Things Old Are New Again

 

Maritime commerce has been the backbone of all of great societies, and certainly was essential to the survival of the original 13 colonies. Even though the modes of transportation have changed dramatically, what hasn't changed are the risks associated with the sea.

 

Historically, the only chance of survival for a vessel in peril was the willingness of another ship nearby to render assistance. Countless lives and millions of dollars in cargo were saved because another vessel was willing to go out of her way to respond to a call for help. To reward these acts of heroism the vessel was generously awarded an amount that reflected a percentage of the value of what was saved.

 

As is often the case, there were disagreements as to what was a proper reward for the efforts of the rescue vessel. And to complicate matters even further, the rescued vessel and the rescuer were often from two different countries. Disputes were common as to what country's laws applied, and how the matter would be settled.

 

Often, the only thing the vessels had in common was that they were insured through Lloyds of London. So Lloyds developed a "Standard Open Form Salvage Contract" which set to paper the criteria on which the salvage award would be based, and where and how any disputes would be settled. This program was very successful and continues to this day, being utilized by Lloyd’s underwriters for both commercial vessels and yachts. The Lloyds contract is still the recognized standard for salvage contracts in the international maritime community.

 

Unfortunately, for recreational boats in the United States, which did need to be "rescued" the Lloyds Contract has proven to be a difficult and disadvantageous route to dispute resolution. First of all, the Lloyd's Open Form Salvage Contract is hard to read, - with a lot of thee's and thou's - and even harder to understand. Ever more daunting was the requirement that any dispute be arbitrated in London England. This meant the parties in a dispute involving two Americans and a salvage in American waters had to go to London, hire English barristers (lawyers) and pay substantial amounts of money to prepare a case to be heard by the Lloyds Arbitration Committee. It would not be unreasonable for the owner of a boat worth $35,000 to spend half that just to have the case decided.

 

To make matters even more expensive, the Lloyds system was based on English law, which includes the provision that the loser pays both sides' attorneys' fees. Salvage claim are almost always a matter of negotiation, since the price is usually not established before the work is done. So if the boat owner's offer to settle a salvage claim were further away from the award than the demand of the salvor (and it often was), the boat owner would also be responsible for the salvor's legal fees as well. Concern over becoming responsible for the salvor's barrister fees could add pressure to the boat owner (or his insurance company) to settle the salvage claim at a higher amount than they would other wise think reasonable. Of course this pressure exists for the salvor as well.

 

The American judicial system recognized the inequities in this approach, and ruled that if both parties (the boat owner and the salvor) were U.S. citizens, they could not be forced into arbitration in a foreign country What remained was how to give both the salvor and the boat owner the same protections provided in the Lloyd's Open Form Salvage Contract.

 

Q: What if I don't sign a contract before my boat is salvaged? Can the salvor still make a claim?

 

A: It is important to understand that a contract is not necessary in order for a salvor to make a salvage claim. The salvor only needs to demonstrate that the effort was voluntary (he had no pre-existing obligation to come to the rescue ), that he was successful and that the vessel rescued was in peril. This type of salvage claim is often referred to as "pure salvage".

 

Q: So, what if you find yourself in the predicament of needing a salvor to save your boat, you allow him to do it, and now he wants you to sign a contract. Do you have to sign any contract just because the salvor puts it in front of you?

 

A: NO. The salvor still has a pure salvage claim against your boat. He must have your permission to render assistance if you are on board (you can not be forced into anything), but the absence of a signed agreement may mean that there will be some convincing necessary to get the salvor to resolve any dispute by arbitration as opposed to litigation. There is always litigation in Federal Court and, while not the most economical method of resolving the value of a boats "rescue", it is tried and true.

 

Q: What if a salvor insists that you sign a Lloyd's Open Form Salvage Contract?

 

A: Offer as an alternative the attached Open Form Salvage Contract, or simply suggest that the salvor does not need a contract at all. You can always refuse his services and call for other commercial assistance.

 

Losing a vessel to the forces of nature, or worse, through navigational error, is traumatic and disheartening.

 

But you will almost certainly discover a new low point when you first receive the salvor's bill for salvage work or wreck removal. The phrase "sticker shock" comes to mind, but understates the case. The salvor’s expectations are created by 200 years of Admiralty Court decisions - including recent ones - where judicious minds felt that significant "rewards" were necessary to encourage people to invest their capital and risk their lives to save others in peril on the sea.

 

SALVAGE

 

To deal with the cost and complications of salvage claims, boaters should insure with a yacht insurance company that employs specialists in marine claims.

 

Ask your agent to determine this (they will know which companies have these specialists, and if they do not know, consider shopping for a different agent).

 

Also, ask your agent or read your boat insurance policy to make certain that it;

 

 Specifically covers salvage charges (or the costs to rescue the boat from perils at sea).

 Provides salvage coverage equal to the value of the boat.

 Provides the salvage coverage in addition to the repair of any damage to the boat.

 Does not apply a deductible or other adjustment to the payment.

 

 

PAYING FOR WRECK REMOVAL

 

Contrary to popular myth, you cannot abandon a vessel at sea or on a reef, collect your insurance and forget about it. The Owner of a vessel remains liable for subsequent problems associated with that vessel.

 

For more information regarding Salvage & Wreck-Removal, visit BoatU.S.

 

 

TO PAY FOR TOWING

 

The cost of towing is straightforward. Marine Assistance companies charge an average of$2750 per hour from the time they leave their dock, to the time they return to their dock. (This is referred to as a 'portal-to-portal' charge. Rates are even higher between sunset and sunrise and also during inclement weather or poor sea conditions.)

 

For example, if you break down 1 hour from their dock, they tow you for a 1/2 hour to your dock and they require 1 hour to return to their dock, the charge will be for 2 1/2 hours or$275.000 X 2.5 =$687.50.. This would be a minimum charge as taxes and other fees may also apply.

 

Most tow companies accept cash or credit cards and some may accept personal checks. However,most tow companies will want some form of guaranteed payment before responding. This would most likely be a pre-authorized amount on a credit card or, better yet, your membership in a TowBoatU.S. unlimited towing plan.

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