Salvage Claims & Awards Under Admiralty Law

January 23, 2012

I am tending traps in my lobster boat one blustery fall day, and as I watch an expensive yacht run up on a ledge. The yacht backs away from the ledge, then loses power and begins to flood. Despite the menacing rocks I come alongside, and the passengers clamber onto my boat and are ordered into the cabin. My crew and I jump on the yacht, jam greasy rags into a big crack, and we run the intake for my engine-driven bilge pump into the yacht. Just able to keep ahead of the flooding, we secure the yacht alongside the lobsterboat (“on the hip”) and make for a nearby harbor. We have radioed ahead, and a shipyard has cleared its Travelift® and is able immediately to haul the yacht. Damage to the yacht is $50,000. Had I not come along the yacht would have sunk, at a loss of $650,000.00.

 At that point I have a salvage claim against the yacht. Admiralty law is the most ancient commercial law on the planet, and since at least 1500 years before Christ it has been recognized that those who through their efforts are able to save a ship from loss are entitled to an award – a salvage award. It is sometimes thought that a salvor gains title to the ship he saved, but that’s not so.

 How Big is the Salvage Award?

The ancient Phoenicians recognized that the more challenging the salvage, the bigger the award ought to be, and modern law follows the same principle. The factors set forth in the 1989 International Convention on Salvage (by the IMO, or International Maritime Organization) follow admiralty law closely and generally govern salvage awards:

 1. The salved value of the vessel and other property.

 For obvious reasons this factor is generally the most important. If the yacht in my example above had been a rotting derelict of small value, my claim would be minimal.

 2. The skill and efforts of the salvors in preventing or minimizing damage to the environment.

 This factor is relatively new, and seeks, for example, to encourage salvage where a total loss would result in oil (cargo or fuel) being released into the sea.

 3. The measure of success obtained by the salvor.

 Suppose my yacht managed to make the harbor, but there sank. Although she is later raised, the damage is great – a total loss for insurance purposes. My reward will be much smaller in consequence.

 4. The nature and degree of the danger.

 I don’t think this factor needs any explanation.

 5. The skill and efforts of the salvors in salving the vessel, other property and life.

This has a big influence on the size of the award. If the efforts required to salavage a ship requires days of backbreaking labor and superb seamanship, the award will be a greater proportion of the salved ship’s value.

 6. The time used and expenses and losses incurred by the salvors.

 If a salvor uses an expensive ship and pumps, he will get a bigger award, and if he loses some of his gear that will affect the award as well.

 7. The risk of liability and other risks run by the salvors or their equipment.

This one is a bit like the factor which takes into account the degree of danger involved.

 8. The promptness of the services rendered.

No explanation required.

 9. The availability and use of vessels or other equipment intended for salvage operations, and (10) the state of readiness and efficiency of the salvor’s equipment and the value thereof.

 These last two are closely related, and both factors recognize that the maritime world should reward those who purchase, man and maintain expensive salvage ships. For example, Europe’s Bay of Biscay, where oil tankers from the Med and Africa are exposed to easterly storms and a nasty lee shore, has powerful and costly salvage ships standing by, ready to prevent a disaster should a ship lose power. If the salvage awards do not reflect the capital costs associated with building such ships and keeping them ready, the salvage firms will seek better uses for their capital and more ships will wreck.

 Let’s apply these factors to a salvage such as described above. The salved vessel has a value of $650,000.00. If the yacht sank the fuel would likely have escaped through the tank vents, so my efforts prevented fuel from entering the water.

 The salvage was quite successful, with no additional damage done to the yacht and the yacht safely hauled out of the water. There was some danger, to my boat in any case. A fair amount of skill was required to effect the salvage. Time and expenses incurred are small, and there is a modest amount of risk of civil liability.

The salvage was prompt, and the final two factors don’t apply, for I would have maintained my boat and been available regardless of possible salvage opportunities. (If my bilge pump was specially configured to be placed aboard another boat, for use in salvage, that changes matters slightly.)

  It’s up to the judge, but I would give this case an award of $150,000.00, give or take $50,000.00.

 The same principles, strangely enough, apply to salvage of even long-lost treasure ships. The ship, which is perhaps scattered over a square mile of ocean floor, is considered to be “in peril.” The salvor’s efforts “rescue” the ship from that peril. The factors listed above apply, with a typically very substantial award (in terms of percentage of value of the salved treasure) to the salvor, all in consideration of the reality that but for the salvage the wreck might never even have been found.

 It is a fascinating area of the law, with many a twist and turn.

 

Nicholas Walsh  207/772-2191, nwalsh@gwi.net

 





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