Salvage: Contract or Common Law?

When the subject of admiralty and maritime law comes up, there are usually questions of great speculation and interest. This is largely due to the ancient traditions of the sea, which form the basis of modern day admiralty law. Indeed, even the United States, a part of the “new world,” bases its general maritime law on traditional maritime law principles. In fact, much of the case law relied on by maritime attorneys today is precedent set by cases which were heard in courts during the nineteenth century.

One subject of maritime law in particular is often of interest to those who sail the seas. That is the question of salvage rights. It is true that a person, a crew of persons, or an entity can claim an interest in a vessel which was rescued from a certain marine peril.

Salvage is defined as compensation allowed to persons by whose assistance a ship or its cargo have been saved, in whole or in part “from impending peril on the sea, or in recovering such property from actual loss, as in the case of shipwreck, derelict or recapture.” The Blackwall, 77 U.S. 1 (1869).

Basic salvage is a common law right. That means there is no written statute or codified law on the matter, but rather that past decisions from competent courts spell out how the law will be applied. In the case of common law salvage rights, there are two essential elements which are required for anyone seeking to enforce those rights against a vessel. First, there must be a marine peril which is reasonably perceived by the salvor. Second, the service must be voluntary and not the duty of the person conducting the salvage operation. Terms like “marine peril” and “the duty” have been more specifically defined in case law through the years. In general, a marine peril exists when a vessel at sea will surely go to waste if something is not done. A crewmember of a yacht may not be in a position to claim a salvage right if the vessel he or she saves is the vessel he or she is charged with sustaining, operating and maintaining.

Common law salvage rights are often asserted after a rescue of property in cases when no one was around to “save the sinking ship” except the magnanimous salvager who, with skills and effort, put out the fire or pumped the bilge. In cases of common law salvage the courts have formed an equitable method of reaching what is considered a just salvage award.

Courts in the United States will consider the following factors in awarding salvage rights: 1) the time and labor expended by the salvors in rendering salvage services, 2) the promptness, skill and energy displayed by the salvors in rendering service and saving property, 3) the value of the property employed by the salvors in rendering service, 4) the danger and risk in which salving vessels, equipment and crew were exposed in securing property from peril, 5) the value of the property saved and 6) the degree of danger from which the lives and property were saved. The Blackwall, 77 U.S. 1 (1869).

Of course, these factors come into play when there was no prior agreement for salvage, and the property was saved voluntarily. Often salvage is a matter of contract. Both the potential salvor and the owner of a vessel in marine peril may have an interest in contracting for salvage when time permits and the parties are available to one another.

In contract salvage, the rescuer and the owner or owner’s representative agree upon an amount to be paid for the salvor’s services. This is often the case when a vessel simply needs a tow in, but can also arise from pre-existing contracts such as those with some of  he towing services currently available. Contract salvage has benefits for both parties. For the salvor, he or she need not go to the lengths it takes to prove all the elements of salvage or the factors of a just award because the terms are already setout in the party’s agreement. From the perspective of the owner or owner’s representatives, there is not costly surprise. The terms are known from the outset and the costs expected in the event of a breakdown or mechanical failure.

As a potential salvor, you may have the opportunity to create a contract salvage situation if an owner representative is available and you can make an agreement (even an oral one) before responding. Likewise, as a mariner in trouble at sea – time permitting – upon contact with the potential salvor, an agreement for payment can be made prior to the salvor extending its efforts.

David E. Irwin is a Florida attorney with Irwin Law Firm. He practices admiralty and maritime law with an emphasis on transactions, litigation and contracts. His office is in downtown Fort Lauderdale, and he can be reached at (954) 775-2301 or by e-mail at david@irwinlegal.com.