that no ''cure'' is possible.

In addition to encouraging the maintenance of professional salvage organizations, an open form contract provides a set of terms without addressing specific compensation. The terms are well known, reducing any need to haggle over details and delay the work. Shipowners often feel the open form contract favors salvors, but this is not the case. Such a contract is a high-risk agreement for salvors, especially with regulators playing an expanding role in salvage operations.

Under the LOF and other open form contracts, the salvor's award is determined by arbitration. Although arbitrators may be experienced and knowledgeable regarding salvage, the amount of an award is not predictable. The U.S. Supreme Court, in the case of The Blackwall,2 set forth criteria for determining the proper amount of a salvage award. In brief, these are:

  1. Labor expended by salvors

  2. Promptitude, skill, and energy in rendering services

  3. Value of property employed

  4. Risk incurred

  5. Value of property saved

  6. Degree of danger from which the property was rescued

The Blackwall decision may have binding value as a precedent in U.S. courts only; nevertheless, its criteria are generally followed by arbitrators in establishing awards both in foreign and U.S. courts.

The courts have held that a salvor who maintains expensive equipment and personnel solely to render salvage services is entitled to a greater award than other responders. But in the 1990s there are so few calls for such services that it seems counterproductive to penalize professional salvors who perform work other than salvage. This reality has been recognized to some degree. The U.S. Court of Appeals for the Second Circuit has stated, for example, that "exclusive devotion of a company's resources to salvage is not a condition precedent to recognition of a professional salvor's favored status,"3 and courts and arbitrators have just begun to recognize "part-time professional salvors" as "deserving of an increment due to their availability to persons in distress."4 But the salvage industry—which cannot rely solely on salvage and must accept other work is nearly unanimous in its view that unless a contract specifies an amount, there is no assurance the award will be adequate.

Accordingly, no-cure-no-pay salvage contracts are falling out of favor, not only because the awards may be inadequate but also because arbitration is often lengthy. While salvors and other claimants may feel that "justice delayed is justice denied," some progress has been made in addressing this complaint. LOF-90 has introduced steps to cut delays in arbitrations, and arbitral procedures under the Japanese Shipping Exchange Agreement are deliberately short, so that the salvor receives a prompt award.

When compensation depends on successful results, any work carries high risk. Salvors can spend large sums and receive nothing in return. Yet salvors faced with an impossible or unprofitable job cannot simply declare "no cure" and walk away. They must follow established procedures to be relieved of their contractual obligations, while the salvage activities, costs, and losses continue.

Public concern for environmental protection and a parallel increase in environmental legislation exacerbate the uncertainty of the business aspects of salvage. Regulatory intervention that may occur outside the business framework of

2  

77 U.S. 1, 10 Wall.

3  

B.V. Bureau Wijsmuller v. U.S., 1980 AMC 2331 at 2356.

4  

Bindon v. Jones, 1986 AMC 1403 at 1405.



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