Salvage, Basics

Q. What is salvage?
The salvage generally is defined as the rescue of a wrecked or disabled ship or its cargo from loss at sea. It is also defined as a process of saving goods from damage or destruction, especially from a ship that has sunk or been damaged. In respect of a ship it may also be defined as transforming the status of a ship from ‘in peril’ to ‘in safety’. The safety being specified in the LOF.

Q. What is Contract Salvage?
In the legal perspective, the contract salvage is just a contract to do salvage rather than salvage. In 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. The features may vary depending on the mutual agreement between the parties and not on the existing laws. 

  1. This can be a fixed consideration (amount), based on a ‘time and materials’ basis.
  2. The contract may also become a ‘No Cure, No Pay’ type.
  3. Payment may be due on employing the services even if the operation is not successful.
  4. It depends on terms that both parties agree to.

Q. How did 1910 Convention, addressed the drawbacks of contract salvage?
The amount of risk or the existing danger cannot always be pre-assessed and therefore cannot be known precisely till the task is accomplished. This means the salvage remuneration cannot be determined prior accomplishment of the task. It is for this reason that the 1910 Convention had the provision that provided court with the power of voiding the contract of salvage that was made on false estimation of danger, had too high or low remuneration, had fraud as element, etc. Thus, though the Art. 6 & 7 of 1910 Convention had a provision of contract salvage, the Convention vide Art. 8 had the court empowered to fix the reward based on the circumstances of each case, on the basis of the certain considerations.

Q. Does the 89 Convention have the provision for contract salvage?
The provision of 1989 Convention on Salvage is basically outside the limits of a contract. It   applies to any salvage operation, save to the extent that a contract otherwise provides expressly or by implication.

Q. What is Pure Salvage?
In pure salvage (also called ‘merit salvage’), there is no contract in respect of remuneration between the owner of the goods and the salvor. The relationship is implied by law. The salvor of property under pure salvage may 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.

Q. What are the three most important conditions, which must be satisfied, in order that the award may be decided by article 13 of the Convention?
In order for a claim to be awarded, three conditions must be satisfied:

  • the property must be in peril;
  • the services must be rendered voluntarily (no duty to act); and
  • the salvage must be successful in whole or in part.

Q. Can the crew or Master get salvage after working rigorously for days and safely getting the ship out of storm?
A salvage service may be described as a service which saves or helps to save a recognised subject of salvage when in danger, if the rendering of such service is voluntary, which means it is attributable not to pre-existing contractual or official duty owed to the owner of the salved property. Master and crew have duty towards the safety of the ship in the situations of storm, etc.

Q. Does pilot get entitled when helping in navigation through fog, severe weather, etc.?
No, a pilot has the duty to assist in navigation through above situations. So, he cannot claim salvage. The pilot on board the salved vessel, who had been engaged as such, cannot claim salvage remuneration for ordinary pilotage services, nor are the services of a pilot to be deemed extraordinary, merely because they involve some degree of hazard. The pilot ought to know about such dangers. Although, a similar degree of hazard may entitle, one who performed them, purely as a volunteer.

Q. What if the ship that is salved is from the same company?
In one particular decided case, two vessels were insured in the same mutual insurance company under policies containing a condition that, ‘any vessel insured with the company should, if necessary, render assistance to any other vessel insured with the same company. One of the vessel rendered assistance to the other in distress’. It was admitted that the Master and crew of the vessel rendering assistance, who were not contracting parties, were entitled to salvage reward. The claim of the owners however, was suspended as the services rendered, being contractual and obligatory.

Q. How does a salvor ensure that he would be paid by the ship owner?
Signing of the LOF ensures the payment be done as per Salvage Convention, 89 and / or SCOPIC. The salvors who render services can ensure the security being deposited prior release of cargo or avail an order by tribunal with jurisdiction as per the interim decision. He, also acquires a maritime lien on the property saved and they are entitled to remuneration.

Q. Can a salvor claim salvage, if LOF is not signed?
‘The right to claim salvage is a fundamental right of the International Maritime Law, depending neither upon any contractual engagement between the salvor and the owner of the salved property, nor upon a cause of action in tort’. Salvage is governed to a significant degree by equity, involves both private rights and public policy.

Q. What is tort?
Tort is a wrongful act or an infringement of a right (other than under contract) leading to legal liability.

Q. Give an example of cause of action by salvor in tort.  
If a tug pushes a ship in deep waters and saves her from positively running aground even where the Master did not request the help or even where he refused to be assisted, entitles the tug Master for salvage remuneration. Thus, the danger necessary to establish a salvage service, whether it arises from the condition of the vessel or of her crew or from her situation, must be a real and sensible danger. No reasonably prudent and skillful seaman in charge of the venture would refuse the salvor’s help.

There is a fine difference between the basic work related duty and statutory duties provided by law. Statuary duties do not preclude claims for salvage. The Indian Merchant Shipping Act, sec. 348 provides, ‘In every case of collision between two vessels, it shall be the duty of the Master or person in charge of each vessel, if and so far as he can do so without danger to his own vessel, crew and passengers (if any), to render to the other vessel her Master crew and passengers (if any) such assistance as may be practicable, and may be necessary to save them from any danger caused by the collision and to stay by the other vessel until he has ascertained that she has no need of further assistance.

If the Master or person in charge fails without reasonable cause to comply with this section, he shall be guilty of misdemeanor. The statutory duty imposed by this section does not prevent the vessel rendering assistance from claiming salvage.

Q. What are the other statuary duties to help the ships?
The sec. 355A of MSA provides that, the Master of an Indian ship, on receiving at sea a signal of distress or information from any source that a vessel or aircraft is in distress, shall proceed with all speed to the assistance of the person in distress (informing them if possible that he is doing so), unless he is unable or in the special circumstances of the case considers it unreasonable or unnecessary, to do so, or unless he is released under these provisions (sub section 3 and 4). Similar regulation is also in chapter V of SOLAS. It will be noted, therefore, that none of the foregoing statutory duties precludes a claim for salvage.

Q. Can a towage contract be considered as a salvage operation?
Where there is a towage contract, service may be treated as salvage in certain situations particularly, at some point after the towage had begun, towage had been superseded by the right to salvage owing to the altered circumstances. Concealment of material fact by ship (being towed) can change the towage contract to salvage. In a decided case it was found that those who represented the ship in making the towage contract did not disclose to the other party material facts affecting the danger of the ship, or the danger or the difficulty of the required service, in view of which it would be unreasonable and unjust to expect the performance of the service to be undertaken for remuneration at a mere towage rate.

Q. Can the salvor be deprived of the remuneration?
1989 Convention Art 14 states, “If the salvor has been negligent and has thereby failed to prevent or minimize damage to the environment, he may be deprived of the whole or part of any special compensation due under this article”. Article 18 states, “A 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.”

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