So you are bobbing about at sea somewhere and realise there is no wind, and you’ve run out of diesel and beer and you are about to get dashed on the rocks. So you call up someone to get rescued (or at least deliver some beer and diesel) you get towed back to port only to find that your rescuers have made a salvage claim against you or your boat!
Crikey – didn’t see that coming did we?
Or another scenario – you are out sailing having a great day and you come across a vessel that has broken its mooring and is about to drift in to the shipping channel and get run over by a ship, so you tow it back to safety and it takes you hours and lots of diesel to do this and you are out of pocket.
So how does one learn more about this Salvage business? – Well read on and I will tell you because I just happen to be studying again for my Ocean Yachtmaster qualification, and this just happens to be one of the things I need to know about!
So we all know about the SOLAS (Safety of Life at Sea) convention that says that as good seafarers we have a statutory duty to assist any boat in distress and to save life.
Yes got that bit sorted. So whats the story with salvage?
The law of salvage has been around for a long time. It aims to provide a financial incentive to those who rescue vessels that are either in distress or that have been abandoned. The idea is that it offers a reward to those who go to the assistance of others.
Basically under the salvage law the person who recovers another persons boat or cargo from danger at sea is entitled to a reward based on the value of the property saved. This idea is based on the principle that the boat owner (or their insurance company) has avoided the total loss of their boat, and the person providing the assistance shouldn’t be left out of pocket for being good samaritans.
Salvage services could include:
- Standing by a boat
- Taking off any equipment
- Taking a passenger ashore
- Floating a stranded boat (or raising one which is sunken)
- Saving a derelict or wreck.
The underlying principles governing a salvage claim are:
- The service must be used by legally recognisable subjects of salvage (i.e. any boat or property in danger in navigable waters.)
- The service must be voluntary and not under a pre-arranged contract (i.e. a tugboat performing its normal duties of towing a vessel couldn’t suddenly also put in a salvage claim for that job too)
- The subject of salvage must be in danger (don’t go around rescuing boats off their moorings – its just not appropriate ok…?!)
- The service must either be successful or prevent or minimise damage to the environment (you wont get paid if you don’t bring the boat back! Also if you are careless and damage the boat even more in the process then you can be liable for the damages)
- The service must be performed in tidal waters (including harbours)
Given that the reward is normally payable out of the value of the property saved, for a salvor to be entitled to a reward something of value must be saved! This is known as the ‘no cure, no pay’ principle.
There is no requirement for a contractual agreement to be in place with the vessel owner before a salvor can take steps to salvage a vessel or its cargo. Most situations in New Zealand waters have involved ‘amateur’ salvors who have salvaged vessels without waiting to enter into formal contracts with the vessel owners.
The salvors cannot claim a salvage award for saving life unless they save property at the same time. The policy reasons for this are that no-one should need any financial encouragement to save lives. However if the salvage of a vessel also leads to saving lives, then the ultimate salvage award will be increased to reflect this fact. This is known as life salvage.
Salvage in a rescue situation
Generally speaking, recreational boaters are happy to help each other out and it is unusual for those offering assistance to claim salvage. However, if you are worried about a claim for salvage being made, it is usually cheaper to agree a payment for assistance in advance rather than to leave it to be determined after the event.
If you’re not in imminent danger and the situation does not warrant calling the emergency services, you would probably be better off being up-front about fixing a price with the person offering assistance.
If danger is imminent, call the emergency services. Coastguard do not normally make claims for salvage. However there will be occasions where a boat is in imminent danger and salvage has to be accepted without an agreement on payment (i.e. the amount of any payment will be settled later), and therefore a skipper and salvor should be very clear on what is being agreed at the time.
Every situation is unique and there are a number of factors a skipper should take into account when considering the options:
- Safety of people on board
- Proximity to hazards
- Weather conditions
- Current, tide and sea state
- Potential for anchoring
If a boat is in distress, it’s unlikely the skipper will be able to arrange a written agreement, so a verbal agreement, witnessed by other crew members or individuals on board, of ‘salvage services’ upon the principle of ‘no cure, no pay’ should be offered.
Skippers should also consider trying to agree salvage subject to the terms of the Lloyd’s Open Form, which is a simple form of salvage agreement and gives jurisdiction to determine the reward to Lloyd’s of London arbitrators, rather than the courts.
If you have time, now might be a good opportunity to call your insurance company to discuss your options.
Salvage without prior agreement
If you find yourself subject to a salvage claim without prior agreement; for example if your boat has been salvaged without your knowledge after it has broken free of its mooring or any such circumstances where salvage is unavoidable, most insurance policies require immediate written notice of any accident or of any claim. No negotiations, payments, settlements, admissions or terminations of any claim should be made without the written consent of the insurers.
If a salvage claim arises after your boat has been saved, notify your insurers straight away and leave the negotiations to them.
Who is entitled to claim salvage?
The owners, masters and crew of the salving vessel will often all have separate and independent rights to claim salvage. Shares in the salvage fund are normally worked out by agreement and there are no binding rules in this regard. However, as a rough guide the vessel owner would normally take about three-quarters, the master one-third of what remains and the balance split between the crew and shared according to their rating. This apportionment always depends on the particular circumstances. For example, if the crew or master have shown particular courage and/or skill out of the ordinary in effecting the salvage, then their share will be increased accordingly.
If more than one party is involved in the salvage, there will need to be an apportionment between the parties. Again this apportionment would normally be worked out by agreement. Usually the first salvor in time would be treated more generously than later salvors, but payment would also depend on the degree and expertise of services rendered.
Where the salvor vessel is under a demise charter at the time of salvage, the charterer can usually claim the salvage award in place of the owner.
Who has to pay?
The basic rule is that all the owners of property which has benefited from salvage must contribute to the salvage award. Accordingly cargo owners, and sometimes charterers, can be required to contribute to the salvage award, in addition to the vessel owner.
Time to check those insurance policies!
How is the salvage award assessed?
The amount of salvage payable is often negotiated by agreement between the parties, particularly where insurers are involved. New Zealand Courts have indicated that they will look at:
- The degree of danger, if any, to human life;
- The degree of danger to the property salvaged;
- The value of the property salved;
- Skill and expertise shown by the salvor;
- The degree of danger to, and hardship suffered by, property and personnel employed in the salvage;
- The time taken up in the salvage;
- The value of equipment used in salvage work;
- Responsibilities incurred;
- Losses and other out of pocket expenses incurred as a result of the performance of the salvage.
Salvage awards made through the New Zealand Courts have amounted to 10% to 20% of the value of the property salved, but the Courts have insisted that the amounts are fixed after taking into account all relevant factors and the percentage calculation is really used as a final rough guide to ensure that the award is set at an appropriate level.
Thankfully when Wildy recently broke off her mooring, she was rescued by a friendly power boater. I paid salvage costs of one bottle of Mt Gay Rum…
Have you ever been involved in any salvage claims?