Several recent disasters in SA coastal waters have raised questions about the laws of salvage.Legal expert Steven Wallace of Garlicke & Bousfield takes a closer look. The Sea Elegance enters port earlier this month trailing smoke from the remnants of a week-long fire- one of several recent maritime casualties in SA coastal waters. THE LAW relating to salvage used to be a matter of easily understood robust common sense. The cornerstones of salvage are still clear but have been modified by international conventions and agreements. There are four basic requirements which must be satisfied to obtain a salvage award. Firstly the salvor has to be a “volunteer adventurer” rather than being under a duty to assist. For instance, a crewmember of a vessel in distress cannot claim salvage for saving the vessel because he is merely doing his job. Secondly, the salvage award can only potentially be made in respect of a certain limited class of things including ships and other floating vessels, cargo, wreck, freight, aircraft and human life. Thirdly, the property salved must be exposed to imminent danger, peril or distress. These may occur where, for instance, the vessel is on fire or has lost her power or steering and is a “dead ship”. In one case a salvage award was approved on the basis that the captain was unfit due to either drink or mental illness and would therefore have been a danger to any ship he was on. Finally, there can be no salvage award under the common law unless the operation is successful, or at least partly successful. It is sometimes hotly debated whether a particular operation amounted to salvage or towage. A tug which is merely furnishing towage services is not entitled to a salvage award. However, towage may become salvage if, for instance, the vessel under tow becomes exposed to grave danger during the towage operation and has to be salved. Common Law The common law of salvage and usual modifications by agreement were codified over time into a standard form contract known as “Lloyd’s Open Form” which has undergone various changes over the years, but is still frequently used in salvage situations. Most professional salvors will offer the latest version of Lloyd’s Open Form as a basis for the salvage operations. Salvors are generally recognised as filling an important role in the shipping industry. The amount of salvage awards is expressly designed to encourage professional salvors to remain in business and maintain specialist equipment. Other players in the shipping industry often express the view that salvors seek to be paid too much. Due to the tension between salvor and shipowner, and the fact that the salvor was only paid if he was successful, salvors have always had to assess each situation to determine whether it was worth them incurring the effort and expense involved in the light of what they reckoned on receiving as an award. Until fairly recently the only criterion for success justifying an award was whether any valuable assets had been saved, but the International Convention on Salvage 1989 demonstrates that society demands recognition of a new factor affecting salvage awards, namely the safety and integrity of the environment. Under Article 14 of the Convention, a salvor who does not successfully save the ship or cargo she is attempting to assist, but nevertheless averts an environmental disaster, is entitled to have her expenses paid, in addition to an award of up to 100% of those expenses. Article 14 was welcomed by environmentalists and salvors but caused concern in the insurance industry. Suddenly, there was now a completely open ended and unpredictable figure thrown onto the table which made it impossible for insurers to plan for and anticipate levels of monetary exposure for environmental awards. Compromise After much negotiation, a compromise was reached between salvors, owners and insurers which resulted in what is called the Special Compensation P&I Club Clause (SCOPIC). The salvor and owner in distress may now choose to incorporate and invoke SCOPIC into the latest version of the Lloyd’s Open Form (LOF2000) or they may exclude it. The details and consequences of incorporating and invoking SCOPIC, and the manner in which it may be terminated, are complex and it is recommended that specialist advice be sought in that regard. Essentially, if SCOPIC is adopted, then there is no possibility of the salvors obtaining a special environmental award under Article 14, but they are nevertheless paid in accordance with a tariff for the work they do and expenses incurred, whether they are successful or not. It is often a difficult choice for a shipowner under pressure to decide whether or not to agree to SCOPIC. If the job is going to be quick and easy, the SCOPIC tariff may favour the owner, because the amount incurred might well come to less than the usual salvage award for the same job. However if the salvage operation is likely to be unpredictable, long and drawn out, a pure “no cure, no pay” arrangement may be better, in spite of the exposure to a special award under Article 14. The reality in each case is that the shipowners will only have an idea whether SCOPIC was the right choice after the event. Obviously, if there is a casualty near an environmentally sensitive area then SCOPIC is probably the prudent choice for an owner to adopt.
