by Mr. C.P. Beesley, Ince
&Co., London
Chri8 Bees£ey has worked with Ince & Co'? Maritime Solicitors, since 1972 pnmaniy dealing with aU aspects ofman"ne casualty law and in particuiar salvage claims far shipowners and salvors. In 1979 he set up thefirm's HO/1ii KO/1ii q[i/:efrom where he handled marine casualties throughout Asia and the P(X!ific Rim before returning to Ince & Ca. London In 1984. He is joint Chairman of the firm's Admiralty Group. He travels extenSiVely and frequentfy addresses seminars an safety and naVlgafion Issues and has had numerQUl1 articles published in his specialist areas. He has also deliveredpapers on salvage at the ever popular Nautical Institute Master and Maritime Law Series afseminars in Newcastle and at the International Tug and Salvage Symposium.
Summary
This chapter deals with the infrequent occurrence where a master may be confronted with a number of different salvage problems and contract wordings and examines his options from a practical rather than strictly legal viewpoint The authority of the master to engage help and his duties and obligations under the most commonly used salvage contract (L1oyd's Open Form) are also considered.
Introduction
A vessel in distress requires assistance and depending on her circumstances may be required to seek help (MARPOL). A claim for salvage can be pursued at common law by anyone who is a volunteer (i.e. not acting under the existing obligation - for example a statutory duty that may be the case of some port authorities) and who saves property in danger that has some value. This long established formula, which still holds good today, is the foundation on which many published and widely used salvage contracts are based- the 'No Cure- No Pay' principle.
There is no payment where property is not saved except in certain pollution related cases.
Successful salvage claims have been pursued by individuals (pilots, tug crew members, firemen and Iifeboatmen for example) as well as companies, owners and crews of merchant ships, tugs and of course professional salvage companies. It is the intervention of tugs and the confusion over their terms of engagement (on "contract" or "tariff" terms, etc.) which gives rise to most legal disputes concerning entitlement to claim salvage. Salvage services can be refused or prohibited by ship's masters but only if 'reasonable' to do SOl. Under those same conventions, masters of ships are obliged to render assistance to persons in distress at sea. Responding to a distress message however does not deprive a salvor of reward if property is salved. English law does not recognise the
concept of life salvage (where only lives are saved)
i The Brussels Convention on Salvage 1910 and the London Salvage Convention 1989.
but an enhanced salvage award will be made where lives as well as property were at risk and saved.
Types of salvage contract
The most common dedicated salvage contract in worldwide use is the L1oyd's Open Fonn. In its various guises, this contract has been in common use since 1908 and there have been ten versions of the contract published by the Council of L1oyd's since then. In those early days, the 'open' part of the title referred to the amount of the salvage award: either the amount was agreed between salvor and the ship's representatives and inserted in the contract or it was left 'open' for determination by arbitration in London at a subsequent date. The latest variant of the fonn, LOF 95, (and most ofits recent predecessors) provides for assessment of the award by arbitration in London and a ship's master should not be concerned that in signing LOF he is exposing his owners and underwriters to an open ended payment of money. If the ship, its crew, cargo or the environment is in any way threatened by a particular misfortune then engaging suitable salvage help on L1oyd's Fonn tenns (ifavailable) will invariably be the most sensible thing to do. The level of the award will be determined by amicable negotiation or by arbitration applying criteria embodied in English (and also International) Law. An award will only become payable when property is saved ('no cure - no pay') except in certain circumstances when anti pollution measures are undertaken. Salvage operations which predate the agreement to LOF can be included within the LOF ( c1aus e 1 (d)).
A specimen LOF 95 appears in the appendices.
Other versions of the fonn are also in use and contain very different terms, particularly LOF 80 (LOF 90 is not materially different to LOF 95 and if a contract is offered on these terms this probably represents 'old stock'). Space here does not allow a detailed comparison between LOF 80 and LOF 95 but significant differences in the level of the salvage awards under each could arise in certain circumstances on identic al facts and it is ve11' unlikely that a professional
salvor will be offering the old version of the form by mistake. As in any situation where salvage assistance is being negotiated, then owners or local representatives of insurers should be consulted where the circumstances allow. Agreeing LOF rarely ifever creates grounds for a salvage claim where these did not exist previously. In the legal systems of most countries each interest salved (ship, calgO, freight and bunkers) will be responsible for paying its share of the ultimate award or settlement in proportion to the value ofthe property salved.
Most of the terms ofLOF 95 relate to procedures which will not concern masters of salved ships.
However, some clauses are ofa practical operational character and should be familiar to masters, preferably in advance and certainly after the contract has been agreed or signed. In particular, masters should be aware of the following:
1 (a) The Contractor shall use his best endeavours:- (i) To salve the "[ship]" and/or her cargo freight
bunkers stores and any other prop erty thereon and take them to ... or to such other place as may hereafter be agreed either place to be deemed a place of safety or if no such place is named or agreed to a place of safety and
(ii) while performing the salvage services to prevent or minimise damage to the environment
1 (d) In the event of the services referred to in this Agreement or any part of such services having been already rend ered at the date of this Agreement by the Contractor to the said vessel and/or her cargo freight bunkers stores and any other property thereon the provisions of this Agreement shall apply to such services.
3. Ownerscooperation:The owners their servants and agents shall cooperate fully with the contractor in and about the salvage including obtaining entry to the place named or the place of safety as defined in clause 1. The contractor may make reasonable use of the vessel's machinery gear equipment anchors chains stores and other appurtenances during and for the purpose ofthe salvage services free of expense but shall not unnecessarily damage abandon or sacrifice the same or any property the subject of this agreement
5 (d) The owners of the vessel their servants and agents shall use their best endeavours to ensure that the cargo owners provide their proportion of
salvage security before the cargo is released.
19. Inducements prohibited: No person signing this Agreement or any party on whose behalf it is signed shall at any time or in any manner whatsoever offer provide make give or promise to provide demand or take any form of inducement for entering into this Agreement 90 THE NAUTICAL INSTITUTE
International Convention on S4jvage 1989
As incorporated into LOF 95, English and many other countries' domestic laws).
Article 6
2. The master shall have the authority to conclude contracts for salvage operations on behalf of the owner of the vessel The master or the owner of the vessel shall have the authority to conclude such
contracts on behalf of the owner of the property on board the vessel
Article 8
Duties of the sa1vor and of the owner and master
1. 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 sub- paragraph (a), to exercise due care to prevent
or minimize damage to the environment;
(e) 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.
2. The owner and master of the vessel or the owner of other property in danger shall owe a duty to the salvor:
(a) to cooperate fully with him during the course of the salvage operations;
(b) in so doing, to exercise due care to prevent or minimize damage to the environment; and (e) when the vessel or other property has been brought to a plac e of safety, to accept redelivery when reasonably requested by the salvor to do so.
Modern communications now make it possible for masters to be in contact with their owners/managers and thus often allow discussion to take place before salvage help is taken. Some hull insurance companies actually require prior consultation and masters should be familiar with an insurers' own wishes in this respect - often through claims handbooks or circulars. Whilst the master has actual authority to enter into salvage contracts on behalfofthe ship, her cargo and bunkers (regardless of owners hip ), where circumstances allow, consultation is always preferable. Owners/managersl insurers will have access to a number ofintemational salvage companies and tug brokers and may be able to secure more favourab le commercial terms than perhaps a master left to his own devices. Consultation also prevents an unfortunate situation developing where more than one salvor is engaged to do the same job resulting in the possibility of double payment.
Salvors, by the nature of the agreement entered into, generally take a risk when salving a stricken vessel. On occasions, the best equipment for the job may not readily be available and a vessel inappropriate for the entire contract may initially be offered on the understanding that a more substantial unit will be substituted at a later date. It is not uncommon, for example, for a harbour tug to be despatched in an attempt to stabilise the position initially, on the understanding that a more powerful vessel will be provided subsequently. The master needs to assess the risks that such prop osals involve and ensure that insofar as is possible the best salvage "service" is selected. The closest salvor is not necessarily the best nor is the cheapest offer necessarily the one that should be accepted. Obviously the urgency and severity of the situation need to be taken into account, looking particularly at danger to life, risk to the environment and the safety of ship and cargo.
LOF or any other salvage contract does not have to be physically signed for there to be a binding contract in existence. There have been cases where LOF has been agreed over the VHF, by fax, telephone or cable.
Other 'standard' printed forms of salvage agreement also exist and contracts from the following areas are occasionally seen: Turkey, The Peoples Republic of China, some FSU countries, some Scandinavian countries, Germany and Japan.
Professional salvors tend to prefer the certainty ofLOF however and this is also true of most underwriters and P&l Clubs where no fixed price agreement can be reached.
Most of the recent changes to LOF (and some of its overseas 'cousins') have been driven by changing world attitudes to the environment and the need to encourage salvors to be particularly careful to prevent or reduce environmental damage - even where little or no residual property value remains at the end of thejob. To take account of ever changing global needs and problems, a new LOF is being discussed by the LOF Working Group and it is quite possible that we will see LOF 99 or 2000.
Fixed rate or lump sum contracts will invariably be entered into when there is no threat of imminent danger. Almost always in these circumstances, the contract will be negotiated and signed ashore.
In a salvage situation there is frequently danger and many worrying aspects for the master to consider.
In most cases the last thing the master thinks of is keeping a running note of key facts, position lines, day's run, engine movements, availability of personnel, communications, details of the salvage agreement and so on. Because salvage awards are settled generally by arbitration the master will need to testifY in court and contemporary records, ifpossible with photographs, will be invaluable when the case is
heard, generally months and sometimes even years after the event.
Other forms of salvage contracts
A contract to perform assistance does not have to be in writing for a successful salvage claim to be made.
A discussion over the VHF or an exchange of written messages constitutes a contract upon which the foundations for a salvage claim exist. The most common of such cases are the services "at request" or
"engaged services". Ifa vessel in difficulties requests a passing vessel to stand by whilst repairs are made or weather abates then a successful salvage claim can be made. The ship standing by, does not have physically to make fast or board the casualty (unless requested to do so) for her owners, master and crew to recover an award. To be successful in this respect, the ship and/or cargo must be saved - nothing would be recoverable in the event that the ship was totally lost - whether or not her crew were successfully rescued.
Ifa vessel is engaged to undertake a specific task (such as towage service) then merely standing by, having failed to connect orperform the towage requested will give rise to no award. The "comfort" created by a vessel standing by to enable a crew to work on a stricken vessel will however give rise to a claim as will the provision of spare parts to a vessel in difficulty or the supply of some additional technical expertise.
In the UNDA UNTE D2 a ship lost her anchors in heavy weather and a passing merchant vessel was requested to seek a replacement anchor and cable.
The merchant vessel duly put into port in accordance with this request but in the meantime the UNDAUNTED reached port safely partly under her own power and partly under tow of another vessel.
The requested services gave rise to a successful salvage claim.
The rationale behind engaged services is easy to understand. The mere presence of a vessel standing by (invariably a merchantman) whilst essential repairs are undertaken can very often provide the comforting difference between property (and lives) being saved or the ship and her cargo becoming totally lost.
"Salvors" in these situations deserve encouragement by way of salvage award. The law of contract applies equally to salvage as it does in many other walks of life. If a request is made for ajob to be performed and the job is successfully completed in accordance with the terms of the request then a reward is payable.
Similarly, if an offer to perform ajob is accepted and performed then again remuneration will be payable.
This is the most basic form of salvage contract and masters should always take particular care in choosing words for discussions with third parties as misunderstandings can and do frequently occur.
(1928) 31 LLR339
· .
Photograph courtesy of Hong Kong Salvage & Towage Company Ltd.
Figure 13.1 A routine berthing operation could give rise to a salvage claim if something unexpected happens.
Photograph by MJ Gaston, courtesy of Howard Smith Towage & Salvage Figure 13.2 A vessel In difficulty requires salvage assistance
92 THE NAUTICAL INSTITUTE