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.
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:
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.
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.
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.
I don’t think this factor needs any explanation.
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.
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.
This one is a bit like the factor which takes into account the degree of danger involved.
No explanation required.
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.
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.)
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.
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.
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.
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.
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.
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.