The Lloyd’s of London insurance market has decided to retain its salvage arbitration branch, which will ensure the traditional Lloyd’s Open Form (LOF) salvage contract can continue.
Salvors had feared that a Lloyd's review would spell the end of Lloyd’s Salvage Arbitration Branch (LSAB) and the LOF, which has been the main form of emergency response contract for more than a century.
Under a LOF contract, awards are decided — often through arbitration — based on the value of the salvaged property and cargo, and protection of the environment. But, more recently, insurers have preferred fixed-price contracts, which prompted the review.
Lloyd’s said: “Lloyd’s has recognised and listened to the high volume of representations, in support of LSAB and LOF, made by market representatives, committees and other interested parties.”
Lloyd’s will now promote the LOF contract and amend the pricing structure.
“Having taken the decision to continue to support LOF, Lloyd’s is now determined to increase the use of the form and highlight the benefits that its use can bring. We will amend our charging structure to better reflect the importance of the work undertaken by the LSAB,” Lloyd’s said.
The move was welcomed by the salvage industry association, the International Salvage Union (ISU), which has been lobbying for the LOF to be more widely used.
“ISU welcomes the news that LSAB is to continue and will work with Lloyd's and others as the working groups and process develops,” the union said.
