001D Admiralty Law Sg2021

Master of Laws (LLM)
Postgraduate Diploma in Laws

Postgraduate Certificate in Laws
Admiralty law
Module D: Assistance at
sea and in ports
Revised edition, 2021
A. Mandaraka-Sheppard
M. Tsimplis
LWM01D
This Study Guide was prepared for the University of London by:
̆ Dr Aleka Mandaraka-Sheppard (LLB, LLM, PhD, Dip.IArb), formerly Head of the

Shipping Law Unit, University College London – Founder and Chairman of the
London Shipping Law Centre.
̆ Professor Mikis Tsimplis (BSc, LLM, PhD) Professor of Law, City University of
Hong Kong.
This is one of a series of Study Guides published by the University. We regret that
owing to pressure of work the authors are unable to enter into any correspondence
relating to, or arising from, the Guide.
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Contents
Contents
Chapter 1: Introduction..........................................................................................1
1.1 Admiralty law...........................................................................................................1
1.1.1 Study sequence................................................................................................1
1.2 Course aims and outcomes................................................................................. 2
1.3 Introduction to Module D.................................................................................... 2
1.4 How to use this Study Guide .............................................................................4
1.4.1 Case-law and statutes..................................................................................4
1.4.2 Reading............................................................................................................ 5
1.5 Preparation for the course...................................................................................6
1.5.1 Self-assessment questions......................................................................... 7
1.6 Allocating your time.............................................................................................8
1.7 The examination....................................................................................................8
1.7.1 How to approach the examination questions.....................................8
Chapter 2: The concept of salvage...................................................................... 13
Introduction...................................................................................................................13
2.1 1989 Salvage Convention................................................................................... 14
2.2 Assessment of salvage award and special compensation...................... 18
2.3 Salvage agreements under the 1989 Salvage Convention .................... 20
Chapter 3: Towage contracts.............................................................................. 29
Introduction..................................................................................................................29
3.1 The contract and basic terms...........................................................................29
3.2 Duties and liability of the contractual parties under standard forms...31
3.2.1 UK Standard Conditions for Towage and Other Services 1986
(UKSTC)......................................................................................................................31
3.2.2 Liability allocation under TOWHIRE 2008 and TOWCON 2008.. 33
3.3 Liabilities of the contractual parties to third parties and remedies... 35
Chapter 4: Duties and liabilities of ports and pilots....................................... 39
Introduction..................................................................................................................39
4.1 Statutory duties and rights of port authorities..........................................39
4.2 Duties of pilots and liabilities........................................................................ 40
4.3 Liability of the harbour authority ................................................................. 41
Chapter 5: Liability for marine pollution......................................................... 45
Introduction..................................................................................................................45
5.1 1992 Civil Liability Convention....................................................................... 46
5.2 Who is liable?........................................................................................................47
5.3 Pollution damage.................................................................................................47
5.4 Liability of the insurer...................................................................................... 48
5.5 Limitation of liability........................................................................................ 48
5.6 Role of the 1992 IOPC Fund.............................................................................. 49
5.7 2003 Supplementary Fund.............................................................................. 50
5.8 2001 Bunker Pollution Convention .............................................................. 50
5.9 Hazardous and Noxious Substances Convention 2010........................... 51
i
Admiralty law: Module D
Notes
ii
Chapter 1: Introduction
1.1 Admiralty law

Admiralty law belongs to the category of private law and, as such, it
regulates the rights and duties of people whose object of trade is a
ship. Although the subject comprises areas of the law which regulate
conduct of seamen at sea while navigating or assisting other ships
in need, the subject encompasses many more other areas of the law
(as you will find out by studying this subject). However, it does not
include the law relating to the carriage of goods by sea, international
trade law and marine insurance. These are complementary subjects
and are covered by separate courses in the University of London series.
Admiralty law is the core subject of shipping law (or maritime law, in a
sense), which means that you will comprehend shipping law better by
studying this subject.
In particular, when studying this subject you will learn about the
following areas of law in each of the four Study Guides:
• Module A: Admiralty jurisdiction; claims in rem and in personam;
maritime liens; ship arrest as security for civil liability claims.
• Module B: ownership and management of ships and the liabilities
that might be involved; intimately related areas to this are the laws
relating to the sale and purchase of second-hand ships as well as to
shipbuilding.
• Module C: the law of liabilities arising from negligence at sea and
limitation of liability.
• Module D: the law relating to assistance given at sea and in ports.
Admiralty law has developed from sources common to many maritime
nations and, as such, it is useful to many international lawyers (and
even to non-lawyers) who wish to know about the areas covered by the
subject. Through the ratification of international conventions by most
maritime nations, the internal municipal laws of different countries
show greater similarity to one another. Its substance is, therefore, of
direct interest to nationals of many maritime nations (even though the
law to be studied is common law and has been developed over the
years by the English courts). Thus, many of the principles you will learn
are applied by non-English courts as well.
1.1.1 Study sequence

The Study Guide for each of the four modules is self-contained
(Modules A–D); for example, you can learn about admiralty jurisdiction
without knowledge of the other modules. However, you will need
to understand some concepts which are unique to admiralty law by
looking them up in the textbook.
It is advisable that the study of the subject of admiralty law is
approached in the order of presentation (A to D) and Module C must
be attempted before Module D.
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1.2 Course aims and outcomes

Aims of the course
The primary aims of this course are to enable you to:
• learn the legal principles related to admiralty law
• acquire a deeper understanding of difficult legal concepts
• widen your knowledge of maritime law and commercial reality
• develop lateral thinking.
These skills will be essential for both the final examination and future work
opportunities.
Course learning outcomes

By the end of this course you should be able to:
• interpret maritime statutes, conventions and contractual terms in specialised
maritime contracts
• explain the legal principles and concepts derived from court decisions and
international conventions
• critically analyse admiralty law
• apply legal principles and statutory provisions to practical situations
• distinguish between the principles applicable to different sets of
circumstances.
1.3 Introduction to Module D

This module deals with four separate topics.
The first, salvage, concerns a legal right which exists exclusively in
admiralty law. When ships are in danger, frequently in areas outside the
jurisdiction of any state, they need to engage assistance as otherwise
they could be lost to the sea. Such assistance historically was provided
by other ships passing by because no other assistance was available.
This reduced losses and benefited ship and cargo owners and their
insurers. To encourage this practice public policy supporting salvage
assistance has been developed. This includes a monetary award
payable to the salvor by the owners of the property and prioritisation
of the payment of salvage claims following the arrest of the ship.
In addition, two international Conventions supporting salvage and
providing a degree of uniformity internationally have been developed.
In parallel to the statutory provisions concerning salvage, the parties
involved in the salvage operation have developed mutually convenient
salvage contracts which have, over time, acquired very distinct
characteristics and were used to overcome problems and clarify issues
that were unclear under the international salvage regimes. The 1989
Salvage Convention, which is the basis of the English and international
legal framework of salvage, will be the focus of study.
The second topic is towage. Towage concerns the provision of
assistance to ships by tugs either because the towed ship has suffered
a breakdown or simply in order to make the approach into and out of
a port safer. Towage is contractual in character. Towage contracts have
developed distinct liability allocation clauses which differ for towage
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into a port and ocean towing. Understanding the terms implied to

towage and the main contractual arrangements will be the basis for
this topic.
The third topic is pilotage, the use of licensed navigational experts,
who assist the ship’s master to navigate the ship in and out of a port
or in particularly dangerous or vulnerable areas of the ocean. Pilots
are licensed by a port authority but the liability for any navigational or
other errors they may make is on the owner of the ship. The liability of
pilots is limited by statute.
The fourth topic is liability for marine pollution by ships. The
international legal framework when compared with salvage is very
young but has expanded significantly, and there are different legal
regimes dealing with oil pollution from tankers, bunker oil pollution
from non-tankers and pollution damage arising from hazardous and
noxious substances, although the latter is not in force yet. These
regimes are based on four interlinked principles, namely strict but
limited liability for the shipowner, backed with compulsory insurance
and direct action against the insurer. These legal regimes significantly
assist claimants by providing, in most cases, adequate compensation.
They also facilitate trade and protect shipowners by reducing their
exposure to claims and security measures based on national laws.
However, national laws can also provide the basis of recovery for
pollution damage from ships.
Learning objectives for Module D

1. To provide an in-depth understanding of:
• the legal principles that underpin salvage liability
• the international legal regime that governs salvage liability
• the role of contractual agreements in salvage operations
• the development of incentives for the engagement of salvors in incidents
threatening marine pollution
• the legal provisions governing towage contracts
• the specifics of towage contracts for towage in port and towage in the
open sea
• pilotage and port authority liability
• the policies underpinning the legal framework of oil pollution from ships
• the operation and limitations of the international liability regimes for pollu-
tion from ships
• the interaction of national laws with the international liability regime for oil
pollution from ships.
2. To develop the ability to synthesise and apply the legal knowledge acquired
to complex practical problems.
3. To develop the ability to integrate the legal principles and the case-law in
order to critically assess the underpinning policies.
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Learning outcomes for Module D

By the end of this module, and having completed the Essential readings and
activities, you should be able to:
• describe the legal framework for the four topics
• critically assess the commercial and policy reasons for the development of the
current legal arrangements
• analyse and respond to critical statements on the current legal status on the
basis of the rationale of case-law and statutory provisions
• apply relevant principles, legal provisions and case-law in order to resolve case
studies based on a set of facts and to outline the potential outcomes
• synthesise case-law and statutory provisions regarding the legal position with
respect to any of the four topics concerned.
1.4 How to use this Study Guide

This Study Guide acts as a focal point for the study of Admiralty law on
the Postgraduate Laws programme. It is designed to guide you through
the various important elements of the subject and, in particular,
the difficult areas which you need to master for the examination. In
addition to giving guidance on the sources in which you will find the
information required for your gradual learning, you are also given
learning outcomes and activities for each chapter, which you must
complete before you move to the next area of study. Some feedback
and advice as to how to approach your answers are also given.
It is impossible in this Study Guide to deal with all the areas in which
you need to expand your knowledge. The Guide simply draws up the
boundaries of the course, and it is recommended that you search for
more reading. The Guide includes suggestions about Essential reading
as well as Useful further reading in each of the chapters.
Without lectures or seminars to attend, you are in charge of your time
allocated to your study and, therefore, it must be used sensibly and
constructively.
This course requires a systematic and methodical approach not only
because of the difficulty of the subject but also because you will not
have lectures, tutorials or group pressure from other students that you
would have were you to complete the course internally. Those of you
from civil law jurisdictions, or non-lawyers, will require even more time
to devote to the subject because of the different way of learning a
common law subject. The role of case-law in common law jurisdictions
cannot be understated, not only for learning and understanding the
law, but also for your success in the course.
1.4.1 Case-law and statutes

The exam assesses the module outcomes. This is done through essay
questions, which ask you to write an essay critically analysing or
explaining a legal principle or development, and problem questions,
normally drawn from real factual situations of previous court cases
with, perhaps, some additional points not necessarily fully discussed
in court. In order to answer both types of questions you need to be
aware of court decisions and their rationale. It is therefore strongly
4
recommended that you read the suggested case-law as well as the

case-law cited in the readings. This will enable you to:
• acquire the ability to make the legal argument in support of your
case
• understand the limitations of each court decision
• develop a critical view as to the correctness of the majority, and any
dissenting, judgments forming the decisions
• learn the importance of the commercial reality surrounding a
particular case.
To be able to remember the cases (of which there are many), it is
advisable that you devise a method that is suitable for you. The human
memory is enhanced if the principles of cases are noted in clear and
succinct notes, either by using a card system or another clear form of
note taking. Mind maps have a more long-term effect on learning than
a linear method of note taking. This method is described in a book by
Tony Buzan: The Mind Map Book (BBC Worldwide Publishing, 2009).
In addition to case-law the other main legal sources for studying
admiralty law are the statutory provisions of the Merchant Shipping
Act 1995, as well as other statutory instruments and legislative acts and
the international maritime and other conventions. These, together with
the case-law, are synthesised in a coherent discussion of admiralty law
in the Study Guide and, more comprehensively, in the textbook (see
below).
Admiralty law evolves continuously. It is good practice to learn how
to keep yourself updated by searching for new leading authorities,
statutory instruments and international conventions. The Online
Library subscribes to several databases including LexisLibrary, Westlaw
and Lloyds Law Reports: https://onlinelibrary.london.ac.uk/
In view of the strict time limit during the examination, you will be
required to remember important decisions and statutes.
1.4.2 Reading
This Study Guide is based on the set textbook:
• Modern maritime law: Volumes 1 and 2 by Aleka Mandaraka-Sheppard.
This is a comprehensive text, which has been chosen by the University
for your study and is supplemented by additional references provided
in this Guide. Throughout this course, the textbook will be referred to
as ‘Sheppard’). This is available via VLeBooks in the Online Library.
References to other important books and materials are also made
in the Useful further reading. You should expand your knowledge
by referring to these other sources as well, particularly if they are
emphasised in the text.
Essential reading
• Mandaraka-Sheppard, A. Modern maritime law (Volumes 1 and 2). (Abingdon:
Informa Law, 2014), 3rd edition [ISBN 9780415843201].
Module A refers to Volume 1: Jurisdiction and risks and Modules B, C and D
refer to Volume 2: Managing risks and liabilities.
• For Module D, Chapters 10, 11 and parts of Chapters 13 and 16 are relevant.
5
Useful further reading

Books
• Baatz, Y. Maritime law. (Informa Law from Routledge, 2020) 5th edition
[ISBN 9780367496708] Chapters 7 and 10.
• De La Rue, C. and C. Anderson Shipping and the environment. (Abingdon:
Informa Law, 2009) 2nd edition [ISBN 9781843113232].
• Gault, S. et al Marsden and Gault on collisions at sea. (London: Sweet & Maxwell,
2016) 14th edition [ISBN 9780414045750].
• Rainey, S. The law of tug and tow and offshore contracts. (Abingdon: Informa
Law (Lloyd’s Shipping Law Library), 2017) 4th edition [ISBN 9781138558441].
• Reeder, J. Brice on maritime law of salvage. (London: Sweet & Maxwell, 2012) 5th
edition [ISBN 9780414045798].
• Rose, F. Kennedy and Rose on the law of salvage. (London, Sweet & Maxwell,
2017) 9th edition [ISBN 9780414061064].
Statutes, conventions and contracts
Salvage:
• Merchant Shipping Act 1995, Schedule 11.
• 1989 Salvage Convention.
• Salvage forms and contracts: www.marine-salvage.com/documents
Towage:
• Towage contracts: www.marine-salvage.com/documents
Pilots and port authorities:
• Pilotage Act 1987.
• Harbours, Docks and Piers Clauses Act 1847.
Marine pollution:
• Merchant Shipping Act 1995, ss.152–171.
• The 1992 Civil Liability Convention (www.iopcfunds.org/about-us/legal-
framework/).
• The 1992 Fund Convention on Compensation for oil pollution damage.
(www.iopcfunds.org/about-us/legal-framework/).
• The 2003 Supplementary Fund Protocol (www.iopcfunds.org/about-us/legal-
framework/).
• The 2001 Bunker Pollution Convention (https://www.gov.uk/government/
publications/international-convention-on-civil-liability-for-bunker-oil-
pollution-damage-2001).
• The 2010 Hazardous and Noxious Substances Convention
(www.hnsconvention.org/the-convention/).
1.5 Preparation for the course

Bear in mind that the reading required for any postgraduate course
is remarkable and for this subject, in particular, you are required to
study a number of important decisions. But you are guided on how to
proceed and which sources to pay more attention to than others.
It is therefore extremely important to at least complete all the Essential
reading. The suggested materials, including the Useful further reading,
help you to complete the picture: this will all become clear to you at
6
the end. The required study is extensive and you will not be able to do
all your reading at the last minute. Studying gradually, while making
clear notes, will enable you to obtain a better understanding of this
exciting and difficult subject.
1.5.1 Self-assessment questions

Self-assessment can tell you how well you understand the topic
of study. For self-assessment to be effective, however, you need to
understand the assessment criteria.
In addition to the learning objectives and outcomes for each module,
Admiralty law has some overarching aims for the whole course
(see 1.2).
There are also specific learning objectives and outcomes for each
module, to help with your self-assessment (see 1.3).
The self-assessment questions – like the examination questions –
always cover several learning objectives and are assessed against the
general and specific learning outcomes.
Example (from Module A): ‘Explain the priority of claims for actions
in rem.’
This question requires an explanation of where an action in rem can be
initiated.
• This engages with the objective ‘the enforcement procedures
available under the Admiralty jurisdiction of the High Court’.
• It also requires an understanding of ‘the concept of maritime
liens, their significance in enforcing the claim which gives rise to
a maritime lien and conflict of laws’ in order to explain why these
have priority.
• It further covers ‘the procedure of arrest and release of the ship
from arrest and the consequences for the shipowner, the claimant
and any third party’ in order to explain how/when the priority
issues arise and who decides them.
• And of course it also covers ‘the order of priorities in the payment of
claims by the court’, which refers to the case-law and its rationale.
The question also reflects the two course learning outcomes:
• ‘explain the legal principles and concepts derived from court
decisions and international conventions’
• ‘distinguish between the principles applicable to different sets of
circumstances’
and to a lesser extent covers:
• ‘critically analyse admiralty law’ and
• ‘apply legal principles and statutory provisions to practical situations’.
Of course, self-assessment is also concerned with how well each
outcome is met and – for those outcomes and skills that reflect
synthetic and critical ability – how well the various learning outcomes
are integrated. In other words, when you use self-assessment you not
only have to ask ‘Have I done a particular task?’, but also ‘How well have
I done the particular task?’
7
Stating the law correctly and accurately is, for example, one level,
providing the correct source (whether it is a case or a statute), is a
second, and being able to critically analyse the law is a third level.
Self-assessment will help you to identify areas where your performance
is good and where it is less good. This will enable you to improve in those
areas where you fall below your own standards. By comparing your legal
statements with those made in the Essential and Useful further reading
you will be able to identify where your expression and writing technique
is not precise enough or where you have simply made a mistake.
So the self-assessment questions are learning tools to improve your
awareness of what you know and how well you know it. You do not need
to treat them as sample examination questions or complete them within
the time normally allowed in the examination. They are simply another
stage of preparation which you must start after you complete the work in
each module. When you have completed a task, you might like to upload
your answers to the Student Café on the VLE and seek comments from
your peers. Peer evaluation is an excellent method of assessment.
1.6 Allocating your time

It is impossible to say how much time you should set aside for studying
Admiralty law because each student has individual learning rates
depending on personal circumstances, fluency in English and any prior
study of law.
However, as a full-time Postgraduate Laws student you are expected
to spend approximately 120 hours studying and preparing for the
examination for each module of this course. It is advisable to set aside
a specific amount of time each week to study each module, increasing
the amount of time dedicated to studying in the six weeks before the
examination. Some topics of the syllabus will require considerably
more time than others.
1.7 The examination

Important: The information and advice given in the following
section is based on the examination structure used at the time this
Study Guide was written. However, the University can alter the
format, style or requirements of an examination paper without
notice. Because of this, we strongly advise you to check the
instructions on the paper you actually sit.
The course outcomes for each module will be assessed by an unseen
written examination of 45 minutes’ length, with reading time. To the
extent that there are any prerequisites for this module, knowledge
of the materials covered in those prerequisites may be necessary to
answer the questions on the examination of this module.
1.7.1 How to approach the examination questions

The overarching course aims (see 1.2) and the specific learning
objectives and outcomes for each module (see 1.3) encompass both
declarative and functional knowledge:
8
• Declarative knowledge in our context is what you know about the

relevant area of admiralty law (including the source and how to
reference it).
• Functional knowledge concerns the things you can do with
it. These could be a synthesis, a comparison, a critique or an
application of the law to specific facts.
Examination questions are generally in two forms:
• An essay question could ask you to synthesise, compare, criticise or
agree/disagree with a statement (in many cases quite a provocative
or exaggerated one).
• A problem question could ask you to apply the law to a number of
facts and, unavoidably, synthesise the outcomes into some sort of
advice or analysis.
Both types of questions therefore test the same knowledge. In both
cases declarative knowledge must be demonstrated and supported.
Functional knowledge is also tested by both methods, although in
slightly different ways.
• Essay questions emphasise the ability to correctly identify the
issue raised by the question, describe the arguments and counter
arguments, synthesise the declarative knowledge so that it answers
the question asked and so demonstrates your relevant knowledge.
• In problem questions the important first step is to identify the
issues raised by the facts given. Then you need to demonstrate your
knowledge of the law relevant to the facts and synthesise them so
as to give the potential outcomes of such a case.
Some further guidance is given below on each type of examination
question.
Remember that a good structure, an accurate description of the law
and its limitations with appropriate references is needed in both cases
– as well as appropriate reasoning.
Therefore, a poor answer to a question on salvage, for example, would
generally describe the law of salvage instead of focusing on the
question or the facts of the problem. And even with a good structure,
an answer will be poor if it does not state the law correctly. Only good
legal knowledge combined with good functional knowledge will result
in a good answer. That is why it is essential that you not only learn
admiralty law but also develop the required functional skills through
the various activities and self-assessment questions. You should also
practise answering past examination questions, initially without time
constraints and then with the actual examination time limit.
Remember that you are studying for a Masters degree and this requires
more extensive and in-depth declarative knowledge than undergraduate
courses, and significantly improved functional knowledge. This can only
be acquired by broader reading, accurate analysis of the law and the
development of critical and synthesising skills.
A final and very important point: time in the examination is limited.
Every minute you spend adding irrelevant information is a minute
wasted, when you could have been doing something to gain marks.
So make sure that you are selective in what information you use when
answering an examination question. 9
Essay questions
Structure
Properly structuring an answer to an essay question will facilitate your
writing, and ensure that it is logical and that the conclusions follow a
logical flow. In general there should be at least three sections:
• First, an Introduction, identifying the limits of the answer and
perhaps the policy or commercial reasons why it is important.
• Second, the main part of the essay, identifying and discussing
the arguments for and against, demonstrating the declarative
knowledge (i.e. what the law is, what the source is: statute/case),
what are the problems/unclear issues/unsatisfactory aspects.
Here you should also develop your arguments based on what you
know. Arguments do not need to be one sided: an accurate and
dispassionate analysis is much better than a one-sided analysis. This
section can have more than one sub-section discussing specific
arguments for dealing with partial issues that affect the main part
of the discussion.
• Finally, a concluding section where a clear answer to the question is
given on the basis of the arguments made earlier. Where there are
competing arguments, explain here why you prefer one to another,
and how these affect your answer.
Content
• Demonstrate a good understanding of the topic. You should not
only make accurate statements on the law but also discuss only the
relevant aspects of the law, instead of a general exposition.
• Reference the right legal sources and materials. The primary
textbook is very comprehensive so you are not expected to refer,
in a written examination, to all the case-law. However, reference to
the basic sources are needed to get a pass mark, and discussion of
further sources – including material from the Useful further reading
– will get higher marks (always remembering that this is only part
of the tested learning outcomes).
• Be able to analyse and/or synthesise the law. This must be based on
decided case-law and/or statute, whichever is appropriate.
• Give a dispassionate and rational analysis of the issues involved
by referring to the relevant legal principles or policy objectives.
Discussing only some of the arguments in order to make your
answer more persuasive is not good practice because it implies
lack of knowledge of the counter arguments. It is good practice to
examine all the arguments and counter arguments one by one and
assess them against each other.
• Always keep your discussion relevant to and focused on the
question asked. You may have read something remotely relevant
or prepared an essay on a similar – but not exactly the same –
question. Trying to fit what you have prepared or read as part of the
answer to another question will not gain you a good mark.
10
Problem questions
A problem question has advantages and disadvantages when
compared with an essay question. The advantage is that because
problem questions are normally based on several legal issues there is
a better chance that you will be aware of at least some of them. The
disadvantage is that identifying these issues is by itself part of the
examination – a part of functional knowledge. Missing out one or more
makes the answer incomplete, with consequently poorer marks.
Structure
An answer to a problem question can be structured in different ways:
• You can follow the temporal steps in the case. This way you can
discuss every part and identify the issues. This is a very basic
structure, and in the end you should bring all the sections together.
• Another common structure is to identify the major legal issues or
risks, discuss the facts surrounding them and come to a conclusion
on each of them. In the end you should provide a synthesis
according to the question asked (e.g. advise A or discuss).
• For liability problems perhaps the best technique is to identify
the damages, the parties that suffered them and complete your
analysis by looking practically at each of the potential claims and
counterclaims.
You can use other structures, but important elements to always include
are:
• identifying the issues
• explaining and documenting the applicable law
• discussing the facts of the question and the extent to which those
facts permit different outcomes to those in the existing case-law
• performing the task required (advise, discuss, etc) in the conclusion.
Content
• Demonstrate a good understanding of the topic. You should not
only state the law accurately but also explain whether existing
case-law can be distinguished from the facts of the problem, why
and with what potential outcomes.
• Reference the right legal sources and materials. Avoid trying to
demonstrate how much of the case-law you know – use only what
is relevant.
• Show your ability to apply the law to the facts of the case – and
arrive at an outcome.
• Provide alternative analyses where the facts are inadequate. If facts
are missing, then either state what your assumption is in order to
continue your answer or – a better option leading to higher marks
if done correctly – state alternatives and their outcomes.
• Give a relevant analysis of the facts and the case-law, focused on
the problem question asked. If, for example, there are three parties
involved – A, B and C – and you are asked to advise A, do not
concern yourself with any disputes between B and C, unless these
affect A too.
11
Notes
12
Chapter 2: The concept of salvage
Introduction
There is a legal duty to assist ships in distress at sea when human life
is at risk. However, there is no corresponding duty to save property in
danger at sea. In order to avoid losses and get specialised assistance
to ships a public policy has been developed, encouraging private
parties to assist ships by granting them the right to a reward when
they successfully save property at risk at sea. Thus, a right to a salvage
reward is available to a person who, without any pre-existing legal
or contractual duty, preserves or contributes to preserving maritime
property from being lost. In addition, the right to a salvage reward
arises at the time of rendering assistance and it does not depend on
the existence of any contract. This right is protected by a maritime lien,
a claim of the highest priority, which is enforceable by a right to arrest
the salved property through an action in rem.
The quantification of the reward is linked to the value of the property
salved and is paid in proportion by the owners of the property, be it the
ship, the cargo, the bunkers or those who are entitled to the payment
of freight. To smooth out issues of performance and security, salvage
contracts are normally agreed detailing the applicable law, the duties
of the parties and the place of termination of salvage. The Salvage
Convention 1910 unified the principles of maritime salvage law.
However, the original concept of salvage does not provide incentives
for salvage assistance in situations where all property is likely to be
lost. This is particularly problematic where the cargo is a pollutant, for
example crude oil, which needs significant expenditure to clean up
and exposes shipowners and oil traders to civil liability and clean-up
costs. Contractual modifications and the 1989 International Convention
on Salvage (1989 Salvage Convention) have extended the original
salvage rights and introduced additional remuneration in cases where
environmental damage is avoided due to salvage assistance.
The 1989 Salvage Convention applies to proceedings related to salvage
operations undertaken anywhere in the world. However, it permits
contracting out of its provisions, with very few exceptions. The best
known salvage contract is the Lloyd’s Open Form (LOF) which is an
agreement to accept the determination of the salvage reward by Lloyd’s
of London arbitration in London, under English law, on a ‘No cure, no
pay’ basis. This means that the salvage reward is not agreed in advance
but is left for the arbitration panel to decide with the provision that,
unless the salvor succeeds in or contributes to saving of property in
danger, there will be no salvage reward at all. It is called ‘open’ because
there is no price agreed for the award. If there is no contract signed, the
matter of fixing the salvage award will be referred to the court, together
with any other related matters. The LOF has been modified to provide
for payments of salvage services on the basis of tariffs when a special
clause, the Special Compensation of Protection and Indemnity Club
clause (SCOPIC Clause), is incorporated or to enable salvors to be paid in
accordance with the 1989 Salvage Convention.
13
Because the obligation to pay the salvage award attaches to all

property owners there can be significant objections by cargo owners
when an agreement for salvage is signed. This is understandable
because cargo owners are asked to pay to have their own goods
delivered to them, perhaps in the wrong part of the world, while at the
same time they have already paid, or remain liable for paying, freight
under the contract of carriage. Salvors are concerned that if cargo
interests successfully avoid being bound by a contract for salvage they
may remain unpaid. While the issue is, as will be seen, resolved under
the 1989 Salvage Convention, the conflicts between the interests
of property owners and salvors helps the understanding of the
development of the current legal framework.
Learning outcomes
By the end of this chapter, and having completed the Essential readings and
• explain the principles applicable to maritime salvage under the 1989 Salvage
Convention and preceding developments which led to the Convention
• apply the particular characteristics of salvage agreements
• discuss the duties and rights of salvors under both the Convention and the
Lloyd’s Open Form (LOF) agreements
• state the particular criteria for fixing a salvage award
• determine when there will be a breach of the contract by either party and any
remedies available
• state the circumstances under which the courts would intervene with a
salvage agreement
• explain the particular requirements for awarding special compensation for
protection of the environment from pollution
• determine whether a ship whose fault gave rise to the need for salvage,
or its sister ship, can earn a salvage award by rendering successful salvage
operations.
Essential reading
• Sheppard, Vol. 2, Chapter 10.
• Salvage Convention 1989. Available at: https://www.jus.uio.no/lm/imo.salvage.
convention.1989/doc.html
• Merchant Shipping Act 1995, Schedule 11. Available via Lexis in the Online Library.
2.1 1989 Salvage Convention

The 1989 Salvage Convention has the force of law under s.224 of the
Merchant Shipping Act 1995 (MSA 1995). It is the starting reference
point for the current English law of salvage. Consequently, earlier pre-
existing salvage case-law needs to be assessed under the 1989 Salvage
Convention. Where the Convention is unclear or silent, pre-existing
English law can be used to clarify the unclear or silent points.
The 1989 Salvage Convention applies in all cases where salvage
matters are brought before an English court or an arbitration panel
seated in England. It applies irrespective of the flag of the ship involved
or the area of the sea in which the salvage operation was undertaken.
The Convention applies to ‘navigable waters or in any other waters
whatsoever’.
14
However, the UK has reduced the geographical scope of application

by excluding, through a permissible reservation, salvage operations
that take place in UK inland waters where all vessels involved are
vessels of inland navigation, and excluding salvage in inland waters
where no ships are involved. The definition of inland waters provided
within the same section excludes waters ‘within the ebb and flow’ of
the spring tide and any docks connected with such waters. This brings
the application of salvage law closer to what it was under pre-existing
English law which did not cover salvage operations that took place in
non-tidal waters. However, the reduction in the Convention’s scope
concerns only the UK’s internal waters.
Ships, craft and other structures capable of navigation, as well as other
property not permanently and intentionally attached to the shore,
can be the objects of salvage. Freight ‘at risk’ – in other words not yet
paid or payable – is also subject to salvage. Pipelines and jetties are
excluded from the operation of the salvage regime because they are
permanently and intentionally attached to the shore. By contrast, cargo
adrift or sunken can be the subject of salvage.
Drilling platforms, whether floating, fixed or mobile, are expressly
excluded from the application of the 1989 Salvage Convention when
they are on location and engaged in their specific operation of drilling.
However, while underway these structures are subject to salvage law.
For an operation to fall under the definition of salvage the relevant
property must be in ‘danger’. The 1989 Salvage Convention does
not define the term ‘danger’. Under pre-existing English law the
requirement was one of ‘real danger’, reasonably apprehended, and
this also appears to be accepted as the correct interpretation under
the Convention. The danger does not need to be present at the time
of the sustained damage, provided that it is reasonably expected
that it will arise before self-help can remedy the situation. Thus, a
ship immobilised by engine failure is generally in danger, even if the
weather is calm or it is anchored, unless it is possible to effect repairs
within a reasonable time. Whether the vessel is in danger or not is to
be decided objectively by the judge or arbitrator. The master’s opinion
is not conclusive in this respect, even if they are the person who will
request or accept an offer for salvage assistance.
The salvor is under a duty to perform the salvage operation with due
care and in doing so to minimise environmental damage and to seek
assistance from other salvors if necessary. If the salvor fails to fulfil
these duties it may receive a reduced reward or no reward at all.
Under English law the salvor is also liable for damages caused to the
property salvaged if negligent. The owners of the property in danger
are under an obligation to cooperate fully with the salvor, to prevent or
minimise environmental damage and to accept redelivery at a place of
safety (Art.8(1)).
The 1989 Salvage Convention is unclear on what the consequences
are if the owners of the property or the master do not fulfil these
obligations. Is the salvor entitled to a salvage reward or some
compensation if the owner of the property fails to provide information
of the cargo’s nature and as a result the vessel and the cargo are lost?
15
Similar questions can be posed in respect of the environmental duties

of the salvor and the owner or master. The 1989 Salvage Convention
is clear that if there is no property salved then no salvage reward can
be due (Art.12 and Art.13(3)). Thus, the only available remedies to the
salvor would arguably be either breach of the salvage contract, if there
is one, or the breach of the statutory duties under Art.8. However, the
Convention does not specify such remedies.
The obligation of the owners of property to accept redelivery, when
the property is at a place of safety, is also problematic. The 1989
Salvage Convention does not define what a place of safety is. One
could suggest a definition, e.g. a place of physical safety can be a place
where the property can stay without being under immediate threat of
the elements of nature even if it cannot be repaired and returned into
service. Under pre-existing English law an interpretation requiring that
the place of safety does not only need to be physically safe but also
to have appropriate facilities to put the vessel back into service is the
correct one. The problem of whether the meaning of the specific term
should be interpreted under pre-existing English law or by seeking an
international definition, and what this would be, remains unresolved.
Under pre-existing English law the essential elements for the claim of
salvage reward are: danger, voluntary services, and success in bringing
the property to safety, or contribution to meritorious services.
The element of danger is expressly preserved in the 1989 Salvage
Convention and case-law has confirmed that the interpretation of the
term has not changed by the Convention.
The requirement of voluntary services is dealt with in two parts of the
Convention:
• Salvors working under public authorities are entitled to a salvage
award (Art.5(2)) but the issue whether salvage authorities are
entitled to a salvage reward is left to the law of the state where the
authority is located (Art.5(3)).
• The issue of salvage by entities already contractually engaged to
work or assist the ship is dealt with under Art.17, which requires
that the services provided exceed those contractually agreed
before the occurrence of the danger.
The combination of these two articles resembles very closely the
position of English salvage law before the Convention.
The third element, the issue of success, is, in the Convention, translated
to services that have a ‘useful result’. Whether this is to be interpreted
as reflecting only the need to save property or, in addition, improving
the situation of the endangered property is not decided, but certainly
the term is broad enough to be interpreted consistently with the pre-
existing English law which favours the latter arrangement.
Time bar
The time bar under Art.23(1) of the 1989 Salvage Convention is two
years. The limitation period starts when the salvage operations are
terminated. The Salvage Convention permits, however, contractually
agreed limits. Time bars do not normally provide problems in salvage
cases. However in a case where salvage of objects from a wreck has
16
taken place over a long period of time a question on time limitation

had arisen. Mr. Justice Teare held in R (Knight) v Secretary of State for
Transport [2017] EWHC 1722 (Admin), [2017] 2 Lloyd’s Rep 453 that
determining when the salvage operations ended with respect to a
wreck was a matter of fact to be determined and did not require the
removal of all the objects of the wreck from the sea bed before salvage
was terminated.
Now read the Essential and Useful further reading and undertake the
following activities.
Activities 2.1–2.9
2.1 Illustrate what property would be subject to salvage services and what
property is excluded from those services under Art.1(a), (b), (c) and Art.3 of
the 1989 Salvage Convention.
2.2 Considering the definition of property in the Convention, do you think that
a vessel permanently moored or anchored to the seabed will be property for
salvage services? Also, would a sunken ship (a wreck) be subject to salvage?
2.3 Identify the commercial parties who may be owners of property, as
described under Art.1(a), (b), (c) and Art.3 of the 1989 Salvage Convention.
2.4 Consider the situation where salvage services are provided in a river in the
UK or in a river in another contracting state to the 1989 Salvage Convention.
Would there be entitlement to a salvage award if an arbitration panel
established in England heard the case?
2.5 Explain how life salvage was treated prior to the 1989 Salvage Convention
and how is it treated now under the Convention.
2.6 Explain by reference to case-law what the degree of danger should be in
order to give rise to salvage services. Would a temporary difficulty or a future
danger suffice?
2.7 Illustrate your understanding of the restrictions in claiming a salvage reward
under the 1989 Salvage Convention, Arts.5 and 17. Set out the circumstances
in which the crew of a ship would be able to claim salvage for their services
by referring to case-law and consider whether the position has been
changed under the 1989 Salvage Convention.
2.8 Explain the position of those who offer salvage services under a statutory or
official duty and their possible right to claim a salvage award.
2.9 Explain your understanding of meritorious services. Are these supported
under the 1989 Salvage Convention? Give examples of what would deprive a
salvor of a salvage award.
Feedback is available at the end of this chapter.

• Baatz, Y. Maritime law. (Abingdon: Informa Law, 2020) 5th edition
[ISBN 9780367493844] Chapter 7.
• Kennedy & Rose on the law of salvage. (London: Sweet & Maxwell, 2017) 9th
edition [ISBN 9780414061064].
• Brice, G. ‘The new Salvage Convention’ [1990] LMCLQ 32.
17
2.2 Assessment of salvage award and special

compensation
Essential reading
• Sheppard, Vol. 2, Chapter 10, section 11.
Two ways of rewarding a salvor are provided for under the 1989
Salvage Convention. The first way corresponds to the customary
salvage award. This is awarded when the salvage operations have a
useful result. The criteria for the calculation of the salvage award are
detailed under Art.13. The criteria employed include:
• the value of the salved property
• the skills of the salvors in minimising environmental damage
• the nature and extent of danger, the measure of success and the
general skills of the salvors as evidenced in the response time
• the risks undertaken
• the availability of vessels
• the promptness and length of the salvage service.
The various criteria listed under Art.13 are not in a hierarchical order
and can only be considered as indicators for the adjudicators of the
salvage reward. Thus, it cannot be said a priori which of these criteria is
the most determinative of the amount of the reward. As a result, judges
and arbitrators have significant discretion in determining the amount
awarded. What is certain is that if there is no valuable property salved
there will be no such reward.
There is no equivalent list of criteria under pre-existing English law, and
especially the criterion taking into account the threat of environmental
damage was not considered before the Convention as being eligible
for the calculation of the salvage reward.
The salvage reward is payable by the owners of the property salved
and in proportion to the value of the salved property. Thus, for
example, if the ship’s salved value is £8,000,000, the salved cargo’s
value is £90,000,000, the bunkers cost £1,000,000 and the freight at risk
another £1,000,000, then a salvage reward of £100,000 under Art.13
will be payable as follows: the owner of the ship will pay £8,000, the
cargo owner £90,000, the owner of the bunkers £1,000 and the party
benefiting from the unpaid freight for the salved cargo another £1,000.
The amount awarded must take into account the value of the salved
property but cannot be out of proportion to the services rendered.
This means that for the same services a higher reward will be awarded
to the salvor of a more expensive ship and cargo. The second part
restricts, to an extent, the possibility of providing very high salvage
awards without taking into account the type of the actual services
rendered. Overall, the reward criteria give significant discretion to the
courts and arbitrators.
The second way of rewarding salvors concerns the special
compensation of Art.14. This arrangement was the primary reason
18
for developing the 1989 Salvage Convention and was initiated after
the Torrey Canyon accident when it was realised that salvors would
be reluctant to engage with the salvage of a stricken tanker if the
prospects were that ship and cargo would be likely lost to the sea.
Such a situation would promise zero reward to salvors. This posed a
major problem to coastal states, shipowners and oil traders because
the environmental impact of such an accident would not be mitigated
early enough and by the highly skilled salvage industry, and this would
lead to increased environmental damage and liabilities.
The Art.14 special compensation is payable when the salvor assists a
vessel which threatens damage to the environment. Damage to the
environment is defined as:
substantial physical damage to human health or to marine
life or resources in coastal or inland waters or areas adjacent
thereto, caused by pollution, contamination, fire, explosion or
similar major incidents.
This definition is restrictive in several ways:

• Damage to the environment is only covered in coastal or inland
waters and adjacent areas. Therefore, it is arguable that any
damage occurring away from the coastal areas, presumably within
the Exclusive Economic Zone (EEZ) but certainly on the high seas,
does not come under this definition, with the consequence that
the relevant incentives are not available to salvors in circumstances
where the oil spill or other type of pollution occurs far from the
coast.
• It requires ‘substantial’ physical damage, a term which is not clear.
Presumably, the ‘substantial’ nature of the damage will depend not
only on the extent of the damage but also on the importance and
rarity of the marine life and resources affected.
• It requires a link with major incidents, indicating that where
physical damage to the environment is substantial but the incident
is not a major one the environmental damage will probably not be
covered by the definition.
A salvor who assists a vessel that threats environmental damage
and who fails to earn enough money under Art.13 is entitled to their
expenses under Art.14. Further, where the salvor has had some success
in their efforts they are entitled to an increase that may double their
expenses. The drafting of Art.14(2) is particularly confusing because it
suggests an uplift of up to 30 per cent but not exceeding 100 per cent.
The unclear drafting represents a late compromise made during the
final negotiations on the Convention.
The special compensation is only payable to the extent that it exceeds
the Art.13 reward. Only the shipowner is liable for the payment of the
special compensation.
The definition of the salvor expenses has led to two significant
problems under English law.
The first concerns the calculation of expenses under Art.14(3) and
particularly the use of ‘a fair rate for equipment and personnel actually
and reasonably used in the salvage operation’ in order to calculate
19
other than out-of-pocket expenses. The House of Lords’ decision in The

Nagasaki Spirit [1997] 1 Lloyd’s Rep 323, where it was decided that the
term ‘fair rate’ referred to expenditure and did not include an element
of profit, has resolved the legal issue by adopting an impractical
arrangement.
The second unclear point regarding Art.14 is whether special
compensation is payable only during the period in which the threat of
environmental damage is present or whether it is to be calculated until
the redelivery of the property to its owners. In The Nagasaki Spirit the
House of Lords favoured the latter solution. If the salvor is negligent
in their efforts of preventing or minimising damage, they may be
deprived of special compensation (Art.14(5)).
2.10 Discuss the criteria for a salvage award to be made under Art.13. Some are
only relevant to professional salvors. Would this have a consequence for the
awards granted to non-professional salvors?
2.11 Illustrate the requirements for triggering Art.14 and the payment of special
compensation.
2.12 Explain the meaning and the limitations of ‘damage to the environment’
under Art.14 of the 1989 Salvage Convention.
2.13 Assume that the salvor protected the environment from damage with skill
and great effort and expense, what would their maximum compensation be
under Art.14?
2.14 Explain what is meant by the words ‘expenses’ and ‘fair rate’ in Art.14(3).
Should ‘fair rate’ include an element of profit and what is meant by profit?
How is it to be ascertained?
2.15 Identify the problematic areas of the 1989 Salvage Convention. Consider
not only Art.14 but also the location where salvage terminates and the
provisions for financial security to salvors during the salvage operations and
before redelivery of the salved property.
2.16 Will the salvors be granted special compensation if their services to protect
the environment from damage take place in the open sea, or if the cargo
spill evaporates and pollutes the atmosphere but does not pollute the
marine environment?
2.3 Salvage agreements under the 1989 Salvage

Convention
Essential reading
• Sheppard, Vol. 2, Chapter 10, sections 6, 7, 13 and 14.
The right to a salvage reward arises independently of whether there

is a salvage contract agreed or not. However, appropriately drafted
salvage contracts can significantly clarify the duties of the parties
during the salvage operation, including provisions for the place of
redelivery, the conditions under which salvage can be terminated, the
dispute resolution forum and the law of the contract. The 1989 Salvage
Convention permits the contractual exclusion of most of its provisions.
However, the rights granted to courts to review salvage contracts
20
under Art.7, as well as the environmental obligations imposed on the

salvor and the owner of the salved property under Art.8, cannot be
contracted out.
The 1989 Salvage Convention also provides for the authority of the
master to bind their employer to a salvage contract and for the authority
of the master and the shipowner to bind owners of property on board to
a salvage contract. These arrangements have significantly improved the
salvors’ position because, under pre-existing English law, the master had
to become an agent of necessity in order to bind the property owners
to the salvage contract. This was unsatisfactory because for the agency
of necessity to come into existence the inability to communicate with
the cargo owners is a prerequisite. This, in the case of a container ship
with thousands of containers, would be the cause of delay and is likely
to result in a situation where some cargo owners will and some will
not provide authority to sign a salvage contract. While the liability for
salvage under the 1989 Salvage Convention would be in existence the
contract would be exempting or altering parts of the Convention for the
ship and some of the cargo, but not for all cargo. This is not a reasonable
position for a salvor to be in and affects their entitlement for security and
prospects of payment. Thus, the Convention’s resolution of the issue has
been a major benefit for the salvors.
Note, however, that if there is no danger there are no salvage operations,
and thus the authority of the master under Art.6 will not operate.
The extent of the master’s authority under Art.6(2) has not yet been
interpreted by the courts. However, it appears that after a reasonable
contract of salvage is concluded, further modifications agreed between
the shipowner and the salvor will not necessarily be binding on the
cargo owners. Similarly, it can be argued that where the master breaches
the contract of salvage, for example, by unreasonably replacing the
salvor, then the cargo owners would probably not be considered in
breach of the original salvage contract or bound by the new contract,
leaving the shipowner to pay for the contractual breaches.
One of the most extensively used salvage contract forms globally is the
Lloyd’s Open Form (LOF) ‘No cure-no pay’. The LOF has been repeatedly
adjusted to accommodate the needs of contemporary salvage in
anticipation of developments of national or international law which
always took much longer. Thus, the LOF 1980 included the first departure
from the ‘No cure-no pay’ principle by entitling the salvor of a stricken
tanker who had failed to recover an ordinary salvage reward to recover
their costs plus a 15 per cent uplift on top of those costs, but only to
the extent that the expenses together with the increment were greater
than the ordinary ‘No cure-no pay’ award. The 1990 version of the LOF
incorporated the 1989 Salvage Convention six years before it came
into force. The LOF 2000 introduced the first attempt to overcome the
difficulties of the 1989 Salvage Convention by providing the option to
incorporate the special compensation P&I Club’s (SCOPIC) Clause.
The most recent LOF 2020 contract consists of a short form which
incorporates the Lloyd’s Salvage Arbitration Clauses 2020 (LSAC) and,
when the option is exercised, the SCOPIC Clause. Signing the LOF
constitutes an express choice of arbitration as the means of determining
the award and resolving disputes related to the salvage contract.
21
The LOF contract is subject to English law and Lloyd’s Arbitration.

The arbitration process is comparatively informal for the purposes
of efficiency and costs savings (see Navigator Spirit SA v Five Oceans
Salvage SA, 15 May 2018, unreported, paragraph 51).
While performing the contract the salvors should use best endeavours
to prevent or minimise damage to the environment. Note that the term
‘best endeavours’ has been argued to be more burdensome than the
obligation under Art.8 of the Convention to ‘exercise due care’. Other
views are also arguable and ‘best endeavours’ can be taken to mean
a subjective measure of care that depends on the particular salvor,
while ‘due care’ could reflect the standard of professional care and skill
required of professional salvors.
The LOF 2020 imposes obligations on the owners of the property in
danger to allow reasonable use of the machinery on board the ship, to
provide all necessary information to the salvors and help in obtaining
permission for entry into the designated place of safety. The LOF 2020
further provides that the master has authority to act as agent of the
property interests. This is a contractual undertaking by the shipowner
and cannot replace the 1989 Salvage Convention’s authority of the
master under Art.6(2). However, it can be the basis for a claim for
damages against the shipowner if the cargo owners escape salvage
liability.
Where the 2020 SCOPIC Clause is not incorporated, the two types of
remuneration under the 1989 Salvage Convention – namely the reward
under Art.13 and the special compensation under Art.14 – are available
to the salvor.
However, where the 2020 SCOPIC Clause is incorporated, Art.14 is
excluded as a potential remuneration. Thus, from the moment the
contract is signed until the salvor decides to invoke, in writing, the
SCOPIC Clause, the salvor can only rely on an Art.13 reward. From
the moment the 2020 SCOPIC Clause is invoked an alternative way of
calculating the salvage reward is available to the salvor.
The remuneration under the 2020 SCOPIC Clause is based on set tariffs
contained in a separate appendix (Appendix A) to the clause. There is a
standard bonus of 25 per cent on top of the tariffs. Thus, the calculation
of the SCOPIC reward is simple and easy to make. The standard of
conduct required under the SCOPIC Clause is, as under the LOF, to use
best endeavours (Clause 10) for salving the property and in doing so to
prevent or minimise damage to the environment.
The SCOPIC reward does not depend on the existence of any threat
of damage to the environment, nor is it restricted to a particular
jurisdictional or physical area of the seas. Thus, it is a more general and
readily available compensation for salvors in all cases in which they
may be worried about the possibility of a satisfactory Art.13 reward.
The SCOPIC reward is only payable by shipowners and only to
the extent it exceeds the Art.13 reward under the 1989 Salvage
Convention. A discount to the Art.13 award is imposed if the salvor
has unnecessarily invoked the SCOPIC Clause in a situation where the
Art.13 reward would have been larger. In such a case the Art.13 reward
is reduced by 25 per cent of the difference between the salvage reward
and the SCOPIC remuneration.
22
Apart from the difference in the way the salvor’s remuneration is

calculated, the invocation of the 2020 SCOPIC Clause has several other
consequences.
First, the owners are obliged to put up a bank guarantee or P&I Club
security for US$3,000,000 within two working days. This initial security
can be adjusted later as needed or by the arbitrator if there is a dispute.
If security is not provided the salvor can withdraw from the 2020
SCOPIC Clause and revert to the LOF, including Art.14.
Second, a Special Casualty Representative (SCR) is appointed. The
SCR is a salvage specialist acting as an independent adviser to
the shipowner, assessing the efficiency and the reasonableness of
the salvage operation undertaken under the SCOPIC agreement
and providing the shipowner with daily estimates of the SCOPIC
remuneration. The SCR is to be selected from a list of specialists.
Two other Special Representatives, one for the hull and one for the
cargo interests, can also be appointed. Their role is set out in Appendix
C. The aim of having the SCR and the Special Representatives is to
provide transparency to the salvage operation, thus removing fears
that salvors would unnecessarily prolong salvage in order to achieve
higher SCOPIC remuneration. However, the control of the salvage
operation remains with the salvage master.
Rights of termination for both parties are also available. In the absence
of a salvage contract, the master of the vessel may dismiss the salvors,
although a payment for meritorious services will be awarded by the
court on principles of what is fair and equitable. The 1989 Salvage
Convention is silent on the right to dismiss the salvors but permits the
addition of salvors when reasonable.
The SCOPIC Clause has so far been considered successful, resolving
most of the problems arising from the 1989 Salvage Convention. It is a
further example of a successful and well-designed intervention by the
salvage industry to avoid the difficulties posed by the Convention and
to satisfy the needs of the market.
The existence of a salvage contract means that the parties may recover
damages in contract. This applies both ways. Thus where, for example,
the property that is the subject of salvage operations becomes
damaged due to the salvor’s negligence, damages may be available
(see The Key Singapore [2004] EWHC 2227 (Comm)) in addition to the
reduction, or complete deprivation, of the award imposed under Art.18
of the Convention.
Similarly, if the salvor is dismissed by the shipowner, damages for
breach of contract will be available to them. The SCOPIC remuneration
has been considered as distinct from the no cure-no pay remuneration
under Art.13 within the context of marine insurance. Thus, it has
been held that the salvage expenditure incurred not for the salvage
of the ship but in the reduction of the shipowner’s environmental
liability should not be taken into account when constructive total loss
is considered under s.60(2)(ii) Marine Insurance Act 1906 (Sveriges
Angfartygs Assurans Forening (The Swedish Club) and others v Connect
Shipping Inc and another (The Renos) [2019] UKSC 29).
23
Limitation of liability is discussed in Module C. However, there are two

issues that need to be stated here:
• Claims by the salvors against the shipowner concerning payments
for the salvage operations are not subject to limitation of liability.
Thus, the shipowner has to pay them in full.
• Claims by shipowners against the salvors are subject to limitation
of liability, provided they concern claims covered by Art.2 of the
1976 LLMC as amended. The limits are set to those of a 1,500 gross
tonnage (grt) vessel.
2.17 Illustrate the principles and elements of agency of necessity as derived
from The Winson [1982] AC 939 and explain the problems which arose in
their application, particularly in The Unique Mariner [1978] 1 Lloyd’s Rep 438
and in The Choko Star [1990] 1 Lloyd’s Rep 516.
2.18 Consider the possible outcomes of a situation similar to that in The Unique
Mariner where the ship is fully laden and the bunkers belong to the charterer.
2.19 Explain by reference to case-law the situations in which the court may alter
a salvage agreement.
2.20 Illustrate the meaning of the words ‘best endeavours’ which are found in
the LOF contracts and the difference with ‘due care’ under Art.8 of the 1989
Salvage Convention.
2.21 Give examples of when the owner of the vessel in danger might be in
breach of their duty under Art.8(2) of the Convention. What would the
consequences be in such a case?
2.22 Explain what rights a dismissed salvor would have under common law and
under the Convention.
2.23 Illustrate the principles established by The Tojo Maru [1970] P 21 (CA); [1972]
AC 242 (HL); compare the views expressed by Lord Justice Salmon in the Court
of Appeal with the views of Lord Reid and Lord Diplock on salvors’ negligence.
2.24 Illustrate whether or not a salvor, whose ship was at fault in causing the
danger to another ship and hence the need for salvage services, would be
entitled to earn a salvage reward if meritorious services were rendered. If
they would be entitled, would that not be in conflict with the principle at
common law that ‘no man will profit from its own wrong’?

• Bishop, A. ‘The development of environmental salvage and review of the
London Salvage Convention 1989’ [2012] TMLJ 54.
24
Self-assessment questions
1. Discuss the geographical areas to which the 1989 Salvage Convention applies
as implemented under Schedule 11 of the MSA 1995.
2. When is a vessel in danger according to the English courts?
3. What changes has the implementation of the 1989 Salvage Convention
brought to English law?
4. Identify the entities who may be liable for paying salvage.
5. How did the 1989 Salvage Convention attempt to solve the problem of
assisting stricken tankers?
6. Which are the unclear and deficient arrangements of the 1989 Salvage
Convention and how do contractual arrangements resolve them?
7. Can the authority of the master under Art.6 of the 1989 Salvage Convention
be removed by a contractual arrangement, for example, under a charterparty?
What would then be the position of the salvors?
8. The SCOPIC Clause has been considered satisfactory for the salvage industry.
Explain why this is so.
9. How does the 1989 Salvage Convention attempt to resolve issues where a
salvor is unable to complete the salvage operation?
10. Discuss when the salvage operations terminate under the 1989 Salvage
Convention.
25
Reminder of learning outcomes

Having completed this chapter, and the Essential readings and activities, you
should be able to:
• explain the principles applicable to maritime salvage under the 1989 Salvage
Convention and preceding developments which led to the Convention
• apply the particular characteristics of salvage agreements
• discuss the duties and rights of salvors under both the Convention and the
Lloyd’s Open Form (LOF) agreements
• state the particular criteria for fixing a salvage award
• determine when there will be a breach of the contract by either party and any
remedies available
• state the circumstances under which the courts would intervene with a
salvage agreement
• explain the particular requirements for awarding special compensation for
protection of the environment from pollution
• determine whether a ship whose fault gave rise to the need for salvage,
or its sister ship, can earn a salvage award by rendering successful salvage
operations.
26
Feedback to activities: Chapter 2

Consider what ‘not permanently and intentionally attached to the shore’ means.
Freight is the payment to the shipowner under a voyage charterparty. Consider when
and why this is ‘at risk’ and should contribute to the salvage award. Who should pay
this contribution? Consider the scope of Art.3 and the structures that fall under it.
Activity 2.4
Read the exception in the 1995 MSA Schedule 11, Part 2. To which internal waters does
this apply?
Activity 2.5
Read Sheppard, Vol. 2, Chapter 10, section 4.3.6. Also read Part 2 of Schedule 11 of the
MSA 1995.
Activity 2.6
Read Sheppard, Vol. 2, Chapter 10, section 5.1 and case law referred to there.
Activity 2.7
Read and explain how Arts.5 and 17 operate. Read Sheppard, Vol. 2, Chapter 10,
section 5.2. Identify whether voluntariness under common law is a pre-requisite for
salvage (i.e. there is no salvage without it) or it is simply, as under the 1989 Salvage
Convention, an obstacle to receiving a reward. Consider whether the case law provided
in the textbook would have been resolved in the same way under Art.17 of the 1989
Salvage Convention.
Activity 2.8
A statutory duty imposes an obligation on the master and crew of a ship to stand by
and render assistance to another ship after a collision between these ships. It is also
their statutory duty to assist others in distress; see, for example, the illustration of the
first point by the House of Lords in The Melanie v The San Onofre [1925] AC 246 and
the second point in The Tower Bridge [1936] P 30 (see Sheppard, Chapter 10).
As regards the officers of the Royal Navy see s.230 MSA 1995.
Activity 2.9
See further in the Essential reading The Gregerso [1971] 1 All ER 961 regarding port
authorities and a recent decision of the court of South Africa: The Mbashi [2002] 2
Lloyd’s Rep 602.
With regard to meritorious services, good examples are The Cheerful (1855) 11 PD
3, The Melanie v The San Onofre and The Tojo Maru [1972] AC 242, 293 (see the
Essential reading). Also read Articles 6 and 12 of the Salvage Convention in Schedule
11 of the MSA 1995.
Back
Read carefully the Essential reading, the 1989 Salvage Convention and the Nagasaki
Spirit.
Back
Activities 2.17
With careful reading of the Essential reading and the decisions referred to you will be
able to master these activities. Read in particular the issues that arise with regard to
salvors’ negligence and whether or not strict principles of the law of negligence should
apply to salvors who should be supported for the risks they take in danger to save
property; consider reasons of public policy.
27
Activity 2.18
Read The Unique Mariner (No.2) [1979] 1 Lloyd’s Rep 37 and The Pa Mar [1999] 1
Lloyd’s Rep 338. Who should and would be paying the contractual damages?
Activity 2.19
Read Sheppard, Vol. 2, Chapter 10, section 6.3 and the cases referred to there.
Activity 2.20
Read Sheppard, Vol. 2, Chapter 10, section 8 and the cases referred to there.
Activity 2.21
Consider each part of Art.8(2) and the relevant parts of the Essential reading.
Activity 2.22
Read Sheppard, Vol. 2, Chapter 10, section 9.2 and the cases referred to there. The
Unique Mariner (No.2) is central.
Activity 2.23
You will also be assisted by the decision in Key Singapore (above) on the application
of Art.18 of the Convention in relation to the effect of negligence on salvage award.
In particular, the point of this decision was that when a salvor is engaged in some
services, for example, under a towage contract and due to the fault of both the tug and
the tow there is danger or the services have become more difficult, the faults of both
will be apportioned in determining the extent to which the salvage operations became
necessary or more difficult due to the salvor’s fault. Then the extent of the salvor’s fault
will be taken into account in reducing the salvage award, or if there is no success at all
due to his fault, there will be no award under Art.18.
Activity 2.24
Consider how the collision damage and the salvage claim will relate to each other.
Back
28
Chapter 3: Towage contracts
Introduction
Towage has been defined as:
the employment of one vessel to expedite the voyage of
another when nothing more is required than the accelerating of
her progress.
(The Princess Alice [1849] 3 W Rob 138, at p.139)
Tugs are employed, however, for many more tasks than this definition
would imply. While tugs still accompany or speed up the voyage of
larger vessels, especially at their entry to, manoeuvring within and
departure from ports where restrictions in the movement and heavy
traffic can pose risks, tugs are also used for towing dead ships or
unmanned barges between places. They also supply services and
assistance to the offshore industry.
Tugs can also be employed for salvage assistance, pollution prevention
or clean-up operations. However, such services are not usually in
the nature of towage but are remunerated under the legal regime
of salvage or under clean-up arrangements with the coastal state
respectively.
Learning outcomes
• interpret the specialised terms of the towage contract
• recognise when a towage can be converted to salvage services
• explain the duties of the respective parties and advise on the consequences
of breach of their obligations
• advise on the liabilities of the contracting parties to third parties including
contribution between the joint tortfeasors and limitation of liability
• apply the knowledge acquired to complex practical scenarios.
Essential reading
• Tsimplis, M. ‘The liabilities of the vessel’, Chapter 7 in Baatz, Y. (ed.) Maritime law.
(Abingdon: Informa Law, 2017) 4th edition [ISBN 9780367493844]. Available
via Lloyd’s Law Reports in the Online Library.
3.1 The contract and basic terms

Essential reading
• Sheppard, Vol. 2, Chapter 11, sections 1–7.
Various standard forms of towage contracts are available. However,

the arrangements under these forms are not restrictive and parties can
agree on any terms they wish subject to restrictions imposed by statute,
for example, by the Unfair Contract Terms Act 1977. However, towage is
29
excluded from this Act save for circumstances in which there has been
liability for death or personal injury and where the towage contract
concerns a private yacht, in which case the Act will apply in full.
Towage services in a port are in many cases monopolised by tugowners
working as a group offering exactly the same contractual terms. In
addition, standard forms are convenient because they are supposedly
better thought out and tested in practice than new arrangements, the
parties are used to them and it would be impractical to negotiate a
different contract every time a ship enters or leaves a port.
While in general a written contract is available it is instructive to start
by considering the position where the terms of the contract are not
expressed in writing by the parties. In the absence of a written contract
the courts would imply certain terms and conditions. The contract of
towage is one for the provision of services, and the Supply of Goods
and Services Act 1982 (SGSA 1982) would apply to such contracts.
The SGSA 1982 implies an obligation to perform the service with
reasonable care and skill (s.13) and within a reasonable time (s.14).
However, these implied terms can be excluded under s.16(1) by
express contractual agreement, or by a course of dealing or a usage
binding between the tug and the tow. They are also very similar if not
identical to the requirements under earlier case-law stipulating for the
use of ‘best endeavours’ (see The Minnehaha (1861) 15 Moo PC 133)
or the exercise of ‘proper skill and diligence’ (see The Julia (1861) 14
Moo PC 210). These obligations have been detailed to involve a tug
appropriately fitted and manned, acting with reasonable and proper
skill, and an obligation to stay with the tow if the towing line breaks
and use at least the appropriate skill or possibly best endeavours to
reconnect with it. Several examples of application of these obligations
exist in case-law.
Obligations are not only imposed on the tug but on the tow as well.
Thus, the tow is also under an obligation to be fit for towage and
appropriately manned. In addition, the persons on board the tow must
demonstrate proper skill and diligence in respect of the tow’s actions
during towage (The Julia). Accordingly, where the tow collides and
sinks the tug because of negligence in its navigation, the tow is liable
for breach of the towage contract.
The law is unclear as to whether the standard of the duty imposed
in respect of the fitness of the tug is an absolute one, akin to the
obligation of a common carrier to provide a seaworthy vessel or
one of due care to provide a tug fitted to the service. It appears that
the stronger view under the English system is the latter, while other
legal systems favour the former. The implied duties, or indeed the
contractual obligations, come into play when towage starts. In the
absence of express contractual stipulation towing starts at the time the
towing line is passed and ends when the towing line is slipped.
All contractual and pre-contractual remedies available under English
law are applicable to a contract of towage. For example the contract
can be frustrated, and remedies for misrepresentation under the
Misrepresentation Act 1967 are available. Issues related to the parties
to the contract and the authority of the tug’s and tow’s masters to bind
30
their principals are also dealt with on the basis of general contract law.
Thus the master usually has an express or implied actual authority to
bind their principal to a reasonable contract of towage.

3.1 Illustrate when a towage contract will be regarded as commenced and what
the significance of this would be for the parties’ rights and obligations under
the contract.
3.2 Explain when there would be an interruption of towage and its effect upon
the rights and remedies of the parties under the contract.
3.3 When would an accidental parting of the tow lines amount to termination
of the towage contract?
3.4 Illustrate the differences between towage and salvage and when a towage
contract would be converted to salvage. Would this mean then that the
place of redelivery of the tow is to the discretion of the tugowner (salvor)?
3.2 Duties and liability of the contractual parties

under standard forms
Essential reading
• Sheppard, Vol. 2, Chapter 11, sections 6, 7, 9 and 10.
Special forms of contract have been developed reflecting the needs

of the towage industry. Exclusions of liability and indemnities are
routinely introduced in towage contracts. Under English law such
exclusion and indemnity terms are valid if clearly drafted.
The inclusion of wide exclusion and indemnity clauses has led to
attempts by shipowners to avoid their consequences by disputing that
they are operative in respect of a particular incident because towage
has either not started or has already finished. This in turn depends on
the construction of the contract and will be discussed in detail when
the most common contracts are outlined. The parties to these standard
forms are usually termed the ‘Tugowner’ and the ‘Hirer’.
The second term is an indication that it is not necessarily the owner of
the tow who is a party to the contract but probably a charterer, demise
charterer or some other entity. To avoid the risk that the person signing
the contract has no authority to bind the owner of the tow to the
towage contract, most standard forms include a ‘warranty of authority’
clause. Below we will use the terms ‘tug’ and ‘tow’ to refer to the parties
to the contract. However, this should not be misunderstood as an
assumption that the Hirer is always the tow owner.
3.2.1 UK Standard Conditions for Towage and Other Services

1986 (UKSTC)
From the variety of forms available worldwide the UKSTC are probably
the most favourable to tugowners. The UKSTC include English law and
31
exclusive English jurisdiction, except in Scotland where local courts

have jurisdiction.
The UKSTC can be incorporated into the towage contract where there
is an express incorporation, for example on fixture communication,
or where the conduct of past dealing between the parties indicates
an intention to be bound by the standard conditions, or because they
habitually apply to such contracts and this fact is known and expected.
The terms provide for two different types of services: towing and other
services. Towing is defined as:
any operation in connection with the holding, pushing, pulling,
moving, escorting or guiding of or standing by the Hirer’s vessel
and the contract applies ‘whilst towing’. This covers the period from
when the tug is in position to receive orders or to pick up ropes or when
the towing line has passed, whichever occurred first, until the final
orders have been performed or the lines have slipped (whichever is
later) and the tug or any other assisting vessel is safely clear of the tow.
This definition is not free from difficulty. Consider the situation where
the tug arrives early on site and the vessel has not yet finished loading
or discharging the cargo. If the tug runs into the prospective tow and
damages itself and the tow, could it then be protected by the UKSTC?
In The Apollon [1971] 1 Lloyd’s Rep 471 it was held that for the tug to be
‘in a position to receive orders direct from the Hirer’s vessel ... to pick up
lines ... etc’ three conditions must be fulfilled:
• that the situation is such that those on board can reasonably
expect the tow to give the tug orders or to pick up ropes or lines
• that the tug is ready to respond to such orders
• that the tug can receive these orders directly, that is, the tug is
within hailing distance.
The protection of the tug under the UKSTC is based on the following
contractual arrangements:
• Under clause 3, all employees of the tugowner are deemed to be
servants of the tow for the duration of the service.
• Under clause 4, the liability of the tugowner is expressly exempted.
This exemption covers any liability for damage caused either by the
tug or the tow and it is effected by use of very wide terms.
• Clause 4 also expressly imposes an obligation on the tow owner
to indemnify the tugowner for any damages sustained or paid
out to third parties. The indemnity provision in clause 4(b) is wide
enough to cover even the loss of the tug caused by the negligence
of the tugowner or the tug’s crew, or even cases where the tug is
unseaworthy.
• An additional exemption under clause 8 excludes any liability of the
tug in respect of losses suffered by the tow and caused by war, riots,
civil commotions, acts of terrorism or sabotage, strikes, lockouts,
disputes, stoppages or labour disturbances, etc.
The liability of the tug is not exempted in three situations:
• Where there is personal want of due diligence by the tugowner to
provide a seaworthy tug and that has caused the damage.
32
• Where the services have been interrupted and the tug has moved
away from the tow.
• Where loss of life or personal injury is caused by the tug’s
negligence.
3.2.2 Liability allocation under TOWHIRE 2008 and

TOWCON 2008
The TOWHIRE and TOWCON forms resemble in many aspects time
and voyage charterparties and attempt to provide a more balanced
solution to the need for standardised contractual forms for open ocean
towage.
TOWHIRE is a daily hire towage contract. Clause 17 of TOWHIRE 2008
imposes an obligation of due diligence on the tugowner to provide a
seaworthy ship at the place of delivery of the tug. A similar obligation
of tow-worthiness is placed on the tow owner under clause 16. In
addition the tow owner has to provide a certificate issued by the
appropriate marine surveyors stating that the vessel is tow-worthy.
However, even after such a certificate has been provided the tugowner
can still refuse to start the towage if they are not satisfied that the tow
is indeed tow-worthy.
Allocation of liabilities under TOWHIRE is on a ‘knock for knock’ basis
(clause 23). Under this arrangement some liabilities are allocated to the
tug or the tow in relation to which they arose, irrespective of whether
liability would normally attach to the owner of the tug or the tow
respectively.
There are three parts of clause 23, each working in a slightly different
way:
• Clause 23(a)(i) provides that the tugowner will indemnify the tow
owner for liability arising from loss of life or personal injury of the
tug’s employees or happenings on board the tug.
• Clause 23(b)(i) similarly provides indemnification to the tugowner
for loss of life or personal injury of the tow’s employees or people
on board the tow.
• Clause 23(b)(ii) provides that the tugowner will pay, without having
a right of recourse against the tow owner, for:
• loss or damage to the tug or property on board the tug and
consequential loss
• loss or damage to any other property caused by contact with
the tug and consequential loss
• wreck removal
• pollution liability for the tug.
This is coupled with an obligation imposed on the tugowner to
indemnify the tow owner for any such liability imposed on the tow
owner by a court or an arbitration award. The reverse arrangement
applies for the tow (clause 23(b)).
Notably, the division of damages under clause 23(b) is stated to be
applicable whether or not the damages are ‘due to breach of contract,
negligence or any other fault on the part’ of the party to whom liability
33
to pay attaches. Such a statement is not present in the arrangement

under clause 23(a). Note that clause 23(c) further restricts the general
rights of recovery of the parties against each other.
Difficulty arises when the division of financial liability under the
knock-for-knock agreement is considered together with the respective
obligations of the tug and the tow to provide a seaworthy and tow-
worthy ship (clauses 16 and 17). The question of which clause prevails
would then arise.
If the duty of seaworthiness or tow-worthiness is considered as the
primary obligation that needs to be fulfilled, this would then mean that
when this obligation is breached the knock-for-knock arrangement can
be avoided. The alternative interpretation is that the knock-for-knock
agreement applies in spite of the breach of the seaworthiness or tow-
worthiness obligation.
In Smit v Mobius [2001] CLC 1545 the tow was not entitled to introduce
arguments concerning the seaworthiness of the tug in respect of
liability arising from a collision between the tow and another vessel,
because the ‘knock-for-knock’ agreement was a workable allocation
of risk and responsibility. Consequently, under a knock-for-knock
agreement the significance of the obligation of seaworthiness and
tow-worthiness is restricted in respect of the liabilities specified in the
knock-for-knock agreement under clause 23.
TOWHIRE provides for the creation of a lien on the tow for any unpaid
amounts under the contract. However, this will be enforceable only
where the tow owner is bound by the towage contract (clause 29).
TOWCON 2008 is used for towage where payment by lump sum has
been agreed. However, the form has flexibility in that it permits part
payment to be made at particular times, for example, at the time when
the contract is agreed, when lines are passed and when the towage is
finished. It thus determines when the instalment is earned and when
and how payment is to be effected.
The major differences from TOWHIRE concern the payment provisions
under clause 2 and the place of departure, which is more complicated
than that of TOWHIRE. As with TOWHIRE, obligations of due diligence
to provide a seaworthy tug and a tow-worthy tow are imposed (clauses
18 and 19) as well as the knock-for-knock agreement under clause 25.
Because under TOWCON the risk of delay is on the tug, clause 27
provides for ‘Delay Payment’ if the delay is due to unsuitability of the
tow for towage. The amount is agreed in advance in Box 30 of the form.
What would render the tow unsuitable for towage is a question that is
not necessarily answered in exactly the same way as under a time or
voyage charterparty.
In The A Turtle [2008] EWHC 3034 (Admlty) a drilling rig towed by the
Mighty Deliverer from Brazil to Singapore via Cape Town ended up on
the shores of Tristan da Cunha. The claim was put forward by the rig
owners in respect of liability arising for the loss of the rig and the wreck
removal costs, while the counterclaim put forward by the tugowners
concerned entitlement to the outstanding 95 per cent of freight
described in the contract to be ‘due and payable on arrival of tug and
tow at the place of destination’ and ‘deemed earned whether the tug
34
or rig was lost or not lost’. The A Turtle was intentionally released by the
Mighty Deliverer because the latter was running out of fuel. It was held
that the knock-for-knock arrangement protected the owners of the
Mighty Deliverer in spite of the breach of the seaworthiness obligation
under clause 13 because these were risks expressly accepted to be
borne by the owners of the rig.
The freight arrangement was held to make the 5 per cent of the freight
payable irrespective of the loss of the tug or the tow while the 95
per cent was only payable on arrival of the flotilla at the contractual
destination, a precondition that was not fulfilled.
The decision in The A Turtle under the TOWCON contract confirms the
view in Smit v Mobius under the 1985 TOWHIRE contract in respect of
the coupling of the seaworthiness obligations for tug and tow with the
knock-for-knock agreement.
3.5 On what grounds can you distinguish the decision in The West Cock [1911] P
208 from the decision in The Sumi Maru [1993] 1 SLR 198?
3.6 Compare and contrast the consequences of breach of an absolute
contractual obligation with the consequences of breach of an obligation to
exercise reasonable care.
3.7 What is required by the standard terms contracts for fitness of the tug?
3.8 What are the obligations of the tug during performance of the towage
contract under TOWHIRE 2008?
3.9 What are the obligations of the tug during performance of the towage
contract under the UKSTC?
3.10 Summarise the duties of the tow owner and the tow master under the
statutory provisions and under TOWCON 2008 and the UKSTC.
3.11 Explain when a contract of towage starts and when it ends. Consider the
contractual terms under TOWCON 2008 and the UKSTC as well as what
happens in the absence of a written contract.
3.12 Set out the protective clauses in the UKSTC in favour of the tug and the
circumstances in which the tugowner will not be able to rely on them.
3.13 What are the arguments for and against upholding the ‘knock-for-knock’
agreement where there is a breach of the obligation to provide a seaworthy tug?
3.3 Liabilities of the contractual parties to third

parties and remedies
Essential reading
• Sheppard, Vol. 2, Chapter 11, section 8.
Towage law involves two different aspects which must not be

confused.
The first concerns the contractual relationship between the tug and the
tow. This is a matter for the towage contract and any implied terms or
statutory interventions relevant to this contract. These have been dealt
with above.
35
The second aspect concerns tug and tow liability to third parties in
collision or pollution cases. The legal basis for this and the liability vis-
à-vis the third party are governed by the law of torts and any statutory
regimes concerning pollution. The fact that the tug and the tow are
physically connected or commanded by the same person can create
problems when one tries to identify to which vessel liability attaches.
The third party is not affected by the towage contract between the tug
and the tow; thus even where the contract puts liability solely on one
party this is not effective vis-à-vis the third party, which can recover
in tort from whichever party has been negligent. However, because
the limits of liability for the tug are many times smaller than those for
the tow it is to the advantage of the third party to attempt to attach
negligence and consequential liability to the tow, thus increasing the
amount of recovery available to them.
For the purpose of the Collision Regulations, tug and tow are
regarded as one vessel but that does not mean that one is necessarily
responsible for the negligence of the other. Liability will in the end
depend on whether the tug or the tow had acted negligently causing
the damage, which is a question of fact (The Devonshire).
If both tug and tow are sued for their respective negligence, for
example, in causing a collision with a third ship (which may also be
to blame), the Collision Regulations and the rule of apportionment of
liability under s.187 of the Merchant Shipping Act 1995 will apply (as
seen in Module C, which you should have already studied).
If only the tug is liable, it will pay the third party and it may claim
indemnity from the tow, if the towage contract so provides. In any
event, the UKSTC provide for an indemnity to the tug, unless it can be
proved that the damage caused to the third party by the negligence of
the tug did not occur while towing.
If the tow is innocent and both the tug and the third ship are to blame,
the tow can sue either; if it sues the third ship, like in The Devonshire,
the third ship will join the tug as a third party in the proceedings
and their liability will be apportioned as per s.187, or sue the tug
later to claim contribution. The irony is that the tug would then claim
indemnity from the tow as per the terms of the UKSTC contract for the
liability caused to the tow by the negligence of the tug.
Like all shipowners, tugowners can also limit their liability to third parties
under the Limitation of Liability Conventions 1957 or 1976, whichever is
applicable under the law where suit is brought. The amount of the limit
will depend on the tonnage of the limiting vessel. If the tug is liable but
not the tow, the limitation fund is calculated on the tonnage of the tug
alone (The Bramley Moore [1963] 2 Lloyd’s Rep 429). If both are liable
there will be aggregation of tonnage (The Smjeli [1982] 2 Lloyd’s Rep 74).
3.14 Explain why third party claimants have sought to consider the tug and the
tow as a ‘unit’.
3.15 Consider how the liability in negligence for collision with a third party is
indemnified under the various towage contracts discussed earlier.
36

1. Explain how a towage contract can turn into a salvage operation. Would the
duties of the 1989 Salvage Convention under Art.8 and Art.14 operate in such
a case?
2. Explain the liability arrangements under the UKSTC 1986.
3. If, under a TOWHIRE 2008 arrangement, the tug disconnects the tow in order
to engage with a more profitable operation (for example, salvage), what
would be the recourse of the tow if it suffers damages?
4. Which are the implied terms in a contract of towage? To what extent are these
modified by TOWCON 2008?
5. What are the payment arrangements under TOWHIRE and TOWCON?
6. Explain how tugs and towing are treated under the COLREGS.
7. Explain how limitation of liability operates in a case where there is a collision
between the tug and a third ship.

should be able to:
• interpret the specialised terms of the towage contract
• recognise when a towage can be converted to salvage services
• explain the duties of the respective parties and advise on the consequences
of breach of their obligations
• advise on the liabilities of the contracting parties to third parties including
contribution between the joint tortfeasors and limitation of liability
• apply the knowledge acquired to complex practical scenarios.

Activity 3.1
Bear in mind that the exceptions from liability in favour of the tug will only apply ‘while
towing’, not before commencement, or after interruption which may be a serious
breach terminating the contract (read the case in Essential reading, some standard
forms (for example TOWHIRE) and the UK STC 1986). Compare the contractual
arrangements with the start of the towage services under case-law.
Read Sheppard Vol. 2, Chapter 11, section 5 and cases referred to there.
Activity 3.4
Relevant to this is Article 17 of the Salvage Convention, clause 6 of the UKSTC 1986 and
clause 15 of the TOWCON contract (at Chapter 11, section 3.3, Sheppard).
However, in a towage contract the tug should also expect some unexpected difficulty
inherent to towage: for example, when the ropes are parted by the wind and force
the tug, it is still obliged to perform the contract without claiming salvage (see The
North Goodwin [1980] 1 Lloyd’s Rep 71) unless there emerged a danger not being
contemplated by the towage contract.
Back
37
Pay attention to the facts of The West Cock which indicated that the tugowners in
fact did not exercise due care to inspect the tug and find the defects which would
have been discoverable upon the exercise of due diligence; by contrast the tugowners
of The Sumi Maru behaved very badly so as to act maliciously. So in both cases the
tugowners failed in their defence to rely on the exceptions from liability clauses not so
much because they were in breach of an absolute warranty but rather because of the
consequences of their breach.
Read Robertson v Amazon (1881) 7 QBD 598.
Read The Julia and The Minnehaha from the Essential reading.
For ‘Whilst towing’ see clause 1(b)(iv) of UKSTC; see also: The Uraniengorg (towing
starts when the tug is in a position to receive orders, or when the tow line is passed,
whichever is the soonest, and ends when final orders to cease are given or the tow line
is cast off, whichever is the later (The Glenaffric)).
For exceptions and indemnities: ‘the Hirer is vicariously liable for any acts or omissions
of the tug master and crew’ (clause 3); ‘the tug can claim indemnity from the Hirer
for liability caused to third parties by the tug’s negligence whilst towing’ (clauses 3
and 4). Clause 5 provides for the same protection to substituted tugs (known as the
Himalaya clause, which intends to protect third party tugowners, who are not parties
to the towage contract but are substituted by the original tugowner under the towage
contract).
Back
Consider the issues of limitation of liability from the point of view of a third party. For
3.15 consider that negligence must be causative for the damage and what this means
since there are two ships that may be negligent. Consider who has the command and
how this affects liability. Also distinguish between negligent commands and negligent
execution of non-negligent commands.
Back
38
Chapter 4: Duties and liabilities of ports and pilots
Chapter 4: Duties and liabilities of ports

and pilots
Introduction
A pilot is defined, under s.31(1) of the Pilotage Act 1987, to be ‘any
person not belonging to a ship who has the conduct thereof’.
Pilots are usually master mariners or deck officers with experience and
knowledge of particular sea passages or approaches to harbours. They
act as advisers under the ship’s master’s supervision to enhance the
safety of navigation in difficult areas. They also act as a ‘principal source
of skilled marine advice to the harbour authority’.
Pilotage can be compulsory or voluntary and can also be distinguished
between coastal and deep sea. Deep sea pilots are licensed by Trinity
House and coastal pilots by competent harbour authorities. Deep
sea pilotage is not compulsory although it may become so in marine
protected areas. Compulsory pilotage is much more common in coastal
areas and the approaches to harbours where collisions and accidents
are more likely to happen. The most important legal issue in respect of
pilotage is arguably who has to pay for damages caused by the pilot’s
negligence when the pilot is employed under compulsory and non-
compulsory pilotage respectively.
Learning outcomes
• explain the powers of the port and harbour authorities
• explain the liability regime for harbour damage
• explain the liability position for pilots and the entity to which vicarious liability
attaches.
4.1 Statutory duties and rights of port authorities
Essential reading
• Sheppard, Vol. 2, Chapter 13, pages 679–711.
Harbour authorities have the power and the obligation under the
Pilotage Act 1987 to decide whether and what type of pilotage services
are needed in their area for each type of ship, and whether pilotage
should be compulsory. In addition, such harbour authorities are
authorised to provide the pilotage services, to set the qualifications
of pilots, to authorise pilots and to disqualify incompetent pilots.
Compulsory pilotage is determined by the issuance of pilotage
directions by the harbour authorities, empowered under the Pilotage
Act 1987. The competent harbour authority may charge for the
pilotage services provided.
If a ship is navigated in an area of compulsory pilotage without a pilot or
without a master or first mate holding an exemption certificate, then the
39
ship’s master is guilty of an offence and liable on summary conviction.

A review of the Pilotage Act 1987 undertaken by the UK Department of
Transport has led to the development of the Port Maritime Safety Code.
While the review and the code identified significant improvements that
need to be made in respect of the training and licensing of pilots and
advocated the use of port passage plans, it did not suggest any changes
in the liability regime applicable under the Pilotage Act 1987, except
perhaps in clarifying that the performance required by the competent
harbour authorities in order to discharge their statutory obligations
under the Act must be consistent with the Port Maritime Safety Code.
4.1 Explain the duty of a port authority to provide efficient pilotage services and
the consequences if it does not.
4.2 Explain the principle established by the decisions in River Wear
Commissioners v Adamson [1877] AC 743 and in The Mostyn [1928] AC 57.
4.3 Illustrate the powers of a port authority under s.74 of the Harbour, Docks
and Piers Clauses Act (HDPCA) 1847.
4.2 Duties of pilots and liabilities

Essential reading
• Sheppard, Vol. 2, Chapter 13, section B.
Pilots are liable under the Pilotage Act 1987 for acts or omissions which
cause ‘loss, destruction or serious damage’ or ‘personal injury or death’
(s.21(1)) only where they act deliberately or under the influence of
drugs or drink, or their act or omission amounts to a breach or neglect
of duty. In such circumstances fines and prison sentences may be
imposed upon pilots. The criminal liability provisions under s.21 are not
restricted to authorised pilots.
The Pilotage Act 1987 limits the civil liability of an authorised pilot to
£1,000 plus the pilotage fee. The latter can be up to a few thousand
pounds for larger vessels, though this varies between ports.
There is no limitation for unauthorised pilots under the Pilotage Act
1987. Presumably unauthorised pilots would be considered as crew
and would be protected against third party claims by the 1976 LLMC as
amended.
4.4 Explain the duties of a master of a ship in a compulsory pilotage area.
4.5 Illustrate the pilot’s authority and division of control between the pilot on
board a ship and the ship’s master.
4.6 Advise on the extent of the pilot’s duties and liability for breach of their
duties generally.
4.7 Explain the effect of s.16 of the Pilotage Act 1987 and the interpretation of
s.15 in the previous Pilotage Act 1913 by the relevant authorities.
40
Chapter 4: Duties and liabilities of ports and pilots
4.3 Liability of the harbour authority

The harbour authority is not liable just because it has licensed a pilot
whose acts or omissions have caused damage. Fault by the competent
harbour authority itself must be demonstrated. Arguably, the fault of
the competent harbour authority may be based most probably on a
breach of its statutory duties.
Pilots usually have a contractual arrangement, normally a contract
of employment, with the harbour authority. The question then arises
whether the negligence of the pilot imposes vicarious liability on the
employing harbour authority or on the shipowner, or on both.
Up to the coming into force of the Pilotage Act 1913, case-law
supported the proposition that in respect of compulsory pilotage the
shipowner’s liability was excluded. However, the introduction of s.15(1)
of the Pilotage Act 1913 reversed the position (Workington Harbour and
Dock Board v Towerfield (Owners) (The Towerfield) [1951] AC 112). The
relevant section states:
Notwithstanding anything in any public or local Act, the owner
or master of a vessel navigating under circumstances in which
pilotage is compulsory shall be answerable for any loss or
damage caused by the vessel or by any fault of the navigation
of the vessel in the same manner as he would if pilotage were
not compulsory.
Thus in The Esso Bernicia [1989] 1 Lloyd’s Rep 8 the House of Lords held
that no vicarious liability attaches to the general employer of a pilot for
two reasons:
• Because the pilot navigates the ship as a principal, not as a servant
of their general employer.
• Because of the application of s.15(1) of the Pilotage Act 1913.
The current relevant provision is s.16 of the Pilotage Act 1987, which
states:
The fact that a ship is being navigated in an area and in
circumstances in which pilotage is compulsory for it shall not
affect any liability of the owner or master of the ship for any loss
or damage caused by the ship or by the manner in which it is
navigated.
Taken within the historical context of s.15(1) of the Pilotage Act 1913,
s.16 of the Pilotage Act 1987 has been held to impose liability for the
negligence of a compulsory pilot on shipowners in respect of claims
by third parties and make the pilot the servant of the shipowner in
all respects, even where this concerns the damage suffered by the
shipowner.
The liability of the competent harbour authority is anyway limited
under the Pilotage Act 1987 in respect of loss of or damage to the ship
under pilotage and any property on it, loss of or damage to any other
ship or property on board such ship as well as to any other property
or rights (s.22(3)). The applicable limits of liability are calculated by
multiplying the number of authorised pilots employed by the harbour
authority by £1,000.
41
There is no right to limit liability for loss of life or personal injury under
the Pilotage Act 1987. Consequently, for such claims the liability of the
harbour authority or any authorised agent is unlimited.
As explained, s.16 of the Pilotage Act 1987 provides that the liability
of the owner and the master of the ship is not affected in any way for
‘any loss or damage caused by the ship or by the manner in which it
is navigated’. This provision has been deemed to impose liability on
the shipowner in respect of the acts or omissions of the pilot during
compulsory pilotage, and to assimilate it to the long-standing position
in respect of non-compulsory pilotage that the pilot’s actions make the
shipowner vicariously liable (The Cavendish [1993] 2 Lloyd’s Rep 292).
Activity 4.8
Explain the situations under which the harbour authority may be liable for
damages arising from the conduct of a pilot.
1. Explain the legal framework for the liability of pilots where pilotage is
compulsory.
2. Outline the powers of a port authority.
3. How can a port authority recover for the costs of wreck removal and those of
damages caused by a ship to its installation?
4. Can a port authority limit its liability and for what claims?

should be able to:
• explain the powers of the port and harbour authorities
• explain the liability regime for harbour damage
• explain the liability position for pilots and the entity to which vicarious liability
attaches.
42
Notes
Notes
43

You need to read the cases mentioned, long extracts of which and commentary you
will find in the Essential reading. In addition, you should read The Towerfield [1951]
AC 112 in conjunction with the duty of the port authority to maintain the port in
good condition. Read Sheppard Vol. 2, Chapter 13, section 4.3. There are public policy
reasons behind s.74 so as to simplify the remedy in the event of damage being done
by a vessel to harbour installations (BP Exploration Operating co Ltd v Chevron
Shipping [2002] 1 Lloyd’s Rep 77).
Read The Crystal [1894] AC 508, The Douglas (1882) 7 PD 151, The Utopia [1893] AC
492.
Back
Relevant authorities are The Ignition [1983] 1 Lloyd’s Rep 382, The Princess Juliana
[1936] P 139, and The Alexander Shukoff [1921] 1 AC 216.
Relevant sections of the Pilotage Act 1987 are ss.16, 21 and 22. Other relevant
authorities are The Towerfield [1951] AC 112, The Esso Bernicia [1989] AC 643, The
Cavendish [1993] 2 Lloyd’s Rep 292.
You will find extracts from and comments on these decisions in the Essential reading.
Bear in mind that pilots are assisting ships to protect them and others in ports from
accidents as pilots have knowledge of dangers in a particular port. It is paramount
that there should be co-operation between ships and pilots.
Pilots can earn salvage in circumstances of exceptional skill and effort (read The
Aldora [1975] 1 Lloyd’s Rep 617 and The Akeblom v Price (1881) 7 QB 129 from the
Essential reading).
Back
Activity 4.8
Read Sheppard Vol. 2, Chapter 13, section 4.3 and consider which of the duties may
give rise to civil liability.
Back
44
Chapter 5: Liability for marine pollution
Chapter 5: Liability for marine

pollution
Introduction
Civil liability for oil pollution damage from ships is covered by a
number of international conventions. These conventions have been
developed since 1969 and share common characteristics, but they also
have significant differences between them.
Tankers carrying persistent oil are treated differently from other ships
because they have a higher potential for causing extensive pollution
damage. For such damage compensation is provided by the shipowner
up to a limit and, in addition, by a specially formed intergovernmental
legal entity called the International Oil Pollution Compensation Fund
(IOPCF), funded from money collected from oil importers.
The 1969 International Convention on Civil Liability for Oil Pollution
Damage (1969 Civil Liability Convention) as amended by the 1992
Protocol (and known as 1992 Civil Liability Convention or 1992
CLC) establishes strict but limited liability for the shipowner (with
exceptions), coupled with compulsory insurance and direct action
against the insurer. The 1992 CLC is supplemented by the International
Convention on the Establishment of an International Fund for
Compensation for Oil Pollution Damage (IOPC Fund) 1992. The 1969
CLC – which remains in force in various countries – was supported by
the 1971 Fund Convention. This ceased to be in force on 24 May 2002
and the Fund was wound up with effect from 31 December 2014. Thus,
only the 1992 IOPC Fund is presently active.
The role of the IOPC Fund is twofold:
• It provides additional compensation to victims of oil pollution
in cases where compensation cannot be received under the
CLC because the shipowner’s liability is exempted, or where the
shipowner and its insurer are financially unable to provide for
compensation.
• It also provides compensation to marine pollution victims to limits
of liability higher than those available against the shipowner.
The CLC/IOPCF system has been very successful as shown by their wide
ratification. A Protocol to IOPC Fund 1992 was agreed on 27 May 2003
for the creation of a voluntary third tier of liability for oil pollution.
This third tier came into force in 2005 and is available only in those
states which are party to it – and is supported by the contribution of
importers of those states. The Supplementary Protocol raises the funds
available for compensation to 750 million Standard Drawing Rights.
Oil spill damage from bunkers and lubrication oils from ships not
employed for the carriage of oil are covered by the 2001 Bunker Oil
Pollution Convention (2001 BOPC) which establishes strict but limited
liability for the shipowner and other persons associated with the
running of the ship, coupled with compulsory insurance and direct
45
action against insurers. However, unlike the CLC Fund/Supplementary

Fund system, the 2001 BOPC does not provide for a separate ‘stand-
alone’ limitation fund but preserves existing rights to limit liability
whether under national or international law.
Learning outcomes
• explain the principles applicable to compensation for marine pollution from
ships
• distinguish between the liability regimes of the 1992 CLC and the 2001 BOPC
• explain the role of the IOPC Fund and the Supplementary Fund in providing
compensation for victims and the way these funds are funded.
Essential reading
• Merchant Shipping Act 1995, ss.152–171. Available via Lexis in the Online Library.
• Tsimplis, M. ‘Marine pollution’ in Baatz, Y. (ed.) Maritime law. (Abingdon: Informa
Law, 2020) 5th edition [ISBN 9780367493844].
5.1 1992 Civil Liability Convention

The 1992 CLC and the 1992 Fund Convention apply to oil pollution
damage caused in the territory, including the territorial sea, of a
contracting state, and to damage caused within 200 miles from the
coast. It also covers the costs of preventive measures ‘wherever taken’,
i.e. in areas beyond national jurisdiction or even in jurisdictional areas
of non-contracting states, provided their role is to protect the coasts of
contracting states.
The 1992 CLC/Fund apply to spills by persistent hydrocarbon mineral
oil such as crude oil, fuel oil, heavy diesel oil and lubricating oil,
whether carried on board a ship as cargo or in the bunkers of a ship.
The 1992 CLC covers ships defined as ‘any sea-going vessel and any
seaborne craft of any type whatsoever’. The 1992 CLC further restricts
its application to ships ‘constructed or adapted for the carriage of oil in
bulk as cargo’, thus giving emphasis to the requirements of approval of
ships as physically suitable for the carriage of oil.
The 1992 CLC applies always to ships which are only capable of
carrying oil in bulk. In addition, the 1992 CLC extends the scope of
coverage to oil spillage from Oil/Bulk/Ore ships (OBOs) which arguably
fulfil the requirement to be constructed for the carriage of oil, provided
that these vessels are laden with oil or that they are on their first
voyage after the carriage of oil and they have oil residues from the
previous voyage on board.
The application of the 1992 CLC will also turn upon whether the
structure under discussion is ‘carrying oil in bulk as cargo’. The notion of
carriage usually involves transportation rather than containment, thus
making it strongly arguable that where the intention is storage rather
than carriage the 1992 CLC would be inapplicable. The IOPC Fund has
extensively discussed the possibility of expanding its coverage after
46
the Greek Supreme Court held that the Slops, a decommissioned tanker
used for storage of oil, was covered by the definition of ship.
5.2 Who is liable?

The 1992 CLC imposes strict liability on the owner of the ship causing
pollution damage. The owner is defined as the registered owner or, in
the absence of registration, the persons(s) owning the ship.
Strict liability in this context means the claimant needs only to prove
that the pollution damage suffered was caused by a type of oil covered
by the 1992 CLC which came from a ship covered by the Convention.
There is no need to prove fault of the shipowner. The shipowner can
avoid liability only under some limited exceptions. Strict liability
does not prevent the shipowner from claiming against the party
responsible for the pollution damage, nor does it remove the defence
of contributory negligence by any victim of pollution damage.
No liability for pollution damage will attach to the owner if they prove
that the damage resulted from an act of war, hostilities, civil war,
insurrection or a natural phenomenon of an exceptional, inevitable
and irresistible character; or was wholly caused by a third party’s act or
omission done with intent to cause damage. Furthermore, no liability
attaches where the oil pollution damage was wholly caused by the
negligence or other wrongful act of any government or other authority
responsible for the maintenance of lights or other navigational aids in
the exercise of that function.
5.3 Pollution damage

‘Pollution damage’ is defined as loss or damage outside the oil-carrying
ship caused by contamination resulting from the escape or discharge
of oil from the ship, wherever this escape or discharge may occur. It
includes the costs of preventive measures and further loss or damage
caused by preventive measures. These measures are defined as
reasonable measures taken by any person after the incident occurred
to prevent or minimise pollution damage.
Under the 1992 CLC the definition of ‘pollution damage’ also includes
the stipulation that compensation for impairment of the environment,
other than for loss of profit from such impairment, shall be limited to
costs of reasonable measures of reinstatement actually undertaken
or to be undertaken. The wording of the pollution damage definition
and in particular the ‘loss of profit’ arising from the impairment of the
environment creates rights for recovery of economic losses which are
otherwise not recoverable under English law.
The IOPC Fund practice is that loss of earnings caused by oil pollution
suffered by persons whose property has not been polluted (pure
economic loss) may be covered. For example:
• loss of earnings by fishermen whose nets were not contaminated
but who may be prevented from fishing because of the pollution of
the area they normally fish
• loss of income by hotel owners located close to a contaminated
public beach
47
• costs of marketing campaigns to prevent or reduce economic

losses by counteracting the negative publicity arising from a major
pollution incident.
The discrepancy between the common law position and the IOPC
Fund practice has led to litigation in order to clarify the extent to
which the common law rule of non-recovery has been modified by the
introduction of the 1992 CLC/Fund legal framework into English law.
The English courts have imposed limits to the types of pure economic
losses claimed by demanding a requirement for a direct link between
the economic loss and the claimant’s activity within the polluted area.
5.4 Liability of the insurer

The 1992 CLC provides for a direct right of action by third party
claimants against the insurer or other person providing financial
security for the owner’s liability for pollution damage. This ensures that
recovery may be available even if the owner is not financially capable
of paying.
Insurers are entitled to the same exceptions of liability the shipowner is
entitled to and, in addition, can avoid liability if they can show that the
pollution damage resulted from the wilful misconduct of the owner.
However, the insurer is not entitled to rely on any other contractual
defence which they might have been entitled to take in proceedings
brought by the owner against them.
The 1992 CLC prohibits claims for pollution damage against
crewmembers and other servants or agents of the owner, the pilot (or
any other person who, without being a member of the crew, performs
services for the ship), any charterer, any manager or operator of the
ship, any person performing salvage operations with the consent of
the owner or on the instructions of a competent public authority, and
any person taking preventive measures to avoid oil pollution damage.
Servants or agents of the charterer, manager, operator, salvor or other
person taking oil pollution prevention measures are also protected.
Thus, for any pollution damage claim the shipowner or their insurer are
the only persons a claimant may sue under the 1992 CLC.
5.5 Limitation of liability

Owners of ships covered by the 1992 CLC and their insurers are entitled
to limit their liability for oil pollution damage. The liability of the insurer
is always limited and the insurer can always constitute a limitation fund
even if the owner is itself unable to limit liability.
Only acts or omissions of the owner may remove the owner’s right
to limit liability under the 1992 CLC. Where, as is the usual case, the
shipowner personally is not directly involved in the running of the ship,
a search for the ‘alter ego’ of the shipowner in respect of the particular
act or omission needs to be undertaken. This must be resolved on a
case-by-case basis depending on the structure of each company and
the way responsibilities are distributed within each company either by
the company’s constitution or by statutory responsibility or by fact.
48
The conduct required for the shipowner’s act is intention to cause

damage, or, recklessness coupled with knowledge that such damage
would probably result – a very difficult test to fulfil.
5.6 Role of the 1992 IOPC Fund

The creation of the 1971 and the 1992 IOPC Fund Conventions
crystallised the undertaking of the oil industry and, in particular, oil
importers to contribute to the compensation for oil pollution damage.
The management and organisation of their contribution is effected by
the creation of an intergovernmental organisation: the IOPC Fund.
The 1992 IOPC Fund covers situations in which the owner’s liability is
excluded under Art.III(2) of the 1992 CLC. Thus, the Fund will pay out
where the pollution damage was caused by:
a natural phenomenon of an exceptional, inevitable and
irresistible character
or was
wholly caused by an act or omission done with intent to cause
damage by a third party.
In addition, the IOPC Fund will pay where the damage was:
wholly caused by the negligence or other wrongful act of any
Government or other authority responsible for the maintenance
of lights or other navigational aids.
Thus, in the situations mentioned above, although the shipowner will
not be liable, an equal amount of compensation will be provided by
the IOPC Fund.
The IOPC Fund also covers oil pollution liability in cases where, and
to the extent that, the shipowner and their insurer are financially
incapable of providing the required compensation under the 1992 CLC
or where the damages exceed the owners’ liability.
In situations where there is oil pollution damage but the vessel that
caused the oil spill has not been identified, the claimant can still be
compensated by the IOPC Fund if it can prove that the oil that caused
the damage came from at least one ship. Thus, the Fund is liable for
compensation from ‘mystery’ oil spills where the ship that caused the
damage is not identified.
However, the IOPC Fund will not be liable where the damage
arises from acts of war, hostilities, civil war, insurrection or from a
governmental ship used in a governmental mission, or where the
claimant cannot prove that the damage resulted from a ship.
The limits of liability payable under the 1992 Fund and the 1992 CLC
are available as an overall total amount against which recovery is
possible. In other words, the limits of liability established by the Fund
include the owners’ limits of liability under the 1992 CLC. This means
that whether the shipowner pays their part or whether they do not pay
anything, the overall available compensation will be the same. Thus, in
cases where the shipowner pays their part the IOPC Fund will ‘top-up’
the amount, while in other cases the whole compensation will be paid
by the IOPC Fund.
49
The 1992 IOPC Fund is supported financially by every oil importer who
has imported within a year 150,000 tons or more of contributing oil
into a contracting state.
5.7 2003 Supplementary Fund

The 2003 Supplementary Fund was created following major oil
incidents at the Spanish and French coasts which made clear that the
limits of liability under the two-tier system of the 1992 CLC and Fund
were inadequate, especially for coastal areas where the clean-up costs
were expensive. Following very strong political pressure from the
EU, the IMO quickly developed a third tier of compensation which is
available but not compulsory for all parties to the 1992 CLC and the
IOPC Fund Convention.
The 2003 Supplementary Fund increases the compensation available
to victims of oil pollution damage to a total of 750 million SDR. This
third tier of compensation is available only to those contracting states
of the 1992 IOPC Fund which are also contracting states to the 2003
Supplementary Fund.
5.8 2001 Bunker Pollution Convention

The 1992 CLC/IOPC Fund framework applies only to pollution damage
from bunker oil and cargo for tankers carrying persistent oil. Thus,
pollution damage for bunker oil from other ships was not subject to
any international convention until the entry into force of the 2001
Bunker Oil Pollution Convention (2001 BOPC).
The 2001 BOPC is modelled on the 1992 CLC but has significant
differences. The 2001 BOPC establishes strict liability for the registered
owner, bareboat charterer, manager and operator of the ship in respect
of oil pollution damage from bunker oil. It also establishes compulsory
insurance for the registered owner and direct action of third party
claimants against the insurer.
The 2001 BOPC does not affect any right of limitation of liability
established in national legislation or by international conventions,
although it does give a clear suggestion to parties that the 1996
Protocol to the 1976 Convention on Limitation of Liability for Maritime
Claims (1996 LLMC) provides the best background for its application.
While the 2001 BOPC applies to all ships, compulsory insurance applies
only to the registered owner of ships larger than 1,000 grt. The amount
for which this insurance is required corresponds to the limits of liability
available to the shipowner under applicable national law but may not
exceed the 1976 LLMC limits, as amended.
The 2001 BOPC covers only hydrocarbon mineral oils used or intended
to be used for the operation or propulsion of the ship as fuel or
lubrication, as well as the residues from the use of such oil. These are
defined as ‘bunker oil’.
The 2001 BOPC covers pollution damage defined in the same terms as
under the 1992 CLC.
50
Any seagoing vessel and seaborne craft of any type whatsoever are
covered by the 2001 BOPC definition of a ship. The shipowner is strictly
liable for pollution damage from bunker oil spilled. However, the
definition of shipowner includes the registered owner, the bareboat
charterer, the manager and the operator of a ship. The same exceptions
of liability under the 1992 CLC also apply in the strict liability
established under the 2001 BOPC.
The channelling of claims within the 2001 BOPC is restricted to the
shipowner only, thus the protection is not extended to other entities as
under the 1992 CLC. However, the UK enactment excludes from liability
any servant or agent of the owner and any person engaged in any
capacity on board or performing any service for the ship; salvors, their
servants and agents and any person involved in pollution prevention or
mitigation activities and their servants or agents.
Arguably the most significant difference between the 2001 BOPC and
the 1992 CLC concerns the limits of liability. The 2001 BOPC does not
have specific limits of liability for bunker pollution damage, and nor
does it earmark a fund for this purpose. Instead it generally preserves
the shipowner’s right to limit liability. Thus, compensation for bunker
pollution damage is payable by the general limitation fund under the
1996 LLMC if the specific pollution claim is covered by its provisions.
More importantly, there is no second tier of compensation as that
developed by the 1992 Fund Convention. As a result, if the liability of
the shipowner is exempted or if the shipowner and their insurer are out
of business, the claimant will not be compensated under the regime.
A claimant under the 2001 BOPC can directly sue the insurer whether
or not the shipowner is solvent or is in breach of its insurance contract
and therefore cannot recover under it. Nevertheless, the insurer is
entitled to limit liability even if the shipowner is not. The insurer can
invoke all the defences the shipowner would have invoked in an action
against the shipowner. In addition, the insurer may avoid liability if the
pollution was a result of wilful misconduct by the shipowner. Defences
that could have been invoked under the insurance contract – for
example, misrepresentation, breach of the obligation of good faith,
etc. – would not allow the insurer to avoid liability against third parties
under the 2001 BOPC.
5.9 Hazardous and Noxious Substances

Convention 2010
Liability for damage arising from the carriage of hazardous and/or
noxious cargo is presently, under English law, based in tort. Limitation
of such liability is currently covered by the 1996 LLMC for those claims
covered by the wording of Art.2. Pure economic losses arising from the
escape of HNS cargo is currently non-recoverable.
The 1996 International Convention on Liability and Compensation for
Damage in Connection with the Carriage of Hazardous and Noxious
Substances by Sea (the 1996 HNS Convention) was designed for the
purpose of establishing strict liability and providing compensation in
respect of such damage.
51
The 1996 HNS Convention was modelled in many aspects on the 1992
CLC/Fund system. A two-tier system, expressing the joint responsibility
of the shipowner (first tier) and the importers/traders (second tier) was
devised. However, instead of having two independent conventions the
HNS opted for one convention dealing with both tiers. The choice to
bundle together the liability of the shipowner with that of the importer
was made in spite of the very important practical difference between
the oil trade and the trade in hazardous and noxious substances.
However, the 1996 HNS Convention faced significant practical
difficulties related to the HNS Fund and failed to come into force.
Following extensive discussions within the IOPC Fund the 2010 HNS
Protocol was adopted in May 2010. The 2010 HNS Protocol attempts to
resolve the most pressing problems with the 1996 HNS Convention, all
of which relate to the HNS Fund, but it remains to be seen whether the
amendments will persuade states to bring the revised HNS 2010 into
force. Because the HNS 2010 is not in force yet it will not be discussed
in detail.
In June 2016 the European Parliament passed resolution
P8_TA(2016)0259 responding to the submitted European Council
decisions in December 2015 (decisions 13806/15 and 14112/15),
authorising EU member states to ratify or accede to the HNS 2010. The
European Parliament’s resolution suggests a reasonable framework for
signing up by member states, not longer than two years from the time
the European Council’s decision enters into force.
It should be noted, however, that in addition to pollution damage it
also covers loss of life on board and outside the ship as well as property
damage outside the ship, thus having significantly broader application
than the 1992 CLC.
5.1 Explain the three-tier system of compensation for oil pollution damage from
tankers.
5.2 Illustrate the basis of liability for oil pollution under the current 1992 CLC and
the possible defences of a shipowner and their insurer.
5.3 Outline the circumstances in which the 1992 CLC and those in which the
2001 BOPC would apply.
5.4 Explain what is recoverable under both the 1992 CLC and the 2001 BOPC.
5.5 Illustrate the criteria which may be taken into account in considering
compensation to victims of oil pollution damage.
5.6 Explain the right of a shipowner to limit liability for oil pollution damage and
the circumstances in which such right may be barred.

• Baatz, Y. Maritime law. (Abingdon: Informa Law, 2020), 5th edition
[ISBN 9780367493844] Chapter 10.
• Blackburn, E. ‘The 2003 Protocol to the International Fund Convention 1992 for
pollution damage’ [2003] 9(6) Journal of International Maritime Law 530.
52
1. Identify the reasons why fault-based national laws were not considered
suitable as the legal basis for oil pollution damage.
2. Discuss the four basic characteristics of the liability regimes for pollution
damage and discuss their advantages and disadvantages.
3. What are the differences in the channelling of liability between the 1992
CLC and the 2001 Bunker Pollution Convention? Why were they considered
necessary?
4. Consider why it would not be feasible to unify all liability conventions in one
pollution liability regime for all types of pollutants carried by sea.
5. Discuss the exceptions to strict liability that the shipowner can rely upon, and
explain why the insurers are concerned about one of them.
6. Compare the availability of funds for compensation of pollution damage from:
• oil spilled from a tanker
• bunker oil from a passenger ship
• hazardous chemical spilled from containers.
Which claims have better chances for recovery? You must take a ship of a
certain size for the comparison to be feasible.

should be able to:
• explain the principles applicable to compensation for marine pollution from
ships
• distinguish between the liability regimes of the 1992 CLC and the 2001 BOPC
• explain the role of the IOPC Fund and the Supplementary Fund in providing
compensation for victims and the way these funds are funded.
53

Activity 5.1
Read the CLC 1992, the IOPCF 1992 and the Supplementary Fund Protocol 2003.
Activity 5.2
Discuss Art.3 and the relevant parts of Art.7.
Activity 5.3
Consider the definition of ship,the type of pollutant covered and the coupling section in
the BOPC.
Activity 5.4
Read the definition of pollution damage and the scope of the Convention.
Activity 5.5
Discuss how pollution damage has been considered. Read the current claims manual
issued from the IOPCF. Discuss the relevant case-law considering the extent to which
financial losses are recoverable.
Activity 5.6
Consider the test in the CLC and compare it with the test under Limitation of Liability
considered in Module C of the course.
Back
54
Sample examination questions

These questions appeared in the October 2017 paper.
Question 1
Discuss the effects the 1989 Salvage Convention has on:
a) the voluntariness requirement; and
b) the cargo owner’s and charterer’s ability to deny the existence of a salvage
contract.
Question 2
A collision between the Princess, a laden tanker, and the Beast, a passenger ship,
takes place two miles south of the UK coast. The Samson, a tug owned by PayMe
Inc., offers to help the Princess on the basis of an LOF 2011 incorporating the
SCOPIC Clause. The master of the Samson invokes the SCOPIC Clause in writing
immediately and starts preparations to contain an oil spill from the Princess and
to take her into tow. However, as soon as a line is passed to the Princess the Beast
starts sinking. The Samson abandons the salvage of the Princess and participates
in saving passengers and crew from the Beast. By the time the Samson is again
able to approach the Princess she is assisted by two port tugs, the Hector and
the Achilles. These are normally employed under the UK Standard Conditions for
Towage and Other Services 1986. On approach of the Samson an agreement to
collaborate is reached between the three tugs over the VHF. Unfortunately, as the
Samson approaches it runs into the Princess and sinks her.
Advise the owners of all ships in relation to civil liability arising from the facts
above.
55
Advice on answering the questions

Question 1
Outline answer:
a) The voluntariness requirement
The 1989 Salvage Convention does not refer to voluntariness at all. It does have, however,
two provisions. One under Art.5 concerns salvage services provided by public authorities
and leaves the decision on whether such services are entitled to an award to national
law. It also provides that salvors acting under public authorities do not lose their salvage
rights. More important is perhaps Art.17 of the 1989 Salvage Convention. This provides
that non-payment is due ‘unless the services rendered exceed what can be reasonably
considered as due performance of a contract entered before the danger arose’.
Thus, the Convention does not consider voluntariness as a requirement for the
existence of salvage but restricts the recovery of a reward when the claimant salvor is
acting under and within a contract.
There are various cases in common law discussing voluntariness (The San Demetrio
concerns officers and crew of a torpedoed boat, The Sava Star claim for salvage by the
cargo owner, The Troilus claim for salvage by a sister ship, The Sandefjord salvage by a
pilot, The Homewood for towage. These are cases before the Convention and their use
should be accompanied by an assessment on whether under Art.17 the position may
have changed (the answer is no for these but you need to refer to facts and explain)).
b) The cargo owner’s and charterer’s ability to deny the existence of a salvage contract
The cargo owner and the charterer may become liable for paying an Art.13 award under
the 1989 Salvage Convention if cargo or the bunkers (if these belong to the charterer)
or freight due to the charterer has been saved by the intervention by the salvors. In the
past these entities were only bound to a salvage contract signed by the master of the
ship where the master was an agent of necessity. In The Choko Star, this was taken to
require danger that made an action necessary for the protection of the interests of the
alleged principal (not of the agent), the alleged agent must have acted in good faith and
reasonably in the interests of the alleged principal and that where it can communicate
with the principal then it should do so (see The Winson). Thus, where there is a possibility
of communication, the agency of necessity will not normally arise. This created problems
for salvors who wanted undertakings that the cargo, which in many cases has the
highest salved value, would be bound by the contract of salvage.
This problem was resolved by Art.6 of the Salvage Convention which permits salvors and
shipowners to contract out of the 1989 Salvage Convention in all aspects except in relation
to the powers of courts to review salvage contracts (Art.7) and in relation to the duty of
care towards the environment (Art.8). The same Article gives express powers to the master
and the owner of the ship to bind the owners of property to a salvage contract.
The 1989 Salvage Convention including Art.6 is based on the concept of salvage
operations which concern property in danger. Presumably, if a cargo owner or
charterer can demonstrate that there was no danger, the authority granted under
Art.6 disappears and the shipowner’s or master’s choices are not binding on the other
property owners.
Also in The Pa Mar, a case where the shipowner and salvors modified the contract
by changing the range of the agreed places of safety, the court held that while the
original contract was binding to the cargo owner the modification was not binding
because it was unreasonable. This case was not decided with the Salvage Convention
applying with the force of law but as incorporated contractually. If it is correct that
such a test of reasonableness can be implied in the Art.6 authority that may be
an alternative situation where the cargo owner or charterer can avoid a salvage
agreement. However, the Art.6 wording is not supportive of such an interpretation as
the authority is not qualified.
Back
56
Question 2
Outline answer:
1. Where the collision took place or where the salvage took place does not matter
under the 1989 Salvage Convention because it applies when a salvage claim
comes before the courts of a contracting state.
2. Because the Princess is laden there is a threat of damage to the environment
(Art.1(d)). The proximity to the coast permits the definition of Art.1(d) to operate as
it requires ‘coastal waters or areas adjacent thereto’. Therefore, there is a potential
operation of Art.14 and special compensation.
3. However, the agreement with the Samson is on the basis of LOF 2011 with the
SCOPIC incorporated. This automatically removes the application of Art.14,
(SCOPIC s.1). Furthermore, the salvor immediately invokes the SCOPIC in writing
as required under its s.2. Therefore, from that moment the salvor is entitled to
payment in SCOPIC tariffs.
4. The Samson does not perform under the contract but assists in the saving of
passengers of the Beast which is sinking. The Samson in doing so is complying
with Art.10 of the 1989 Salvage Convention and it cannot be said that this was
repudiatory conduct.
5. The Samson participates in assisting the Hector and the Achilles following an
agreement which must be looked at under Art.8.1(d). If the Samson has preserved
its right under this article it may be still be entitled to its full salvage award if the
acceptance of the two tugs by the Princess was unreasonable. (It is unknown
what agreement has been reached between the tugs. The complication is that
the two other tugs are under towage terms and therefore a claim for salvage by
them may fail altogether as not satisfying Art.17. If the Samson was dismissed by
the master of the Princess a situation like that in The Unique Mariner (No.2) may
be in existence creating liability on the Princess to compensate the Samson for
contractual damages.)
6. Samson runs into the Princess and sinks her. Therefore, there is no Art.13 award.
Perhaps there is still a SCOPIC award. The salvor’s misconduct falls under Art.18
of the 1989 Salvage Convention which provides that the salvor may be deprived
from all reward if it has made the salvage operation more difficult than it might
otherwise have been. However, the salvor is also in breach of the LOF 2011’s
obligation to exercise best endeavours and also liable in negligence for the
damage caused to the Princess. Therefore, the owners of the Princess can sue
Samson for the damage caused (see, for example, the Tojo Maru). However, the
owner of Samson can limit liability under the LLMC to the limits of a ship 1,500 grt
– the lowest possible limits for a ship.
The Hector and the Achilles have lost the possibility of being remunerated either
in towage or in salvage (depending on how they are employed). However, the
Samson’s negligence has caused them pure economic loss – not recoverable under
English law.
Back
57
Notes
58
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Master of Laws (LLM)

Postgraduate Diploma in Laws

Revised edition, 2021

̆ Dr Aleka Mandaraka-Sheppard (LLB, LLM, PhD, Dip.IArb), formerly Head of the

Published by the University of London

1.1 Admiralty law

1.1.1 Study sequence

1.2 Course aims and outcomes

Course learning outcomes

1.3 Introduction to Module D

into a port and ocean towing. Understanding the terms implied to

Learning objectives for Module D

Learning outcomes for Module D

1.4 How to use this Study Guide

1.4.1 Case-law and statutes

recommended that you read the suggested case-law as well as the

Useful further reading

1.5 Preparation for the course

1.5.1 Self-assessment questions

1.6 Allocating your time

1.7 The examination

1.7.1 How to approach the examination questions

• Declarative knowledge in our context is what you know about the

Chapter 2: The concept of salvage

Because the obligation to pay the salvage award attaches to all

2.1 1989 Salvage Convention

However, the UK has reduced the geographical scope of application

Similar questions can be posed in respect of the environmental duties

taken place over a long period of time a question on time limitation

Useful further reading

2.2 Assessment of salvage award and special

This definition is restrictive in several ways:

other than out-of-pocket expenses. The House of Lords’ decision in The

2.3 Salvage agreements under the 1989 Salvage

The right to a salvage reward arises independently of whether there

under Art.7, as well as the environmental obligations imposed on the

The LOF contract is subject to English law and Lloyd’s Arbitration.

Apart from the difference in the way the salvor’s remuneration is

Limitation of liability is discussed in Module C. However, there are two

Useful further reading

Reminder of learning outcomes

Feedback to activities: Chapter 2

Chapter 3: Towage contracts

3.1 The contract and basic terms

Various standard forms of towage contracts are available. However,

Useful further reading

3.2 Duties and liability of the contractual parties

Special forms of contract have been developed reflecting the needs

3.2.1 UK Standard Conditions for Towage and Other Services

exclusive English jurisdiction, except in Scotland where local courts

3.2.2 Liability allocation under TOWHIRE 2008 and

to pay attaches. Such a statement is not present in the arrangement

3.3 Liabilities of the contractual parties to third

Towage law involves two different aspects which must not be

Useful further reading

Reminder of learning outcomes

Feedback to activities: Chapter 3

Chapter 4: Duties and liabilities of ports

4.1 Statutory duties and rights of port authorities

ship’s master is guilty of an offence and liable on summary conviction.

4.2 Duties of pilots and liabilities

4.3 Liability of the harbour authority

Reminder of learning outcomes

Feedback to activities: Chapter 4

2.2 Assessment of salvage award and special

2.3 Salvage agreements under the 1989 Salvage

3.2 Duties and liability of the contractual parties

3.2.1 UK Standard Conditions for Towage and Other Services

3.2.2 Liability allocation under TOWHIRE 2008 and

3.3 Liabilities of the contractual parties to third

5.9 Hazardous and Noxious Substances