An overview of the Law of Salvage

The Modern Admiralty Law descends from an era, when the distinction between
pirates and free booters on the one hand and honest seamen and salvors on the
other was often only one of motivation and exception, while both were on a look out
for a generous reward for their efforts, at least the latter hoped to come by it
honestly. The purpose was to encourage honestly by generously rewarding those who
restored property safely to the owner.1
The Law of Salvage is a concept of Maritime Law, which states that, a person
who recovers another persons ship or cargo, after peril or loss at sea, is entitled to a
reward commensurate to the value of the property so saved.
The concept of salvage traces its origin to the principle of equity, according to which
a person who puts himself and his own vessel, at risk to recover another should be
appropriately rewarded and its earliest roots can be traced to the Rhodian era, 900
years before the Christian era. Rhodian laws were the first to allow a salvor to claim a
reward based on a percentage of the cargo or ship recovered and the danger
involved in the operation. Awards varied from ten percent for cargo washed ashore to
between thirty three and fifty percent for recovered cargo, based on the depth of a
shipwreck.2
Traditionally the term salvage only recognized a ship or craft (vessel), cargo on
board, freight payable and bunkers carried on board, as the subject matter of the
property in danger. However it is pertinent to mention that, in true terms for a
salvage to commence, the danger to the ship or vessel needs to be real, though it
may not necessarily be immediate or absolute, in other words the property in
question must be exposed to danger and destruction.
Marine Salvage (Meaning):
Salvage has been defined as a service voluntarily rendered in relieving property
from an impending peril at sea or other navigable waters by those under no legal
obligation to do so.3
A salvage service is considered to take place when a person, acting without any preexisting contractual or other legal duty preserves or contributes to preserving at sea
any vessel, cargo, freight or other recognized subject of salvage from danger 4.
1 Andrew Anderson an Authority on Law of Salvage in U.S.A
2 Mark A. Wilder, author of Application of salvage law and law of finds to sunken shipwreck
and discoveries
3 Martin J Norris, Benedict on Admiralty, the Law of Salvage at 1-4(7 th Ed 91)
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Marine Salvage is the process of rescuing a ship, its cargo or other property from
peril. Only maritime property; i.e., vessel, apparel, cargo, including flotsam,
jetsam, lagan, derelict and wreck of these and freight can be subjects of salvage. 5
Salvage is a wide term and encompasses several operations such as : Rescue
Towing, Refloating a sunken or grounded vessel and patching or repairing a ship.
Thus in other words the ones who will expose themselves to peril at sea and provide
the fastest response to a ship in distress are said to be engaged in a venture
popularly known as marine salvage and are commonly known as salvors.
In 1869 in the Blackwall Case6 The United States set forth the Basic Principle of
Maritime Salvage, including the principle that, a salvors efforts need to be
successful, in order to recover a reward, which is known as the No Cure No Pay
Principle, in Contract Salvage.
The Court Stated,...salvage is the compensation allowed to persons by whose
assistance, a ship or her cargo has been saved, in whole or in part, from impending
peril on the sea, or in recovering such property from actual loss in cases of ship
wreck, derelict or recapture. Success is essential to the claim, as if the property is not
saved or if it perish or if in case of capture, if it is not re-taken, no compensation can
be allowed. The court stated that providing compensation in the maritime context is
consonant with the public policy of encouraging rescue at sea. Compensation as
salvage is not viewed, by admiralty courts, merely as pay on the principle of
Quantum Meriut, but as a reward for perilous services, voluntarily rendered and as an
inducement to sea men and others to embark in such undertakings to save life and
property. Public Policy encourages the hardy and adventurous mariner, to engage in
these laborious and sometimes dangerous enterprises and with a view to withdraw
him every temptation to embezzlement and Dishonesty, the law allows him, in case
he is successful, a liberal compensation.
Law of Salvage vs. Law of Finds:
Once an Admiralty court establishes jurisdiction, the next step is to decide, whether
law of salvage or the law of finds applies, this enquiry ultimately requires,
examination of particular facts and circumstances of each case, the key issue is
whether, the owner of the vessel or an insurer that asserts ownership, through
subrogation, has abandoned the wreck or its cargo.
According to Norris, Abandonment in the maritime salvage context has been
defined, as the act of leaving or deserting, such property by those who were incharge of it, without hope on their part of recovering it.

4 Geoffrey Brice, Maritime Law of Salvage, London: Sweet and Maxwell 2003, 4th edition, p. 1. )
5 In The Gas Float Whitton No. 2 (1895), P. 301; (1987), A.C. 337, a gas float adrift from moorings
was considered not to be a subject of salvage.

6 77 U.S 1, 1869
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However the mere fact, that the property was lost at sea, does not divest the owner
of title.7
As a general principle admiralty court, will favour salvage law, over the law of finds,
because salvage law is more supportive of the public policy issues of preservation of
maritime property and return of distressed property to a use beneficial to society.

Commencement of a Right to Begin Salvage

A right to salvage can only arise where a vessel 8 or other property as defined,
above is in peril at sea or in navigable waters. It is pertinent to mention that rights of
salvage are applicable to any property not permanently or intentionally attached to
the shoreline and include freight adrift or at risk.
Instances Where Right to Salvage Cannot be Exercised
It is pertinent to mention and interesting to note that the law of salvage does not
apply to salvage of aircraft as well as oil and gas platforms.
Who Are Salvors:
According to the Blacks Law Dictionary (2nd Ed). A Salvor is:
...a person who, without any particular relation to a ship in distress, proffers useful
service, and gives it as a volunteer adventurer, without any pre-existing covenant
that connected him with the duty of employing himself for the preservation of that
ship.9
Salvors are usually Sea men and Engineers, who carry out salvage of vessels that are
not owned by themselves and who are also not the members of the vessels original
crew.

7 The Akaba , 54F, 197, 200( 4th CIR 1983)

8 vessel is defined to include any ship or craft or any structure capable of navigation.
9 The Clara,23 Wall.16,23L.Ed 150;The Dumper,129 Fed.99,63 C.C.A.600;Central Stockyard
Co.v.Mears,89App.Div 452,85 N.Y.Supp.795.
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Definition of Wreck
According of the Merchant Shipping Act10, the definition of wreck includes jetsam,
flotsam, lagan and derelict found in or on the shores of the sea or any tidal water.
The problems from wrecks are three fold. First, and depending on its location, a
wreck may constitute a hazard to navigation, potentially endangering other vessels
and their crews; second, and of equal concern, depending on the nature of the cargo,
is the potential for a wreck to cause substantial damage to the marine and coastal
environments; and third, in an age where goods and services are becoming
increasingly expensive, is the issue of the costs involved in the marking and removal
of hazardous wrecks.11
Salvage Includes Retrieval of: Floatism, Jetsam, Ligan & Derelict.
Flotsam describes goods lost from a ship which has sunk or otherwise perished.
Goods are recoverable because they remain afloat on the sea.
Jetsam is when the ship is in danger of being sunk, and to lighten the ship the goods
are cast overboard into the sea. Ligan (vel potius ligan) describes goods cast
overboard from a ship which afterwards perishes, since these goods are so heavy
that they sink to the bottom, and the mariners, with the intent to have them again,
tie them to a buoy, or cork, or such other thing that will not sink, so that they may
find them again, none of these goods which are called jetsam, flotsam or Ligan, are
called wreck so long as they remain in or upon the sea; but if any of them by the sea
be put upon the land, then they shall be said wreck.
While term Derelict describes property, whether vessel or cargo, which has been
abandoned and deserted at sea by those who were in charge of it without any hope
of recovering it.
Difference Between Salvage & Wreck Removal
A salvage operation is generally distinguished from 'wreck removal' as its purpose is
usually to save a vessel as a going concern, whereas a wreck removal generally
concerns a vessel which is already agreed to be a total loss. Consequently salvage
operations usually try to cause minimal damage to the concerned vessel whereas
wreck removal operations often involve intentionally breaking the vessel involved
into pieces.
Position of Salvage under Customary Law
10 Section -255 Merchant Shipping Act,1995.
11Law relating to Maritime Wrecks in India, V.M Syam Kumar, BAL, LLM (Maritime Law)
Cochin India
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Under the customary law, five prerequisites will be taken into consideration while
qualifying an act of rendering assistance at sea as a salvage service, and comprises
factors such as:
(a)
(b)
(c)
(d)
(e)

Danger,
Voluntariness,
Success
Place of rendering the services, and
Type of property salved12.

Types of Salvage:I.

Pure Salvage:

In Pure Salvage there is no pre-existing agreement between the parties.

Essential Pre-requisites For / Elements Of Salvage
The meanings of the first three ingredients danger, voluntariness, success have
been interpreted by courts on numerous occasions. Not every act of rendering
assistance at sea can be qualified as salvage under customary law. There are two
other categories of human involvement at sea which are relatively proximate to
salvage: towage and wreck removal. Principles are embraced by a laconic formula
no cure no pay, which has been the cornerstone of the balance of interests in
salvage for centuries. It is usually impossible to forecast success, while the chance
for failure and no pay is always present. Salvage remuneration is only recoverable
in cases of saving of a recognized subject of salvage, which traditionally would be the
ship, her stores and apparel, cargo and freight at risk.
1. Concept of Property In Peril, and Its Relevance to The Law of Salvage:
A right to a salvage reward can only arise in respect of a vessel, or valuable
freight, provided the property must be in peril. The right to salvage isnt just
restricted to ships in immediate danger of sinking but extends to any marine
property, where there is a reasonable apprehension of danger and is applicable in
respect of an abandoned vessel adrift at sea, or to one that has accidentally run
aground, and one which is leaking or has otherwise become unseaworthy.
Thus in other words, there must be a marine peril placing the property at risk of
loss, destruction, or deterioration. In determining whether there is a marine peril,
the court must decide whether, at the time the assistance was rendered, the
vessel was in a situation that might expose her to loss or destruction 13.Further to
constitute a marine peril, the danger need not be imminent or actual. All that is
necessary is a reasonable apprehension of peril.14
12 William Tetley, Maritime Liens and Claims, 2nd edition, Montreal: International Shipping
Publications, 1998, p.331.
13 Markakis v. S/S Volendam, 486 F. Supp. 508 (S.D.N.Y. 1995).
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1.1

Salvage Operations Can only be Initiated In Case of Derelict Vessels

Technically, an abandoned vessel is referred to as a Derelict vessel, such vessels

comprise of those vessels which have been left by its crew without intention to
return, or hope of recovery of the vessel or property on board.
Whether or not a vessel may be considered a derelict and salvage operations in
respect thereof be commenced depends upon the intentions of the master and
crew when leaving, in instances where, having abandoned their vessel without an
intention to return, the master and crew later change their mind, then also the
vessel remains derelict for the purpose of the law of salvage.
1.2

Prior Acceptance of Salvage Services not a Necessary Criteria for

Claiming
Salvage Award

One unusual aspect of the law of salvage is that rights to reward can arise without
the vessel master or owner agreeing to accept salvage services. Sole criteria for
the salvor commencing with a salvage would be as to whether , in the
circumstances the vessel was in, a prudent owner or master would have accepted
salvage services, if an answer to this is in affirmative, it is sufficient to entitle the
salvor to a reward. Usually in instances where a vessel is exposed to a marine peril
and no one is aboard to refuse or accept the salvage services it is not necessarily
for the salvor to attempt to locate the owner or to obtain anyones permission prior
to undertaking the salvage operation, as any delay in such critical situation may
lead to disastrous consequences causing substantial loss to the ship as well as its
cargo.
Thus the salvor needs to be rewarded if he successfully saves the vessel, even
without obtaining the consent of salvaging from the perilous ships owner.
In the absence of a salvaging agreement the amount of salvage reward would be
fixed by a Court of Admiralty.
However salvage services cannot be thrust upon an unwilling vessel master or
owner who positively refuses them.
2.

For a Salvage Claim/Reward to arise the Services Must Have been

Voluntary:The salvage service must be voluntarily rendered. Voluntariness is also
perceived as a key element indicative of a salvage contract. Services rendered
under a pre-existing duty are not merited to be identified as salvage.

14 Reynolds Leasing Corp. v. Tug Patrice McAllister, 572 F. Supp. 1131 (S.D.N.Y. 1983).

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Salvage services must have been rendered voluntarily in the sense of being
rendered without a legal obligation or a duty to do so.
However it is pertinent to state that a Naval Vessel is an exception to the
aforesaid rule , therefore such a vessel performing a rescue or saving any
property, in the course of its duty, would not become entitled for any claims of
salvage.
Signing of the LOF does not change the nature of rescue and does not affect
the voluntary nature of the operation as it does not constitute the passing of
consideration.15
3.

Necessity of Success of Salvage Operation a Pre-requisite for Salvage

Claims
The salvage efforts must be successful, in whole or in part 16 , i.e there must be
a success of Salvage Operation, though it may either be complete or partial,
and the salvor must have rendered an active contribution in facilitating the
same, but no salvage compensation may be claimed in circumstances where
the salvage services were rendered necessary on account of salving vessels
fault itself, say where a vessel fails to give way and collides with another vessel
, then such a vessel can in no way seek any salvage reward for saving the
damaged vessel from sinking.

Criteria For Determining the Existence of a Need or Request for

Salvage
i. Whether a reasonable master of the vessel, in distress would have under the
circumstances accepted the salvors offer of assistance.
ii. Whether there was any real or reasonable apprehension of danger, even though such
danger might not have been absolute or immediate.
iii. Whether such danger was merely fanciful or so remote as to only have been a distant
possibility.
Salvage, Modern Day Scenario
In the modern world, the dispute normally is not merely, just about, whether
there is existence of danger to the vessel, but also as to the degree or magnitude of
the danger, since it comprises of a key factor relevant in determining the extent of
the award.

15 Christopher Hill, supra, note 46 at p. 347

16 Lathrop v. Unidentified, Wrecked & Abandoned Vessel, 817 F. Supp. 953 (M.D. Fla. 1993).

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Salvage Services Need to be Voluntary and Not Obligatory

For the services to be categorized as salvage, they must be voluntary and not
obligatory. Therefore for services to be termed as an operation of salvage; they must
not have been rendered under:
(a)
a pre-existing contract agreement (b)
purely self preservation interests of the salvor.

an official duty or (c) or for

A pre-existing agreement means any agreement entered into before the time of
the existence of the danger. It includes the ships master and crew, who have a preexisting employment agreement with the ship owners. They have duty to preserve
the ship and cargo and therefore cannot convert themselves into salvors in the event
of trouble. Salvage can be rendered by these people, if the pilot of the crew or ship in
peril rendered service outside or beyond the scope of their duties under the contract.
Ordinarily crewmen cannot claim themselves to be individual salvors , unless and
until their employment contract has actually or constructively been, terminated
before the salvage service commenced.
In respect of such persons termination of contract shall be brought by: an
authorized abandonment of ship under the masters authority, the masters
discharge of the crew concerned or by the capture of the vessel in a hostile
encounter.
When Salvage Shall Be Considered A Success
The requirement for a salvage to be successful can be summed up from the
common law expression NO CURE NO PAY which signifies that only a successful
salvor can anticipate to be rewarded, while the absence of an useful result precludes
any remuneration, no matter how great the salvors exertions were, and this is
precisely the basis and the genisis of the famous no cure no pay formula.
However the success need not be total. Even partial success, provided that there
is some means of preservation to the owners is sufficient.
In Tajo Maro Case17 where in certain characteristics of salvage contract were
examined and it was concluded that the primary consideration is that, the person
rendering the salvage service, is not entitled to any remuneration, unless he saves
the property in whole or part.
Therefore if the ships peril following the service is as grave as before, no award
would be given, similarly the salvage services which rescued a vessel from one
danger, but eventually left her in a situation far more precarious than earlier and
didnot therefore contribute to the ultimate success thereof would not amount to
salvage.
Forms of Salvage:
i.

Contract Salvage: In a contract salvage the owner of the property and the
salvor enter into a salvage contract prior to the commencement of salvage

17 1972AC 242 HL
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operations and the amount that the salvor is to be paid is determined by the
contract. Such contract may also state that the payment is only due, if the
salvage operation is successful (No Cure No Pay) or the payment is due even if
the operation is not is not successful.
ii.

Pure Salvage:(Merit Salvage) There is no contract between the owner of the

goods and the salvor, the relationship is one which is implied by law. The
salvor of property under salvage must.
a) Bring his claim for salvage in a court which has jurisdiction.
b) Such court will then award salvage based upon the meritof the service
and the value of the salvaged property.
Pure Salvage is further Sub - Divided into:
High Order Salvage: In such kind of salvage the salvor exposes himself and
his crew to the risk of injury and loss or damage to his equipment in order to
salvage the property in peril, for example: Boarding a sinking ship in heavy
weather or Boarding a Ship which is on fire.
Low Order Salvage: Occurs where the salvage is exposed to little or no
personal risk, for example: towing another vessel in calm seas, supplying a
vessel with fuel.
The Salvors performing high order salvage, receive substantially greater
salvage award, than those performing low order salvage.

Salvage under a Contract

A genuine salvage contract is expected to preserve the classic ingredients of
salvage, namely : danger, voluntariness and success. Since salvage contract is
entered into by the parties in written or oral form in the face of danger, even though
the danger might not necessarily be immediate. It should be real and not too remote
as to be a mere possibility.18
However in the practice of professional salvage, rendering salvage services, will be
always supported by an agreement /contract.
A salvage contract per se is not a foundation for a legal relationship between the
salvor and salvee , as the right to a salvage claim, to a salvage lien and eventually to
salvage remuneration exists notwithstanding any agreement between the parties to
the service. All those substantive rights owe their binding force to legal principles
outside contract law19 as they spring from the very fact of delivering a useful result to
someone by virtue of saving their property.

18 Christopher Hill, Maritime Law, 4th edition, Lloyds of London Press Ltd., p. 340
19 Goode Roy, Commercial Law, 3rd edition, Penguin Books, 2004, at p.67
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The salvage services are often rendered under severe time restrictions, where debate
over the most efficient contractual terms would be counterproductive.
Salvage may not necessarily arise from an actual contract. However professional
salvors with a fleet of vessels on a stand by crewed by professional salvors do
provide these kinds of services under the internationally recognized, salvage
agreement under the L.O.F (London Open Form). Under these contracts rewards are
based on NO CURE NO PAY principle under which the salvor receives no reward, if
no property is saved. Special compensation is however paid as a reward for efforts of
salvors efforts to prevent or minimize the damage to the environment, even though
no property has been saved .
However as a matter of general practice, under a contract of salvage, the owner of
the property and the salvor enter into a salvage contract, prior to the
commencement of salvage operations and the amount that the salvor is to be paid is
determined by such contract. Such contract may also state that the payment is only
due, if the salvage operations are successful(No Cure No Pay) or the payment is due
even if the operation is not is not successful.
Lloyds Open Form and Its relevance to International Salvage Operations:
The salvage cases that arise worldwide are usually under English Law and in
particular the Lloyds Open Form (LOF).
As time is of the essence when a vessel is in distress, it is understood, that neither
the salvor nor the captain / owner of the distressed vessel will generally have time to
take lengthy legal advice and negotiate contractual terms for the salvage operation.
For this reason procedures such as LOF (Lloyds Open Form), have evolved, which
allow the parties to essentially agree that the operation will go ahead and if they are
unable to agree on the appropriate amount of salvage reward afterwards then a
specialist arbitrator appointed by Lloyds of London shall make the decision.
This option is popular with salvors and distressed vessels as in the heat of the
moment it allows decisions to be made quickly without the risk of any gross injustice
resulting to either side20
In its pure form LOF is not a contract in stricto sensu,21 as the requirement for
consideration is not fulfilled completely. In 1908, the LOF form was first officially
published and since then it has been undergoing systematic revision, following
closely the changes in the convention law on salvage or sometimes forerunning
these.
Since the salvage services are often rendered under severe time restrictions, where
debate over the most efficient contractual terms would be counterproductive, it has
therefore as a matter of convenience become quite common to use standard forms,
the most popular of which is the Lloyds Standard Form of Salvage Agreement,
20 http://www.theshippinglawblog.com/2010/09/salvage-claims.html
21 In the strict sense.
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usually in full referred to as Lloyds Open Form No Cure No Pay. By signing LOF the
parties to the agreement give their consent to the arbitration in London to assess the
sum of the salvage remuneration, and to English law to govern the settlement.
Special Compensation Protection & Insurance Club Clause(SCOPIC) & Its
Influence upon
Law of Salvage
SCOPIC22 is a complex instrument, representing a kind of a separate sub-contract
within LOF and is supplementary to any Lloyds Form Salvage Agreement. It consists
of fifteen clauses, three appendices and two codes of practice, running to no less
than 20 pages in sum. It brings in a few significant improvements to the LOF.
This clause was introduced to prevent environmental damage when little or no salved
value is involved in the salvage.
The SCOPIC solution is available only within the LOF forum. LOF remains the standard
contract form, which is the most commonly, used, for salvage operations, but there
are other open forms such as the Turkish Open Form, the Japanese Open Form and
the Chinese Open Form, which are available regionally. Although not all of them take
the approach of LOF in finding the middle path of balance of interests, ship owners
might still be bound to sign one of those forms instead of LOF, should a casualty
occur in a certain region. However the salvage agreement which has been generally
recognized as the most marketable standard form is without doubt the Lloyds Open
Form, which to a large extent owes its popularity to the formula of the balance of
interests it fixes.
Modern Approach towards Special Consideration to Salvors, for their
Efforts to Minimize Danger to the Environment;
While the general principle of salvage law has been No Cure No Pay, yet the concept
needed to be modernized in line with the current international shipping trends,
wherein more and more vessels are now being propelled by internal combustion
engines, which have unleashed their share of environmental hazards such as oil spills
that are possible where one of these were to sink. Therefore one of the most
interesting developments recently in salvage law has been the growing attention
paid to environmental concerns.
Since at present, the pressure for further changes is rising with new vigour. Today the
salvor is rendering assistance not only to the property in peril, but also and often to a
much larger extent to the environment, being an environmental responder in the
first instance23
Accordingly the L.O.F 198024, took steps to protect the environment from oil pollution,
in consonance with the internationally acceptable concept of safety net. The
22 Special Compensation P&I(Protection and Indemnity Insurance ) Club Clause
23 Witte A. (2008, September 16). Environmental Salvage. IUMI Vancouver Conference. Retrieved
February 15, 2010 from the World Wide Web: http://www.iumi.com/index.cfm?id=7244

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Salvage Convention of 1989 introduced the concept of Special Compensation. This

special compensation is obtainable from the owner of the vessel and is equivalent to
the salvors expenses.
Under the 1989 International Convention on Salvage a salvor must now exercise due
care to prevent or minimise damage to the environment in the course of a salvage
operation.
Jurisdictional Aspect:
Under the LOF25 Contracts the parties submit to the jurisdiction of the Lloyds
Arbitrator to determine the amount of award. However salvage is also a remedy that
arises independently of a contract.
A salvage claim outside LOF Arbitration Agreement can be brought in the Admiralty
Courts; for raising a claim for: Salvage, special compensation, for appointment of
salvager and ones arising out of and connected with any contract of/ for salvage
services.
Salvage claims are enforceable in personam as well as in rem , further a ship or its
sister ship can be held in lien to enforce the salvors claim, in addition to this , a
property salvage attracts a marine lien against all property saved.
Limitation or Time Period to claim Salvage
Article -23 of the 1989 Convention provides for a two year limit to commence judicial
or arbitration proceedings arising from a salvage claim. The limitation commences on
the date on which the salvage operations are terminated. During the two year period,
an extension of time can be agreed by the parties. An action for indemnity by a
person liable may be instituted after the expiration of the limitation period, with the
assumption that, it is brought within the time allowed by the states in which the
proceedings are brought. However if the ship is not saved and the loss was due to
the salvors negligence , the time limit to bring action against the salvor will be
based upon the tort of Negligence.
Salvage Award Scope and Limitations:
Traditional justification for salvage remuneration evolved from the principles of unjust
enrichment. Those who act on behalf of another in an emergency should be
compensated for doing so. 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.

24 Lloyds Open Form 1980

25 Lloyds Open Form
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Factors to be Considered by The Court In Establishing the Salvors Award

a)
b)
c)
d)
e)

Difficulty in operation.
Risk involved to the salvor.
The value of the property saved.
The degree of the danger to which the property was exposed.
The potential environmental impacts.

However it would be a rare case in which the salvage award would be greater than
50% of the value of the property salvaged .More commonly the salvage award
amounts to 10% to 25% of the value of the property.
There is no reward for saving life at sea as distinct from property. Where both
property and life are saved, the salvage reward relating to the property may be fixed
at a higher rate than would be the case otherwise.
But, regardless of reward, the master of a ship is under a duty of law to render
assistance to any person found at sea in danger of being lost if this can be done
without danger to the rescuing ship, its crew or passengers.
The concept of liability salvage implies that the liability for potential damage should
be treated as a distinct basis for fixing a salvage award. Accordingly, the assessment
of salvage remuneration should rest on the assumption what the consequences could
have been, had the salvor taken no action.
A voluntary act of preserving or saving the property of another from a danger gives
rise to a reward only if that act takes place in navigable waters.
However by no means can such award exceed the value of the salved property,
assessed at the date and place of termination of the salvage services.26
Even in instances where the salvor is successful only in minimizing damage to the
environment, it shall be entitled to seek special compensation. However in order to
claim such special compensation, it must be shown by the salvor, that the vessel
salvaged or any cargo thereon, threatened to damage the environment , but
negligence if any, on the part of the salvor, would deprive it of the right of whole or
part of any such special compensation.
Salvage Claims:
26 (source Geoffrey Brice, Maritime Law of Salvage, London: Sweet and Maxwell 2003, 4th edition, p.
1. )

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There are three broad areas related to the Salvage Claims viz: (a) property salvage,
(b) life salvage, and (c) treasure salvage. Of these property salvage is the wider as
well as popular concept as compared to the others.
Concept of Safety Net & Its Impact upon Determination of Salvage Award
In its bold sense, the safety-net concept abolishes the requirement for success in
salving property and transfers the calculation of the remuneration on to the basis of
compensating for the expenses reasonably incurred by the salvor, plus an increment.
Important Legal Provisions Pertaining to Salvage Reward &
Compensation

Special

Salient Features of International Convention on Salvage, 1989.

Article.1, of the International Convention on Salvage recognizes Environnemental
considerations, and defines the term Damage to Environment.
Article.5 of the Conventionprovides for the Control of salvage operations by Public
Authorities.
Article.8- Lays down the Duties of salvor, owner and master to exercise due care to
prevent or minimize damage to environment.
Article.9 provides for the Rights of coastal State to protect their coastlines; right to
give directions to salvor.
Article 13 provides for the Criteria for Fixing the Reward for Salvage
1. The reward shall be fixed with a view to encouraging salvage operations, taking
into
account the following criteria without regard to the order in which they are
presented below:
a. the salved value of the vessel and other property;
b. the skill and efforts of the salvors in preventing or minimizing damage to
the environment;
c. the measure of success obtained by the salvor;
d. the nature and degree of the danger;
e. the skill and efforts of the salvors in salving the vessel, other property
and life;
f. the time used and expenses and losses incurred by the salvors;
g. the risk of liability and other risks run by the salvors or their equipment;
h. the promptness of the services rendered;
i. the availability and use of vessels or other equipment intended for
salvage operations;
j. the state of readiness and efficiency of the salvor's equipment and the
value thereof.
2. Payment of a reward fixed according to paragraph 1 shall be made by all of the
vessel and other property interests in proportion to their respective salved values.
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However, a State Party may in its national law provide that the payment of a
reward has to be made by one of these interests, subject to a right of recourse of
this interest against the other interests for their respective shares. Nothing in this
Article shall prevent any right of defence
3. The rewards, exclusive of any interests and recoverable legal costs that may be
payable thereon, shall not exceed the salved value of the vessel and other
property.
Article 14 of the International Convention on Salvage, lays down the provisions
entitling the salvor to Special compensation , for Salvage In Certain Situations
such as :
1.

2.

3.

4.
5.
6.

If the salvor has carried out salvage operations in respect of a vessel which by
itself or its cargo threatened damage to the environment and has failed to earn
a reward under Article 13 at least equivalent to the special compensation
assessable in accordance with this Article, he shall be entitled to special
compensation from the owner of that vessel equivalent to his expenses as
herein defined.
If, in the circumstances set out in paragraph 1, the salvor by his salvage
operations has prevented or minimized damage to the environment, the
special compensation payable by the owner to the salvor under paragraph 1
may be increased up to a maximum of 30% of the expenses incurred by the
salvor. However, the tribunal, if it deems it fair and just to do so and bearing in
mind the relevant criteria set out in Article 13, paragraph 1, may increase such
special compensation further, but in no event shall the total increase be more
than 100% of the expenses incurred by the salvor.
Salvor's expenses for the purpose of paragraphs 1 and 2 means the out-ofpocket expenses reasonably incurred by the salvor in the salvage operation
and a fair rate for equipment and personnel actually and reasonably used in
the salvage operation, taking into consideration the criteria set out in Article
13, paragraph 1(h), (i) and (j).
The total special compensation under this Article shall be paid only if and to
the extent that such compensation is greater than any reward recoverable by
the salvor under Article 13.
If the salvor has been negligent and has thereby failed to prevent or minimize
damage to the environment, he may be deprived of the whole or part of any
special compensation due under this Article.
Nothing in this Article shall affect any right of recourse on the part of the
owner of the vessel. The rewards exclusive of any interest and recoverable
legal costs, that may be payable thereon, shall not exceed the salved value of
the vessel and another property.

Salvors Right to Maritime Lien, in respect of Salved Property:

In instances where services have been rendered to a Ship, to facilitate its use in
navigation and the ship owner has not paid for the services, a maritime lien can be
placed on the ship. A maritime lien is a special property right in a ship, given to a
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creditor by law as security for a debt or claim. The ship may be sold and the debt
paid out of the proceeds.
The salvor has a maritime lien on the salved property (in an amount determined by
national statute or juridical custom) and need not return the property to the owner
until his claim is satisfied or until security to meet an award is given. An owner who
elects not to reclaim his property cannot be made liable for a salvage reward.27

Law of Salvage Under Various Jurisdictions:

Abandoned Ship Wreck Act 1987 ;( U.S.A)
In response to the competing interests of sport divers, professional salvors and
preservationists, advances in technology and confusion over the states role in
applying their laws, to the ownership of the abandoned ship wrecks, lying in their
territorial waters, the U.S Congress enacted the, Abandoned Ship Wreck Act, 1987,
under the Act the United States, asserts title to any abandoned ship wreck that is:
(a) embedded in submerged lands of a state;(b) embedded in coralline formations
protected by a state on submerged lands of a state or (c) on submerged lands of a
state and is included in the National Register.28
The Law Relating to Wrecks in (U.K)
In the UK, there are three main laws which apply to shipwrecks:

Merchant Shipping Act 1995

Protection of Wrecks Act 1973
Protection of Military Remains Act 1986

Depending on where the wreck site is, the Ancient Monuments & Archaeological
Areas Act 1979 may also apply.
Merchant Shipping Act 1995
Under the Merchant Shipping Act 1995, you must report to the Receiver of Wreck all
wreck material recovered from UK territorial waters and any wreck material brought
into the UK from outside UK territorial waters. This includes:
27 www.britannica.com/EBchecked/topic/519995/salvage)
28 Timothy T Stevens, the Abandoned Ship Wreck Act of 1987, Finding the Proper Ballast for
the States,37 VILL REV 573,574- 80(1992).
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wreck material found in or on the sea

wreck material washed ashore in tidal waters
material recovered from a wreck site - regardless of age, size or apparent
importance or value

When you report recovered wreck material to the Receiver, you may be entitled to a
salvage award.
Protection of Military Remains Act 1986
The Protection of Military Remains Act 1986 deals with wrecks of both aircraft and
ships, and all military aircraft is automatically protected under this legislation. This
act is administered by the Ministry of Defence (MOD) - RAF for aircraft, Navy for
vessels.
Under this act, vessels may be designated either as a protected place or as a
controlled site. Divers may visit a protected place on a look but dont touch basis,
however they are prohibited from visiting controlled sites.

Since, there are myriad laws around the world concerning salvage and each situation
will turn on the particular laws and contracts that apply, as well as the court which
has jurisdiction, but there are some general principles which are useful as a basis for
knowledge of key general principles involved in any salvage.
Law of Salvage an Indian Perspective:
India has ratified 1989 Salvage Convention and The Merchant Shipping Act , 1958 is
the Legislation dealing with the Law of Salvage in India, the Key provisions of the
provision are enumerated as under:
Section 402 In The Merchant Shipping Act, 1958
402. Salvage payable for saving life, cargo or wreck.
(1) Where services are rendered
(a)

wholly or in part within the territorial waters of India in saving life from any
vessel, or elsewhere in saving life from a vessel registered in India; or

(b)

in assisting a vessel or saving the cargo or equipment of a vessel which is

wrecked, stranded or in distress at any place on or near the coasts of India; or

(c)

by any person other than the receiver of wreck in saving any wreck, there shall
be payable to the salvor by the owner of the vessel, cargo, equipment or

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wreck, a reasonable sum for salvage having regard to all the circumstances of
the case.
(2)

Salvage in respect of the preservation of life when payable by the owner of the
vessel shall be payable in priority to all other claims for salvage.

(3)

Where salvage services are rendered by or on behalf of the Government or by

a vessel of the Indian Navy 1[or of the Coast Guard] or the commander or crew
of any such vessel, the Government, the commander or the crew, as the case
may be, shall be entitled to salvage and shall have the same rights and
remedies in respect of those services as any other salvor. 1[Explanation
Coast Guard means the Coast Guard constituted under section 3 of the
Coast Guard Act, 1978 (30 of 1978).]

(4)

Any dispute arising concerning the amount due under this section shall be
determined upon application made by either of the disputing parties

(a)

to a 2[Judicial Magistrate of the first class or Metropolitan Magistrate, as the

case may be,] where the amount claimed does not exceed ten thousand
rupees; or

(b)

to the High Court, where the amount claimed exceeds ten thousand rupees.

(5)

Where there is any dispute as to the persons who are entitled to the salvage
amount under this section, 3[the Judicial Magistrate of the first class or the
Metropolitan Magistrate or the High Court, as the case may be,] shall decide
the dispute and if there are more persons than one entitled to such amount,
4[such Magistrate] or the High Court sliall apportion the amount thereof among
such persons.

(6)

The costs of and incidental to all proceedings before 5[a Judicial Magistrate of
the first class or Metropolitan Magistrate] or the High Court under this section
shall be in the discretion of 6[such Magistrate] or the High Court, and 6[such
Magistrate] or the High Court shall have full power to determine by whom or
out of what property and to what extent such costs are to be paid and to give
all necessary directions for the purpose aforesaid.

Section 398 in The Merchant Shipping Act, 1958

398. Immediate sale of wreck by receiver in certain cases.A receiver of wreck may
at any time sell any wreck in his custody if, in his opinion,
(a)

it is under the value of five hundred rupees; or

(b)

it is so much damaged or of so perishable a nature that it cannot with

advantage be kept; or

(c)

it is not of sufficient value for warehousing, and the proceeds of the sale shall,
after defraying the expenses thereof, be held by the receiver for the same

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purposes and subject to the same claims, rights and liabilities as if the wreck
had remained unsold
Section 404 , of The Merchant Shipping Act, 1958
404. Power to make rules respecting wreck and salvage.
(1)

The Central Government may make rules to carry out the purposes of this Part.

(2)

In particular, and without prejudice to the generality of the foregoing power,

such rules may provide for all or any of the following matters, namely:

(a)

the procedure to be followed by a receiver of wreck in respect of the taking

possession of wrecks and their disposal;

(b)

the fees payable to receivers in respect of the work done by them;

(c) the procedure to be followed for dealing with claims relating to ownership of
wrecks;
(d)

the appointment of valuers in salvage cases;

(e)
the principles to be followed in awarding the salvage and the apportioning of
salvage;

(f)

the procedure to be followed for dealing with claims for salvage;

(g)

the detention of property in the custody of a receiver of wreck for the purpose
of enforcing payment of salvage.

General Principles of Salvage:

i.

Normal contractual assistance will not generally constitute a salvage operation.

ii.

It is generally accepted that the salvor has a right to a reward for saving the
vessel because as we have seen above his service in this regard can be
priceless but clearly he cannot merely decide the ship is his own property.

iii.

an amount of reward should be given to the salvor by the distressed vessel, which is
appropriate to the value of the vessel saved, the level of distress it was in and the
level of risk which the salvor(s) had to take to salve the vessel.

Arbitration vs. Litigation

Most salvage is preformed under contract as opposed to pure salvage. Both of the
LOF &
MARSALV contracts provide for arbitration should any dispute arises from the
agreement.
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The LOF requires London arbitration while the MARSALV form requires arbitration in
the United States.
As such, should the yacht owner or its underwriters wish to challenge the amount
charged for the salvage operation, it has little choice but to arbitrate the case as
opposed to litigate it in court
Arbitration does have its advantages as it is more cost effective and resolution of the
claim will be quicker than proceeding in Court.
CONCLUSION
In ordinary parlance 'Salvage' is the term used in maritime law to refer to the process
whereby a third party rescues a vessel from a danger which would have likely
destroyed it by sinking, breaking it up or otherwise.
Only maritime property; i.e., vessel, apparel, cargo, including flotsam, jetsam,
lagan, derelict and wreck of these and freight can be subjects of salvage.
Financially, salvage has always been a risky enterprise due to the principle no cure
no pay. A professional salvor, who has made salvage his daily business, is doubly
exposed to the risks, for as an entrepreneur he may be unsuccessful in his operations
and suffer losses. On account of the scale of investments incurred in fleet
maintenance and other salvage response related logistics, salvaging has in fact
turned out to be a virtually unforgiving business.
The third party is generally entitled to a financial reward for such an action as their
assistance can often lead to a saving of several thousands or millions of dollars for
the vessel's owner (the vessel may be worth a considerable amount, its cargo may
be worth a considerable amount and In shipping law, salvage is the compensation
allowed to persons who voluntarily assist in saving a vessel or its cargo from
impending or actual peril from the sea. Generally salvage is limited to vessels and
their cargoes, or to property lost in the sea or other navigable waters, that have been
subsequently found and rescued.
Except for salvage performed under contract, the rescuer, known as the salvor, must
act voluntarily without being under any legal duty to do so. As long as the owner or
the owner's agent remains on the ship, unwanted offers of salvage may be refused.
Typical acts of salvage include releasing ships that have run aground or on reefs,
raising sunken ships or their cargo, or putting out fires.
The salvor has a maritime lien on the salvaged property, in an amount determined by
a court based on the facts and circumstances of the case. The salvor may retain the
property until the claim is satisfied or until security to meet an award is given. The
owner may elect to pay salvage money to the salvor or to not reclaim the property.
It can be safely stated that the genesis of the law of salvage lies in cardinal legal
principles, such as those concerning prevention of unjust enrichment, providing
restitution, implied contract, quasi contract and quantum meriut.
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Salvage as matter of fact is the compensation allowed to persons by whose

assistance, a ship or her cargo has been saved, in whole or in part, from impending
peril on the sea, or in recovering such property from actual loss in cases of ship
wreck, derelict or recapture.
Success is essential to the claim, as if the property is not saved or if it perish or if in
case of capture, if it is not re-taken, no compensation can be allowed as providing
compensation in the maritime context is consonant with the public policy of
encouraging rescue at sea.
Adv. Aniket Datta
Allahabad High Court

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