UNIVERSITY OF PETROLEUM AND ENERGY STUDIES
COLLEGE OF LEGAL STUDIES
DEHRADUN
MARITIME LAW PROJECT ON
MARITIME SALVAGE
Submitted To: Submitted By:Mr. A. Aravindan Anika Bajpai- RollNo. 18 Asst. Professor Devesh Sharma- Roll No. 44 COLS , UPES B.ALLB Sec A Sem VIII
ACKNOWLEDGEMENT
We have taken efforts in this project. However, it would nothave been possible without the kind support and help of manyindividuals. We are highly indebted to Mr. A. Aravindan , mysubject teacher for his guidance and constant supervision as wellas for providing necessary information regarding the project &also for his support in completing the project.
INDEX
INTRODUCTION MARITIME SALVAGE CLASSIFICATION OF SALVAGE TYPES OFSALVAGE LEGAL INSTRUMENTS CONDITIONS REQUIRED SALVORS RIGHT TOLIMIT LIABILITY NEGLIGENCE OF SALVORS SALVAGE CLAIMS AND LIENSSPECIAL COMPENSATION CASE LAWS CONCLUSION
INTRODUCTION
Salvage covers section of maritime law under assistance at seaand in port. Modern principles of maritime salvage law establishedin the early part of 19th century but the maritime salvage practiceexisted long before that time. Modern day maritime salvageconstitutes on three basic principles: when there is an imminentdanger at sea concerning a marine peril; the salvor voluntarilyrender a service and; upon successful completion he will be awardedthe salvage taking into consideration all the relevant factorsincluding the value of the property and the degree of risk he hastaken. Having its roots in the law of equity maritime salvage bearsvery peculiar set of laws quite different from others. The wellknown principle no cure no pay is one of the yard stick taken indetermining the salvage award but exceptions to this also havedeveloped that is to considers further re-covering some of expensesthat have reasonably incurred in cases of contribution to marineenviron-mental protection even without the success of salvaging thewhole property. Salvors priority in maritime liens, leniency onnegligence observed by the courts, allowed for limitation ofliability by existing limitation liability convention and evendeparture from the no cure no pay principle were allowed forsalvors by 1989 International Salvage Convention but, these are notwithout controversies. Although today salvage mainly depends upon1989 International Salvage Convention its interpretation de-pendsupon the national courts thus need the under-standing of theinterpretation under varies jurisdictions specially the English andthe American. English law and the Lloyds Open Form played ahistorical role in developing salvage law on the other handAmerican salvage law have also shown steadyprogress.[footnoteRef:1] [1: Maritime Law of Salvage and Adequacyof Laws Protecting the Salvors Interest- F. Lansakara]
MARITIME SALVAGEMarine salvage is the process of rescuing aship, its cargo, or other property from peril. Salvage encompassesrescue towing, putting out fires, patching or repairing a ship,refloating a sunken or grounded vessel, moving a disabled vessel inorder to clear navigation channels, and raising sunken ships ortheir cargo. Equipment involved in salvage operations may includecranes, floating dry docks, and support vessels (such as tugboats).Commercial divers may be called upon to perform underwater tasksand monitor progress below the surface.Marine salvage is theprocess of recovering a ship, its cargo, or other property after ashipwreck. Salvage encompasses towing, refloating a sunken orgrounded vessel, or patching or repairing a ship. Today theprotection of the environment from cargoes such as oil or othercontaminants is often considered a high priority.
CLASSIFICATION OF SALVAGE
OFFSHORE SALVAGE
The refloating of ships stranded or sunk in exposed waters iscalled offshore salvage. In this type of salvage, vessels areexposed to waves, currents and weather and are the most vulnerableand difficult to work on. They also tend to deteriorate morerapidly than such vessels in protected harbors. Offshore salvagemay provide only a short window of opportunity for the salvage teamdue to unusually high tide or inclement weather for instance. Thework window may not come around again for as long as weeks ormonths and in the interim, the vessel will continue to deteriorate.As a result, it is often imperative to work quickly. Typically,offshore salvage is conducted from pre-outfitted salvage tugs andother tugboats. In addition, portable diving facilities may betransported by helicopter or small boat to the work area. From atactical point of view, working in unprotected waters is lesshospitable for floating cranes, construction tenders, dredges andequipment barges. Plus, it is often difficult to depend upon astable workforce (welders, carpenters, etc.) as all personnel mustbe present on site for the duration.
HARBOUR SALVAGEThe term harbour salvage refers to the salvage ofvessels stranded or sunk in sheltered waters. Such vessels are notnormally subject to the same deterioration caused by marine andweather conditions as offshore salvage vessels are. In addition,unless the vessel to be salvaged is obstructing navigation, thenthere is no need to work as swiftly as in offshore salvage. Also,harbour pre-salvage survey and planning stages tend to be less timeconsuming and environmentally dependent. It is also easier to gainaccess to local labour resources and heavy equipment such asfloating cranes and barges.
CARGO AND EQUIPMENT SALVAGESaving the cargo and equipment aboarda vessel may be of higher priority than saving the vessel itself.The cargo may pose an environmental hazard or may include expensivematerials such as machinery or precious metals. In this form ofsalvage, the main focus is on the rapid removal of goods and mayinclude deliberate dissection, disassembly or destruction of thehull.
WRECK REMOVALWreck removal focuses on the removal of hazardousor unsightly wrecks that have little or no salvage value. Becausethe objectives here are not to save the vessel, the wrecks areusually refloated or removed by the cheapest and most practicalmethod possible. In many cases, hazardous materials must be removedprior to disposing of the wreck. The most common techniques used inwreck removal are cutting the hull into easily handled sections orrefloating the vessel and scuttling it in deeper waters.
AFLOAT SALVAGEThe salvage of a vessel that is damaged but stillafloat is called afloat salvage. This type of salvage is mostlyunobtrusive and involves primarily damage control work such as hullwelding, stabilization (rebalancing ballast tanks and shiftingcargo) and structural bracing. In some cases, the vessel can remainunderway with little disruption to its original purpose andcrew.
CLEARANCE SALVAGEClearance salvage is the coordinated removal orsalvage of numerous vessels in a harbor or waterway. It typicallyfollows a catastrophic event such as a tsunami, hurricane or an actof war (e.g. Pearl Harbor). There may be multiple vesselobstructions with varying degrees of damage due to collision, fireor explosions.
TYPES OF SALVAGE
CONTRACT SALVAGEIn contract salvage the owner of the propertyand salvor enter into a salvage contract prior to the commencementof salvage operations and the amount that the salvor is paid isdetermined by the contract. This can be a fixed amount, based on a"time and materials" basis, or any other terms that both partiesagree to. The contract may also state that payment is only due ifthe salvage operation is successful (a.k.a. "No Cure, No Pay") orthat payment is due even if the operation is not successful
PURE SALVAGEIn pure salvage (also called "merit salvage"), thereis no contract between the owner of the goods and the salvor. Therelationship is one which is implied by law. The salvor of propertyunder pure salvage must bring his claim for salvage in a courtwhich has jurisdiction, and this will award salvage based upon the"merit" of the service and the value of the salvaged property.
Pure salvage claims are divided into "high-order" and"low-order" salvage. In high-order salvage, the salvor exposeshimself and his crew to the risk of injury and loss or damage tohis equipment in order to salvage the property that is in peril.Examples of high-order salvage are boarding a sinking ship in heavyweather, boarding a ship which is on fire, raising a ship, plane,or other sunken property, or towing a ship which is in the surfaway from the shore. Low-order salvage occurs where the salvor isexposed to little or no personal risk. Examples of low-ordersalvage include towing another vessel in calm seas, supplying avessel with fuel, or pulling a vessel off a sand bar. Salvorsperforming high order salvage receive substantially greater salvageaward than those performing low order salvage.
In order for a claim to be awarded three requirements must bemet: The property must be in peril, the services must be renderedvoluntarily (no duty to act), and finally the salvage must besuccessful in whole or in part.
There are several factors that would be considered by a court inestablishing the amount of the salvors award. Some of these includethe difficulty of the operation, the risk involved to the salvor,the value of the property saved, the degree of danger to which theproperty was exposed, and the potential environmental impacts. Itwould be a rare case in which the salvage award would be greaterthan 50 percent of the value of the property salvaged. Morecommonly, salvage awards amount to 10 percent to 25 percent of thevalue of the property.
Private boat owners, to protect themselves from salvage laws inthe event of a rescue, would be wise to clarify with their rescuerif the operation is to be considered salvage, or simply assistancetowing. If this is not done, the boat owner may be shocked todiscover that the rescuer may be eligible for a substantial salvageaward, and a lien may be placed on the vessel if it is notpaid.
NAVAL SALVAGESeveral navies have Rescue Salvage vessels whichare to support their fleet and to come to the aid of vessels indistress. In addition they may have Deep Salvage Units. A DSU(salvage) is an attached unit to the US Navy Submarine Rescue Unit.Technical diving marine salvage units which can operate in depthsunworkable by civilian divers, and which requires saturation divingor trimix (breathing gas) diving techniques. This type of Unit isat times formed by a commercial diving company contracting togovernment via the Baltic Exchange.
PLUNDERWhen certain vessels are lost in an unknown area, apotential salvor might discover and plunder the wreck withoutknowledge of the wreck's owner. Such a "finder's, keepers" salvageoperation was conducted at the height of the Cold War when theUnited States raised a portion of Soviet submarine K-129 in theWestern Pacific Ocean. The CIA, who conducted the salvage under theguise of "mining the seafloor for manganese nodules" with acommercial vessel, spent over $800 million (1974 Dollars) on theclandestine operation now known as Project Azorian. Salvaging aforeign navy's vessel is against international law.
LEGAL INSTRUMENTS Sec. 6 of the Admiralty Court Act, 1840 Sec/20(2) j of the Supreme Court Act, 1981 Sec. 20(6) of the SupremeCourt Act, 1981 Clause 5 (2) j of the Admiralty Bill, 2005 402 (1)(a) and 402(2) of the Merchant Shipping Act, 1958 BrusselsConvention on Assistance and Salvage at Sea, 1910 InternationalSalvage Convention, 1989 International Convention on Maritime Liensand Mortgages, 1993
CONDITIONS REQUIREDAlthough salvage laws vary from one countryto another, generally there are conditions that must be met toallow a claim of salvage. The article under salvage must be fitinto certain recognized categories. The vessel must be in peril,which is defined broadly. The person rendering aid (the "salvor")must be acting voluntarily and under no pre-existing contract.Finally, the salvor must be successful in his efforts, thoughpayment for partial success can be granted in certaincirc*mstances.
RECOGNIZED SUBJECT MATTERTraditionally, salvage only recognizesa ship or craft ("vessel"), cargo on board, freight payable, andbunkers carried on board as the subject of property in danger. Theconcept of property has been expanded by the 1989 SalvageConvention.
The Convention does not consider saving lives to be part ofsalvage, but the protection of the environment is part of salvage.Oil pollution can cause damage to the environment. If the salvorprevents oil pollution from happening, he indeed performs avaluable service to the community as mentioned by (1997) 1 Lloyd'sRep 323 (HL), pp 32628. Therefore, the salvor will be rewarded withspecial compensation, i.e., liability salvage instead of propertysalvage.
REAL DANGERDanger needs to be real but not necessarily immediateor absolute. The subject of salvage must be in real danger, whichmeans the property is exposed to damage or destruction.
The burden of proof lies on the salvor, which means the salvorneeds to prove real danger existed when the performance of servicecommenced. The court or arbitrators must determine whether theproperty was truly in danger. As every situation differs, bothsubjective and objective tests will be conducted. Commonconsiderations are:
Template:Ordered llist
It is incumbent upon the court to assess the existence and levelof danger, both present and future. The case of the Troilus (1951 1Lloyd's Rep. 467, HL) illustrated the concept of future danger thatthe court must take into account when determining the existence ofdanger. In this particular case, the cargo owners contended thatthe ship was in perfect safety when she reached Aden, and thereforeit constituted ocean towage but not salvage when towing from Adento UK. The court held that even though the ship and cargo was inphysical safety, the services rendered still amounted to salvageservice on the grounds that the master of a damaged ship must dohis best to preserve the ship and cargo and bring them to theirdestination as cheaply and efficiently as possible. The salvageaward was reasonable as long as the master acts reasonably for thecombined benefit of ship and cargo.
In the modern world, the dispute normally is not about whetherthere is just the existence of danger, but also the degree ofdanger, as it determines the extent of the award.
VOLUNTARY SERVICEVoluntary means that the services are notrendered under a pre-existing contract agreement or under officialduty or purely for the self-preservation interests of the salvor.Because of this, there is no limitation to the class of personsthat can be considered as volunteers.
A pre-existing agreement refers to any agreement entered intobefore the time of the existence of danger. It includes ship'smaster and crew who have pre-existing employment agreement withship-owners. They have the duty to preserve the ship and cargo, andtherefore they cannot convert themselves into salvors in the eventof trouble.
Notwithstanding, exceptions still exist in this area. Salvagecan still be rendered if the pilot or crews of the ship in perilrendered service outside or beyond the scope of their duties underthe contract. The case of the Sandefjord (1953 2 Lloyd's Rep. 557)held that the pilot brought his personal knowledge of the localconditions and his seafaring skills to bear when faced with agrounding. Moreover, the pilot relieved the ship owner of paying avast salvage award for tug assistance. Under these conditions, thepilot was entitled to a salvage award.
Crewmen cannot claim themselves as individual salvors unlesstheir employment contract has been actually or constructivelyterminated before the salvage service commenced. The termination ofcontract could be brought by: authorized abandonment of the shipunder the Master's authority; or the Master's discharge of the crewconcerned; or the capture of the vessel in hostileencounter.Authorized abandonment refers to a condition wherein, atthe time the Master decided to abandon ship, there was no hope orintention of returning to the stricken ship. There can be nosuggestion that a mere temporary abandonment would dissolve thecrew's contract of employment. The case of the Albionic (1941 70L1.L.Rep.257) ruled that there was no express order given by theMaster to abandon the ship, and therefore the crew's contracts ofservice were not terminated at the time when they performed thesalvage service. The San Demetrio (1941 69 L1.L.Rep.5) casedemonstrated a good example of an authorized abandonment of shipunder the Master's authority. If the ship was properly abandonedunder the orders from the master, the vessel's own crews who savedthe vessel or cargo on board were entitled to claim salvage.
In the case of the Master's discharge of crew concerned, theWarrior Lush (476) case ruled that if the crew is properlydischarged by the master, their employment contract is validlyterminated. Therefore, any crew who returned to and saved thevessel were truly salvors.
Additionally, hostile capture of the crew effectively causes thedissolution of the sailors' employment contract, as the general andexpected duties for the seamen no longer exist. The Two Friends(1799 1 Ch Rob 271) provided support for this argument.
SUCCESSThe requirement for the service to be successful can besummed up from the common expression no cure; no pay. However,success need not be total. Partial success, provided that there issome measure of preservation to the owners, is sufficient. The TojoMaru[footnoteRef:2] examined certain characteristics of salvagecontracts and concluded that the primary consideration is that theperson rendering the salvage service is not entitled to anyremuneration unless he saves the property in whole or in part. [2:1972 AC 242 HL]
If the ship's peril following the service is as grave as before,no award will be given. Likewise, if the salvage services whichrescue a vessel from one danger eventually make the situationworse, no salvage award is typically granted. The Melanie v The SanOnofre[footnoteRef:3] held that the services which rescued a vesselfrom one danger, but eventually left her in a position of evengreater danger, did not contribute to ultimate success andtherefore do not amount to salvage. [3: 1925 AC 246]
SALVORS RIGHT TO LIMIT LIABILITYPrior to 1976 LimitationLiability Convention, salvors had no right to limit theirliabilities in cases of negligence or misconduct which blame onsalvor their liabilities were unlimited for example the Tojo MaruCase in 1972.[footnoteRef:4] [4: Tojo Maru case salvors were notallowed to limit liability under the old sys-tem existed before1976 Limitation of liability Convention.]
1976 Limitation of Liability Convention, states that ship ownersand salvors as defined, may limit their liability in accordancewith rules of this convention for claims in respect of loss ordamaged to property occurring on board in relation to salvageoperation[footnoteRef:5] subject to certain exceptions such asgross negligence if proved limitations will not be allowed. Thisnew development was a direct consequence of 1972 Tojo Maru case.Limitation Liability Convention, ratified by 52 States about 50% ofworld shipping tonnage and its latest protocol with higher amountof limits has ratified by 37 states about 42 % of the worldshipping tonnage. 1996 protocol to Limitation Liability Conventionprovides an enhanced compensation regime compare to the former. USAis not a party to these conventions but thy have their ownstatutory provisions. [5: Article 2 (1) (a) claims in respect ofloss of life or personal injury or loss of or damage to property(including damage to harbor works, basins and water-ways and aidsto navigation), occurring on board or in direct connection with theoperation of the ship or with salvage operations, and consequentialloss resulting]
Inclusion of salvors for limitation of liability is a recentdevelopment in favor of their rights.
NEGLIGENCE OF SALVORSSalvor taking the risk to save the propertyand during the salvage operation accidents occur due to salvorsnegligence or misconduct the question is to what extend thesenegligence or misconduct affect the salvage award and whether theship owner can make a counterclaim for damages. Decisions on thesewere difficult because of the extra ordinary nature of the job andinvolvement of the high risk.Although both UK and USA are thesignatories to the 1989 Salvage Convention the interpretation ofprovisions on salvors negligence by the courts have been different.Under the convention the salvor shall owes a duty to the owner ofthe vessel or other property in danger to carry out the salvageoperations with due care also to exercise due care to preventminimize damages to the environment and take assistance whenreasonably requested.[footnoteRef:6] The salvors negligence mayalso deprive him of whole or part of the award[footnoteRef:7] theconvention is silence on how they are measured and, it has left thedecisions to national courts. [6: Article 8 - Duties of the salvorand of the owner and master1. The salvor shall owe a duty to theowner of the vessel or other property in danger:(a) to carry outthe salvage operations with due care;(b) in performing the dutyspecified in subparagraph (a), to exercise due care to prevent orminimize damage to the environment;(c) whenever circ*mstancesreasonably require, to seek assistance from other salvors; and(d)to accept the intervention of other salvors when reasonablyrequested to do so by the owner or master of the vessel or otherproperty in danger; provided however that the amount of his rewardshall not be prejudiced should it be found that such a request wasunreasonable.] [7: Article 18 - The effect of salvor's misconductAsalvor may be deprived of the whole or part of the payment dueunder this Convention to the extent that the salvage operationshave become necessary or more difficult because of fault or neglecton his part or if the salvor has been guilty of fraud or otherdishonest conduct.]
The case Alenquer courts description to what extend the leniencycan be granted has a notable value. A brief outcome of the Englishlaw cases de-scribed below.
Case 1947 The Delphinula (Court of Appeal)The salvor guilty ofmisconduct reduction in salved value due to his misconduct wastaken into consideration and also a counter claim or independentaction.
Case 1955 The AlenquerNo salvage award was made but the damageclaim had to be paid in full the judge adhered to the generalprinciple and described why leniency cannot be applied here whenthe their behavior is criticized contrary to public interest, theresult of the courts decision as such to discourage salvors oftaking unnecessary risks
Case 1972 Tojo Maru (House of Lords) [footnoteRef:8] [8: 1972Tojo Maru collision accident in Persian Gulf salvors agreed to towher to Kobe during the salvage operation, the salvors negligencecaused an explo-sion and heavy damages to the ship. They howeverwere successful in towing her to final destination. The ownerscounterclaim damages from salvor due to negligence.]
It was held that when the salvage operation is successful butthere is negligence of the salvor in the case of successful salvagethe owners can counter-claim damages from the salvor and themeasure of damage is the difference between undamaged value of theship base on no negligence of the salvor and damaged value of theship and, the salvage award to be calculated base on undamagedvalue of the ship.Finally the salvage award and ownerscounter-claim will set off against each other the balance will bedue owner or salvor. It was also held that when there is no successin salvage there can be no counter claims as well.This case has thehighest authority the House of Lords however its calculation of theaward taking into account undamaged value of the ship althoughthere were no negligence has created a friction between it and nocure no pay principle. There are also other concerns on applicationof this case law to cases with two or more salvors with only one atfault and how it can affect the one who is not at fault.With regardto Limitation of liability of the salvors the Court of Appeal inthe above case held that limitation of liability can be appliedbefore setting off owners counter claim.When considering thesalvors negligence or misconduct the American method is differentfrom the English courts. They categorize them as distinguishabledamages and independent damages. Distinguishable damages means theyinherit in the situation for example the Tojo Maru case was adistinguishable damage and the independent damages means they werecaused independently by the salvor any counter claim for damagesthe independent damages may only consider. Limitation of liabilityunder the American statute is the damaged value of the ship plusthe freight in the course of being earned.Under the Llloyd OpenForm 2000 the salvor is required to have observed best endeavors31,there has been no definition of best endeavors it is commonly usedin industry and widely known therefore best endeavor means Standardof reasonableness is that of a prudent sailor acting properly inthe interest of salved property.The law with respect to negligenceand misconduct of salvors their interpretations by English Courtsare conflicting and the American Courts interpretations muchpreferred with respect to preservation of salvors rights.
SALVAGE CLAIMS AND LIENSEnglish law embraces the salvage claimas a maritime lien as described under English Supreme Courts Actstates that under any contract in relation to salvage serviceswhether covered under salvage convention or not. Under the Englishlaw salvage awards are given priority on liens. They consider amongother things damage done by a ship, sea-mens wages, masters wagesand disbursem*nts. The courts will determine the distribution ofthe funds in order of their priorities[footnoteRef:9] but there areno strict rules of rankings. [9: Supreme Court Act, 1981S.21(6)]
1 Admiralty Marshals cost2 Claimants cost3 Maritime Lienees4Mortgagees5 Other in rem claimants When there are several salvorsthe last in time take priority. When there are different categoriesWhen a claimant has a damage lien subsequent to lien that preservedthe ship (salvage) the damage lien will take priority oversalvage.[footnoteRef:10] [10: The case Veritas 1901 the vessel wassafely towed by the salvors but un-fortunately her engine failedand a second salvor assisted her to prevent her from sinking.During the operation the vessel came into contact with landingstage belonging to the Dock Board. The Board used its statutorypowers to re-move the vessel and claim against the ship in thiscase priority was given to the Boards claim against the ship beforeconsidering the salvage awards.]
English law considers the extinction of maritime liens under thefollowing circ*mstances: Immunity; delay of law suit; uponproviding financial security by the defendant; establishment oflimitation fund; wavier; destruction of property; Judgment onliability; Judicial sale and; sister ship arrest.1993 InternationalConvention on Maritime Liens and Mortgages came into force in Sept2004. Few countries have so far ratified this convention they are:Indonesia, Ecuador, Estonia, Nigeria, Monaco, Russia, St Vincentand Grenadians, Spain, Tunisia, Ukraine andVanuatu.[footnoteRef:11] This convention contained the provisionsin relation to maritime liens similar to that have generallyaccepted by major maritime nations and it also has the provisionsthat each state under its own law may grant maritime liens on avessel to secure claims other than those generallyrecognized.[footnoteRef:12] [11: Article 4 (1) ( c ) Maritime Liens- Claim for reward for the salvage of the shipArticle 5 - Priorityof maritime liens; Article 15- Conflict of laws ; Article 16 -Extinction of maritime liens because of time limit] [12: Article 6Other maritime liens Each State Party may, under its law, grantother maritime liens on a vessel to secure claimssubject tocondition which include time bar and rank below Salvage lien.]
SPECIAL COMPENSATIONSpecial compensation was introduced in 1989Salvage Convention to compensate the salvors if their salvageoperation has contributed to protection of the marine environmenteven though they could not earn full or any salvage award.Under the1989 Salvage Convention if a salvor has carried out salvageoperation in respect of a vessel which by itself or its cargothreatened damage to the environment and has failed to earn rewardunder article 13 he shall be entitled to special compensation fromthe owner of the vessel equivalent to his expenses as defined inarticle 14. This appear to be a another step to encourage thesalvor for saving the environment but the calculation of thesalvage expenses without considering the profits or bonuses turnout to be an unpractical one. The principle issue in the NagasakiSpirit case was concern with the definition of expenses in Article14(3) and, in particular, that part of it which refers to fair ratefor equipment and personnel actually and reasonably used in thesalvage operation.[footnoteRef:13] The question was whether is itpermissible to include a market or profitable rate, or whether thesalvor was entitled to solely to reimbursem*nt of expenditure.House of Lords delivering the judgment held that fair rate underarticle 14(3) meant fair rate of expenditure and did not includeany element of profits. This draws strong re-action from thesalvors and after lengthy discussions the marine salvage communityarrived with the solution. This was a set of clause giving thebasis for calculation of special compensation including bonusesunder the guide lines set up by International Salvage Union (ISU)and clarifying other relevant criteria known as SpecialCompensation and Indemnity Clause (SCOPIC). The solution providedby SCOPIC is, the parties to a salvage contract may agree toincorporate SCOPIC into any LOF contract by reference, thereforecontracting out of Article 14 of the Convention. Such contractingout is allowed under article 6 of the SalvageConvention.[footnoteRef:14] The ship owners P&I clubs haveagreed through a code of conduct (a gentlemen agreement betweenP& I Clubs and ISU) to provide financial security required forSCOPIC compensation by a standard guarantee form known as ISU5.[13: 14(3) Salvor's expenses for the purpose of paragraphs 1 and 2means the out-of-pocket expenses reasonably incurred by the salvorin the salvage opera-tion and a fair rate for equipment andpersonnel actually and reasonably used in the salvage operation,taking into consideration the criteria set out in article 13,paragraph 1 (h), (i) and (j).Article 13 the Criteria for fixing therewards(h)the promptness of the services rendered;(i) theavailability and use of vessels or other equipment intended forsalvage operations;(j) the state of readiness and efficiency of thesalvor's equipment and the value thereof.] [14: Article 6 - Salvagecontracts. 1. This Convention shall apply to any salvage operationssave to the extent that a contract otherwise provides expressly orby implication]
Special compensation available to salvors under the conventionhave faced with problems in practical application, SCOPIC sointroduced is a contractual obligation and not a statutory one.Salvage convention compensation limits to apply if SCOPIC is notagreed.
CASE LAWS
Arielle Shipping Ltd v Owners of the Lady Emma [footnoteRef:15][15: [1993] FJHC 11; (11 February 1993)]
Marine Salvage- contract for towage service- not agreement forsalvageThe defendants vessel, the Lady Emma was blown ashore andgrounded high and dry as the result of a cyclone. After 2 failedattempts by a salvage company to refloat the vessel, the defendantasked the plaintiff , captain of the vessel Arielle to pull theLady Emma free from where she was stranded. The Arielle had beenused to tow oil rigs but was not designed for salvage operationsand had never been used as such. The plaintiff advised thedefendant that he considered that the Lady Emma could be towed offthe reef. The plaintiff asked the defendant to supply the salvageequipment and the diver and stipulated a $3000 per day chargewhether or not the operation was successful. A $3000 deposit waspaid and the plaintiff tried to refloat the vessel for 3 days, butwas unsuccessful. The defendant refused payment claiming that theoperation was not carried out in a workmanlike manner.DECISION:Action allowedHELD: The plaintiff agreed to perform a towing job.This was evidenced by the oral agreement between the parties and bythe fact that the defendant paid a $3000 deposit. The defendantrequired a salvage operation. The court compared towage and salvageservices where salvage is voluntary with no title to award unlessthe ship freight or cargo is saved. The court was of the view thatthis was a contractual towage service for which payment was agreed.The duty of care of the plaintiff was not that of a salvagecontractor undertaking a continual obligation until the ship islost or salvaged. The plaintiffs duty of care was that he usereasonable skill and care in the provision of the services.
Bohn v Vanuatu Maritime Authority [footnoteRef:16] [16: [2001]VUSC 127; Civil Case 115 of 2000 (9 September 2001);]
Marine salvage- contract to salvage terminated when salvageoperation almost complete- party contracted to salvage entitled toreasonable value of work done The parties contracted for thesalvage of 2 vessels that posed a safety threat to the harbour. Thecontract stipulated that the work was to be completed in 30 days.The plaintiff encountered many difficulties in the operationparticularly in finding equipment and competent personnel. After 37days the plaintiff wrote to the defendant requested an extension ofthe allowable time to complete the contract. The defendant failedto respond and the plaintiff continued with the salvage operationon an implicit understanding. After 4 months on the job the partieshad a difficult relationship frustrating the operation further.After nearly 8 months the salvage was completed and arrangementswere made to scuttle the vessels. The defendants appeared to haveencouraged the plaintiffs to complete the contract after the timeperiod. However the defendant refused to pay on the basis of abreach of the contract in that the plaintiff did not complete intime. The defendant claimed that work done by the plaintiff afterthe expiration of the contract was as a voluntary salvor, and thedefendant challenged the competency of the work done. The plaintiffclaimed quantum meruit for the value of the work done under thecontract.DECISION: for the PlaintiffHELD: The defendant had theright to terminate the contract. However when the contract wasterminated most of the work had been completed. The court found onthe evidence that the work had been done competently. Therefore theplaintiff was entitled to a reasonable value of the work done.
Mauitoga v Consort Shipping Line Ltd [footnoteRef:17] [17:[1995] FJHC 16; (18 January 1995)]
Marine salvage- Apportioning the share of the owner of thesalving vesselThe owner of a salving vessel received a $25,000award for the salvage of a vessel. The salvage was undertaken bythe Captain and crew of the salving vessel and these partiesapplied to the court for a determination of the proportion of theaward that they were entitled to. The owner of the salving vesselargued that no apportion was necessary as wages had been paidduring the salvage operation.DECISION: 75% to the owner and 25% toCaptain and crew (of the latter amount, 1/3 to the Captain and therest divided amongst crew membersHELD: Although the Captain and thecrew members were paid their usual wages as employees of the vesselowner, according to maritime practice they were entitled to theirrespective share in the reward. Since 1883 and the demise of sail,the apportionment to the owner has been generally 75%.
Owner of the Ship Classique v Marine Services Ltd[footnoteRef:18] [18: [1993] SBCA 3]
Marine salvage- quantum- claim for salvage is not a claim for aliquidated amountanalogous to a claim for damages at common law.Jurisdiction- Lloyds contract provided for arbitration to proceedin London, but court would not allow challenge to jurisdiction 2years after defendant had taken a step in the action.The salvorclaimed $85,000 for salvage. The vessel was arrested, but the ownertook the ship out of the jurisdiction in contempt of the courtordered arrest. Subsequently the salvor was awarded judgment of$85,000 in default. The trial court upheld the judgment, and theowner appealed on the grounds that the judgment was irregular, noevidence having been considered in establishing quantum. The owneralso disputed jurisdiction, arguing that the contract provided forarbitration in London.DECISION: Appeal allowed.HELD: The judgmentwas irregularly obtained because there was no evidence at allbefore the Judge supporting the quantum of the judgment. As tojurisdiction, the defendant could not challenge jurisdiction 2years after it had entered an appearance.
Seafreight Pty Ltd v The Ship Manutea [footnoteRef:19] [19:[1975] PGSC 28; [1975] PNGLR 64 (29 March 1975)]
Marine salvage- Lloyds no cure- no pay agreement- claim must bequantified to be considered proper claim for purposes of arrest ofvessel for securityThe defendant ship (Manutea) was successfullysalved by the plaintiff. During the extensive tow the two captainsentered an oral salvage agreement which was to be in terms of aLloyds Salvage Agreement described as a no cure- no pay agreement.Contrary to the agreement the salved ship was moved from her placeof safety without the consent of the salvor. The plaintiff had herarrested and filed an in rem claim for salvage fees. The claim forsalvage fees was made after the arrest. The owner of the Manuteaapplied for an order to set aside the warrant to arrest and torelease the vessel from the arrest made under the warrant.DECISION:Order grantedHELD: The court looked at clauses 4 & 5 of thecontract. Pursuant to this contract the salvor must notify Lloydsof the amount for which he requires security be given- this was notdone by the salvor in this case. The contract also provided thatthe property would not be arrested or detained unless security wasnot given within 14 days. The court decided that there was a periodafter the successful salvage operation and before the claim under ano cure- no pay agreement where there is no maritime lien exceptwhere there is reason to believe that removal of the salvedproperty is contemplated. The ship had been moved without theconsent of the plaintiff but the court found that there was goodreason to move the ship and it had not been moved to a foreignport. There had not been a claim made for salvage at the time ofthe arrest because at that time the claim had not beenquantified.
CONCLUSION
Conflict of law with respect to maritime liens on salvage lesslikely priority for salvor has maintained throughout, butuncertainty exists in the English law with respect to claims onsalvors negligence American law appears to be more settled on thisregard. Limitation of liability conventions applied to salvors butunder American law different limits will consider since they arenot party to international Limitation Liability Conventions.Special compensation applicable to salvor under the 1989 SalvageConvention not practical therefore contracts shall insert SCOPICclause in order for the salvor to get reasonable rate includingbonus.The adequacy of the laws protecting the salvors interesttoday depends upon international conventions and national laws. Theexisting set of maritime salvage laws covering the interest of thesalvors with respect to limitation of liability and priority inmaritime liens appeared to be adequate, with regard to judgment onsalvors misconduct and negligence the existing laws are notuniversal therefore inadequate. Similarly, special compensationprovisions which are available under the salvage convention do notencourage the salvor and seems inadequate unless SCOPIC isinserted.Page | 20
![Maritime Salvage - [PDF Document] (2024)](data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAQAAAC1HAwCAAAAC0lEQVR42mP8/h8AAvMB+NzmkbcAAAAASUVORK5CYII=)