columns
A Brief History of Marine Salvage Contracting
Jim Shirley is a Master Mariner, former salvage master and maritime lawyer specializing in maritime casualty and salvage matters, now serving as legal counsel to the ASA and as Principal Consultant in JTS Marine LLC. He can be reached at jtsmarine@ verizon.net or (609) 883-3522.
Amongst the maritime activities engaged in by mankind, marine salvage is unique operationally, commercially and legally. Operational uniqueness includes the requirement that those engaged in salvage services must often steam into weather conditions from which most mariners are seeking shelter. Also, the master of a salvage vessel must often take his ship into the shallows or other dangerous areas that he has been trained as a mariner to diligently avoid. Commercially, no ship-owner or shipmaster ever wants to be in the position of requiring salvage services, but if circumstances make them necessary, the owner or master wants them promptly from those best suited to perform. Promptness is also important to the salvor. In the words of one renowned salvage master, "when a vessel is in peril, the salvor has only a given amount of time to get to the scene and successfully complete the salvage, and it is not given to him to know how much time that is." That urgency has led to the unique features of marine salvage contracts, the manner of contracting for salvage services, and the terms of the contracts used. As with other commercial adventures, the contract terms may be limited in scope, or they may be as expansive as necessary to address all the concerns of the parties or special considerations of the particular situation. As with other maritime contracts, they may be agreed orally. Most interesting and unique, if salvage services are voluntarily performed with no terms having been agreed, the law already provides the terms for determining the compensation to be paid to the salvor for his services, and the manner of securing his compensation with a maritime lien against the property saved. There is no similar law to provide for compensating those who rescue property in peril on land.
24 MN
There may, however, be other commercial pursuits in which the law operates to provide compensation for services, but the compensation in those situations will be equitable, based upon the principles of quantum meruit, i.e. reasonable value for the services rendered. In salvage, however, the law provides that the compensation is to be an especially generous reward for success. That is in part because the salvor gets paid only if he does succeed, i.e. his services are performed on "no cure, no pay" terms, so he will be encouraged to press on with even the most difficult cases. The generous award is also meant to encourage the good conduct of saving property in peril for the continued benefit of its owners, and to discourage bad conduct by persons who might otherwise be tempted to take undue advantage of distressed mariners by plundering their ships and cargoes or engaging in other bad conduct. These terms for compensating salvors have evolved over a period of nearly 3,000 years, from a time that preceded the biblical story of Jonah and the whale. In 900 B.C., Rhodian law required that persons rescuing property from the sea be paid one-fifth of what they saved. Over the centuries, other codes have been devised in different jurisdictions, but all applied similar principles of generosity. In common law jurisdictions, such as England and the U.S., the courts also weighed in, still applying similar principles. Those principles have been reduced to international convention twice, in 1912 and in 1989. It was appropriate in the 19th century when salvage contracting began being used in some cases as a substitute for common law salvage, amongst other things, the contracts often incorporated the same or similar principles for determining the salvor's compensation for his services as would have been provided by law, and other legal precepts such as the marOctober 2009