Techniques & Tactics

SALVAGE LAW: Do You Get to Keep an Abandoned Boat?

Boat on beach

I've been posting a bit lately about abandoned boats, and my SAILfeed colleague Clark Beek has rightly pointed out that it is high time I bloviated on the subject of salvage rights. Many people believe that if you find an abandoned boat it automatically belongs to you, and yes, I intentionally played into and exploited that popular misconception in the title of my first post on Wolfhound, the abandoned Swan 48 now adrift 600 miles east of Bermuda. But in fact the law isn't that simple.

Salvage law is very old and dates back to medieval times, when men went to sea primarily to engage in commerce. A vessel in trouble often carried cargo worth as much or more than the ship itself, and the men attracted by her distress were just as likely to plunder her as to save her. Thus the core principle of salvage law has always been that honest men who risk their own lives and vessels trying to save other vessels should be very well rewarded.

Under current U.S. admiralty law, which conforms to international salvage law as laid out in the Salvage Convention of 1989, assistance rendered another vessel is considered salvage when: 1) the assisted vessel is subject to a reasonable apprehension of marine peril; 2) the assistance is voluntary; and 3) the assistance is successful in whole or part.

A successful salvor is NOT entitled to just keep the salved vessel, under any circumstances, but is entitled to a generous award. The amount of the award, under the law, is based on the following factors: 1) the value of the vessel and its contents after the salvage is complete; 2) the salvor's skill and initiative in minimizing damage to the environment; 3) the degree of success obtained by the salvor; 4) the level of peril to which the salvaged vessel was subject; 5) the salvor's skill and initiative in saving the vessel, human lives, and other property; 6) the salvor's labor and expenses; 7) the amount of risk run by the salvor; 8) the promptness of the services rendered; 9) the availability and use of any alternative salvage resources; and 10) the readiness, efficiency, and value of the salvor's vessel and equipment.

Consider all these factors together, and you'll note they strongly favor the salvor. The idea being that salvors should not only be compensated for their time and trouble; they should also receive a substantial premium as an inducement to render assistance in the first place. In a "low-order" salvage, where the risk to a salvor is negligible and the salvaged vessel was in little danger, the premium will be relatively small, but in a "high-order" salvage the total award can, under the law, be as high as (though it may not exceed) 100 percent of the value of the salvaged vessel and its contents. Also, salvors automatically get a high-priority lien on any vessel they save and may keep the vessel until the owner posts security.

This, of course, is where the misconception come from. If you are entitled to an award equaling 100 percent of the value of a vessel, some owners and most insurers may well propose that you simply keep the vessel, as this saves them the administrative and transactional costs of selling it to pay you off. Even if you don't want the vessel, they can force the situation by not paying you, thereby compelling you to seize the boat.

In the immediate example, salvaging Wolfhound, a vessel that most likely has already been given up for lost by its insurer (the owner, I assume, has been paid off and is out of the picture), would certainly entitle you to a "high-order" award. You will have either towed the vessel hundreds of miles, or you will have put crew aboard to rehabilitate and navigate the boat to shore, a decidedly risky proposition. The vessel, in perfect condition, is worth $500-600K. In her present condition, she may be worth $200K or so. So I'd guess you'd have a good chance of getting to keep her... if you wanted her.

On the other hand, if Wolfhound drifts on to a beach somewhere, like Running Free on Martha's Vineyard, and all you do is put a line on her and pull her off, it is not likely you'll have earned an award equal to 100 percent of her value.

When Is a Tow Not a Tow?

The more pertinent question for most of us involves commercial towing services like Sea Tow and TowBoat/US. Lots of people sign up as members of these services and pay a flat annual fee they think covers any troublesome situation they might get themselves into. But in fact in many circumstances where you most need help, your service contract does not apply and the guys helping you are entitled to claim a salvage award, which can be very large, depending on the circumstances.

In one particularly egregious example I found online, a guy in a leaky fishing skiff, a Sea Tow member, reports that a Sea Tow skipper demanded a $2,000 salvage fee after loaning him a pump in a marina for not more than 10 minutes. This sort of abuse no doubt is the exception rather the rule, but the current legal landscape does give the towing services a huge advantage.

Boat under tow

The fact is nearly everything a towing service does is salvage under the law, for the definition of "marine peril" has historically been very broad. The peril need not be immediate, and any vessel that is disabled and adrift, and certainly if it is aground, is held to be "in apprehension" of danger. Most companies do however perform basic services, like straight tows of disabled vessels, "soft" ungroundings, or fuel drops, for a straight hourly fee, or for free, if you're a dues-paying member. But different companies draw the line between salvage and "basic services" in different places. These differences are normally defined in the company contracts you sign (or impliedly agree to), but in almost all cases the bottom line is the same: when you're really in trouble and need help the most, the amount you pay in the end can conceivably run as high as the value of your boat.

Is this fair? Most insurance companies, though they pay the bulk of salvage claims, don't have a problem with it. They recognize that competent towing services spend a great deal of money on vessels and equipment. They appreciate the fact that these people are on call 24/7. And, of course, they would much rather pay a claim for a portion of a vessel's value (which is what normally happens) than be confronted with a total loss.

How To Deal With Salvors

The best policy, of course, is to deal with them as little as possible. If you are serious about cruising, you should be prepared to get yourself out of trouble in most low-risk situations. If you do need to call for assistance you should:

A) Get in touch with your insurer and let them negotiate directly with the salvor if possible. Most salvors will welcome a chance to cut a deal up front, as this means they get paid much faster. A good marine insurer will maintain a 24-hour claims service. Note, too, some insurers limit their salvage exposure; a good policy will cover you for 100 percent of the value of your boat.

B) If you can't reach your insurer (or don't have one) negotiate yourself before any assistance is rendered. Never assume you're contracting for a straight tow or other "basic services," even when dealing with a towing service you are a member of. Establish clearly whether or not you're in a salvage situation and understand how the bill will be calculated. Don't be afraid to use your leverage, which is that a salvor cannot aid you against your will. Don't be afraid to get on the radio and call other services for help if the people on the scene are not reasonable. (Note, however, salvors can act to save your vessel without your permission if you are not on the scene or if you do not expressly forbid it. The law presumes you want your boat saved, so you must be clear and firm when refusing help.)

C) If the sh*t is hitting the fan and there is no time to negotiate, you should at least establish that the salvor is working on a no cure/no pay basis. Under the law, they are not entitled to an award if they don't save your boat. There is, however, one exception to this rule, which is that salvors do get paid something if they prevent or minimize environmental harm while failing to save your boat, which is only fair, as you'd be on the hook for the damage done in any event.

The Bottom Line advice: When choosing a towing service to join as a member (which in most cases is well worth it if you do much coastal sailing), study the service contract closely. Find the language describing what services are covered and what is considered salvage (or "vessel recovery") and make sure you understand it. The more precise the language the better. You can assume the service provider will try to take advantage of any vague "weasel words" (as I used to call them in law school). Also, you want an arbitration clause. You certainly do not want to have to go to federal court to settle a dispute over payment (or anything else).

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