Following market feedback, the Lloyd’s Market Association (LMA) today released LMA5654A, a revised version of the Lloyd’s Open Form (LOF) Default Agreement, originally published in September 2024. An Accompanying Guidance Note designed to support stakeholders in interpreting and applying the agreement has also been issued. Both documents were drafted in co-operation with the International Chamber of Shipping (ICS). 

LMA5654 was developed to encourage the use of LOF in emergency situations by giving shipowners confidence that their hull and machinery insurers support the use of LOF as appropriate. LOF itself is a long‑established no cure, no pay contract agreed directly between the shipowner and the salvor, incorporating the Lloyd’s Salvage Arbitration Clauses (LSAC) which govern the arbitration process for determining salvage awards. In contrast, the Default Clause (LMA5654/LMA5654A) is an agreement between the shipowner and their vessel’s hull insurers, strengthening alignment between the parties before any salvage services are needed. Together, these mechanisms support prompt decision‑making and early dialogue when a vessel may require emergency assistance.

In 2024, following market‑wide consultation, updated versions of LOF 2024 and LSAC 2024 were released. After publication of LMA5654, feedback from shipowners, insurers and other stakeholders indicated that additional clarity would improve the clause’s practical application. LMA and ICS have therefore refined the wording and produced accompanying guidance to promote consistent understanding across the market.

LMA5654A and the Accompanying Guidance are now available on the LMA website and Lloyd’s Wordings Repository.

LOF Default Agreement LMA 5654A

LOF Default Agreement LMA 5654A Accompanying Guidance

Arabella Ramage
Legal and Regulatory Director
arabella.ramage@lmalloyds.com