The relationship

between salvor and

salvee
1) The parties bound by the signing of a
salvage agreement
2) Setting aside a salvage agreement
3) The effect of negligence
• The third is where the salvor negligently
damages the salved property during the
salvage operations. Where a non-contractual
salvor is involved, the action will sound in
tort.
• Where a contractual salvor is involved, the
action will sound in contract.
BEST ENDEAVOURS
• All LOFs, 1980, 1990, 1995 by cl 1(a), LOF 2000 and
LOF 2011 by cl A, provide that the contractor
(salvor) shall use his best endeavours to salve the
property
• What is certain about this term is that there is no
absolute obligation or a guarantee given to
succeed.
• In an old non-salvage case, best endeavours was
interpreted to meant that ‘the contractor will do
his best, not his second best’.
• Art 8 of the 1989 Salvage Convention
imposes duties on the salvor and salvee
towards each other
• Article 8 - Duties of the salvor and of the owner
and master 38
• 1. The salvor shall owe a duty to the owner of the
vessel or other property in danger:
• (a) to carry out the salvage operations with due
care;
• (b) in performing the duty specified in
subparagraph (a), to exercise due care to prevent
or minimize damage to the environment
Does not address the issue of damages for
breach
• Article 8(1) of the 1989 Convention does not
address the issue of damages for breach,
therefore, principles of damages at common law
have been applied.
• This has, however, been contested, because
salvors should be viewed leniently, even if they
are negligent, considering the dangers they face,
and, therefore, it has been suggested that
principles of the maritime law salvage should be
applicable.
• Although the Convention provides no express
sanction for breach of these obligations, it
cannot have been intended to impose duties
without sanctions.
Effect on salvage award
• The 1989 Salvage Convention contains
provisions under which salvorial misconduct
may have the effect of reducing or
extinguishing any entitlement to a salvage
award or to special compensation.
• Article 18 provides that: A salvor may be
deprived of the whole or part of the payment
due under this Convention to the extent that
the salvage operations have become
necessary or more difficult because of fault or
neglect on his part or if the salvor has been
guilty of fraud or other dishonest conduct.
• This Article deals only with negligence before
salvage, which makes a salvage operation
necessary, and when the salvage becomes
more difficult owing to the negligence of
salvors, but the remedy provided is reduction
of the award or no award; no damages.
Potential conflict with Common Law
• The Convention may not have intended that
the salvor should be liable to pay damages in
the event of damage caused by his negligence,
and, therefore, a potential conflict would
arise between the consequences provided
under common law and Art 18 of the
Convention.
• Convention does not deal with situations
where the negligence of the salvor causes an
independent damage, being distinct from the
original danger.
English courts
• The English courts have for many years,
recognised that negligence of salvor who
respond to an emergency of a ship should be
judged leniently.
• It was considered that deduction from the
award of an assessed sum of the damage done
would be sufficient, or the misconduct could
forfeit the award. This approach later changed
Negligent misconduct under common law

• In the twentieth century, the courts were

more robust in considering awarding damages
to the owner of the salved property for a
salvor’s negligence.
• In The Delphinula (1947) 80 LlL Rep 459, the
CA (reversing the first instance decision) held
that, if the salvor is guilty of misconduct, not
only may a reduction in value of the salved
property caused by his negligence be taken
into account in assessing the award, but also
a counterclaim or cross-claim, or an
independent action for damages, will lie.
• In The Alenquer[1955] 1 Lloyd’s Rep 101, no
salvage award was made, but the damage
claim had to be paid in full
The Tojo Maru, [1971] 1 Lloyd’s Rep 341
(HL)
• Facts
• In 1971, the House of Lords, in The Tojo Maru,
affirmed that a claim in damages will lie
against the salvors for their negligence by way
of a counterclaim, independently of merely
taking salvors’ negligence into account in the
assessment of the salvage award.
The Tojo Maru Case
• .
The Tojo Maru Case
• A tanker that was being salved was badly
damaged by an explosion caused by the
negligence of the salvor’s chief diver, who had
fired a bolt gun into her shell plating.
• The salvors argued that because they had
contracted on a ‘no cure, no pay’ basis, under
LOF, the only consequence of their
negligence should be to affect the amount of
their salvage reward.
• Their Lordships rejected this argument, and
held that the owners of the salved vessel were
entitled to bring a counterclaim for negligence
in the salvage proceedings, even though it was
likely to exceed the amount of any salvage
award.
• Lord Diplock analysed the contract as one for
work and labour under which a duty of care
would ordinarily be imposed on the contractor.
• Not surprisingly, their Lordships held that
professional salvors would have to meet a
higher standard of care than non-
professionals.
• Held
4) Termination of the salvage services
• In The Unique Mariner (No 2) The master of the distressed
ship had engaged the first set of salvors under the mistaken
impression that they were the salvors being sent by the
vessel’s agents.
• When these salvors actually arrived, the master dismissed the
first salvors, although they were willing and able to continue
their services. Brandon J considered the rights of the
dismissed salvors on the assumption, first, that the salvage
had been non-contractual, and secondly, that it had been
contractual.
• With non-contractual salvage, the salvor and salvee owe
only minimal duties towards one another.
Non-contractual salvage
• In non-contractual salvage, salvor owes a duty of care in respect
of any services that it actually performs, but it owes no duty to
perform those services. It is free to cease work at any time it
chooses. The corollary of this is that the salvee is free to dismiss
the salvor at any time, for whatever reason, justified or not.
• However, the dismissed salvor will be able to participate in any
eventual salvage award. Its share of the award will be calculated
on the basis of its expenses up to the time of its dismissal.
• If the salvor was willing and able to continue with the services, it
will also be entitled to ‘some’ compensation for the loss of the
opportunity to earn a full salvage award by completing the
salvage services.
Contractual salvor,
• The position is quite different with a contractual
salvor, such as the salvor in the present case,
where LOF had been signed. LOF imposes an
additional duty on the salvor to use its best
endeavours to salve the ship and its cargo.
• The salvor would, therefore, no longer have the
freedom unilaterally to terminate the services
before the ship had reached a place of safety.
• A term therefore needed to be implied into
LOF that, so long as the salvor was both
willing and able to continue with the
services, the salvee should continue to
engage it. In the present case, this term had
been broken and the owners of the distressed
ship became liable to the first salvors in
damages.
• Damages were to be assessed on the basis of
the award that would have been made had
the salvor been able to complete the services,
subject to deductions for expenses not
incurred and risks not run.
• The claim sounded in general contract rather
than salvage, so that the availability of
damages was not dependent on the eventual
salving of the distressed ship.
Principal characteristics of the LOF
• First, the parties agree to refer the amount of the
award, and any disputes relating to the services
performed under the agreement, to arbitration in
London, subject to English law. The salvor’s
entitlement to a reward is dependent on the principle
of ‘no cure, no pay’, as is the case at common law.
• Secondly, the parties accept that the services are
salvage services, thereby preventing the owner of
the salved property from arguing that its property
was not in danger.
• Thirdly, the obligations of the salvor to the
salvee are spelt out with more clarity than is
the case at common law. In particular, the
salvor undertakes to use its best endeavours
to salve .
• Fourthly, the salvor is granted an express
right to subcontract, although it will remain
liable for performance of the salvage contract.