Crown

Basically, the owners of all property who have benefited from a salvage award must contribute to it. Exceptions to this rule in respect of property are: The personal effects of the Master and crew and, postal packets (Crown) property. Also excepted from contributing are lenders on a bottomry bond. In accordance with Admiralty requirements, there must be a fund formed from the salved property out of which salvage is paid or payable. In The ‘MV Vatan’ (1990) an ultra large crude oil tanker was struck by a missile in July 1985. The Master agreed to engage salvors on LOF terms noting however, that ‘cargo owners are not authorising us to give instructions regarding cargo salvage’. The arbitrator found that the value of the salved property was US$ 77.29 million (this included nearly 400,000 tons of crude oil worth US$ 73.35 million) and that a fair reward for the salvage was US$ 4.75 million. Applying the long established pro rata rule, the shipowners would be liable to pay only that proportion of the total salvage which the value of their property bore to the total value of all the property salved. This resulted in a figure of some US$ 221,350. The arbitrator awarded, however, US$ 850,000 on the basis that, in the exceptional circumstances of the case, the salvors were unlikely to make any substantial recovery from the owners of the oil. The appeal arbitrator held that the salvors’ reward should have been US$ 7.7 million and that applying the Pro Rata Rule the shipowners were liable to pay 4.66%, amounting to about US$ 350,000. The judge upheld the appeal arbitrator’s award and said there was no basis for departing from the Pro Rata Rule.