Concept of salvage under Maritime Law

1. Concept of salvage under Maritime Law When a person, acting as a volunteer (that is, without any pre-existing contractual or other legal duty so to act) preserves or contributes so to preserving at sea any vessel, cargo, freight or other recognized subject of salvage from danger. This is known to be the civil salvage. A service which confers a benefit by saving or helping to save a recognized subject of salvage when in danger from which it cannot be extricated unaided, if and so far as the rendering of such service is voluntary in the sense of being attributable neither to a pre-existing obligation, nor solely for the interests of the salvor.

2. Any act or activity to assist a vessel, or any other property in danger, in navigabel waters, or in any other waters watsoever

3. Common salvage operations and services • Operations • Stranding and Grounding • Sinking • Rescue Towage • Included services • Refloating • Pumping, raising and repair • Hook up and Tow in • Surveys • Fire fighting - assistance • Cargo/equipment recovery • Wreck removal • Standing by • Prevention of third party damage

4. The right to be rewarded for salvage at sea under common law is based both on equitable ( FAIR, REASONABLE. JUST. UNBIASED) principles and public policy and is not contractual in origin. The law seeks to do what is fair to both of the property owners and the salvors The foundation of salvage is necessity when the subject of salvage has been in danger and services are rendered, even without request, under the condition that a reasonable prudent owner would have accepted them.

5. Assessment of the reward • Aim to encouraging salvage efforts • the saved value of the vessel and other property; • the skill and efforts of the salvors in preventing or minimizing damage to the environment; • the measure of success obtained by the salvor; • the nature and degree of the danger; • the skill and efforts of the salvors in salving the vessel, other property and life; • the time used and expenses and losses incurred by the salvors; • the risk of liability and other risks run by the salvors or their equipment; • the promptness of the services rendered; • the availability and use of vessels or other equipment intended for salvage operations; • the state of readiness and efficiency of the salvor's equipment and the value thereof • Without regard to the order of the criteria • Never to exceed the saved value

6. Four elements for the salvage award • Recognized subject matter • Real danger • Voluntary service • Success Recognized subject matter Traditionally, salvage only recognizes as a ship or craft, 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 protection of the environment is the subject of salvage Oil pollution can cause damage to the environment. If the salvor had prevented oil pollution from happening, he indeed performed a valuable service to the community therefore, the salvor will be rewarded with special compensation; i.e., liability salvage instead of property salvage.

7. Real danger Danger 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 salvor needs to prove real danger existed when the performance of service commenced. This is up to the court or arbitrator's decision to determine whether the property was really in danger or not. Naturally every situation has to be treated on its own merits and both subjective and objective tests will be conducted. One of the reasonably effective tests commonly used is: Would a reasonable Master of the vessel in distress have answered yes or no to the offer of assistance? Was there a real apprehension of danger even though that danger may not have been absolute or immediate? Was the danger fanciful or so remote that only to be a possibility?

8. Regarding future or contingent danger, the court will access the existence of danger. Each case will be judged on its own facts and there is no rigid rule about it. The Troilus (1951) 1 Lloyd's Rep. 467, HL illustrated the concept of what kind of future danger the court will prepare to take into account in existence of danger. In this case, the cargo owners contended that the ship was in perfect safety when she reached Aden and therefore it constituted to ocean towage but not salvage when towing from Aden to UK.

9. The court held that even though the ship and cargo was in physical safety but this constituted 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 by bearing in mind expense and the effect of delay would cost. Salvage award was reasonable as long as the master acts reasonably for the combined benefit of ship and cargo. Lord Porter of the Court of Appeal added that the solution of the question on whether a ship and cargo have reached a place of safety must depend upon the facts of each case. Lying on particular position of physical safety is not sufficient to be deemed to as towage. In the modern world, the dispute normally is not about whether there is the existence of danger but the degree of danger as it determines the extent of the award.

10. Voluntary service Voluntary means that the services are not rendered under a pre-existing contract agreement or under official duty, or purely for the self-preservation interests. Subject to this rule, there is no limitation to the class of persons that can be considered as volunteers. Clarke J in The Sava Star(1995) 2 Lloyd's Rep. 134 said: There are no rigid categories of salvor. They include any volunteer who renders service of a salvage nature. Pre-existing agreement relates to 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 though possible.

11. Notwithstanding, exception cases are still exist. Salvage can still be rendered if the pilot or crews of the ship rendered service outside or beyond the scope of their duties under the contract. 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 the problem created by grounding. Moreover, the pilot relieved the ship owner of paying a vast salvage award for tug assistance. As a matter of fact, the pilot was entitled to have a substantial award.

12. 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.

13. Regarding authorized abandonment, at the time when the Master decided to have abandonment, there must be no hope or intention of returning to the stricken ship. There is no suggestion that a mere temporary abandonment would operate to dissolve the crew's contract of employment. The Albionic (1941) 70 L1.L.Rep.257 provided that as 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 service. The San Demetrio (1941) 69 L1.L.Rep.5 demonstrated a good example for the 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.

14. With reference to Master's discharge of crew concerned, If there is discharge given by the master, the employment contract is validly terminated by discharged. Therefore, the crews who returned to and saved the vessel were truly salvors. Moreover, hostile capture brings the dissolution of seamen's employment contract. Therefore, general and expected duties for the seamen are no longer exist.

15. Success The requirement for the service must be successful can be summed up from the common expression no cure; no pay. However, success needs not to be total. Partial success provided that there is some measure of preservation to the owners is sufficient. The Tojo Maru (1972) AC 242 (HL) examined certain characteristics of salvage contracts and concluded that the first distinctive feature is that the person rendering the salvage service is not entitled to any remuneration unless she saves the property in whole or in part. This is called the success in the case of salvage. If the ship is as grave as before after the service has been rendered, no award will be given. Moreover, the services which rescuing a vessel from one danger but eventually making the situation even worst will grant no salvage award. In The Melanie v The San Onofre (1925) AC 246held that the service which rescue a vessel from one danger but eventually leaving her in a position of even greater danger of another kind, do not contribute to ultimate success and therefore do not amount to salvage.

16. Salvage under contract As mentioned previously, salvage may not necessary arise out from actual contract, however, there are standing vessels performed by professional salvors under the salvage agreement under a salvage agreement in LOF. Contracts are usually entered into on the LOF (1980, 1990, 1995 and now 2000 LOF). Under these contracts, rewards are based on no cure; no pay principal, which means salvor receive no reward if no property is salved. However, special compensation will be paid as a reward for making effort to prevent or minimize damage to the environment even with no property was saved under the Convention.

17. Special compensation for preventing or minimizing danger to the environment The earlier principle of salvage law no cures; no pay changed. The novel concept of the safety net by LOF1980 took step to protect the environment from oil pollution. Following the concept of the safety net, the Salvage Convention 1989 introduced the concept of special compensation to encourage salvors to preserve and minimize damage to the environment. However, the safety net concept was very different from the special compensation under the present Convention.

18. Under Article 14(1) the salvor is entitled to special compensation if he has carried out salvage operation on a vessel which by itself or its cargo threatens damage to the environment. It must come along with the failure to earn a reward under Article 13 which is at least equivalent to the special compensation assessable in accordance with the Article. This special compensation is obtainable from the owner of the vessel (or usually appropriate P&I Club) equivalent to his expenses. The salvor does not necessarily achieve success in preventing and minimizing damage to the environment in obtaining special compensation. If success is achieved, special compensation will be payable in greater amount under Article 14 (2).

19. If the salvage operation actually prevents or minimizes damage to the environment, the salvor will be able to claim enhanced special compensation with the provision of Article 14(2). The amount of the salvage award may be increased up to a maximum of 30 percent of the expenses incurred by the salvor. There is possibility that the arbitrator may increase the special compensation to 100 percent of the expenses incurred if this is fair. However, negligence on the part of the salvor will deprive his right of the whole or part of any special compensation under Article 14 (5). In order to claim special compensation, it must be shown that the vessel itself or the cargo threatened damage to the environment. This goes further than the safety net provisions in LOF 1980 which limit to tanker laden with oil. Articles 13 and 14 are both incorporated in the LOFs 1990 and 1995 by reference and LOF 2000 is made subject to the English Law.

20. Jurisdiction • Under the LOF contracts, the parties submit to the jurisdiction of a Lloyd's arbitrator to determine the amount of award. But salvage is also a remedy that arises independently of contract. • A salvage claim, outside the LOF arbitration agreement, can be brought in the Admiralty Court and it defined under CPR r 61.1 (2) (f) to mean: • for or in the nature of salvage; • for special compensation under Article 14; • for the appointment of salvage; and • arising out of or connected with any contract for salvage services. • The claim is enforceable in personam and in rem. The ship or the sister ship can be arrested to enforce the claim. • A property salvage attracts a maritime lien against all property salved, however, the liability salvage (special compensation under Article 14) does not. The Convention does not affect the salvor's maritime lien on property under national or international law under Article 21 (1). As liability salvage under Article 14 is concerned, the salvor's right to compensation depends on the co-operation of the liability insurer, the P&I Club and his right canbe protected by obtaining security for such claims from the liability insurer

21. Time limit to claim the salvage Under Article 23 of the 1989 Convention, which has the force in law in the UK under the Merchant Shipping Act 1995 provides that a two-year limit to commence judicial or arbitral proceedings. The limitation commences on the date on which the salvage operations are terminated. During the limitation period, extension of time can be agreed by parties. An action for indemnity by a person liable may be instituted after the expiration of the limitation period with the assumption that it is brought within the time allowed by the States in which the proceeding are brought. However, if the ship is not saved and the loss was due to the salvor's negligence, the time limit to bring action towards the salvor will be based on the tort of negligence.

22. When the property has been abandoned, anyone may become a salvor and if the owner later wants to reclaim his property, he would take it subject to a lien for the salvage claim. The owner in possession of the property, however, does not have to accept an offer of salvage. Thank you, CAPTAIN THEIN WIN