SALVAGE PRIMER

Commercial vessels in Alaska commonly operate far from safe ports and support facilities.  Pleasure boats operating in Alaskan waters are often exposed to considerably greater risk than are recreational boats in the Lower 48.  And given extreme weather conditions, even lying in port does not necessarily ensure safety. Due especially to these strenuous conditions, Alaskan vessels frequently require assistance.  Fortunately, the admiralty and maritime law of salvage is designed to strongly motivate those in a position to render assistance, with the promise of generous salvage awards.  Insurance policies maintained by vessel owners generally cover liability for these awards.    

An aim of salvage law is to encourage the immediate offer of assistance when the danger first begins to emerge, at a point when the assistance needed to close off a risk may be very mundane.   Accordingly, heroic, dramatic action is not a prerequisite for a salvage award. Merely standing by under circumstances in which assistance might be needed, but ultimately is not, may support a salvage award, and lending equipment that relieves risk of loss surely would.  A salvage award may be made to a ship and crew who bring news of a vessel in distress and its location to the eventual salvor. 

A successful salvage claim usually requires four elements: a marine peril must have existed; the salvor’s assistance must have been necessary to avoiding the peril to the ship or other property rescued; the salvor’s assistance must have been voluntary; and the salvor’s actions must have been successful in saving, or helping to save, at least part of the property at risk.

A “marine peril” is presented when a vessel is actually in distress, or when a threat of harm is reasonably possible.  The threat need not be immediate - even a relatively remote risk of harm will suffice.  It is generally sufficient if, at the time the assistance was rendered, the ship assisted had encountered any misfortune that might possibly have exposed it to destruction or substantial harm had the service not been rendered.

A stranded vessel is exposed to marine peril, even under benign sea and weather conditions.  A disabled vessel adrift is in marine peril, even though it is not taking on water and is at no risk of immediate harm.  Putting a line on such a vessel and towing it into a safe port would surely support a salvage award. A vessel whose moorings are failing in bad weather is also imperiled, as is a vessel that has begun to take on water at its moorings. 

The belief that a line must be put on a vessel before a salvage award is warranted is not correct.  But the reverse- that a line was placed on a vessel- will usually be strong circumstantial evidence that a salvage award is warranted.

Salvage is a reward for perilous services and an inducement to seamen and others to assist in saving life and property.  There is no simple formula for the calculation of a salvage award.  The particular circumstances of each case are to be weighed to calculate an appropriate award.  At least 7 factors should usually be addressed by an attorney handling a marine salvage case:

            1.  The labor expended by the salvors.
           
            2.  The promptitude, skill and energy with which the service was rendered.

            3.  The value of the property employed by the salvors.

            4.  The degree of danger to which the salvors’ property was exposed.

            5.  The degree of risk to which the salvors exposed themselves.

            6.  The value of the property saved.

            7.  The degree of danger from which the salved property was rescued.

Enhancement will usually be allowed if the salvors were at least partly in the business of salvage, to compensate them for capital and other costs of maintaining their responsive capability. 

As a rough rule of thumb, “low order salvage,” which presented little challenge to the salvors, tends to produce total salvage awards in the range of 7.5% to 15% of the post-salvage value of property saved.  “High order salvage” tends to produce awards in the 25% to 35% range.  As the value of vessel and cargo saved becomes very large, these ratios become less accurate.  Careful and thorough development of key facts can greatly affect the ratio reached in a particular case.

For example, an Alaskan purse seiner discovered a prematurely abandoned gill netter intact and afloat, held against a rocky seacoast by the press of wind. The gill netter was towed off the coast and into a port several hours away, earning a total award of 10% to 12% of the post-salvage value of vessel and gear.

Toward the other property value extreme of low order salvage, a freighter, which with its cargo was valued at several million dollars, went softly aground on a bar of mud and glacial till while approaching an Alaskan port on the flood.  The solution was simply to await high tide and back the ship off the bar.  A tug stationed a few miles away provided pressure on the ship’s quarter, as a guard against wheel-walk taking the vessel off a straight line astern.  While the tug’s award was not at the percentage of the seiner’s, its recovery was many times its standard daily rate.   

Salvage does not entitle the salvor to ownership of the vessel or property salved, unless the former owner has abandoned ownership.  Abandonment in this context usually requires more than physical abandonment- a clear expression of intent to relinquish title is usually required.     

A valid claim for “life salvage” probably still cannot be asserted.  But if, during a casualty response, one vessel saves lives while others save a vessel and/or other property, the life salvor may share in the property salvage award.

A claim for salvage compensation is secured by a maritime lien on the vessel or other property salved.  A salvor may normally retain possession of the salved property for a reasonable time, while efforts to agree on compensation are pursued.  But eventually the salvor must either pursue a lien claim or release the property to its owner. A salvage lien may only be foreclosed upon by suit in the federal district court in whose geographic jurisdiction the vessel may be found.

Salvage claims are generally governed by a 2 year statute of limitations, though an exception may apply in some cases.

The crew of a salving vessel may claim salvage in their own right, apart from any award due the owner of their vessel.  Any contractual agreement between the owners of the salving and salvaged vessels, struck before or after the salvage work, that purports to limit or exclude crew claims will probably be ineffective.  Indeed, a vessel’s crew may claim salvage for assisting another vessel owned by their employer, unless perhaps their employment contract expressly provides for payment for such work.

The portion of the total salvage award allocated to the crew may be as much as about 80% when the work of the crew was of greatest importance to as little as 10%, where the crew contributed little and the presence of the salving vessel was of most importance.

While crew members may pursue claims personally, the owner of a salving vessel may pursue a claim in trust for the crew.  But a crew member whose claim is not included in the vessel owner’s claim will likely be barred from bringing his own claim after 2 years.

While a contract to provide assistance to a vessel will bar a salvage claim, such a contract must be to pay a given sum for services to be rendered, whether successful or unsuccessful.  Accordingly, the fact that the salvor responded to a shipowner’s request for assistance will not alone bar a salvage claim. 

A vessel owner that wishes to cap its exposure to a charge for salvage should take care to negotiate in advance a written contract containing all necessary details, including but not limited to coverage of crew compensation. But an “AMOCO CADIZ” must be avoided- bargaining intensely, while the vessel drifts ashore and breaks its back.  Before it is too late, the owner may have to accept that a contract cannot be struck with a hard bargaining would–be salvor, and that the salvage award may have to be left to an admiralty judge.      

Caveat: Salvage law is largely judge-made law, and judges may differ on some of the foregoing points.  Accordingly, these generalities should not be relied upon in deciding what to do in any particular jurisdiction.  Qualified local advice should be sought from a lawyer knowledgeable in the field.