MARINE SALVAGE..... TO TOSS OR NOT TO TOSS YOUR LINE..... ANY MARITIME LAWYERS ON BOARD HERE??

[Terri]

A. Concept of salvage under Maritime Law

There are two comprehensive ‘bibles’ exist on the law of salvage of whom Brice and Kenny provide clear concepts on the law of salvage.

Brice defines salvage as a right in law, which arises under English law when a person, acting as a volunteer (that is, without any pre-existing contractual or other legal duty so to act) preserves or contributes so to preserving at sea any vessel, cargo , freight or other recognized subject of salvage from danger. This is know to be the ‘civil salvage’ as opposed to military, which is the rescuing of property from the enemy at a time of war for which a reward is made by the Court of Admiralty setting as a Prize Court.

Kenny defines salvage as a service which confers a benefit by saving or helping to save a recognized subject of salvage when in danger from which it cannot be extricated unaided, if and so far as the rendering of such service is voluntary in the sense of being attributable neither to a pre-existing obligation, nor solely for the interests of the salvor.

The right to be rewarded for salvage at sea under common law is based both on equitable principles and public policy and is not contractual in origin. The law seeks to do what is fair to both of the property owners and the salvors. The Five Steel Barges underlined the concept by saying the jurisdiction which is exercised by the court in salvage cases is of a peculiarly equitable character. The right to salvage may not be necessarily arises out of an actual contract but is a legal liability arising out of the fact that property has been saved. The property owner who had benefit of it should make remuneration to those who have conferred the benefit upon him no matter he had entered into contract on the subject or not.

The foundation of salvage is necessity when the subject of salvage has been in danger and services are rendered, even without request, under the condition that a reasonable prudent owner would have accepted them.

[edit] B. Four elements for the salvage award

There are four elements must exist in order to get the salvage award:

(i) there should be recognized subject matter;

(ii) the subject of the salvage must be in danger at sea;

(iii) the salvor must be volunteers; and

(iv) the service must be successful.

Element (i) recognized subject matter

Traditionally, salvage only recognizes as a ship or craft, cargo on board, freight payable and bunkers carried on board as the subject of property in danger. The concept of property has been expanded by the 1989 Salvage Convention.

The Convention recognizes saving life as an independent subject of salvage but the protection of the environment is the subject of salvage. Oil pollution can cause damage to the environment. If the salvor had prevented oil pollution from happening, he indeed performed a valuable service to the community as mentioned by (1997) 1 Lloyd’s Rep 323 (HL), pp 326–28. Therefore, the salvor will be rewarded with special compensation, i.e. ‘liability salvage’ instead of ‘property salvage’.

Element (ii) real danger

Danger need to be real but not necessary be immediate or absolute. The subject of salvage must be in real danger, which means the property is exposed to damage or destruction.

The burden of proof lies on the salvor which means salvor needs to prove real danger existed when the performance of service commenced. This is up to the court or arbitrator’s decision to determine whether the property was really in danger or not. Naturally every situation has to be treated on its own merits and both subjective and objective tests will be conducted. One of the reasonably effective tests commonly used is: a.) Would a reasonable Master of the vessel in distress have answer ‘yes’ or ‘no’ to the offer of assistance? b.) Was there a real apprehension of danger even thought that danger was not absolute or immediate? c.) Was the danger a fancy or so remote that only to be a possibility?

Regarding future or contingent danger, the court will access the existence of danger. Each case will be judged on its own facts and there is no rigid rule about it. The Troilus (1951) 1 Lloyd’s Rep. 467, HL illustrated the concept of what kind of future danger the court will prepare to take into account in existence of danger. In this case, the cargo owners contended that the ship was in perfect safety when she reached Aden and therefore it constituted to ocean towage but not salvage when towing from Aden to UK. The court held that even though the ship and cargo was in physical safety but this constituted to salvage service on the grounds that the master of a damaged ship must do his best to preserve the ship and cargo and bring them to their destination as cheaply and efficiently by bearing in mind expense and the effect of delay would cost. Salvage award was reasonable as long as the master acts reasonably for the combined benefit of ship and cargo. Lord Porter of the Court of Appeal added that the solution of the question on whether a ship and cargo have reached a place of safety must depend upon the facts of each case. Lying on particular position of physical safety is not sufficient to be deemed to as towage.

In the modern world, the dispute normally is not about whether there is the existence of danger but the degree of danger as it determines the extent of the award.

Element (iii) voluntary service

‘Voluntary’ means that the services are not rendered under a pre-existing contract agreement or under official duty, or purely for the self-preservation interests. Subject to this rule, there is no limitation to the class of persons that can be considered as volunteers. Clarke J in The Sava Star(1995) 2 Lloyd’s Rep. 134 said: There are no rigid categories of salvor. They include any volunteer who renders service of a salvage nature.

Pre-existing agreement relates to agreement entered into before the time of the existence of danger. It includes ship’s master and crew who have pre-existing employment agreement with ship-owners. They have the duty to preserve the ship and cargo and therefore they cannot convert themselves into salvors though possible.

Notwithstanding, exception cases are still exist. Salvage can still be rendered if the pilot or crews of the ship rendered service outside or beyond the scope of their duties under the contract. The Sandefjord (1953) 2 Lloyd’s Rep. 557 held that the pilot brought his personal knowledge of the local conditions and his seafaring skills to bear the problem created by grounding. Moreover, the pilot relieved the ship owner of paying a vast salvage award for tug assistance. As a matter of fact, the pilot was entitled to have a substantial award.

Crewmen cannot claim themselves as individual salvors unless their employment contract has been actually or constructively terminated before the salvage service commenced. The termination of contract could be brought by:

(a) authorized abandonment of the ship under the Master’s authority; or

(b) the Master’s discharge of the crew concerned; or

(c) the capture of the vessel in hostile encounter.

Regarding authorized abandonment, at the time when the Master decided to have abandonment, there must be no hope or intention of returning to the stricken ship. There is no suggestion that a mere temporary abandonment would operate to dissolve the crew’s contract of employment. The Albionic (1941) 70 L1.L.Rep.257 provided that as there was no express order given by the Master to abandon the ship and therefore the crew’s contracts of service were not terminated at the time when they performed the service. The San Demetrio (1941) 69 L1.L.Rep.5 demonstrated a good example for the authorized abandonment of ship under the Master’s authority. If the ship was properly abandoned under the orders from the master, the vessel’s own crews who saved the vessel or cargo on board were entitled to claim salvage.

With reference to Master’s discharge of crew concerned, The Warrior Lush 476 provided that if there is discharge given by the master, the employment contract is validly terminated by discharged. Therefore, the crews who returned to and saved the vessel were truly salvors.

Moreover, hostile capture brings the dissolution of seamen’s employment contract. Therefore, general and expected duties for the seamen are no longer exist. The Two Friends (1799) 1 Ch Rob 271 provided support for this argument.

Element (iv) success

The requirement for the service must be successful can be summed up from the common expression ‘no cure no pay’. However, success needs not to be total. Partial success provided that there is some measure of preservation to the owners is sufficient. The Tojo Maru (1972) AC 242 (HL) examined certain characteristics of salvage contracts and concluded that the first distinctive feature is that the person rendering the salvage service is not entitled to any remuneration unless she saves the property in whole or in part. This is called the ‘success’ in the case of salvage.

If the ship is as grave as before after the service has been rendered, no award will be given. Moreover, the services which rescuing a vessel from one danger but eventually making the situation even worst will grant no salvage award. In The Melanie v The San Onofre (1925) AC 246held that the service which rescue a vessel from one danger but eventually leaving her in a position of even greater danger of another kind, do not contribute to ultimate success and therefore do not amount to salvage.

[edit] C. Salvage under contract

As mentioned previously, salvage may not necessary arise out from actual contract, however, there are ‘standing by’ vessels performed by professional salvors under the salvage agreement under a salvage agreement in LOF.

Contracts are usually entered into on the LOF (1980, 1990, 1995 and now 2000 LOF). Under these contracts, rewards are based on ‘no cure no pay’ principal, which means salvor receive no reward if no property is salved. However, special compensation will be paid as a reward for making effort to prevent or minimize damage to the environment even with no property was saved under the Convention.

As mentioned previously, salvage may not necessary arise out from actual contract, however, there are ‘standing by’ vessels performed by professional salvors under the salvage agreement under a salvage agreement in LOF.

Contracts are usually entered into on the LOF (1980, 1990, 1995 and now 2000 LOF). Under these contracts, rewards are based on ‘no cure no pay’ principal, which means salvor receive no reward if no property is salved. However, special compensation will be paid as a reward for making effort to prevent or minimize damage to the environment even with no property was saved under the Convention.

[edit] D. Special compensation for preventing or minimizing danger to the environment

The earlier principle of salvage law ‘no cures no pay’ changed. The novel concept of the ‘safety net’ by LOF1980 took step to protect the environment from oil pollution. Following the concept of the ‘safety net’, the Salvage Convention 1989 introduced the concept of ‘special compensation’ to encourage salvors to preserve and minimize damage to the environment. However, the ‘safety net’ concept was very different from the special compensation under the present Convention.

Under Article 14(1) the salvor is entitled to special compensation if he has carried out salvage operation on a vessel which by itself or its cargo threatens damage to the environment. It must come along with the failure to earn a reward under Article 13 which is ‘at least equivalent to the special compensation assessable in accordance with the Article’. This special compensation is obtainable from the owner of the vessel (or usually appropriate P&I Club) equivalent to his expenses. The salvor does not necessarily achieve success in preventing and minimizing damage to the environment in obtaining special compensation. If success is achieved, special compensation will be payable in greater amount under Article 14 (2).

If the salvage operation actually prevents or minimizes damage to the environment, the salvor will be able to claim enhanced special compensation with the provision of Article 14(2). The amount of the salvage award may be increased up to a maximum of 30 percent of the expenses incurred by the salvor. There is possibility that the arbitrator may increase the special compensation to 100 percent of the expenses incurred if this is fair. However, negligence on the part of the salvor will deprive his right of the whole or part of any special compensation under Article 14 (5). In order to claim special compensation, it must be shown that the vessel itself or the cargo threatened damage to the environment. This goes further than the safety net provisions in LOF 1980 which limit to tanker laden with oil.

Articles 13 and 14 are both incorporated in the LOFs 1990 and 1995 by reference and LOF 2000 is made subject to the English Law.

[edit] E. Jurisdiction

Under the LOF contracts, the parties submit to the jurisdiction of a Lloyd’s arbitrator to determine the amount of award. But salvage is also a remedy that arises independently of contract.

A salvage claim, outside the LOF arbitration agreement, can be brought in the Admiralty Court and it defined under CPR r 61.1 (2) (f) to mean:

(i) for or in the nature of salvage;

(ii) for special compensation under Article 14;

(iii) for the appointment of salvage; and

(iv) arising out of or connected with any contract for salvage services.

The claim is enforceable in personam and in rem. The ship or the sister ship can be arrested to enforce the claim.

A property salvage attracts a maritime lien against all property salved, however, the liability salvage (special compensation under Article 14) does not. The Convention does not affect the salvor’s maritime lien on property under national or international law under Article 21 (1). As liability salvage under Article 14 is concerned, the salvor’s right to compensation depends on the co-operation of the liability insurer, the P&I Club and his right can be protected by obtaining security for such claims from the liability insurer.

[edit] F. Time limit to claim the salvage

Under Article 23 of the 1989 Convention, which has the force in law in the UK under the Merchant Shipping Act 1995 provides that a two-year limit to commence judicial or arbitral proceedings. The limitation commences on the date on which the salvage operations are terminated. During the limitation period, extension of time can be agreed by 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 proceeding are brought.

However, if the ship is not saved and the loss was due to the salvor’s negligence, the time limit to bring action towards the salvor will be based on the tort of negligence.

[edit] See also

Marine salvage#Ship salvage and the law

[edit] References

1.Brice, G (2003) Maritime Law of Salvage, 4th ed. London, Sweet and Maxwell. 2.Steel, D W & Rose, F D, (2002) Kennedy’s Law of Salvage, 6th ed. London, Sweet and Maxwell. 3.Hall, C (2003) Lloyd’s Practical Shipping Guide Maritime Law, 6th ed. London LLP. 4.Mandaraka-Sheppard, Aleka (2007) Modern Maritime Law and Risk Management, 2nd ed. London and New York, Taylor & Francis Group.

Retrieved from "http://en.wikipedia.org/wiki/Law_of_salvage"

Categories: Law of the sea | Shipping

 

[Snik, aka John W. Perkins]

If the motor conks out, the sea is rough, and it looks like I'm about to die, I will toss my cookies.

[Terri]

geezus, hell of crewmate you'd be...lol Would have to throw you and yer bucket down below and smile at the seatow guys.

[Terri]

On-the-water breakdowns, running aground or other mishaps can ruin a day of boating or fishing fun. But when the towboat arrives on the scene, do you know if the service is a “tow” or a “salvage” job? If you’re ever in doubt, the safest bet is to ask the towboat crew. That’s because there could be a big difference in the cost of each service, and it also determines who pays the bill, says Boat Owners Association of The United States (BoatUS).

While there is sometimes a fine line between the towing and salvage, there are a few clear indicators that point to each. “Salvage requires the existence of ‘peril’ to the distressed vessel or persons aboard, or peril to the rescue boat and its crew, or the marine environment,” said Vice President of BoatUS Towing Services Jerry Cardarelli.

Historically and legally, salvage is any voluntary and successful rescue of a boat, its cargo, and/or passengers from peril at sea. Today that definition includes the successful avoidance of damage to a legally protected marine environment.

Vessels hard aground, on rocks, taking on water or sunk are salvage, as are collisions, fires, breakaways or other types of immediate danger. Salvage also comes into play when specialized equipment such as pumps, air bags, or divers are called for – even if the boat is at the dock.

All TowBoatUS and Vessel Assist companies are committed to informing the owner of a boat – before beginning any work – if the procedure will be declared salvage. If the owner is not on board or the conditions are so perilous and the rescue of the boat requires immediate action, they’ll be notified as soon as possible after saving the boat.

“On the other hand, when there is very little or no peril or damage to the vessel - you have a towing situation,” said Cardarelli. “A typical example is when you run out of gas or have a dead battery, and have subsequently dropped anchor to await for assistance. Waters are calm, you’re no threat to navigation, your crew and boat are fine and there’s no peril to those on the response boat.” Of all of the thousands of requests for assistance made each year by boaters to BoatUS 24-hour Dispatch Centers, 98% are for routine towing services.

When it comes to soft ungroundings, BoatUS members enjoy a special agreement with the TowBoatUS and Vessel Assist on-the-water towing fleets which ensures that if there is little peril and no damage to the BoatUS member’s disabled boat, and only one towboat is needed to remove the softly grounded vessel from a shoal, it’s a simple towing job. Other commercial towing companies may or may not honor this agreement.

The Costs

Nationwide, towing and soft ungrounding costs average about $600 and $800 respectively. These are either paid by an annual towing service plan or out-of-pocket by the boater.

Salvage cases are usually covered by insurance – or out-of-pocket if self-insured – and are much more expensive than a tow. Salvage continues to be the way to award a rescuer who maintains a 24-hour state of readiness to risk life, limb and vessel for others, and often results in a charge based on the length of the vessel saved or a request for a percentage of the boat's post-casualty value. While it’s a reward for extraordinary service, the dollar amount awarded factors in the degree of peril as well as the risk to the salvor and their crew.

“There are significant expenses in operating and maintaining a towing operation,” says Cardarelli, “such as Captain’s and staff salaries, insurance, equipment maintenance and increasing fuel costs, not to mention capital expenses such as towboats and other specialized recovery equipment – and it all has to be ready to go at a moment’s notice,” he added.

Time and circumstances permitting, Cardarelli suggests that if it’s a salvage job boaters should try to call their insurance company so they may attempt to negotiate with the salvor before the operation gets underway. If circumstances don’t allow this, ask the salvor for a fixed price and try to get it in writing.

He also says that boaters should review their boat’s insurance policy to ensure it fully covers salvage. “Some policies have limits, high deductibles, or may not include environmental damage – all of which would have to be paid out of pocket,” said Cardarelli.

BoatUS also suggests having a copy of the BoatUS Open Form Yacht Salvage Contract aboard at all times, which assures that any salvage claim will go to local binding arbitration if negotiations between your insurance company and salvor fails. Designed to be more understandable, relevant to US laws and potentially money saving for all parties, the Open Form Contract is available free of charge at BoatUS.com/salvage or by calling 800-937-1937.

Boat Owners Association of The United States (BoatUS) is the nation's leading advocate for recreational boaters providing its 650,000 members with a wide array of consumer services, including on-the-water towing assistance provided by TowBoatUS and Vessel Assist Pacific. Combined, these two towing fleets offer North American boaters the largest network of U.S., Canadian and Bahamian towing ports with over 280 locations and over 500 towing assistance vessels - twice that of any other service provider.

FOUR SALVAGE TIPS:

Protect yourself by having both a towing service plan for basic towing assistance needs and an insurance policy that fully covers the costs of salvage.
If you do have an incident, ask questions first, not later, to confirm whether the job is towing or salvage
Have your insurance claims department phone number aboard. If it’s salvage, you’ll want to try to contact them to help negotiate a fixed price.
When all else fails, have a copy of BoatUS Open Form Yacht Salvage Contract aboard. You can get one for free at BoatUS.com/salvage

[Terri]

To Salvage or to Tow
By Tim Akpinar

Picture yourself in this situation. You’ve fouled a prop on a crab line line and drifted hard aground. Some
teenagers in an outboard skiff come over to see if they might be able to help. After a few unsuccessful
attempts that nearly burn out their lower unit, they give up. But they weren’t the only ones who noticed
your predicament. Shortly after they leave, a commercial tow vessel appears, hails you, and asks if you
need help.

Your sentiments are mixed. You’re angry and embarrassed with yourself for snagging the crab pot, you’re
relieved at the prospect of rescue, and you’re anxious and concerned about what the affair will end up
costing you.

“I’ll tow you out of there, but you’ll need to sign a salvage contract”, the tow boat captain says.
“Salvage contract….what will that involve?” you wonder. Although you have basic inkling of what salvage
is, you realize this guy has performed more salvages than you have. What you do and say from this point
on can make a big difference in what this mid-summer mishap is going to cost you.

Boat owners need to be aware of the line between towing and salvage. You may pay annual dues for
membership in a towing service. This is for things like a simple tow if you run aground on a soft sandbar,
overheat your engine, or run out of fuel. Salvage coverage, on the other hand, is a component of a good
marine insurance policy for protecting you against a salvage claim from a salvor (rescuer). A towing bill
might mean two hours charged at $160 per hour…but a salvage claim can mean that someone is
asserting a claim for 20 or 25% of the post-casualty value of your vessel. That’s a big difference!

Traditional marine salvage takes place when there is (1.) a marine peril, (2.) voluntary act by the salvor,
and (3.) salvor’s efforts to save persons and property are successful. The concept evolved to provide a
strong incentive for someone to come to the assistance of a stricken vessel. The salvor (rescuer)
asserts a claim against the vessel as a reward for her salvage efforts.

How is the dollar amount of a salvage award determined? The guidelines followed by judges, marine
arbitrators, and towing companies come from maritime case law and the Salvage Convention of 1989. If
you look through salvage decisions, you’re likely to see judges cite The Blackwall, shorthand for an 1869
Supreme Court ruling that still holds sway.

The Blackwall lists these factors for determining a salvage award:

(1.) The labor expended by the salvors in rendering the salvage service
(2.) The promptitude, skill and energy displayed in rendering the service and saving the property
(3.) The value of the property employed by the salvors in rendering the service, and the danger to which
the property was exposed
(4.) The risk incurred by the salvors in securing the property from the impending peril
(5.) The value of the property saved
(6.) The degree of danger from which the property was rescued

The 1989 Convention modernized the traditional elements by adding “the skill and efforts of the salvors in
preventing or minimizing damage to the environment” as well as several other provisions. Keep in mind
that in the day of the Blackwall, we didn’t have oil and chemical tankers in the proportions of today’s
vessels.

Because salvage law applies to both recreational and commercial vessels, the priorities of these factors
can vary with the size and type of vessel.

Let’s return to your situation with the hard grounding. You ask the tow boat captain how he will bill you for
this job. He explains that after he pulls you off the jetty, he’s going to submit a claim to your insurance
carrier for his services.

You ask, “Why can’t you treat this as a tow?”
He responds, “This isn’t a towing job. You’re on rocks. It would be different if you slid up a sandbar.”
As you wonder what to do, the captain follows up, “It’s totally up to you, sir. We’ll do what you want us to
do.” This brings home the point that salvage is a voluntary act. You can’t be forced to accept a salvage
operation. You’re free to ask this captain to leave if you have another commercial towing service in mind.
However, you’ll be responsible for the removal of the vessel if “inaction” is your course of action.

You can call your insurance company and hope to find someone with knowledge and experience to
advise you. But that’s not likely to happen at 2:00 o’clock on Sunday. You could engage in negotiations
yourself. But you don’t have a feel for what constitutes a 15% salvage job, 20% salvage job, 25% salvage
job. You quickly realize the disadvantaged position from which you’d be negotiating.

You could attempt to negotiate for the captain’s services to be performed at a flat rate for the job, or on an
hourly basis. The captain might insist that your situation is beyond one where he would do it for a flat fee
of $2,000…or an hourly rate of $200. However, if you do manage to come to an agreement on such a
basis, you should put it in writing.

Another option is to enter into a “no cure, no pay” open form salvage agreement, putting your faith in the
system to determine an appropriate award based upon the traditional factors outlined earlier. “No cure,
no pay” is a concept of maritime law where the salvor is granted a reward for a successful effort, but
nothing if he or she is unsuccessful.

Using the open form reserves the haggling for another day. And for people who have a better
understanding of the subject matter…your insurance carrier’s representatives or attorneys. They’ll know
how to take things like adverse wind and sea conditions, the introduction of salvage pumps, the
prevention of environmental damage…and translate them into dollar values or percentages.

Even if you feel confident in haggling over a percentage of a boat worth over six figures, you may be faced
with conditions that make it difficult, or even foolish, to do so. Sea conditions may be deteriorating, or an
imminent storm might endanger the safety of your crew. Since we could be dealing with things like
outgoing tides, fading daylight, unyielding objects such as reefs, a window of opportunity for an
economical salvage action might be narrow in duration.

After contemplating the situation for a few minutes, checking the tide tables, thinking about the weight of
your fully fueled boat settling further on these unfriendly rocks…you painfully come to the conclusion that
your peril is an imminent one, and that your hesitation will only heighten the chances for serious damage
to your hull and rudder. Aggravated by both the physical damage to your boat and the mental stress to
your nerves, you give a sigh of relief as you agree to the open form.

After your boat is out of danger, you wonder what will happen if your insurance company and the salvor
are unable to agree upon the salvage fee. The dispute could be submitted to binding marine arbitration, or
could be litigated in court. In either case, both sides will live by the decision, unless there are grounds for
appeal. Arbitration is generally less expensive and more streamlined than litigation in court. In either
case, salvage proceedings will apply federal maritime law, sometimes to the exclusion of legal principals
familiar to us in state civil court.

Keep in mind that what was said and done in your dialogue with the salvor will be admissible as evidence
at an arbitration or trial. The court may be given a CD with the audio transcript of your conversation,
complete with radio crackle and every “umm” and “uhh”. The court may also be presented with a video
record of the salvage job.

Commercial towing services such as Sea-Tow or BoatU.S. are not the only entities that perform towing
and salvage operations. A commercial fishing trawler returning from sea can assert a salvage claim after
assisting a stricken megayacht…and vice versa. Anyone on their own personal vessel can be a salvor
(rescuer) as well as a salvee (stricken). However, there are people excluded from asserting a salvage
claim because of their pre-existing duty to rescue, such as the Coast
Guard or police. Additionally, a vessel with a contractual obligation cannot turn around and assert a
salvage claim since that would also be considered a pre-existing duty.

Applying salvage law sometimes results in situations that don’t always leave everyone happy in the end. A
boat owner might feel outrage at the thought of a salvor making a “windfall” 20% of his $300,000 yacht for
coming alongside and utilizing high capacity pumps and emergency patches for five or six hours. More
than one disgruntled boat owner has likened his salvage experience to piracy. However, courts will point
out that without the efforts of the salvor, the vessel would be sitting on the ocean floor. Also, a salvor
faces the possibility of risking and investing manpower and equipment to ultimately fail…and have no one
to whom to present a bill for the unsuccessful endeavor.

The most important thing to be learned from this discussion of salvage law is to be prepared, and a large
part of being prepared means being insured. Check your policy to confirm you have towing coverage and
salvage coverage. If you don’t have towing coverage, look into enrollment with a commercial towing
service. As for your salvage coverage, make sure it reflects the full current value of your vessel and that
it doesn’t have a ruinous deductible. And in preparation for the worse, where the boat might become a
hazard to navigation and must be removed, make sure you are insured for wreck removal.















Tim Akpinar, a licensed merchant marine officer, is a maritime attorney on Long Island who handles
recreational boating cases throughout the United States. His last boat was a Pearson 26. www.
mycounsel.us

Chesapeake Bay Magazine, Feb. 2007
TO
SALVAGE
TO TOW?

The general operation may appear
similar but the difference under the
law - and what it may cost you - can
be significant

By Tim Akpinar

reprinted with permission from
Chesapeake Bay Magazine

Don’t Try This On Your Pals

Seeing a fellow club member grounded on a shoal after reading this article, you now regard yourself as
a salvor rather than a good neighbor. After you pull them off a sandbar, they show their gratitude with
an invitation to dinner. However, you decline, instead surprising them with a claim for 20% of their
Grand Banks 32. While it wouldn’t be the best way to stay friends with people you regularly see on the
fuel dock, bringing such an action is permissible under salvage law. But if you decided to moonlight as
an opportunity salvor, you would receive smaller awards than a professional salvor. The additional
margin in salvage awards reserved for professionals stands as an incentive to maintain powerful
vessels, expensive equipment and monitor air waves for boaters in distress.

[Terri]

Boat rescue costs $5,000
By:Jason Fell 12/14/2004
Email to a friendPrinter-friendly
ESSEX - When Jerry Wilson got a call from his marina not long ago with some news about his boat, the first thing he did was make a joke.



"I laughed and asked, 'What's the matter? Is the boat lost or something?'"
Little did he know his 34-foot Tartan sloop Hambo really was lost. Wilson had his boat moored at the Essex Chandlery Dock. The manager informed him that sometime during the night the sailboat had broken free from its mooring and drifted off downriver into the darkness. Wilson's heart sank.
But good news would soon follow. Apparently, the vessel had been rescued after butting up against the Old Saybrook railroad drawbridge. It seems the boat drifted slowly downriver backwards, the mooring gear working like a sea anchor and keeping the bow pointing upriver. Miraculously, it had missed rocks and shoals in its three-mile journey to the bridge.
"I couldn't believe it," Wilson said. "As I understand it, this sort of thing is very rare."
Sea Tow, a marine assistance and salvage service, rescued Wilson's sailboat from the bridge and towed it to Oak Leaf Marina in Old Saybrook for repairs and winter storage. The mizzenmast had been bent from striking the bridge, but other than that, it was fine. It was cause for celebration, until the skipper got the bill from Sea Tow: It was $5,750.
"If I was surprised before, that bill completely shocked me," Wilson said. "I didn't understand how they could charge so much."
It seems Sea Tow didn't consider their job as simply towing. This was marine salvage.
Marine salvage is possibly the most misunderstood area of maritime law, says John Senning, a lawyer with the Essex Law Group. Senning is certified with the Maritime Law Association and specializes in maritime law - especially with recreational vessels.
"There are a lot of factors that go into defining a salvage and the salvor's reward," Senning said. "Boaters should really be more aware of this type of thing."
The concept that a vessel's salvor is entitled to a reward commensurate with the service rendered goes back hundreds of years. Since 1983, when the U.S. Coast Guard ceased to respond to non-emergency calls from recreational boaters, professional towing companies began to take on towing and salvage work themselves. Certain organizations, like the Committee for Private Offshore Rescue and Towing, attempt to establish minimum competence and equipment requirements for many of the smaller commercial towing and salvage companies in business today.
In an article in Sea Tow's summer issue of "Lifelines," it's explained that if a boat is in danger, "salvage rewards are permitted and even encouraged, because they give other mariners an incentive to rescue the boat and its cargo, saving the owner and his insurance agency from a total loss."
But the distinction between salvaging a vessel and simply towing it isn't always clear. According to the article, to be considered a salvage the vessel in question must be "in peril." For example, if a boat has run soft aground and can easily be pulled off, it's considered a standard "ungrounding" tow. If the boat is hard aground, sinking, on fire, posing an environmental hazard or abandoned, however, it is subject to salvage.
Senning explained that it's up to the captain performing the salvage service to determine the reward he or she deserves. In Wilson's case, that was Sea Tow captain Tom Kehlenbach.
"This was the purest form of salvage," Kehlenbach said. "The sailboat had smashed up against the railroad bridge and the rigging could have been hit by an oncoming train, causing damage to the boat and/or to the train. With the mast hung up, the current could have pushed the boat over and it could have sunk. I'm just glad there wasn't a whole lot of damage done and that no one was hurt."
Kehlenbach went on to explain that when a vessel is in peril and the captain is not aboard, it isn't necessary for the salvor to contact the owner of the vessel before undertaking the salvage.
Senning agreed. "The situation Mr. Wilson's sailboat was in, that was a big exposure to all sorts of problems. And even though the bill for the service Sea Tow performed seems exorbitant, it really isn't."
Senning explained that there is a list of criteria used in determining a salvor's reward. Some of those conditions include: the value of the vessel in peril, the value of the salvor's vessel, length of time it takes to rescue the vessel, the weather conditions, the sophistication of the equipment on the salvor's vessel, the level of the salvor's expertise and the possibility of damage occurring to either the vessel.
Wilson has Hambo insured for $28,000.
Right now, Wilson's insurance company is reviewing Sea Tow's bill and the damage done to his sailboat. Senning suggests that, to get the best coverage, boat owners should opt to insure their vessels with companies that specialize in marine coverage, not automotive.
Wilson hopes to clear up the situation as soon as possible. Despite his recent troubles, he said he can't wait to get Hambo back on the water next spring.

[Terri]

That sinking feeling... Imagine! It's late, you're just getting ready for bed when the phone rings. You neighbor says, "your boat is sinking!" You better do something. But what? When you get to the dock you find your boat is full of water, but it's tied to the dock and sitting on the bottom, it's not going anywhere. It's a real fine mess, but not in any danger. So you call around to borrow a pump when a friend recommends you try Boat US. Good idea, you have a contract with them. They come out, pump out the boat close a few sea cocks and hand you a bill ... for $6000.


You see, your contract is only for towing ... period. Only towing! Nothing else! Just towing! Anything else they do comes under the general heading of SALVAGE and the operator is free to make any deal they can. In fact anyone that might help can place a lien on your boat for an astronomical amount of money. Then you have to defend yourself. That's the law!

The players, insurance companies and salvage captains, will tell you that this law is supposed to encourage people to help a distressed vessel. That is the worst excuse for legalized piracy imaginable. Every boater knows that they must render assistance to any boat in distress. It's the unwritten law of the sea. Every boater should be willing to do so without a thought of financial gain. Every boater should know that the next time it might be their turn to be in trouble. There isn't any need for this kind of highway robbery on the water. At least not within US territorial waters and certainly not among pleasure boaters.

I should point out that at least in Boat US's case the fox is in charge of the hen house. Here's how that works. Boat US sells you a towing service contract. But it doesn't cover anything except towing. So Boat US sells you insurance to cover salvage situations. So far so good, right? Well finding yourself in a salvage scenario you get a "bill" from the salvage captain (who is under contract and being paid by Boat US) that you in turn submit to Boat US (insurance) to pay the captain even more. The captain gets paid twice, Boat US gets their cut ... twice. And you learn a valuable lesson, "There's a sucker born every minute and you're it!" Don't like that? You can go through arbitration (big smile here). The Boat US salvage contract the captain slipped under your nose but didn't explain binds you to arbitration by .... Boat US.

I'm reminded of the good ole days when coastal residents would lure passing ships onto the rocks with false lights and steal their cargo. what is the difference between the salvage operators' tactics and Somali pirates? Well OK guns, but other than that they're the same, aren't they?
Well, I think we all agree that this is unfair and needs to change. But how? You can't just throw out the law. There are situations where salvage should apply. A few years ago a dock buddy found a new Island Packet abandoned at sea. Now that was salvage. If they hadn't acted the boat would have been totally lost. No wait, the boat was totally lost. The owner had abandoned it. I'm thinking finders keepers, but salvage law also prevents you from just claiming lost property. In that case the owner paid a hefty price, but got to keep his boat. However, that's a long long way from a grounded boat or a leaky sea cock.

I heard of another case this winter. A boat was in danger of hitting the Chesapeake Bay Bridge in high seas and wind. The Coast Guard dispatched a commercial towing company to assist. Personally I'm very disappointed that the Coast Guard didn't come out themselves. I guess they just don't care about us any more. A long long time ago, before congress made one of their worst decisions ever, the Coast Guard would come to your rescue. It was their mandate. It was why we paid taxes to support them. Then congress decided the Coast Guard was strictly law enforcement and we boaters were out of luck. Thanks guys, we really appreciate your thoughtlessness. Not only did we lose Coast Guard services, but that change created a vacuum to be filled by towing services like Sea Tow and Towboat. Filled at a price!

How do we fix this? I doubt that congress will put the Coast Guard back in the game. That would take business away from the insurance companies and towing operators. They would throw lots and lots of money at congress to keep the status quo. Congress would take the money and look the other way .... wouldn't they? And I doubt that Congress will regulate the towing companies to stop this piracy. Think more special interest, more money, Congress still blinded.

What should you do? Write Towboat, Sea Tow, and your local towing operators! Tell them you want a service contract that covers ANY and ALL situations. Tell them you want a price guarantee no matter what the service. Tell them you want a "time and materials" clause in your contract. A clause that sets the maximum rate they will charge for services not covered (prepaid) in your contract. Tell them you won't be their patsy anymore. Write your Congressman too. Tell them to put a stop to this insanity. Tell them to impose a "windfall tax" on anyone claiming salvage on inland and coastal waters. They did it to the oil companies, they can do it to the salvage operators. If $6000 for an hour at the dock isn't windfall I don't understand the meaning of the word. Tell the towing services that you want a fair deal and don't buy a towing contract unless they give you one. Now that you know that your towing contract doesn't really protect you from anything you probably don't want one anyway. You can usually get a tow from a fellow boater. Anything other than towing isn't covered by your contract so what use is it if you are in real trouble.

The thing that bothers me the most about all of this is that salvage operators are taking advantage of boat owners at their most vulnerable moment. When the owner's property or health are in danger these pirates offer service at over inflated prices. Owners are supposed to compose themselves, call their lawyers and negotiate complicated contracts without regard to the urgency of the situation.

[Terri]

Pirates or Samaritans?

Stories about predatory salvage and towing claims are a dockside staple

By Vince Daniello
Published: April, 2006


On November of 1718 the notorious Edward Teach, also known as Blackbeard the Pirate, was hunted down and killed at Oracoke Inlet, N.C. Thus ended the golden age of piracy. Or did it? We've all heard stories of grinning Samaritans whose offer of a tow nets a whopping salvage bill. Or high-speed, brightly colored inflatables pulling alongside, their crew bearing high-capacity pumps and high-tech towing gear instead of cannon—because they intend to make their fortune by saving, not sinking, their victims' vessels.
What's the truth behind salvage? What are your options and rights? And how do you evaluate what the various towing services offer?

Emergency salvage is a broad legal term covering rescue from anything ranging from raging fire or uncontrollable flooding to simply missing the channel and getting stuck in the mud. In the U.S., salvage awards to a rescuer, called a salvor, range from around 5 percent to 35 percent of post-casualty value (the fair market value of the vessel less the cost of repairs). Depending on the efforts required and the likely outcome, had salvors not been there, an award of 8 percent to 12 percent is typical, with the fee negotiated between salvor and insurer.

To answer the question on everyone's lips, yes, salvors can exaggerate circumstances to boost claims, something I've seen first hand. But to be fair, boat owners sometimes cry piracy just to nurse their own bruised egos. Either way, the operating theory is that it's better to pay even a third of a yacht's residual value than to lose it to the sea. In the old days, even to run aground could mean losing everything.

While growing up boating in South Florida and the Bahamas, Will Beck, a Sea Tow operator in West Palm Beach, saw outbreaks of pure opportunistic larceny. "I would see boats hit a reef or wash up on the beach and just sit there," he says. "The locals' idea of salvage was to take their tool kits and strip the boat, right down to wire and plumbing. The boats were always total losses."

The professional networks now available like Sea Tow and TowBoatU.S. have definitely improved the odds in favor of the beleaguered yachtsman. Says Beck: "Now there's typically at least one Sea Tow or TowBoatU.S. boat at every inlet, with trained people and the right equipment, poised for fast response."

But, you may ask, aren't salvors charging to do what the Coast Guard is there to do? The answer is a clear no. "Our main goal is preservation of life," says Petty Officer Dana Warr, spokesman for the Coast Guard's Seventh District. "We often put ourselves in harm's way, but not when it comes to saving a vessel." Coast Guard boats are equipped with pumps and patching gear, and repairs may be the best option for everyone's safety. But, Warr says, "If a boat is deemed in danger, we'll get everyone off and call in commercial salvors."

Of course, there's nothing to stop you from accepting help from a fellow yachtsman before you call in the pros. But even seemingly simple towing jobs can be dangerous to the uninitiated. Nylon lines may stretch to near double their length, becoming deadly slingshots if one breaks or a cleat pulls out. Handling a tow is difficult, particularly at inlets, which are usually congested and often rough even when it's fairly calm offshore.

And then there are the other dangers. Rescue on the high seas is often made by merchant ships, which sometimes leads to questions of salvage. In his recent book, A Mile Down, Capt. David Vann tells of being saved by a German freighter, after his boat's rudder broke during a nasty storm. Claiming he didn't have the equipment to tow him, the freighter captain took Vann and his crew aboard, but then miraculously rigged a tow and claimed salvage.

"You're a criminal," Vann said to the first mate. "The captain and I are smart," the mate replied, "and you are not. Poor little stupid American out on the high seas. It's a big world, isn't it?"

A Mile Down is a cautionary tale, replete with three salvage incidents that Vann experienced, none of which reflect well on the foreign "Samaritan" salvor community. Then again, Vann himself comes across as impulsive and naive, something hinted at in his book's subtitle: The True Story of a Disastrous Career at Sea.

In the U.S. at least, most of the salvors we usually encounter are professional services such as Sea Tow and TowBoatU.S., which represent the vast majority of towing operators. Much like roadside assistance plans, both companies offer contracts providing free services for offshore breakdowns, dead batteries or even low fuel. (Neither plan includes emergency salvage.)

To be a professional salvor costs money. In Beck's case, he has spent over $1 million in equipment, $800,000 in annual payroll, and $150,000 for fuel. He carries gas-powered pumps, specialized airbags to float grounded vessels higher, even dive gear and underwater patching supplies just for salvage cases. Towing companies also carry oil-spill response gear to protect the environment, as they are often the first on the scene.

Like any entrepreneur, a tow operator expects a return on his investment. When tide and current conspire to strand boaters today, the payout for emergency salvage can lead to allegations that towing companies charge ridiculous fees just to pull a boat from a sandbar, even with a pre-paid towing plan. Recognizing this, BoatU.S. (a consumer advocate and lobbying group long before it got involved in towing and marine insurance), coined the term "soft ungrounding" where extraction requires just one towing vessel and no special equipment like lift bags, with no immediate peril such as breaking surf or fear of significant damage to the vessel, and no danger of fuel spilling. "Any grounding is salvage under maritime law," says Jerry Cardarelli, vice president of BoatU.S. Towing Services. "But our contract with TowBoatU.S. operators requires us to charge a greatly reduced flat rate"—around $10 to $15 per foot plus travel time, often covered by towing plans.

Insurance companies are possibly the biggest variable in salvage cases. Some will pay up to the full hull value for salvage plus up to the hull value again for repairs. Other underwriters cap combined salvage and repairs at the policy's stipulated hull value, or even limit salvage costs to a percentage of hull value. "Removal of wreck" may be considered salvage or handled under liability coverage, the latter being preferable since accessing a wreck with appropriate equipment can be costly.

Obviously it is important to understand these issues before needing salvage, just as it is equally important to contact your underwriter, agent or admiralty attorney before calling a salvor. But given the fact that we're talking about the ocean, this isn't always possible. "If you can't get an agent or underwriter on the phone or the situation is too dire, be clear with the salvor what type of service is being offered," suggests Carroll Robertson, who handles claims for BoatU.S. insurance. Ask if it is "towing" or, if "salvage," ask why and whether the salvor can quote a fee beforehand.

Despite what some disreputable salvors may claim, "The boat owner does not have to sign a contract," says Robertson. "The salvor is always protected under the law." That's information you want to file away, as pitfalls in salvage contracts can include boat owners paying legal fees for both parties regardless of the outcome of proceedings, or language that specifies arbitration that will favor the salvor. The BoatU.S. salvage contract, which can be downloaded from the Web site and used with any salvor (www.boatus.com), calls for three arbitrators: one selected by the salvor, one by the vessel's owner, and a chairman of the panel chosen by those two. Sea Tow may use a similar plan, but individual operators are given some latitude—so read the fine print.

Robertson also cautions never to sign a Lloyds Open Form, which requires litigation in Great Britain at significant expense. Other dirty tricks she's run across include salvors claiming that the Coast Guard or Marine Patrol will fine boat owners if they are not ungrounded right away, or "snatch and grabs" where a grounded boat is pulled off a sandbar without the owner's consent, perhaps while he hiked up to the nearest phone.

Before choosing a towing plan, be aware of differences. The most significant boils down to when the towing company gets paid for service. Sea Tow operators retain about 70 percent of their towing contract fees, but service their local members free of charge. TowBoatU.S. contract fees go directly to BoatU.S. and individual contractors are paid a discounted rate for each incident. Some charge that Sea Tow dispatchers lead boat owners through lengthy troubleshooting to avoid sending a tow boat, or that they will exaggerate a situation until it's not covered by the plan. Others claim TowBoatU.S. captains, less concerned with customer loyalty since they aren't paid the annual fee, can be too quick to tow, when the situation may be as simple as an electrical glitch that could have been fixed in minutes. Ask around your dock before you pick a local provider.

Nearly everyone I interviewed believes that just as there are dishonest auto repairmen and unscrupulous attorneys who spoil the reputation of a majority of honest practitioners, there are a few bad apples in towing. However, the majority of the towing services are straightforward and absolutely necessary. "I really hate this piracy thing," says SeaTow's Beck. "My reputation is very important to me. I'm very cautious how I handle any salvage, big or small. But some situations are salvage, requiring special gear and training, and I deserve to be compensated. I'm building my business based on repeat customers. I know I'll be more successful in the long run being honest."