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Salvage Claims & Awards Under Admiralty Law
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 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 France's 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.
These Factors Applied to My Example
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 prevent 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 certain amount of skill was requuired 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.)
What's the Bottom Line?
It's up to the judge, as we will see below, but I would give this case an award of $150,000.00, give or take $50,000.00.
An Example from a Recent Case
Here is a letter I wrote on behalf of a client who had a salvage claim. My client is a waterman whose workboat is equipped for salvage. All the names are changed.
John Smith asked me to help him in this matter. Mr. Smith directed the salvage of your insured's yacht last October.
The facts are as follows. On October 15, 2015 the Maine coast experienced a powerful easterly storm. Rockland Harbor is open and unprotected to the east, with a substantial fetch when the breeze is from the southeast. The wind was a steady 40 knots with higher gusts and horizontal rain. This is documented in the GoMoos data I enclose, as well as in Station Rockland's report ("Wind Speed: 45. Wind Gust: 55.") Breaking four and five foot chop occurs in the harbor when conditions are as they were the morning of October 15.
Earlier that morning Mr. Smith and one other crew used his vessel Leopard to pull the 41' Formosa ketch Ranger off its grounded position between a steel barge and a stone pier. The vessel had broken loose from its mooring. The vessel was aground for 15 to 20 minutes and sustained approximately $10,000 damage. Coast Guard personnel were on scene on shore and were of some assistance. Mr. Smith was able to tow the vessel off and away from the lee shore and tow it to one of two storm moorings that he maintains in Rockland, tucked up behind the breakwater. In 40 to 50 knots of ESE wind in Rockland harbor this salvage was quite difficult. The owners have paid salvage of 15% of the value of the vessel.
Afterwards the crew of the Leopard were exhausted. They moored Leopard to a protected dock and went home, cold, wet and tired.
After Mr. Smith had been home for ten minutes he got the call about the S/V Stormy. He was convinced that the conditions were far too dangerous for him to get underweigh again, but he quickly drove his truck to the reported location. When he saw the value of the vessel and realized that it would quickly be destroyed if not salvaged, he decided to get underway again despite the risks. This time he had one crew with him in Leopard, and two assisting on shore.
The only way to get someone aboard the vessel was to have them wade and swim from shore. With life jackets on two of them did so to get aboard Stormy, in absolutely harrowing conditions.
Stormy lay aground and abandoned on her keel only, heeling to port with her port side towards shore. The wind, tide (incoming), and waves were pushing her closer and closer to shore, trees, and rocks. The water depth around the vessel was shallow and strewn with boulders. The wind and waves made it very difficult to maneuver without getting swept ashore or into the grounded vessel. Leopard hit bottom several times and sustained damage to her skeg and propeller.
Leopard made several attempts to float a line downwind to the grounded yacht. These attempts failed so there was no option but to get close enough to have the men aboard Stormy throw a line to Leopard. This was accomplished after several attempts, and the line was secured to the yacht's bow.
Leopard took a strain on the line. Owing to the surge the line parted, and the recoil of the line injured a crewmember's hand. A line fouled Leopard's prop, and Mr. Smith cleared it by going overboard with a knife. He was then able to maneuver close enough to the pier to get a long line to his shore crew. The crew carried the line down the pier and swam it to the Stormy. Under Mr. Smith's direction, the crew passed the line under the keel of the vessel and secured it to the port rail (which was toward the shore) about amidships. Simultaneously Mr. Smith had his crew bend a long line onto a halyard led to the top of the Stormy's mast. Leopard crew swam the halyard line swum ashore and bystanders heaved on this line.
With Leopard pulling the boat off, and the halyard keeping the boat heeled, Mr. Smith gradually moved Stormy off the lee shore, skillfully taking advantage of the same rising tide and seas that were previously destroying the ship. When Stormy was in deeper water Mr. Smith towed her away from the lee shore, ascertained that she was not taking on any water, and secured Stormy to one of the large storm moorings that he maintains in Rockland Harbor.
The operations took several hours. Success was contingent on, among other things, Mr. Smith's immediate decision to get under way. It was accomplished at great risk to Mr. Smith's valuable boat, his equipment and his person, as well as at risk to his crew. His own vessel barely escaped loss or damage, from no less a hazard than a fouled propeller on a lee shore in high winds and seas. To this day Mr. Smith is amazed that he was able to achieve success without any serious damage to property or serious injury to personnel involved.
You, as a mariner, can easily conceive the difficulty of accomplishing this salvage. But for the skill of Mr. Smith, and his willingness to put at risk his equipment and person, and his consequent delivery of the vessel from extreme peril to the complete safety of his protected mooring, your company would almost certainly be looking at a total loss, and possible environmental liability from spilled fuel as well.
Your insured's boat is valuable, worth some $300,000.00 according to the BUC Book. Under these circumstances, particularly where the salvor is a professional, a salvage award of 15% of the value is fair and customary. B.V. Bureau Wijsmuller v. United States, 702 F.2d 333, 1983 A.M.C. 1471 (2nd Cir. 1983)(public policy in favor of encouraging the existence of professional salvors favors a more generous award).
You can see the IMO factors at work in this letter. The value of the vessel is determined. The skill of my client and the risk to which he was exposed are detailed. The point is made that "Smith" is a professional and that he keeps his boat (and his mooring and equipment) in readiness for such opportunities. On the minus side, the salvage didn't take long and Smith never had to leave Rockland Harbor. The case settled without court for $40,000.00.
Salvor Claims
A salvor has a claim against the boat he salvaged. The salvage claim is secured by an automatic maritime lien on the ship. A careful salvor will record notice of the lien with the Coast Guard's National Vessel Documentation Center (if the yacht is federally registered) or with the Secretary of State of the yacht's home state. At that point the salvor will likely negotiate with the ship's owners or insurance company for a salvage award. If the negotiations do not settle the case the salvor will bring suit, probably in the local Federal District Court, for a determination of the award.
"Pure" Salvage vs. Contracted Work
The above scenarios describe so-called "pure" salvage. Often salvage is based on a written contract, and the contract then determines the size of the award. There is a standard contract salvage form and a careful fisherman might keep such a form on board in case a salvage opportunity arises.
This Law Also Applies to "Treasure" Cases
The law of salvage is also used to decide treasure cases. For all intents and purposes, the law of "finders keepers, losers weepers" does not apply when one pulls treasure from the sea, even if the treasure has been lying on the seabed for centuries. A court will apply the IMO factors, and determine the skill, risk and capital cots that went into the salvage, as well as the success of the effort. The point will not be lost on the court that but for the salvor the treasure would still be lying beneath the waves. The awards in treasure cases tend, for these reasons, to be quite a large percentage of the total value of the recovery. The balance generally goes either to the lost ship's home state (Spain, often) or to the corporate descendants of the insurers who centuries ago paid claims based on the lost.
Salvage is unquestionably the most fascinating area in the civil law. Few lawyers know how to do it and fewer still have lots of actual experience. If you have a claim, and want a free consultation, give me a call. Cases are often performed for a percentage of the award.
Nicholas Walsh
Portland, ME
207-772-2191