Financial aspects of salvage
The salvor's job is to salve ships in distress and/or their cargo, fuel and stores. A salvor is primarily concerned to save property. The following is largely based on IMO's report Guide to international assistance on marine pollution emergencies.
Payment for salvaging ships in distress is related to the value of the ship, cargo and freight salvaged. Salvage work would therefore be un-remunerative if the wreck contained nothing of value, and for this reason it is often referred to as being performed on a "No Cure - No Pay" basis. Working on this basis is much more risky from a financial viewpoint than agreeing to work at a daily rate, since there is no guarantee that the salvor will be entitled to anything, or that what he will receive will exceed his expenses. Salvage awards can often amount to as much as 50% of the value of the property salvaged, but they cannot exceed the total value of the salvaged property. Salvage services rendered on a "No Cure - No Pay" basis, do give rise to important considerations as regards handling an accidental spill. In the event of an accidental spill involving pollutants other than persistent oil, there are no special provisions in Lloyd's Standard Form by which the salvor is obliged to prevent or mitigate pollution. The local law of the coastal State may impose some kind of legal obligation on the salvor not to act negligently, or to act as a good steward would. In practice, most salvors make considerable efforts to avoid pollution, either under orders from the coastal State's competent authorities, or in the course of salvaging property.
In 1980 a set of provisions was added to "Lloyd's Standard Form" to deal with certain problems which could arise in connection with oil pollution risks. The first is that the salvor must use his best endeavours to prevent oil from escaping from the vessel. It is not clear how far this obligation extends. If the salvor fulfils his obligation he will receive a bigger reward. The second set of provisions added in 1980 relate only to the salvage of a tanker laden or partly laden with a cargo of oil. Before 1980, if no property was salvaged, it did not matter how hard the salvor worked, he got nothing. Therefore, if the ship would be dangerous to attempt to salvage and there was little prospect of success, the salvor might not be too keen to try and save it or its cargo. Under the new provision the salvor, using Lloyd's Standard Form, is awarded reasonable expenses, plus an increment not exceeding 15% of such expenses, but only to the extent that such expenses and increment are greater than any salvage award made under the Lloyd's Standard Form. This means that the salvor will now be inclined to attempt to salvage a laden oil tanker, which offers little prospect of success. However this does not apply if the ship is other than a laden tanker, and so the salvage of a different type of ship causing an accidental spill may still not be attempted by a salvor. The form does not apply to unladen oil tankers, to product tankers or chemical tankers and to ships carrying substances in packaged form.
The International Convention on Salvage 1989 enters into force: 14 July 1996, the law of States Parties will be changed. One of the major changes is that the Convention reflects the interests of environmental protection. The salvor's obligation under the 1980 Lloyd's Standard Form to protect the environment is limited to using his best endeavours to prevent the escape only of oil, and there is a wide range of types of hazardous substances that are not covered. The new Convention (1989) will apply to all types of salvage operation except those relating to fixed or floating platforms and mobile offshore drilling units. Therefore the 1989 Convention and its environmental provisions are not restricted to oil tankers, laden or unladen; it applies to almost all types of ship and hazardous cargoes whether carried in bulk or in packages. The salvor is paid for his environmental efforts. The special compensation varies according to the circumstances. If there was a threat of damage to the environment (not just to flora and fauna, but also to human health, or a danger of fire, explosion, etc.) but the salvor did not by his salvage operations prevent or minimize such damage, then the special compensation figure is equal to his reasonably incurred out-of-pocket expenses plus a fair rate for equipment and personnel reasonably used in the salvage operations. If on the other hand his salvage operations did prevent or minimize damage to the environment, then the special compensation figure may be increased by up to 30% of the salvage expenses and even twice the salvage expenses in cases of exceptional service.
The Salvage Convention (1989) enters into force one year after 15 States have consented to be bound by it. Adoption: 28 April 1989; entry into force: 14 July 1996.
