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Salvage and Towage

Chapter · July 2021

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Salvage and Towage
Towage is when one vessel hired another to provide assistance under a fixed remuneration in view to
accelerate the progress. The contact of towage usually involves between barges from the ship owner and
the tug owner who using tugboats to tow another.
In the case of Mc Connochie v. Kerr [1881] the court managed to differentiate the meaning of salvage and
towage. Stating that towage is known as a service which aims to provide assistance on expediting the voyage
of the vessel without reference to any circumstances of danger by paying fixed remuneration which had
been stated in the towage agreement. Besides in Stevens’s v The White City [1932], case defendant filed
a petition to recover injury suffered under the towage agreement. The court later held the definition of
“towage” is when the providing power of the ship who draw another ship out of a situation.
Under the case of Mississippi Val. Barge Line Co. v T.L. James & Co [1957], the barge together with
the cargo had sank into river during their voyage. The court in this case rule that towing usually involve a
self-propelled ship towing one or more ships.

Elements of Towage:
1. Non-voluntary
Normally for towage services, the right of a tug to payment always depends on a contract either express or
implied. Hence, the towage services are not voluntary as this service is required as an existing duty required
by the contract. In the case of The Mercury XII (aka Wells Fargo) v. The MLT-3 (2013), the court held
that the since the contract in the case was for the use of the Tug and Barge and charges were on an hourly
basis regardless of whether there was cargo on the barge, the contract is a contract of hire rather than a
contract of carriage.
2. Purpose of service
The purpose of a towage contract is tugs to offer towing services but the purpose of salvage is to save a
vessel which is in danger. In a towage contract, the vessel in need is in normal condition without being
exposed to a certain extent of risk. This can be supported by the case of The Princess Alice (1849) whereby
towage is defined in the case as the hiring of a vessel to expedite the voyage of another when nothing more
is required than the accelerating of her progress.
3. The remuneration or reward for the service and the need for success.
In a towage contract, the fee or payment for the service is usually stated in the contract in advance and the
remuneration is mainly based on the condition of the vessel and the distance of towage. Hence, the right to
payment will be based on the construction of the contract instead of the success of the venture. In the case
of The Mercury XII (aka Wells Fargo) v. The MLT-3 (2013), the court held that the since the contract
in the case was for the use of the Tug and Barge and charges were on an hourly basis regardless of whether
there was cargo on the barge, the contract is a contract of hire rather than a contract of carriage. This case
shows that the remuneration is stated in the contract in advance.
4. Maritime Lien
For towage services, there is no maritime lien on the tow for the payment of the towage price fixed in the
towage contract.
5. Governing Law
Since towage is a contract for services, thus like any other contracts, towage is governed by the basic
principles of contract law. In addition, with the existence of standard form contracts for towage, the terms
contained in the United Kingdom Standard Towage Conditions of 1986 or the Baltic and International
Maritime Council forms designed for International Ocean Towage primarily govern the relationship of the
parties.

Salvage
Salvage is known as a process of rescuing or repairing a vessel, its cargos, crews or any other properties
from unpredictable sudden peril at sea, except for the rescuer’s assistance, it would have led to loss or
destruction of the property. The rescuer in under a voluntary act that is not under any binding agreement or
legal duty to do the act of rescuing. It is just their general duty of the rescuer to give assistance to those
peril at the sea, or to stand by after a collision.
The case of Mc Connochie v. Kerr defined the meaning of salvage as a service that is rendered voluntarily
to a vessel that need such form of assistance at the time of her difficulty or peril at sea. This service was
designed to relieve the vessel danger at the present or foreseeable in the future.
In the case of Evanow v. M/V Neptune (1998), the vessel Neptune encountered a heavy storm and docked
decide to dock at the harbour, later it became disabled and grounded on an over shallow sandy shoal. The
master realized the damage caused to ship may result in leaking of fuel and hydraulic fluid that is contain
in the ship. Hence called for a tow to retrieve the barge. In determining whether it was a contract of towage
or salvage. The court ruled that the existence of a marine peril distinguishes a salvage contract from a
towage contract. The ship is considered suffer from a substantial peril “when a vessel is exposed to any
actual or apprehended danger which might cause destruction to the vessel herself.” It was then concluded
as a salvage contract.
Furthermore, salvage services would imply if the salvagers found out that there was some degree of peril
that cause the assistance to be essential. The peril does not need to be immediate, but sufficient if it is
reasonably be apprehended. This condition can be illustrated in the case of Mississippi Valley Barge Line
Co. v. Indian Towage Co. [1956] A barge was adrift in a calm sea and was pulled aside at a Pensacola
dock by a tow. The purpose of salvage was to save by assuring that the greatest likelihood of the peril can
be cut to its least. The court held that the barge at drift was a peril at sea. Hence, it was an act of salvage.
As the act of rescuing does not bind to any legal agreement, there are a few elements to be fulfilled in order
to allow a claim of salvage.
There are a few elements in order to successfully claim for a salvage.
Firstly, the danger or a marine peril must place a property at risk of loss, destruction or deterioration. In the
case of Markakis v. S/S Volendam, the court held that at the time the assistance was rendered, the vessel
must at a marine peril which would cause destruction or loss to the vessel. However, the case of Reynolds
Leasing Corp. v Tug Patrice Mc Allister held that the marine peril or the danger need not to be imminent
or actual. A reasonable apprehension of peril shall be sufficient to prove a marine peril that might expose
the vessel to destruction.
- In The Charlotte (1848), it was further held that it is sufficient to show that there was a state of difficulty
and a reasonable apprehension of danger under an objective test. The opinion of those on board is not
decisive.
- In The Phantom (1866), Justice Dr Lushington held that it is not necessary to show absolute danger in
order to constitute a salvage service. It is sufficient if there is a state of difficulty, and reasonable
apprehension. Having considered the judgment in The Phantom (1866), the Admiralty Court in The Pa
Mar (1999) held that the towage of a vessel whose generator broke down causing a complete failure of
power amounted to a salvage service.
The second element, to be fulfilled is that the assistance rendered through the salvage service must be a
voluntarily act but not any legal duty or obligations that are bound to do so. Under Art 17 of International
Convention on Salvage 1989, it stated no payment can be due under the provisions of this Convention
unless the services rendered exceed what can be reasonably considered as due performance of a contract.
This means the Salvage contract is on no cure no pay and is not render under a pre- existing agreement.
It was defined by Lord Stowell in The Neptune [1824] case that salvor is a person who render services to
ship in distress without any pre- existing contract that linked him with the duty of employing himself for
the preservation of the ship. Next, in Flagship Marine Services, Inc v Belcher Towing Co [1991], the
court allowed plaintiff to claim for voluntary salvage awards from the defendant on the ground that there
was no pre-existing contract between both parties. However, under court of appeal the decision reversed as
fact suggest there was a valid oral agreement on the offered of salvage services to the defendant on the basis
of a reasonable charge. Thus, the claim of plaintiff salvage remarks failed.
The third element is that the salvage efforts must be successful, in whole or in part. In the case of The
Blackwall (1869), the court required that there must be some part of the property saved in order for there
to be a salvage award.

When does towage can become converted to salvage?

In nature, towage services can only be converted to salvage services in certain situation. This can be seen
in Malaysia legislation; S. 391(b) of Merchant Shipping Ordinance 1952 provides that a contract of
towage service may be converted if the act during the towage service is of exceptional character and is
exceeds the scope of a contract of towage.
What amount to rendered the towage service exceed the scope under the contract is depend on whether the
service is beyond the reasonable contemplation of the parties when they originally negotiated the towage
contract. Besides, the towage and salvage services cannot be carried out concurrently. As illustrated in The
Leon Blum (1915) case, the court ruled if a towage contract has already converted to a salvage service, the
towage contract will not be terminated instead it will be suspended.

In the case of The Minnehaha (1861), the Privy Council laid down the rules where it must be unforeseen
difficulties during the completion of the tug’s duty which places the tow in danger and there must be the
incurring of risks and the duties performed were not in the scope of the original engagement.
 Furthermore, Art 17 of the International Convention on Salvage 1989 provides that payment is due if
the services done exceeds what can be reasonably considered as performance required by a contact which
was entered into before the danger arose. The law means when the services incur was unreasonably
expected to be able to perform, the payment could be debited.
Moving on, in Homewood (1928) case the court laid down a test to determine when a contract of towage
becomes a salvage service. The test which must be fulfilled is the tow is in a position of danger which could
not have been in the contemplation of the parties when they concluded the contract and the duty and risks
undertaken could not reasonably be deemed to be in the scope of contract. However mere difficulty does
not automatically convert towage to salvage service.
Another situation of such convert would be when the towage service award is not sufficient to save the
vessel. For this, the burden of proof is on the tug owner who is claiming for salvage award whereby he must
prove that the nature of the service converted from towage to salvage through no fault or no intention on
his part and simply by fortuitous circumstances in which he had no control. This can be supported by the
case of The Marechal Suchet (1911), the burden of proof is on the claimant and based on the case of The
Robert Dixon (1879), it must be shown that the converting of service is not due to want of skill.
In conclusion, a convention of towage should be established to have a more synchronized law in the
maritime industry

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