SUBSEA RESOURCES: A possible Treasure Trove

Wollo.

That information regarding insurance payouts is incorrect. The salvor gets 90% of the cargo and the underwriters get 10%

Read the following on salvage law:

Most of the salvage activities contemplated will be in respect of the vessels which sank some time ago so that the question of danger no longer arises. For this reason a salvage contract will normally be entered into where owners of the cargo (usually the underwriters) can be traced. If this is not possible, the court may well determine that the vessel and cargo have been lost or abandoned and apply the law of FINDS in which case the salvor will receive absolute title to the cargo, free of any claim by the former owners. In any event, the state in which the salvage proceedings are brought receives no part of the cargo value.

The group will generally attempt to negotiate a contract with the owners of a cargo before commencing a salvage operation. Such contracts typically provide that the salvor retains 85 per cent to 90 per cent of the net proceeds from selling the recovered cargo and set out the procedures to be followed when the cargo is landed. It is not, however, essential to have a contract with the owners in place. With respect to wrecks lying in international waters, there is a body of case law that has developed in the admiralty courts being the courts with jurisdication over maritime disputes, of various countries. As in other areas of law, decision made by the courts of one country may have a persuasive effect on those of another, notwithstanding the existence of the internation convention of salvage 1989, which has been ratified by a number of countries. The 1989 convention is enacted in English Law by part IX of the Merchant Shipping Act 1995, It lays down, amongst other things, a number of broad criteria for fixing the amount of the salvage award where not stipulated by contract. It can be excluded by contract and does not apply to state-owned vessels. To some extent, therefore, it is up to the salvor to establish a preferred jurisdiction by landing cargo wherever practicable in a country whose courts are generally more favourable to the salvor. English salvage law provides a clear structure favourable to the salvor and the group will attempt to land cargoes in England wherever practible.
When a cargo is recovered under contract, the recovered cargo is taken to port, declared to the authorities (in England, HM customs and excise), sold and the proceeds distributed in accordance with the contract. The British Government receives no part of the cargo value. In the event of a controversy between the owners and the salvor, the admiralty courts in England and elswhere will uphold the terms of a salvage contract entered into without compulsion, fraudulent misrepresentation or mistake even though the stipulated compensation to the salvor turnes out to be higher or lower than what the services were actually worth.

In the event that the ownership of the cargo is unknown or where no contract exists between the owners and the salvor, English law provides that, on landing the cargo, the salvor must deliver it immediately to the Customs, which provides an opportunity for any party claiming ownership or any other interest in the cargo to establish title. If no owner comes forward to claim an interest in the cargo within a period of 12 months, the Customs will allow the salvor to take possession of the cargo and dispose of it for his own benefit. In practice it is likely that, rather than hold a valuable or cumbersome cargo for any significant period of time, the customs will allow the cargo to be sold and the proceeds held in escrow pending the resolution of the issue of ownership. If the ownership is established, the salvor's remuneration is determined by negotiation with the owner, by well established arbitration procedures or by litigation before the admiralty court.

In suport of their decisions regarding salvage awards (the salvor's compensation), admiralty courts have not viewed the awards as reimbursement for work or labour performed but rather as a bounty given for reasons of public policy. The reasons that have been given by courts in support of salvage awards include insuring the safety of property and life at sea, promoting commerce and trade, saving and restoring property to its owners, inducing and encouraging others to risk life and limb in the interest of saving destressed property, and elimination of any temptation on the part of rescuers to destroy property.

Unless the court concludes that the wreck has been lost or abandoned, title to the distressed goods (the salvaged cargo) remains with the original owner, subject to the salvor's equitable lien on the value of the cargo. In an English arbitration procedure or in litigation before the Admiralty Courts, approximately 90 per cent. of the net value is normally expected to be awarded to the salvor. This of the cargo value to the salvor and 10 per cent to the underwriters. These sort of percentages will obviously vary depending upon the circumstances of the particular salvage operation and the measure of success obtained, the nature and degree of danger, skill and efforts of the salvor, time used and expenses and losses incurred by the salvor, etc.