Assessment of a salvage award

Part 10

In this final instalment, I look at the encouragement factors under Article 13.1 of the Salvage Convention in terms of investment in salvage.

13.1 (i) The availability and use of vessels or other equipment intended for salvage operations

13.1 (j) The state of readiness of efficiency of the salvor’s equipment or value thereof

These factors taken together are of particular relevance as they are the hallmark of a professional salvor. A professional salvor will have invested in salvage craft, equipment and personnel, often over a long period of time, thereby ensuring a capability to respond promptly to a request for assistance. This is perhaps best illustrated by a willingness to maintain tugs on salvage station, which is an expensive policy as it involves a considerable amount of idle time. However, it is now the case that no privately funded salvage company maintains salvage tugs on salvage station. It is simply too expensive when the tugs may remain idle for years sometimes, without work of a salvage nature.

Most, if not all, the well-known salvage companies will at least maintain salvage stores at appropriate locations ready to be deployed at a moment’s notice, along with personnel.  

A number of States, such as France and Spain, will sponsor station keeping tugs ready to be deployed. The decision some time ago by the UK Government to dispense with the ETVs that were stationed around the UK coast for cost reasons is an indication of just how expensive it is to maintain salvage tugs on station waiting for a job to come their way.

In the absence of station keeping tugs, the salvors will often fly their team and equipment to the scene and endeavour to use tugs on such commercial terms as may be available. While the lack of station keeping tugs will impact negatively on the level of the salvage remuneration (as the first part of Article 13.1 (I) will not apply), the investment in equipment and personnel will still count, as will the willingness to finance sub-contracted craft, equipment and personnel.

Where investment is shown, it will enhance the award and the more in-house craft, personnel and equipment used by the salvor, the greater that enhancement will be. I was once asked by a salvor whether the downturn and the lack of work over a considerable period of time for a station keeping tug (as was the case) would provide extra encouragement or enhancement under an LOF award. The simple answer to this is no. There can be no double counting. An LOF Arbitrator is obliged to take into account in the award the fact that the professional salvor had invested in salvage tugs and that the salvage tugs were station keeping and incurring idle time. Obviously the more idle time incurred, the greater the encouragement factor but it cannot be described as an “extra” factor.

Those days are over and, as the current Appeal Arbitrator has found in recent LOF appeal awards, the station keeping tugs as a business model is no longer viable. The recent High Court case I referred to in the first part of this series (SD Rebel BV & Masters and crew of tug “VB REBEL” -v- Elise Tankschiffahrt KG [2025] EWHC 376 (Admlty)]) referred to the current Appeal Arbitrator on the position now on investment and encouragement to salvors:-

“34. In the context of encouragement, Mr Buckingham referred me to some remarks of Mr Jeremy Russell KC sitting as an appeal arbitrator in The Azurite [2022] LOFA 10.08.2022. (Mr Russell was reciting, with approval, a submission made by Mr Thomas Macey-Dare KC, who was acting for the contractors.) At paragraphs 57(c)(ii) & (iii) of the Award Mr Russell said this:

“ … in recent years the salvage world has seen unprecedented changes. In particular, Ardent has left the salvage business entirely and both Kotug Smit and URS have been taken over by Boluda. It is tougher to make salvage pay and the
pool of professional salvors is shrinking. In the meantime, ships are getting larger.

Huge ships present huge problems to salvors and to the world more generally. The above matters are relevant to the level of encouragement which is required to provide a professional salvor with sufficient incentive to stay in the business.”

35. I agree with those remarks and turn to the specific criteria.”

This begs the question whether the lack of LOF cases and the financial pressure on salvors to maintain investment (even though no longer in station keeping tugs) will, or should, in fact increase the level of awards when they do arise. If the source of remuneration is diminishing, is it not the case that those fewer LOF cases will, or should, pay more to compensate?

I leave you with that thought but would invite you to read the judgment in the VB REBEL (read our article on this judgment here) as it provides a rare summary of the criteria under Article 13 of the Salvage Convention for assessing salvage awards and one that is in the public domain (although LOF salvage awards are becoming more accessible).