Legal landscape surrounding ‘Solong’, ‘Stena Immaculate’ collision and salvage costs

The recent incident involving the tanker Stena Immaculate, struck at anchor off the River Humber in poor visibility by the small container vessel Solong, brings into play numerous issues of maritime law and practice.

Starting with at least one straightforward question, apportionment of blame cannot seriously be contested.  

The best that might be said is an alert night-time lookout might have the opportunity to make contact by VHF with an approaching vessel, flash an Aldis light and sound a whistle. However, if there was no effective lookout on the bridge of the container vessel, failure to do so can hardly be said to have been a contributing cause.

Jurisdiction in respect of collisions at sea can give rise to forum selection tactics for the reason touched on below, as an example, but here there can equally be no scope for uncertainty over jurisdiction, with the incident occurring in UK waters.  

In such a case, it is frequently the guilty vessel that will initiate legal proceedings, as Solong here predicably did as a first step to establishing a limitation fund under the International Convention on Limitation of Liability for Maritime Claims 1976. This is a protective, defensive step.

The UK adopted the 1996 Protocol to that Convention and has since regularly brought the tonnage-based calculation up to date. The result is that such a fund, paid into court as security for the inevitable claims, is among the most generous available.  

The effect of a limitation fund is to channel all claims against the registered owner. As such, any bareboat charterer, time or voyage charter, technical or commercial manager, crewing agency and so on are protected. This avoids a plethora of proceedings that might otherwise be brought speculatively against potentially a deeper pocket.

A further objective would be to protect the assured owners’ access to the proceeds of a constructive total loss (CTL) payout under the vessel’s hull and machinery policy. Without the protection of a limitation fund, the freezing of those proceeds would almost certainly be the focus of attention for aggressive claimants.

A fund serves to provide a pot of money from which the colliding vessel and its cargo can expect a recovery, albeit no more than a dividend if the claims are large.

However, it also serves to answer unseaworthiness claims brought by the fire-damaged cargo on board the colliding vessel itself. These will have to compete with the third-party claims.  

Salvage claims are a little different.  

Under the convention, salvage claims are recoverable in full and are not constrained by the assisted vessel’s limitation fund. 

However, any contractor assisting Solong on traditional salvage terms, such as under a Lloyd’s Open Form Salvage Agreement (LOF), would take little comfort from that. A ’best endeavours’ no cure-no pay contract where the reward is contingent upon a residual value in the property salved, would be highly undesirable for a salvor in circumstances where the vessel is clearly a CTL. 

Meanwhile to rely upon any great value in non-fire damaged cargo below decks would be dangerously speculative.

That is where the SCOPIC clause supplemental to LOF comes to the rescue. Where incorporated and invoked, it provides for interim P&I Club security of US$3M to cover the salvors’ expenses.  

Those expenses are generally fixed according to the SCOPIC tariff rates applicable for craft, equipment and personnel deployed. These daily rates vary, for example from US$19 per day for a VHF radio to US$3,514 for a nitrogen generator. The current rate for a salvage master is US$2,750 per day. On top of that, the contractor is entitled to a mark-up of 25%. These costs can rack up very quickly indeed.

Nonetheless, it generally makes sense for much of the work, getting the vessel into port and sorting out the mess there, to be done under SCOPIC. To do so keeps the authorities at bay and allows the parties to respond to the challenge of what is often a constantly evolving situation. 

Salvage services have also been supplied to Stena Immaculate. That vessel has a valuable cargo, largely intact, and most likely a decent residual value in the hull which is only partially damaged. Salvage remuneration will need to be paid for by the property owners in full. When, however, it brings its indemnity claim against Solong for those salvage costs, those claims, in contrast to the salvage claims in relation to Solong, will have to compete with all other claims against the fund in court. Life is not always fair. 

A version of this article first appeared in the publication “Riveria Maritime” – Click here to read it.