Salvage Expenses

Salvage expenses are frequently dealt with in a similar manner.  Where a ship receives salvage assistance either from a professional salvor or another commercial vessel, the salvage costs are again shared between both ship and cargo interests.  To avoid the risk of a rapidly deteriorating situation when a ship is clearly in distress, Masters are empowered and should be encouraged to engage salvage services without delay under an Open Form contract.  The Lloyds “no cure – no pay” form is frequently used for this purpose.  The basis of this form is that the salvor gets nothing if unsuccessful in the salvage attempts, but is rewarded by a payment of a percentage of the total value of the property saved if successful.  This percentage depends on the level of danger faced and the level of skill needed to salvage the property.  This allows the practical work of salvage to get under way immediately, the salvage contract providing for the salvage award to be fixed by an arbitration panel at a later date when all relevant facts are known.  In signing an Open Form, the Master is acting on behalf of both ship and cargo as “agent of necessity” and his position is fully protected under international law.  Once more it is customary practice for an average adjuster to be involved in salvage cases, preparing the necessary adjustment when all costs are finalised. It is worth noting that the current Lloyds Open Form salvage agreement provides a mechanism whereby salvors may be granted an enhancement on the salvage award to cover the reasonable costs of preventing or alleviating pollution damage where their activities involve laden tankers.  This particular provision was introduced in 1980 and is a departure from the “no cure no pay” principle.  It was brought about following pressure from the International Salvage Union after a number of cases where tankers were so badly damaged that salvors were obliged to tow them out to deep water and sink them.