Salvage

Salvage is a concept unique to maritime law. Following a major casualty, the initial priority will be to minimise loss (the principles of Sue and Labouring for marine insurance). The first priority in minimising loss is to arrange or employ salvage services. A salvage operation means an act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any waters whatsoever (Article 1, International Salvage Convention). If a person voluntarily saves the property of another at sea, the person saving the property (the salvor) will be entitled to a reward, not exceeding the value of the property salved. A salvage reward is payable whenever maritime property is saved from danger by a volunteer, a person who is not debarred from claiming salvage by virtue of some pre-existing relationship with the property in question. The current framework of salvage law was established by the Admiralty Court in the 18 th and 19th century. Lloyds Open Form is a particular type of salvage contract which has been judicially categorised as one for work and labour which is subject only to salvage law, expressly or impliedly incorporated in it ( see The Unique Mariner). Lloyds Open Form has developed over the years, the latest draft being LOF 2000. However, general common salvage law is governed by the 1989 Salvage Convention, which is given force of law by the Merchant Shipping (Salvage and Pollution) Act 1924, which is incorporated in section 224, schedule 11of the Merchant Shipping Act 1995. Who Can be A Salvor? A salvor is any person, acting as a volunteer, preserves, or contributes to preserving, at sea, any cargo, freight or other recognised subject to salvage from danger, so long as there are no existing contractual obligations with the endangered property. Such people may include; People with Statutory duties (see The San Onofre) Naval Personnel Cargo Owners (if they go beyond what is expected of them ( see The Sava Star) People performing acts beyond normal duties ( see The Mars) RNLI Crew (see The Africa Occidental) Seaman at the end of a contact of service (See The Port Reath; The San Demitrio) Pilots (See The Aldora) For the rescue of a vessel to be classed as salvage, there are generally three pre requisites; (1) The vessel concerned must be in danger or peril. (2) The actions must be voluntary, and (3) There must be success. Peril This peril must be real, it must not be imaginary (See Joseph Watson & Son v. Firemans Fund on San Francisco) or fanciful (See The Mount Cynthos). Only some, not all, of the property needs to be imperilled ( See The Geertje). Furthermore, the vessel may only need to be in the imminent presence of danger when services were rendered (See The Aldora), or it is sufficient if there is a state of difficulty/ reasonable apprehension of danger (See The Phantom). The burden of proving that the vessel was in danger or peril is upon the salvor. Once an LOF has been signed, a S/O is

estopped from later saying that his vessel was not imperilled ( See Beaverford v. The Kafiristan). Voluntariness As stated, the actions and services rendered must be voluntary in order to claim a salvage award. If a tug were employed to tow a distressed vessel to port, he cannot claim for salvage, even if the vessel was imperilled since the contract entered into would be one for tow of vessel. Success In order for there to be a salvage award, one of the pre-requisites is that the salvor was successful in saving the vessel, or contributing to saving the vessel. There would be no award if salvage services were rendered and the services placed the vessel in greater danger. Thus, in order for there to be success, the vessel must be taken to a place of safety. As to what constitutes a place of safety will depend upon the facts of each case (See The Troilus), however, there is no general rule that without power, ship and cargo remain endangered until repaired. The burden of proving that the vessel is in a safe place is upon the salvor (See The Glenogle). A vessel may lie in a safe port, but may not be itself physically safe. Two cases illustrate this point. The first is the The Merannio were the casualty was left at a place were there was likely to lead to further financial consequences for the owner because the port did not have adequate repair facilities, but the port is self was safe and the vessel was in no physical danger. The second example is The Glaucus, a vessel was towed over a great distance and then left immobile at anchor. In this case, Willmer J, stated until somebody got her to a place where the necessary repairs could be executed she was completely immobilised. It is no use saying that this valuable property, worth something approaching a million pounds, is safe. If it is safe in the circumstances where nobody can use it, for practical purposes, it might as well be at the bottom of the sea . What Can be Salved? Only maritime property can be salved (See The Gas Float Whitton No. 2). A ship is maritime property (Definition of a ship is contained in Section 313 of the Merchant Shipping Act 1995). Bunkers are maritime property (See The Sillia). Cargo on board is maritime property. Oil rigs, providing they are not fixed, may be maritime property. Crown property can be salved (section 230 of MSA 1995), but it cannot be arrested (section 29 of Crown Proceedings Act 1947). The Salvage Award The common law principle of salvage is no cure no pay. This relates back to the prerequisite of success. If there is no success, no award is payable. Therefore, there is only payment of a salvage award if the salvage services rendered had a useful result (sections 1 & 2 of Article 12, 1989 Salvage Convention ). A salvage award can be made, even were the owners of the imperilled vessel refuse or decline the salvage services offered (See The Five Steel Barges), however, if he refuses on the basis that he is employing his own services then no award would be payable ( See The Pretoria). Article 16 of the Salvage Convention gives salvors who have salved a ship/ vessel or other maritime property, or who have prevented damage to the marine environment the entitlement to an award. Under LOF 1995, quantum of salvage awards is now left open to be decided by Lloyds Arbitrators applying English Law. If there is more than one salvor involved, only one award is awarded. The single award is then apportioned by the Arbitrators. Article 13 of the 89 Convention gives details of criteria for the award. Such criteria would be taken into account by an Arbitrator and includes; The salved value of the property salved no cure no pay (if the salved property is worth nothing

Skill and efforts of the salvor in minimising/ preventing damage to the marine environment Nature and degree of danger the property was in Skill and effort of the salvor(s), promptness (professionalism) Time used, expenses and losses incurred Risk of liability and other risks run by the salvor State of readiness and efficiency of the salvors equipment.

In order to administer justice in a more flexible way, particularly for salvage, the admiralty court developed equity and reason. Therefore, if salvage services were rendered but the vessel was not actually in danger, an award may still be payable. Where salvage services are exercised in British Waters and the salved property does not produce enough fund, the Department of transport can make discretionary payments from the Mercantile Marine Fund, schedule 11, MSA 1995. Outside UK Waters for this to occur, the salved property must be British. Security One of a salvors major concerns following the completion of salvage services is that it wants to ensure it will be paid. The salvor has a right in contract and at common law to receive security for such payment. In practice, therefore, upon arrival at the port where the salvage services are completed, the salvor will demand for salvage security which will be based on the salved value of the property (ship, cargo, bunkers and freight). Salvors have aright of maritime lien on property they have salved. If security is not provided, the ship and cargo will usually be arrested. A salvor can pursue an action in rem, arresting the res (this allows the sister ship rule to apply), or in personam. If the res is arrested but it ends up being sold in an admiralty sale, then the salvor has a high ranking claim (based on a pro rata, pari passu basis), second only to lawyers and Admiralty Marshall costs. The salved value of the property is important since it is the starting point for the basis upon which a salvage award is made and also the basis upon which an apportionment is made between the owners of the salved property, usually ship interests, cargo interests and bunkers (which are frequently owned by a time charterer). Article 8 of the Salvage Convention 1989 outline the duties of the salvor and the salvee. The salvor must exercise reasonable care when performing salvage services. SCOPIC (Special Compensation Protection and Indemnity Clause) The 1989 Salvage Convention was drafted by the Committee Maritime International and included the provision of SCOPIC, which is contained under article 14. The principle of SCOPIC evolved from the safety net principles of the LOF 1980. Under SCOPIC, salvors are entitled to special compensation for expenses incurred. The provisions of SCOPIC were at one time only applicable to tankers, laden or partly laden, carrying oil, however this has now been repealed and SCOPIC can apply to all vessels. Under the safety net provision, a salvor rendering services could obtain a maximum payment of 115% of his expenses incurred. The 89 Convention extended and replaced this by establishing a system of special compensation which applied to not only oil tankers. The judgement in the Nagasaki Spirit depicted that the provisions of article 14 could not include a profit element. However, some profit element is available in increment of up to 30% to 100% in certain circumstances. The SCOPIC clause is a tariff-based system for assessing special compensation under article 14. The salvor does not have to prove that there is a threat to the marine environment and there is an uplift of 25%. Either party can opt out of SCOPIC with notice to the other.