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Lighthouse - May, 2017.

The Improvements In Salvage Law: Is The 1989 Salvage Convention Environmentally Dynamic?

The preamble of the 1989 salvage convention begins by elucidating recognition of increased concern for protecting the environment and the need to create a regime to incentivize salvage operations that incorporate environmental considerations. The convention enumerates duties and responsibilities owed by the salvage parties to the environment, but it is principally in two provisions, Article 13 and Article 14 that the regime to incentivize the undertaking of salvage operations for environmental protection purposes is found.

Article 13 provides that the salvage award shall be fixed with a view to encouraging salvage operations, taking into account the following criteria “without regard to the order in which they are presented below…” (b) the skill and efforts of the salvors in preventing or minimizing damage to the environment;

Article 14 provides for a form of special compensation for salvage efforts where there is a threat of damage to the environment in order to address the irreconcilability of the principle of no cure, no pay with incentivizing environmentally motivated salvage operations.

Though these articles were enacted to provide a responsive regime to incentivize environmentally motivated salvage operations, the force of the provisions is weak. A salvage reward under Article 13(b) is will always be qualified by provision 13(3) of the Convention, “The rewards, exclusive of any interest and recoverable legal costs that may be payable thereon, shall not exceed the salved value of the vessel and other property.” Environmental threats can have devastating consequences to a region. A large oil spill for example has the potential to significantly damage marine habitats, biodiversity, and local livelihoods. By limiting a salvage reward in this manner, no matter how devastating the environmental impact of a damaged ship may be, the salvage crew must engage in a balancing exercise to determine if it is profitable. Notably, this limitation was recognized by the International Salvage Union at the 2011 Comité Maritime International (CMI) colloquium; “…all too often the tribunal is unable to give full effect to this provision because of the low value of the salved property.”

Article 14 allows for special compensation claims as an exception to the general no cure no pay principle of salvage law. One of the most significant issues with Article 14 is that the ambiguous wording has created legal uncertainty for when the provision applies as there must be a ‘threat of damage to the environment’. The meaning of the phrase ‘threat of damage to the environment’ is unclear and requires significant interpretation. To give effect to the phrase, a decision maker must consider what constitutes a threat, whether the threat must be real or may be a reasonably perceived threat, what is the meaning of coastal waters found in the definition of damage to the environment, how is the word substantial as found in the definition to be defined, and how substantial must the threat be.

Joy Thattil

Maritime Lawyer & Partner @ Callidus Corporate & Maritime Consulting ( CCMC) Dubai & India


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