Key takeaways
Article 13 sets award criteria
Convention outlines key factors for salvage payments.
Courts balance benefit and public interest
Awards reflect both service value and policy aims.
Historic cases still shape modern ruling
Judgments reinforce principles behind fair remuneration.
Assessment of a salvage award
A review of Article 13 of the Salvage Convention 1989 and case law
Part 1
Over 10 years ago, I gave a series of presentations to the London market on salvage. I reprised one of these last year in a series of short articles on whether there were any circumstances where it would be unreasonable for a shipowner to sign an LOF. This was timely in light of the recent development in the London insurance market for the now published LOF Default Clause that is proposed be used in hull and machinery policies of insurance.
Now, in this latest series, I will look at the assessment of a salvage award. There are many misconceptions as to what goes into assessing a salvage award whether under LOF or as a matter of common law. Not much has changed in this respect over the last 10 years or so except for the investment in the salvage industry, which has gone into serious decline. We will come to that later in the series.
Introduction
How a salvage award is made, and what is to be taken into account in assessing that award, has developed over the centuries in common law, as well as by statute, but perhaps more importantly has been shaped by the English Admiralty Court in the last two centuries. A common law salvage claim came before the Admiralty Court just recently, in February 2025, (a rare occurrence in recent times) and which highlighted the principles required to be considered in assessing a salvage award – SD Rebel BV & Masters and crew of tug “VB REBEL” -v- Elise Tankschiffahrt KG (2025) [EWHC] 376 (Admlty).
The age-old practice of rewarding salvage services is founded upon two main considerations, firstly that the salvors should be paid for benefits conferred and secondly that of public policy of encouraging salvage operations. These are the pillars of the law in relation to salvage awards. LOF Arbitrators have come in for criticism from some quarters in awarding too much for what might be described as straightforward towage services, but the reality is that the law requires the Arbitrators and the Courts to encourage salvors, particularly those that have invested in salvage for the benefit of the shipping community.
In this context, I came across two interesting passages from past authorities. The first from Dr. Lushington in 1865:-
"But direct benefit is not the sole principle upon which salvage reward is required to be paid. I am of opinion that the payment of salvage depends upon more general principles; and, in saying this, I think I am supported both by Lord Stowell and Story J. Salvage is not governed by the ordinary rules which prevail in mercantile transactions on shore. Salvage is governed by due regard to benefit received, combined with a just reward for the general interests of ships and marine commerce. All owners of ships and cargoes and all underwriters are interested in the great principle of adequate remuneration being paid for salvage services...”
In another case, in 1883, Story J stated as follows:-
"Salvage, it is true, is not a question of compensation pro opera et labore. It raises to a higher dignity. It takes its source in a deeper policy. It combines with private merit and individual sacrifices larger considerations of the public good, of commercial liberality, and of international justice. It offers a premium by way of honorary reward, for prompt and ready assistance to human suffering; for a bold and fearless intrepidity; and for that affecting chivalry, which forgets itself in an anxiety to save property, as well as life. Treated as a mere question of compensation for labour and services, measured by any common standard on land or at sea, the salvage of one moiety is far too high. But treated, as it should be, as a mixed question of public policy and private right, equally important to all commercial nations and equally encouraged by all, and moiety is no more than may justly be awarded”.
A rather flamboyant and archaic passage for today’s standards, but an interesting one nonetheless in light of recent debates as to whether salvage awards in certain cases such as simple tows should be close to the commercial rates paid for the tugs. Some phrases still hold good, however.
Incidentally, a moiety (or 50%) of the salved fund was a common approach in those days but is no longer a practice.
All these common law principles as developed over time have now been enshrined into Article 13 of the 1989 International Convention on Salvage (Salvage Convention). The Salvage Convention was rapidly adopted in the 1990 version of the LOF and has subsequently been ratified and enacted not only in England and Wales but in many jurisdictions throughout the world.
It is effectively the ‘Ten Commandments’ as to what a Court or Tribunal should take into account when assessing a salvage award. I will start to look at the Article 13 principles in the next article which you can access here.
