   It is acknowledged that all salvage operations are different. A variety of procedures might be carried out and the following is an outline of some of those which might be used during a tanker salvage operation. Not all of these were necessarily employed during the salvage of SEA EMPRESS.

A.14   A tanker with hull damage, where her cargo tanks have been ruptured, is likely to require a cargo transfer either to lighten the casualty, so she can be moved for total discharge at a terminal, or a much longer operation to completely discharge the cargo on location. Such operations may require salvage tugs and, on some occasions, additional ground anchoring arrangements to hold the casualty in position.

A.15   The damaged tanker is likely to develop an increased draught, list and excessive trim, which may require some correction before the casualty can continue on passage and be accepted in a safe port. In order to lighten a damaged tanker, to reduce her draught, the salvors carry out a "ship-to-ship cargo transfer" operation. If possible, the tanker's own high capacity cargo pumps would be used to transfer cargo from the intact tanks by way of hoses to a lightening vessel berthed alongside the casualty.

A.16   When cargo tanks have been breached in a grounding, depending on the level of the oil in the tanks, either oil will escape to the sea or sea water will enter the damage creating a water plug beneath the oil. As the draught lessens during the ship-to-ship transfer operation, the level of the oil in the breached tanks would fall as well. If this was allowed to happen either more oil would escape or the water plug would be lost through the damaged hull until eventually oil would also be lost to the sea. To prevent this happening, the salvors endeavour to either create or maintain the water plug in the damaged tanks, by lowering hydraulically driven submersible pumps into the oil and transfer cargo into the intact tanks which are being discharged to the lightening vessel. This practice is known as "over-the-top transfer". The lightening operation can therefore only proceed at the capacity of the hydraulic pumps, rather than the higher capacity of the casualty's own pumps.

A.17   When salvors pump cargo over-the-top out of damaged tanks, the oil is replaced through the damage by sea water, creating an ever increasing water plug. Thus the vessel's trim and list would remain approximately the same in the damaged condition. Another salvage method, in order to create extra buoyancy and to help bring the casualty upright and on an even keel, is to pressurise breached ballast tanks so as to push sea water out through the bottom damage. If oil enters breached ballast tanks the presence of oil floating on top of the sea water is likely to cause an explosive atmosphere within the ullage space in the tank. During pressurisation of the ullage space, it would be desirable to use inert gas, rather than air, to render it safe. However the normal tanker's inert gas system is not capable of producing inert gas to the desired pressure and is not designed to supply the ballast tanks. To overcome this, salvors use an empty cargo or ballast tank on board as a buffer tank the atmosphere of which they render inert from portable inert gas generators. From the buffer tank, a portable compressor takes the inert gas and transfers it to the ballast tank under pressure in order to push the sea water out through the damaged hull. To maintain the pressure, the ballast tank's air vents would have to be secured by blanks, which would have to be specially manufactured.

A.18   Ship-to-ship and over-the-top cargo transfer operations, combined with pressurisation of tanks, was the basis of the Salvage Master's plan for the salving of SEA EMPRESS.

A.19   It cannot be emphasised enough that the risk of fire and explosion are ever-present dangers in tanker salvage operations. The salvage team will always have to consider the need to cease their operations and evacuate the casualty if these dangers appear to be increasing.

Salvage Consortium

A.20   It is not unusual for a consortium to be formed to undertake a particular salvage operation. Such was the case in the SEA EMPRESS incident. The selected salvage consortium was made up of Smit Tak BV, Cory Towage Limited, and Klyne Tugs (Lowestoft) Limited.

A.21   Smit Tak is part of Smit International Group of companies who have been in the salvage business over 150 years and are world renowned. It has undertaken over 117 tanker salvage operations resulting in the salvage of 10.5 million tonnes of cargo. Most of its salvage operations are performed under LOF.

A.22   Cory Towage Limited was founded in 1872. It operates a large fleet of tugs throughout the UK, including Milford Haven, and other parts of the world. As well as providing towage within ports it is also a specialist in fire fighting, pollution control and salvage. It has carried out a number of salvage services over the years and was involved with Smit Tak in the salvage of BORGA at Milford Haven in 1995.

A.23   Klyne Tugs (Lowestoft) Limited is a relatively new salvage company based in Lowestoft. It has a working commercial salvage arrangement with Smit Tak and its two largest salvage tugs were involved with the salvage of SEA EMPRESS. It was also involved with Smit Tak in the salvage of BORGA.

ANNEX B

B.1   The Government's responsibility for dealing with major civilian marine emergencies is discharged through the Department of Transport and The Coastguard Agency. Within that Agency HM Coastguard has responsibility for maritime search and rescue, and the MPCU exercises the Government's response to spillages of oil and other hazardous substances at sea from vessels which threaten UK interests. Since 1994/95 The Coastguard Agency has been responsible for the two emergency tugs, stationed in the Dover Straits and at Stornoway, as a trial during winter months. Since the SEA EMPRESS incident a further emergency tug has been stationed in the South Western Approaches. These provide cover when vessels pose a threat to the UK coastline and are a direct result of one of Lord Donaldson's recommendations from his Inquiry into the Prevention of Pollution from Merchant Shipping after the BRAER tanker incident in 1993.

B.2   MPCU is a small command, control and rapid response organisation which was formed in 1978 in the aftermath of a number of accidents which threatened the UK coast with major oil pollution. The Unit, based in Southampton, maintains a National Contingency Plan and stockpiles of both beach and at-sea clean-up equipment. With the decline of the UK's own salvage industry MPCU has also built up a national stockpile of cargo transfer equipment which it maintains, coincidentally in Milford Haven, in a state of readiness to ensure that sufficient equipment is available within the UK at short notice to carry out a major ship-to-ship cargo transfer operation. The unit also provides advice and assistance to local and port authorities on their contingency planning. Regular exercises are arranged to practise both central government and local response to major pollution incidents. A two-day major exercise involving all members of MPCU and their principal contractors had been completed on the day that SEA EMPRESS first went aground. Additionally MPCU provides funding for research programmes relating to both at-sea and on-shore clean up and disseminates the results to interested parties.

B.3   In fulfilling its primary roles MPCU works closely with government departments, government agencies and other organisations.

B.4   The response to a major civilian marine emergency is co-ordinated through the Marine Emergency Operations Room (MEOR) which is situated within The Coastguard Agency headquarters building in Southampton. During a major marine emergency the MEOR will be manned by, among others, an Overall Commander, usually the Chief Executive of The Coastguard Agency, who will co-ordinate the efforts of HM Coastguard, MPCU and other organisations involved in dealing with the emergency. In the case of an emergency involving at-sea pollution MPCU will be represented on scene by a MPCU Local Commander and beneath him an On-Scene Commander. In the SEA EMPRESS incident it was necessary to set up the following additional posts: On-Scene Commander Air, On-Scene Commander Oil Recovery Ships, On-Scene Commander Transfer Operations and On-Scene Commander Equipment. Additionally a Land Co-ordinator will be responsible, under the Overall Commander, for the co-ordination of the central/local government shoreline counter pollution response. The title "Commander" as used by MPCU refers to command of MPCU assets and not to command of the operation as a whole. A potential for confusion arises from the use of these titles.

B.5   It is not the intention of the Government to become involved in the practical aspects of salvage. It is the policy to ensure that professional salvors are engaged by the owners or Master. Thereafter the actions of MPCU might be limited and involve no more than monitoring the actions of those in charge of the vessel to satisfy itself that the wider public and environmental interests are being safeguarded. However, at the other extreme, MPCU could assume a central role, including issuing directions or taking charge of operations. The Secretary of State for Transport has considerable powers to intervene and direct those in possession of a vessel where there is a risk of large scale pollution. These powers can be exercised by the Chief Executive of The Coastguard Agency, the Director of MPCU or the Chief Coastguard.

B.6  MPCU personnel are not, in themselves, salvage experts. In order to perform the required role in a salvage incident the organisation looks mainly to the Ministry of Defence Salvage and Moorings Department for salvage expertise and advice. The Coastguard Agency have sought a formal agreement in the form of a Memorandum of Understanding (MOU) with the Ministry of Defence Salvage and Mooring Department for the provision of salvage advice and assistance. This MOU was in the latter stages of negotiation at the time of the SEA EMPRESS incident. Although not finally agreed the draft MOU was used as the basis for their involvement as advisers to MPCU during the incident.

B.7   In short, the Department of Transport's role in the SEA EMPRESS salvage and pollution incident was:

- to provide search and rescue services to protect safety of life;

- to ensure that competent salvors were quickly appointed and thereafter to monitor the salvage operation with a view to intervening if necessary to protect the wider public or environmental interest;

- to control the at-sea counter pollution measures;

- to assist the local authorities in the on-shore counter-pollution measures through a Joint Response Centre.

ANNEX C

General

C.1   The availability and provision of tugs played a major role throughout the salvage operation, it is therefore helpful to give some general information on tugs.

C.2   Tugs are specialist vessels invariably designed and constructed individually or in limited numbers. The characteristics of the hull form, engine power and equipment of each vessel or class of vessel are dictated by the particular function for which the tug is to be used, and the environment in which it will be employed. Due to the numerous combinations of hull form and engine power it is extremely difficult to determine the exact power of any given tug. Whilst there are a number of empirical methods used to determine tug performance, one which has been standard for some years relates to the tug's continuous static bollard pull. This is a dynamometer reading, measured in tonnes, of the load on the tow line when the tug is pulling at full power against a static load and is commonly expressed as "tonnes bollard pull" (tbp). However, because this test is undertaken in calm conditions, usually in harbour, it is not a true measure of the power exerted in constantly changing operational conditions and must therefore be considered only as a quantitative indication of the tug's towing capabilities.

C.3   In order to apply her full power when towing out at sea, a tug must deploy as long a length of her tow line as possible to create a catenary so that it sags in the water. This enables the line to withstand the dynamic loads (snatching) imposed upon it when the tug and tow are moving in a seaway and prevents the line parting. Tugs employed in ocean and coastal towing activities usually use wire tow lines. Tugs employed within harbours usually use either solely synthetic ropes (such as the Milford Haven harbour tugs) or a combination of rope lines and wire pennants, which are much shorter than the above wires. These are easier to manhandle and as most harbours are not exposed to seaways they do not experience snatching.

C.4   Whilst the design parameters of individual tugs will differ, with some being able to fulfil more than one role, they can be categorised broadly into three types dependent upon their function. These are ocean towing salvage tugs, anchor handling/tug/supply vessels (AHTS) and harbour/coastal tugs. Brief characteristics of each type follow.

Ocean Going Salvage Tugs

C.5   This type of tug, equipped with salvage gear for ocean rescue or to be employed in long haul tows, is designed to work in the severe conditions of the ocean environment. One of the essential features is the engine power which, in addition to providing a fast free running speed, has the power and reliability to tow extremely large vessels long distances, sometimes in appalling weather conditions. The hull form characteristics of long length, deep draught and broad beam provide the tug with high lateral resistance which is ideal in maintaining direction and steerage way in ocean conditions, but reduces the ability to manoeuvre in close quarter situations. In addition, its relatively deep draught makes it highly unsuitable for working in shallow water. Another feature is the towing equipment, which having to be compatible with the high engine power, is heavy and cumbersome making connection to a casualty difficult and lengthy. Also, because of the tug's potential power, the connection on board the casualty has to be compatible and able to withstand the forces involved in the towing operation.

Anchor Handling/Tug/Supply Vessels (AHTS)

C.6   This type of tug has evolved from the design of specialised vessels employed in the offshore oil and gas industry and, whilst capable of fulfilling a multi-purpose role including towing, is also used for the deployment and recovery of anchors during mooring operations of mobile rigs in the offshore industry. The principal characteristics of this design are its engine power, thruster(s) for maintaining position, manoeuvrability and the towing arrangements being directly from a winch. Many AHTSs now have an engine power/bollard pull comparable with that of the large ocean going salvage tugs.

Harbour/Coastal Tugs

C.7   The harbour/coastal tug, whilst capable of undertaking short haul coastal towage, is principally designed and employed to assist in manoeuvring and berthing vessels within the confines of a harbour. There are numerous designs and different means of propulsion for this type of tug, ranging from the conventional open screw single plate rudder type to the omni-directional water tractor concept. However the prime characteristics are a satisfactory degree of engine power for the intended purpose, a good free running speed, coupled with a very high degree of manoeuvrability and the means of rapid connection. Whilst the general purpose tug is capable of pushing by the bow, the towing mode is principally from astern. The advent of large tankers has introduced the purpose built berthing tug which almost exclusively pushes/pulls by the bow. The truly omni-directional tug has almost equal power both ahead and astern.

Hiring of Tugs

C.8   The hiring of tugs is in principle no different from that of hiring any other type of vessel, other than in an emergency situation when there is usually a greater degree of urgency. In such situations clearly the LOF is the most expedient method of securing tugs' services. There are other arrangements used to sub-charter tugs within an existing agreement, but as with all negotiations these can take time, as the tug owner requires to know what is expected of his vessel, the work it is to perform, where it is to take place and the financial terms on which the tug is to be engaged.

C.9   Tugs for hire are described as 'prompt/available', however this is with the unwritten caveat 'subject to satisfactory negotiated terms'. Standardised contracts greatly assist in a rapid conclusion of an agreement and are an element of the matter to be considered, especially when time is an important factor. Once satisfactory terms have been agreed in principle, whilst there may be operational delays such as obtaining port clearance, it is reasonable to expect that the tug will be on its way within two hours. Indeed this is not an unusual contractual term, which if the tug owner fails to comply with could cause a breach of contract and even its cancellation.

C.10   The "Towhire" Agreement is a standardised contract whereby, in principle, the tug owner waives his right to salvage in return for a negotiated daily rate, usually based on a basic minimum of days for which the tug will be employed. In essence, by entering into a "Towhire" Agreement, the tug is contracted to work as directed by the salvor.