Salvage

The portion of goods or property that has been saved or remains after some type of casualty, such as a fire.

The term salvage is defined more specifically depending on the industry referring to it. In business, salvage is any property that is no longer useful but has scrap value. An example of business salvage is obsolete equipment. In insurance, salvage is the portion of property that the insurance company takes after paying the claim for the loss. The insurance company may deduct the salvage value from the amount of the claim paid and leave the property with the insured. In ADMIRALTY or maritime law, salvage is the compensation allowed to persons who voluntarily save a ship or its cargo from impending danger. In addition to compensation, maritime salvage may be property that is recovered from vessels that were shipwrecked, derelict, or recaptured. Salvage as a legal concept typically concerns maritime salvage.

To establish a valid salvage claim under maritime law, the claimant must prove the following: the salvage was needed because of a marine peril; the claimant's service was rendered voluntarily and not because of an existing duty or contract; and the claimant's service contributed to the success of the salvage in whole or in part.

The element of peril is an important, yet misunderstood, element. The maritime interpretation of peril is broad and liberal. Imminent and absolute danger is not a requirement for maritime peril. If the property is in danger, or stranded "so that it [is] subject to the potential danger of damage or destruction," then peril exists (McNabb v. O. S. Bowfin, 565 F. Supp. 22 [W.D. Wash. 1983]). Also, the degree of peril does not determine whether the salvor will be entitled to a salvage award, but it will be considered in determining the amount of the award. According to the admiralty law of the United States, a stranded vessel that may be exposed to wind, weather, and waves is considered to be in a position where it may be destroyed and is therefore in peril.

A wide variety of services can support a claim for a salvage award. For example, a claim for salvage has been granted where the salvor provided assistance in putting out a fire when the fire was not under immediate control. A salvage service claim may even succeed where the salvor assisted in putting out a nearby fire that had the potential to endanger the vessel.

Voluntarily towing a drifting vessel to safety has also supported a claim for salvage award, even where the drifting vessel was not in danger of immediate or absolute harm and apprehension of danger was minimal. Along the same lines, towing a stranded vessel has also constituted salvage service. In the towing situation, courts have held that although there is no apprehension of immediate harm or danger, a stranded vessel is subject to high winds and other severe weather, placing the vessel in peril.

Courts have also upheld a salvage service claim when the crew, master, or officers were incapacitated, and when the vessel was exposed to a hazard of the sea as a result of its master's uncertainty.

In all situations of salvage service, the service must be entirely voluntary. The salvor cannot have provided the service pursuant to any type of contract or agreement or other existing duty. When the U.S. Navy or Coast Guard provided the salvage service, the issue as to whether those services were in fact voluntary has arisen.

When the Navy performs the salvage service, courts have held that, because salvage is not one of the functions of the Navy, any assistance provided by the Navy is voluntary, regardless of whether the Navy is in the area where the salvaged vessel is in peril. Federal law now provides that "the Secretary of Navy may settle any claim by the United States for salvage services rendered by the Department of Navy and may receive payment of any such claim" (10 U.S.C.A. § 7363 [1996]).

Similar claims by the Coast Guard have had different outcomes. According to statute, the Coast Guard may "perform any and all acts necessary to rescue and aid persons and protect and save property" (14 U.S.C.A. § 88 [1996]). Most courts and commentators have interpreted this language as creating a legal duty. Therefore, under this interpretation the government would not have a right to a salvage award for services rendered by the Coast Guard. The Fifth Circuit Court of Appeals declined to follow this interpretation in the case of United States v. American Oil, 417 F.2d 164 (1969). In its decision, the court held that the Coast Guard did not have a preexisting duty to perform salvage services and that the statutory language defining the Coast Guard's duties was permissive. Although the Fifth Circuit Court of Appeals may allow the United States to recover salvage awards for services rendered by the Coast Guard, other courts have declined to follow this interpretation, leaving the right of the government to recover salvage awards for services rendered by the Coast Guard still under debate.

The salvage service rendered must also have been successful, either in whole or in part. Furthermore, the salvor must have contributed to the success. The salvor, however, does not have a right to force his or her services on a distressed vessel. The doctrine of rejection applies when the master of a distressed vessel directly and unequivocally rejects the salvor's services. In that situation, the salvor does not have a right to a salvage award.

In determining the amount of the salvage award, the court will go beyond the value of the services. In 1869 the U.S. Supreme Court, in The Blackwall, 77 U.S. (10 Wall.) 1, 19 L. Ed. 870, set forth the following criteria in determining the amount of the award: (1) the labor expended by the salvors in rendering the salvage service; (2) the promptitude, skill, and energy displayed in rendering the service and saving the property; (3) the value of the property employed by the salvors in rendering the service and the danger to which such property was exposed; (4) the risk incurred by the salvors in securing the property from the impending peril; (5) the value of the property saved; and (6) the degree of danger from which the property was rescued.

When a salvage award is granted, all of the parties who participated in the salvage service will share in the award based on their participation. In addition, the owner, master, and crew of the salvaged vessel are entitled to share in the award. If the salvaged property is damaged as a result of the salvage effort, the owner may claim that the salvor was negligent. If the court finds that the salvor did not adhere to a standard of reasonable care, the salvage award will be reduced depending on the degree of NEGLIGENCE.

An action for salvage is generally an in rem action. This means that the suit is brought against the property saved, such as the ship or its cargo. In the event that the property is no longer within the jurisdiction or has been destroyed, an in personam action may be brought to recover the salvage award. These salvage actions fall under the jurisdiction of the admiralty courts.

Anyone with a direct pecuniary interest in the property salved, such as the owner, may be liable for the salvage award. In addition, anyone who may be liable for the property, for instance a bailee, may also be liable for the salvage award. The persons liable for the salvage award are not necessarily the individuals who requested the salvage services.

In the event that the salvage claim involves a shipwreck, the court has "qualified jurisdiction" when the wreck site is exclusively within the waters of the contiguous zone of the United States. In addition, U.S. admiralty courts have asserted jurisdiction of wrecks in international waters when certain pieces of the wreck were brought into the jurisdiction of the court. This is based on the "first salvor rule," which protects the first salvor from losing the "trove" once it has started salving the wreck to other parties who may intervene and attempt to take over the salvage operations. Most countries recognize the right of the first salvor and will uphold a lien issued by another jurisdiction according to this rule.

According to the agreement, the convention was to become effective one year after 15 states had expressed their consent to be bound by it. In 1996 the agreement became binding, or entered into force, upon 22 countries.