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- Roll No. 18 Asst. Professor Devesh Sharma- Roll No. 44 COLS , UPES B.A LLB Sec A Sem VIII

ACKNOWLEDGEMENT

We have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals. We are highly indebted to Mr. A. Aravindan , my subject teacher for his guidance and constant supervision as well as for providing necessary information regarding the project & also for his support in completing the project.

INDEX

INTRODUCTION MARITIME SALVAGE CLASSIFICATION OF SALVAGE TYPES OF SALVAGE LEGAL INSTRUMENTS CONDITIONS REQUIRED SALVORS RIGHT TO LIMIT LIABILITY NEGLIGENCE OF SALVORS SALVAGE CLAIMS AND LIENS SPECIAL COMPENSATION CASE LAWS CONCLUSION

INTRODUCTION

Salvage covers section of maritime law under assistance at sea and in port. Modern principles of maritime salvage law established in the early part of 19th century but the maritime salvage practice existed long before that time. Modern day maritime salvage constitutes on three basic principles: when there is an imminent danger at sea concerning a marine peril; the salvor voluntarily render a service and; upon successful completion he will be awarded the salvage taking into consideration all the relevant factors including the value of the property and the degree of risk he has taken. Having its roots in the law of equity maritime salvage bears very peculiar set of laws quite different from others. The well known principle no cure no pay is one of the yard stick taken in determining the salvage award but exceptions to this also have developed that is to considers further re-covering some of expenses that have reasonably incurred in cases of contribution to marine environ-mental protection even without the success of salvaging the whole property. Salvors priority in maritime liens, leniency on negligence observed by the courts, allowed for limitation of liability by existing limitation liability convention and even departure from the no cure no pay principle were allowed for salvors by 1989 International Salvage Convention but, these are not without controversies. Although today salvage mainly depends upon 1989 International Salvage Convention its interpretation de-pends upon the national courts thus need the under-standing of the interpretation under varies jurisdictions specially the English and the American. English law and the Lloyds Open Form played a historical role in developing salvage law on the other hand American salvage law have also shown steady progress.[footnoteRef:1] [1: Maritime Law of Salvage and Adequacy of Laws Protecting the Salvors Interest- F. Lansakara]

MARITIME SALVAGEMarine salvage is the process of rescuing a ship, its cargo, or other property from peril. Salvage encompasses rescue towing, putting out fires, patching or repairing a ship, refloating a sunken or grounded vessel, moving a disabled vessel in order to clear navigation channels, and raising sunken ships or their cargo. Equipment involved in salvage operations may include cranes, floating dry docks, and support vessels (such as tugboats). Commercial divers may be called upon to perform underwater tasks and monitor progress below the surface.Marine salvage is the process of recovering a ship, its cargo, or other property after a shipwreck. Salvage encompasses towing, refloating a sunken or grounded vessel, or patching or repairing a ship. Today the protection of the environment from cargoes such as oil or other contaminants is often considered a high priority.

CLASSIFICATION OF SALVAGE

OFFSHORE SALVAGE

The refloating of ships stranded or sunk in exposed waters is called offshore salvage. In this type of salvage, vessels are exposed to waves, currents and weather and are the most vulnerable and difficult to work on. They also tend to deteriorate more rapidly than such vessels in protected harbors. Offshore salvage may provide only a short window of opportunity for the salvage team due to unusually high tide or inclement weather for instance. The work window may not come around again for as long as weeks or months 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 and other tugboats. In addition, portable diving facilities may be transported by helicopter or small boat to the work area. From a tactical point of view, working in unprotected waters is less hospitable for floating cranes, construction tenders, dredges and equipment barges. Plus, it is often difficult to depend upon a stable workforce (welders, carpenters, etc.) as all personnel must be present on site for the duration.

HARBOUR SALVAGEThe term harbour salvage refers to the salvage of vessels stranded or sunk in sheltered waters. Such vessels are not normally subject to the same deterioration caused by marine and weather conditions as offshore salvage vessels are. In addition, unless the vessel to be salvaged is obstructing navigation, then there is no need to work as swiftly as in offshore salvage. Also, harbour pre-salvage survey and planning stages tend to be less time consuming and environmentally dependent. It is also easier to gain access to local labour resources and heavy equipment such as floating cranes and barges.

CARGO AND EQUIPMENT SALVAGESaving the cargo and equipment aboard a vessel may be of higher priority than saving the vessel itself. The cargo may pose an environmental hazard or may include expensive materials such as machinery or precious metals. In this form of salvage, the main focus is on the rapid removal of goods and may include deliberate dissection, disassembly or destruction of the hull.

WRECK REMOVALWreck removal focuses on the removal of hazardous or unsightly wrecks that have little or no salvage value. Because the objectives here are not to save the vessel, the wrecks are usually refloated or removed by the cheapest and most practical method possible. In many cases, hazardous materials must be removed prior to disposing of the wreck. The most common techniques used in wreck removal are cutting the hull into easily handled sections or refloating the vessel and scuttling it in deeper waters.

AFLOAT SALVAGEThe salvage of a vessel that is damaged but still afloat is called afloat salvage. This type of salvage is mostly unobtrusive and involves primarily damage control work such as hull welding, stabilization (rebalancing ballast tanks and shifting cargo) and structural bracing. In some cases, the vessel can remain underway with little disruption to its original purpose and crew.

CLEARANCE SALVAGEClearance salvage is the coordinated removal or salvage of numerous vessels in a harbor or waterway. It typically follows a catastrophic event such as a tsunami, hurricane or an act of war (e.g. Pearl Harbor). There may be multiple vessel obstructions with varying degrees of damage due to collision, fire or explosions.

TYPES OF SALVAGE

CONTRACT SALVAGEIn contract salvage the owner of the property and salvor enter into a salvage contract prior to the commencement of salvage operations and the amount that the salvor is paid is determined by the contract. This can be a fixed amount, based on a "time and materials" basis, or any other terms that both parties agree to. The contract may also state that payment is only due if the salvage operation is successful (a.k.a. "No Cure, No Pay") or that payment is due even if the operation is not successful

PURE SALVAGEIn pure salvage (also called "merit salvage"), there is no contract between the owner of the goods and the salvor. The relationship is one which is implied by law. The salvor of property under pure salvage must bring his claim for salvage in a court which 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 exposes himself and his crew to the risk of injury and loss or damage to his equipment in order to salvage the property that is in peril. Examples of high-order salvage are boarding a sinking ship in heavy weather, boarding a ship which is on fire, raising a ship, plane, or other sunken property, or towing a ship which is in the surf away from the shore. Low-order salvage occurs where the salvor is exposed to little or no personal risk. Examples of low-order salvage include towing another vessel in calm seas, supplying a vessel with fuel, or pulling a vessel off a sand bar. Salvors performing high order salvage receive substantially greater salvage award than those performing low order salvage.

In order for a claim to be awarded three requirements must be met: The property must be in peril, the services must be rendered voluntarily (no duty to act), and finally the salvage must be successful in whole or in part.

There are several factors that would be considered by a court in establishing the amount of the salvors award. Some of these include the difficulty of the operation, the risk involved to the salvor, the value of the property saved, the degree of danger to which the property was exposed, and the potential environmental impacts. It would be a rare case in which the salvage award would be greater than 50 percent of the value of the property salvaged. More commonly, salvage awards amount to 10 percent to 25 percent of the value of the property.

Private boat owners, to protect themselves from salvage laws in the event of a rescue, would be wise to clarify with their rescuer if the operation is to be considered salvage, or simply assistance towing. If this is not done, the boat owner may be shocked to discover that the rescuer may be eligible for a substantial salvage award, and a lien may be placed on the vessel if it is not paid.

NAVAL SALVAGESeveral navies have Rescue Salvage vessels which are to support their fleet and to come to the aid of vessels in distress. 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 depths unworkable by civilian divers, and which requires saturation diving or trimix (breathing gas) diving techniques. This type of Unit is at times formed by a commercial diving company contracting to government via the Baltic Exchange.

PLUNDERWhen certain vessels are lost in an unknown area, a potential salvor might discover and plunder the wreck without knowledge of the wreck's owner. Such a "finder's, keepers" salvage operation was conducted at the height of the Cold War when the United States raised a portion of Soviet submarine K-129 in the Western Pacific Ocean. The CIA, who conducted the salvage under the guise of "mining the seafloor for manganese nodules" with a commercial vessel, spent over $800 million (1974 Dollars) on the clandestine operation now known as Project Azorian. Salvaging a foreign 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 Supreme Court Act, 1981 Clause 5 (2) j of the Admiralty Bill, 2005 402 (1) (a) and 402(2) of the Merchant Shipping Act, 1958 Brussels Convention on Assistance and Salvage at Sea, 1910 International Salvage Convention, 1989 International Convention on Maritime Liens and Mortgages, 1993

CONDITIONS REQUIREDAlthough salvage laws vary from one country to another, generally there are conditions that must be met to allow a claim of salvage. The article under salvage must be fit into 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, though payment for partial success can be granted in certain circumstances.

RECOGNIZED SUBJECT MATTERTraditionally, salvage only recognizes a ship or craft ("vessel"), cargo on board, freight payable, and bunkers carried on board as the subject of property in danger. The concept of property has been expanded by the 1989 Salvage Convention.

The Convention does not consider saving lives to be part of salvage, but the protection of the environment is part of salvage. Oil pollution can cause damage to the environment. If the salvor prevents oil pollution from happening, he indeed performs a valuable service to the community as mentioned by (1997) 1 Lloyd's Rep 323 (HL), pp 32628. Therefore, the salvor will be rewarded with special compensation, i.e., liability salvage instead of property salvage.

REAL DANGERDanger needs to be real but not necessarily immediate or absolute. The subject of salvage must be in real danger, which means the property is exposed to damage or destruction.

The burden of proof lies on the salvor, which means the salvor needs to prove real danger existed when the performance of service commenced. The court or arbitrators must determine whether the property was truly in danger. As every situation differs, both subjective and objective tests will be conducted. Common considerations are:

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It is incumbent upon the court to assess the existence and level of danger, both present and future. The case of the Troilus (1951 1 Lloyd's Rep. 467, HL) illustrated the concept of future danger that the court must take into account when determining the existence of danger. In this particular case, the cargo owners contended that the ship was in perfect safety when she reached Aden, and therefore it constituted ocean towage but not salvage when towing from Aden to UK. The court held that even though the ship and cargo was in physical safety, the services rendered still amounted to salvage service on the grounds that the master of a damaged ship must do his best to preserve the ship and cargo and bring them to their destination as cheaply and efficiently as possible. The salvage award was reasonable as long as the master acts reasonably for the combined benefit of ship and cargo.

In the modern world, the dispute normally is not about whether there is just the existence of danger, but also the degree of danger, as it determines the extent of the award.

VOLUNTARY SERVICEVoluntary means that the services are not rendered under a pre-existing contract agreement or under official duty or purely for the self-preservation interests of the salvor. Because of this, there is no limitation to the class of persons that can be considered as volunteers.

A pre-existing agreement refers to any agreement entered into before the time of the existence of danger. It includes ship's master and crew who have pre-existing employment agreement with ship-owners. They have the duty to preserve the ship and cargo, and therefore they cannot convert themselves into salvors in the event of trouble.

Notwithstanding, exceptions still exist in this area. Salvage can still be rendered if the pilot or crews of the ship in peril rendered service outside or beyond the scope of their duties under the contract. The case of the Sandefjord (1953 2 Lloyd's Rep. 557) held that the pilot brought his personal knowledge of the local conditions and his seafaring skills to bear when faced with a grounding. Moreover, the pilot relieved the ship owner of paying a vast salvage award for tug assistance. Under these conditions, the pilot was entitled to a salvage award.

Crewmen cannot claim themselves as individual salvors unless their employment contract has been actually or constructively terminated before the salvage service commenced. The termination of contract could be brought by: authorized abandonment of the ship under the Master's authority; or the Master's discharge of the crew concerned; or the capture of the vessel in hostile encounter.Authorized abandonment refers to a condition wherein, at the time the Master decided to abandon ship, there was no hope or intention of returning to the stricken ship. There can be no suggestion that a mere temporary abandonment would dissolve the crew's contract of employment. The case of the Albionic (1941 70 L1.L.Rep.257) ruled that there was no express order given by the Master to abandon the ship, and therefore the crew's contracts of service were not terminated at the time when they performed the salvage service. The San Demetrio (1941 69 L1.L.Rep.5) case demonstrated a good example of an authorized abandonment of ship under the Master's authority. If the ship was properly abandoned under the orders from the master, the vessel's own crews who saved the vessel or cargo on board were entitled to claim salvage.

In the case of the Master's discharge of crew concerned, the Warrior Lush (476) case ruled that if the crew is properly discharged by the master, their employment contract is validly terminated. Therefore, any crew who returned to and saved the vessel were truly salvors.

Additionally, hostile capture of the crew effectively causes the dissolution of the sailors' employment contract, as the general and expected 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 be summed up from the common expression no cure; no pay. However, success need not be total. Partial success, provided that there is some measure of preservation to the owners, is sufficient. The Tojo Maru[footnoteRef:2] examined certain characteristics of salvage contracts and concluded that the primary consideration is that the person rendering the salvage service is not entitled to any remuneration 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 which rescue a vessel from one danger eventually make the situation worse, no salvage award is typically granted. The Melanie v The San Onofre[footnoteRef:3] held that the services which rescued a vessel from one danger, but eventually left her in a position of even greater danger, did not contribute to ultimate success and therefore do not amount to salvage. [3: 1925 AC 246]

SALVORS RIGHT TO LIMIT LIABILITYPrior to 1976 Limitation Liability Convention, salvors had no right to limit their liabilities in cases of negligence or misconduct which blame on salvor their liabilities were unlimited for example the Tojo Maru Case in 1972.[footnoteRef:4] [4: Tojo Maru case salvors were not allowed to limit liability under the old sys-tem existed before 1976 Limitation of liability Convention.]

1976 Limitation of Liability Convention, states that ship owners and salvors as defined, may limit their liability in accordance with rules of this convention for claims in respect of loss or damaged to property occurring on board in relation to salvage operation[footnoteRef:5] subject to certain exceptions such as gross negligence if proved limitations will not be allowed. This new development was a direct consequence of 1972 Tojo Maru case. Limitation Liability Convention, ratified by 52 States about 50% of world shipping tonnage and its latest protocol with higher amount of limits has ratified by 37 states about 42 % of the world shipping tonnage. 1996 protocol to Limitation Liability Convention provides an enhanced compensation regime compare to the former. USA is not a party to these conventions but thy have their own statutory provisions. [5: Article 2 (1) (a) claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbor works, basins and water-ways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting]

Inclusion of salvors for limitation of liability is a recent development in favor of their rights.

NEGLIGENCE OF SALVORSSalvor taking the risk to save the property and during the salvage operation accidents occur due to salvors negligence or misconduct the question is to what extend these negligence or misconduct affect the salvage award and whether the ship owner can make a counterclaim for damages. Decisions on these were difficult because of the extra ordinary nature of the job and involvement of the high risk.Although both UK and USA are the signatories to the 1989 Salvage Convention the interpretation of provisions on salvors negligence by the courts have been different. Under the convention the salvor shall owes a duty to the owner of the vessel or other property in danger to carry out the salvage operations with due care also to exercise due care to prevent minimize damages to the environment and take assistance when reasonably requested.[footnoteRef:6] The salvors negligence may also deprive him of whole or part of the award[footnoteRef:7] the convention is silence on how they are measured and, it has left the decisions to national courts. [6: Article 8 - Duties of the salvor and of the owner and master1. The salvor shall owe a duty to the owner of the vessel or other property in danger:(a) to carry out the salvage operations with due care;(b) in performing the duty specified in subparagraph (a), to exercise due care to prevent or minimize damage to the environment;(c) whenever circumstances reasonably require, to seek assistance from other salvors; and(d) to accept the intervention of other salvors when reasonably requested to do so by the owner or master of the vessel or other property in danger; provided however that the amount of his reward shall not be prejudiced should it be found that such a request was unreasonable.] [7: Article 18 - The effect of salvor's misconductA salvor may be deprived of the whole or part of the payment due under this Convention to the extent that the salvage operations have become necessary or more difficult because of fault or neglect on his part or if the salvor has been guilty of fraud or other dishonest conduct.]

The case Alenquer courts description to what extend the leniency can be granted has a notable value. A brief outcome of the English law cases de-scribed below.

Case 1947 The Delphinula (Court of Appeal)The salvor guilty of misconduct reduction in salved value due to his misconduct was taken into consideration and also a counter claim or independent action.

Case 1955 The AlenquerNo salvage award was made but the damage claim had to be paid in full the judge adhered to the general principle and described why leniency cannot be applied here when the their behavior is criticized contrary to public interest, the result of the courts decision as such to discourage salvors of taking unnecessary risks

Case 1972 Tojo Maru (House of Lords) [footnoteRef:8] [8: 1972 Tojo Maru collision accident in Persian Gulf salvors agreed to tow her to Kobe during the salvage operation, the salvors negligence caused an explo-sion and heavy damages to the ship. They however were successful in towing her to final destination. The owners counterclaim damages from salvor due to negligence.]

It was held that when the salvage operation is successful but there is negligence of the salvor in the case of successful salvage the owners can counter-claim damages from the salvor and the measure of damage is the difference between undamaged value of the ship base on no negligence of the salvor and damaged value of the ship and, the salvage award to be calculated base on undamaged value of the ship.Finally the salvage award and owners counter-claim will set off against each other the balance will be due owner or salvor. It was also held that when there is no success in salvage there can be no counter claims as well.This case has the highest authority the House of Lords however its calculation of the award taking into account undamaged value of the ship although there were no negligence has created a friction between it and no cure no pay principle. There are also other concerns on application of this case law to cases with two or more salvors with only one at fault and how it can affect the one who is not at fault.With regard to Limitation of liability of the salvors the Court of Appeal in the above case held that limitation of liability can be applied before setting off owners counter claim.When considering the salvors negligence or misconduct the American method is different from the English courts. They categorize them as distinguishable damages and independent damages. Distinguishable damages means they inherit in the situation for example the Tojo Maru case was a distinguishable damage and the independent damages means they were caused independently by the salvor any counter claim for damages the independent damages may only consider. Limitation of liability under the American statute is the damaged value of the ship plus the freight in the course of being earned.Under the Llloyd Open Form 2000 the salvor is required to have observed best endeavors31, there has been no definition of best endeavors it is commonly used in industry and widely known therefore best endeavor means Standard of reasonableness is that of a prudent sailor acting properly in the interest of salved property.The law with respect to negligence and misconduct of salvors their interpretations by English Courts are conflicting and the American Courts interpretations much preferred with respect to preservation of salvors rights.

SALVAGE CLAIMS AND LIENSEnglish law embraces the salvage claim as a maritime lien as described under English Supreme Courts Act states that under any contract in relation to salvage services whether covered under salvage convention or not. Under the English law salvage awards are given priority on liens. They consider among other things damage done by a ship, sea-mens wages, masters wages and disbursements. The courts will determine the distribution of the funds in order of their priorities[footnoteRef:9] but there are no strict rules of rankings. [9: Supreme Court Act, 1981 S.21(6)]

1 Admiralty Marshals cost2 Claimants cost3 Maritime Lienees4 Mortgagees5 Other in rem claimants When there are several salvors the last in time take priority. When there are different categories When a claimant has a damage lien subsequent to lien that preserved the ship (salvage) the damage lien will take priority over salvage.[footnoteRef:10] [10: The case Veritas 1901 the vessel was safely towed by the salvors but un-fortunately her engine failed and a second salvor assisted her to prevent her from sinking. During the operation the vessel came into contact with landing stage belonging to the Dock Board. The Board used its statutory powers to re-move the vessel and claim against the ship in this case priority was given to the Boards claim against the ship before considering the salvage awards.]

English law considers the extinction of maritime liens under the following circumstances: Immunity; delay of law suit; upon providing financial security by the defendant; establishment of limitation fund; wavier; destruction of property; Judgment on liability; Judicial sale and; sister ship arrest.1993 International Convention on Maritime Liens and Mortgages came into force in Sept 2004. Few countries have so far ratified this convention they are: Indonesia, Ecuador, Estonia, Nigeria, Monaco, Russia, St Vincent and Grenadians, Spain, Tunisia, Ukraine and Vanuatu.[footnoteRef:11] This convention contained the provisions in relation to maritime liens similar to that have generally accepted by major maritime nations and it also has the provisions that each state under its own law may grant maritime liens on a vessel to secure claims other than those generally recognized.[footnoteRef:12] [11: Article 4 (1) ( c ) Maritime Liens - Claim for reward for the salvage of the shipArticle 5 - Priority of maritime liens; Article 15- Conflict of laws ; Article 16 - Extinction of maritime liens because of time limit] [12: Article 6 Other maritime liens Each State Party may, under its law, grant other maritime liens on a vessel to secure claimssubject to condition which include time bar and rank below Salvage lien.]

SPECIAL COMPENSATIONSpecial compensation was introduced in 1989 Salvage Convention to compensate the salvors if their salvage operation has contributed to protection of the marine environment even though they could not earn full or any salvage award.Under the 1989 Salvage Convention if a salvor has carried out salvage operation in respect of a vessel which by itself or its cargo threatened damage to the environment and has failed to earn reward under article 13 he shall be entitled to special compensation from the owner of the vessel equivalent to his expenses as defined in article 14. This appear to be a another step to encourage the salvor for saving the environment but the calculation of the salvage expenses without considering the profits or bonuses turn out to be an unpractical one. The principle issue in the Nagasaki Spirit case was concern with the definition of expenses in Article 14(3) and, in particular, that part of it which refers to fair rate for equipment and personnel actually and reasonably used in the salvage operation.[footnoteRef:13] The question was whether is it permissible to include a market or profitable rate, or whether the salvor was entitled to solely to reimbursement of expenditure. House of Lords delivering the judgment held that fair rate under article 14(3) meant fair rate of expenditure and did not include any element of profits. This draws strong re-action from the salvors and after lengthy discussions the marine salvage community arrived with the solution. This was a set of clause giving the basis for calculation of special compensation including bonuses under the guide lines set up by International Salvage Union (ISU) and clarifying other relevant criteria known as Special Compensation and Indemnity Clause (SCOPIC). The solution provided by SCOPIC is, the parties to a salvage contract may agree to incorporate SCOPIC into any LOF contract by reference, therefore contracting out of Article 14 of the Convention. Such contracting out is allowed under article 6 of the Salvage Convention.[footnoteRef:14] The ship owners P&I clubs have agreed through a code of conduct (a gentlemen agreement between P& I Clubs and ISU) to provide financial security required for SCOPIC compensation by a standard guarantee form known as ISU5. [13: 14(3) Salvor's expenses for the purpose of paragraphs 1 and 2 means the out-of-pocket expenses reasonably incurred by the salvor in the salvage opera-tion and a fair rate for equipment and personnel 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 the rewards(h)the promptness of the services rendered;(i) the availability and use of vessels or other equipment intended for salvage operations;(j) the state of readiness and efficiency of the salvor's equipment and the value thereof.] [14: Article 6 - Salvage contracts. 1. This Convention shall apply to any salvage operations save to the extent that a contract otherwise provides expressly or by implication]

Special compensation available to salvors under the convention have faced with problems in practical application, SCOPIC so introduced is a contractual obligation and not a statutory one. Salvage convention compensation limits to apply if SCOPIC is not agreed.

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 for salvageThe defendants vessel, the Lady Emma was blown ashore and grounded high and dry as the result of a cyclone. After 2 failed attempts by a salvage company to refloat the vessel, the defendant asked the plaintiff , captain of the vessel Arielle to pull the Lady Emma free from where she was stranded. The Arielle had been used to tow oil rigs but was not designed for salvage operations and had never been used as such. The plaintiff advised the defendant that he considered that the Lady Emma could be towed off the reef. The plaintiff asked the defendant to supply the salvage equipment and the diver and stipulated a $3000 per day charge whether or not the operation was successful. A $3000 deposit was paid and the plaintiff tried to refloat the vessel for 3 days, but was unsuccessful. The defendant refused payment claiming that the operation 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 by the fact that the defendant paid a $3000 deposit. The defendant required a salvage operation. The court compared towage and salvage services where salvage is voluntary with no title to award unless the ship freight or cargo is saved. The court was of the view that this was a contractual towage service for which payment was agreed. The duty of care of the plaintiff was not that of a salvage contractor undertaking a continual obligation until the ship is lost or salvaged. The plaintiffs duty of care was that he use reasonable 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 salvage operation almost complete- party contracted to salvage entitled to reasonable value of work done The parties contracted for the salvage of 2 vessels that posed a safety threat to the harbour. The contract stipulated that the work was to be completed in 30 days. The plaintiff encountered many difficulties in the operation particularly in finding equipment and competent personnel. After 37 days the plaintiff wrote to the defendant requested an extension of the allowable time to complete the contract. The defendant failed to respond and the plaintiff continued with the salvage operation on an implicit understanding. After 4 months on the job the parties had a difficult relationship frustrating the operation further. After nearly 8 months the salvage was completed and arrangements were made to scuttle the vessels. The defendants appeared to have encouraged the plaintiffs to complete the contract after the time period. However the defendant refused to pay on the basis of a breach of the contract in that the plaintiff did not complete in time. The defendant claimed that work done by the plaintiff after the expiration of the contract was as a voluntary salvor, and the defendant challenged the competency of the work done. The plaintiff claimed quantum meruit for the value of the work done under the contract.DECISION: for the PlaintiffHELD: The defendant had the right to terminate the contract. However when the contract was terminated most of the work had been completed. The court found on the evidence that the work had been done competently. Therefore the plaintiff 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 the salving vesselThe owner of a salving vessel received a $25,000 award for the salvage of a vessel. The salvage was undertaken by the Captain and crew of the salving vessel and these parties applied to the court for a determination of the proportion of the award that they were entitled to. The owner of the salving vessel argued that no apportion was necessary as wages had been paid during the salvage operation.DECISION: 75% to the owner and 25% to Captain and crew (of the latter amount, 1/3 to the Captain and the rest divided amongst crew membersHELD: Although the Captain and the crew members were paid their usual wages as employees of the vessel owner, according to maritime practice they were entitled to their respective 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 a liquidated amountanalogous to a claim for damages at common law. Jurisdiction- Lloyds contract provided for arbitration to proceed in London, but court would not allow challenge to jurisdiction 2 years after defendant had taken a step in the action.The salvor claimed $85,000 for salvage. The vessel was arrested, but the owner took the ship out of the jurisdiction in contempt of the court ordered arrest. Subsequently the salvor was awarded judgment of $85,000 in default. The trial court upheld the judgment, and the owner appealed on the grounds that the judgment was irregular, no evidence having been considered in establishing quantum. The owner also disputed jurisdiction, arguing that the contract provided for arbitration in London.DECISION: Appeal allowed.HELD: The judgment was irregularly obtained because there was no evidence at all before the Judge supporting the quantum of the judgment. As to jurisdiction, the defendant could not challenge jurisdiction 2 years 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 be quantified to be considered proper claim for purposes of arrest of vessel for securityThe defendant ship (Manutea) was successfully salved by the plaintiff. During the extensive tow the two captains entered an oral salvage agreement which was to be in terms of a Lloyds Salvage Agreement described as a no cure- no pay agreement. Contrary to the agreement the salved ship was moved from her place of safety without the consent of the salvor. The plaintiff had her arrested and filed an in rem claim for salvage fees. The claim for salvage fees was made after the arrest. The owner of the Manutea applied for an order to set aside the warrant to arrest and to release the vessel from the arrest made under the warrant.DECISION: Order grantedHELD: The court looked at clauses 4 & 5 of the contract. Pursuant to this contract the salvor must notify Lloyds of the amount for which he requires security be given- this was not done by the salvor in this case. The contract also provided that the property would not be arrested or detained unless security was not given within 14 days. The court decided that there was a period after the successful salvage operation and before the claim under a no cure- no pay agreement where there is no maritime lien except where there is reason to believe that removal of the salved property is contemplated. The ship had been moved without the consent of the plaintiff but the court found that there was good reason to move the ship and it had not been moved to a foreign port. There had not been a claim made for salvage at the time of the arrest because at that time the claim had not been quantified.

CONCLUSION

Conflict of law with respect to maritime liens on salvage less likely priority for salvor has maintained throughout, but uncertainty exists in the English law with respect to claims on salvors negligence American law appears to be more settled on this regard. Limitation of liability conventions applied to salvors but under American law different limits will consider since they are not party to international Limitation Liability Conventions. Special compensation applicable to salvor under the 1989 Salvage Convention not practical therefore contracts shall insert SCOPIC clause in order for the salvor to get reasonable rate including bonus.The adequacy of the laws protecting the salvors interest today depends upon international conventions and national laws. The existing set of maritime salvage laws covering the interest of the salvors with respect to limitation of liability and priority in maritime liens appeared to be adequate, with regard to judgment on salvors misconduct and negligence the existing laws are not universal therefore inadequate. Similarly, special compensation provisions which are available under the salvage convention do not encourage the salvor and seems inadequate unless SCOPIC is inserted.Page | 20