Reprinted from the JUNE 2010 Edition of Maritime Reporter & Engineering News

By Thomas H. Belknap, Jr., Blank Rome LLP, &Peter E. Mills, Blank Rome Solicitors and

NotariesYou are sailing along in your ship, minding

your owner's business, when suddenly youcome upon a vessel in distress. Under theSOLAS Agreement, you are obliged to assistin saving the lives of those onboard the vessel,but in so doing, you also manage to save thevessel itself from imminent total loss.

This article examines what you should donext to receive your just desserts—and whereyou should do it.

The British ExperienceUnder the English common law, as well as in

many other British Commonwealth countries,the right to claim for maritime salvage formspart of the Admiralty jurisdiction of the HighCourt. A lengthy and exhausting explanationof the origins and scope of this jurisdictionmay be found in the High Court and Court ofAppeal decisions leading up to the House ofLords decision in the "GORING" [1988] 1Lloyd’s Law Reports 397.

In essence, a person who renders services toa vessel in danger, at sea or within tidal waters,is entitled to be remunerated for having ren-dered such assistance. The remedy is exercisedby way of an admiralty action in rem againstthe owners of the vessel, her bunkers, stores,cargo and freight at risk, if any. The in remwrit of summons that commences the action isserved upon the vessel to which the serviceswere rendered, or upon another vessel in thesame ownership, while the vessel is physicallywithin the jurisdiction where the writ wasissued.

If that jurisdiction is one of those which haveincorporated the 1989 InternationalConvention on Salvage into its laws, then oncethe entitlement to a salvage award is estab-lished, the court will proceed to assess theamount of its salvage award using the criteriaset out in Article 13 of that convention, name-

ly:(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 envi-ronment;

(c) the measure of success obtained bythe 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 loss-

es 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 ren-

dered; (i) the availability and use of vessels or

other equipment intended for salvage opera-tions;

(j) the state of readiness and efficiencyof the salvor's equipment and the value there-of.

Alternatively, the parties to the salvage claimmay opt to have salvage remunerationassessed by way of a private arbitration. Byfar, the most popular form of contractual sal-vage assessment is that offered under Lloyd’sOpen Form of Salvage Agreement "No Cure -No Pay" (LOF).

This form of salvage contract may be enteredinto by the parties at any time, before, during,or after the services have been performed and,as its name implies, requires success for pay-ment to be due to the salvor. One exception tothis principle that “success” is required iswhere the Special Compensation Protection &Indemnity Clause (SCOPIC) is incorporatedinto the LOF2000 form. If SCOPIC isinvoked, and should the salvor fail to save thevessel or her cargo, he may still be compensat-ed for his out-of-pocket expenses reasonablyincurred in his attempt, plus an uplift of up to100% thereon. The rationale behind this is toencourage salvors to continue their efforts toprevent or minimise marine pollution in cir-

cumstances where their award under Article13 of the Convention (which is also applicableto LOF) would not warrant continuing withthe services.

The Position in the United StatesIn the main, U.S. law closely tracks the

English law of salvage. Three elements mustbe proven to be entitled to a salvage award: (1)service is voluntarily rendered, (2) to assist avessel or other maritime property, such ascargo, which is in marine peril, (3) which is atleast partially successful. The law of salvageapplies in respect of “navigable” waters that

Money for Nothing

Maritime Salvage for Fun & Profit

Thomas H. Belknap, Jr.TBelknap@BlankRome.com

Peter E. MillsPMills@BlankRome.com

MR JUNE Blank Rome:Blank Rome Reprint MR March09.qxd 6/21/2010 9:34 AM Page 1

are within the Federal court’s admiralty juris-diction. One might think it perverse that thereis no entitlement for an award for the “mere”salvage of human life; however, one who actsto save life, while others simultaneously act tosave the damaged vessel, is entitled to share inthe salvage award in respect of the vessel.

As one might expect, each of the above “ele-ments” of salvage has been subject to exten-sive judicial gloss. Thus, for instance, firefighting services rendered in a harbor by atown fire department are not “voluntary”because the fire crew was under a pre-existingduty to the town to aid in fighting fires. And avessel that is “softly aground” in mud or silt,with no imminent danger from weather andthe ability to re-float herself on the next tide, isnot necessarily in marine peril. And successcan mean something less than saving the ves-sel from total loss where, for instance, someportion of her cargo is rescued before shesinks.

The factors to be considered in determiningwhat level of salvage award should be grantedare essentially in keeping with the English sys-tem, following the basic principle that sal-vages of valuable property in serious peril andat extreme risk to the salvors should be morehandsomely rewarded that simple and routineacts of assistance. Importantly, the award isnot intended to be a simple quantum meruitreimbursement—i.e., to cover the salvor’sexpenses. Rather, it is intended to be a rewardwhich is large enough to affirmatively encour-age those at sea to attempt to rescue propertyin marine peril.

Notably, U.S. courts and arbitrators, recog-nizing the valuable aid that commercialsalvors render to the shipping community atlarge, and acknowledging the large overheadexpenditures those companies need to make inorder to have assets at the ready at all times,frequently award commercial salvors a com-mercial “uplift” for a successful salvage.

A claim for salvage can be enforced eitheragainst the salved vessel in rem by commenc-ing a maritime arrest action, or against theowner by commencing a lawsuit against himpersonally, pursuant to the admiralty jurisdic-tion of the Federal courts. Federal courts haveexclusive jurisdiction over salvage claims, andstate courts are not competent to make mar-itime salvage awards.

As is the case under English law, the parties

can, and often do, agree to arbitrate salvageclaims. This is often preferred on both sides ofthe table because of the significant potentialcost savings and the ability to have the disputedecided by arbitrators who are experienced inthis somewhat esoteric field. The Society ofMaritime Arbitrators, Inc. in New York haspublished a form salvage agreement (theMARSALV Form) and salvage arbitrationrules that are finding more widespread userecently—particularly in the area of pleasure-boat salvage.

ConclusionFinally, the best thing a person who has ren-

dered assistance at sea can do next is to contacta lawyer. There are many pitfalls for the inex-perienced, and a lawyer with good salvageexperience can help his client negotiate a paththrough them and get the salvor paid for thevaluable services he has rendered.

Reprinted from the JUNE 2010 Edition of Maritime Reporter & Engineering News

MR JUNE Blank Rome:Blank Rome Reprint MR March09.qxd 6/21/2010 9:34 AM Page 2