Towage of a boat that is not in danger is paid at the agreed price; assistance to a ship in danger gives a right to a reward fixed according to the result, the danger and the value saved, which it cannot exceed. A contract signed under the pressure of danger can be revised, and the claim for payment is time-barred after two years.
The engine stops six miles offshore, the wind is rising, night is coming. The CROSS coastguard centre, alerted by VHF, calls a launch that takes the boat in tow and brings it back to port in two hours. Three days later an invoice arrives: twelve thousand euros for maritime salvage, for a boat worth one hundred and twenty thousand. The insurer replies that its cover includes towage but not salvage, or the reverse, and the owner no longer knows whether to pay, how much and to whom.
The law of salvage at sea is old, international and precise. It gives those who save a ship a right to a reward that can be high, but it confines that right within conditions, caps its amount, allows an agreement signed in an emergency to be revised, and distinguishes salvage from mere towage, which is paid at the agreed price. Here are the rules that yacht owners, shipowners and insurers need to know before paying or refusing.
Salvage or towage: it all depends on danger
The International Convention on Salvage 1989, done in London on 28 April 1989 and published in France by Decree no. 2002-645 of 23 April 2002, defines a salvage operation as any act or activity undertaken to assist a vessel or any other property in danger in navigable waters. The Transport Code reproduces its rules in articles L. 5132-1 et seq., which apply whenever proceedings are brought before a French court or arbitrator, to any floating craft, in all waters, provided the operations take place wholly or partly at sea or a ship is involved as salved or salvor.
The test for salvage is therefore danger. A boat broken down in a flat sea, a mile from a sheltered port, able to anchor and in stable weather, is not in danger: the service rendered to it is towage, an ordinary contract for services, whose price is that agreed by the parties or, failing that, the price the court sets according to custom and the service rendered. The same boat broken down offshore, with a building sea, drifting towards the coast or taking on water, is in danger, and the service rendered is salvage, which gives rise to the special reward organised by law. The courts take a broad view of danger, which need not be imminent and may only be potential, provided it is real and the ship could not get out of it by her own means.
Article L. 5132-3, III, adds a clarification that settles many disputes with contracted towing companies: no salvage reward is due for services rendered under a contract concluded before the danger arose, unless the services exceed what can reasonably be considered as due performance of that contract. A tug hired to bring a boat back to port does not become a salvor because the weather turns bad on the way; it does so if the situation deteriorates to the point that its service changes in nature.
When the reward is due, and when it is not
The principle is that of a useful result. Article L. 5132-3, I, provides that salvage operations with a useful result give a right to a reward, and that no payment is due if they had no useful result. This is the rule practitioners call no cure no pay: a salvor who tries for six hours to refloat a stranded sailing yacht and fails is entitled to nothing, apart from the special compensation provided where it has limited damage to the environment.
The second principle is freedom to refuse. Under II of the same article, services rendered despite the express and reasonable prohibition of the owner or master of the vessel give no right to a reward. A yacht owner who has anchored, alerted the CROSS and is waiting for the SNSM lifeboat may refuse the help of a commercial launch that turns up without being called, provided the refusal is reasonable in the circumstances. A refusal clearly expressed by VHF and recorded in the logbook deprives the intervener of any right, whatever efforts it then makes.
The third principle concerns persons: no reward is due for persons saved (article L. 5132-8). A salvor of human life who took part in an operation that also saved the ship is only entitled to a fair share of the reward awarded for that. The French lifeboat institution, the SNSM, applies this rule to the letter: rescue of persons is free, and when its resources are used for a boat, it asks for reimbursement of the expenses incurred, not a commercial rate, under the provisions of the Transport Code. A yacht owner towed by an SNSM station therefore receives a request for a contribution to costs, whose amount bears no relation to what a private salvage company claims, and which he would do well to honour.
How much: ten criteria and a cap
Where salvage is established and has succeeded, the reward is not left to the salvor’s discretion. Article L. 5132-4 fixes it with a view to encouraging salvage operations and according to ten criteria listed in no order of priority: the value of the vessel and other property salved, the skill and efforts of the salvors in preventing or minimising damage to the environment, the measure of success obtained, the nature and degree of the danger, the skill and efforts of the salvors in salving the vessel and saving life, the time used, expenses and losses incurred, the risk of liability and other risks run by the salvors or their equipment, the promptness of the services, the availability and use of vessels or other equipment intended for salvage operations, and the state of readiness, efficiency and value of the salvor’s equipment.
Two rules limit the amount. The reward, excluding interest and legal costs, may not exceed the value of the vessel and other property salved (article L. 5132-4, III), and it is payable by all the interested parties in proportion to the respective values of the vessel and the other property (II). On a pleasure yacht there is usually neither cargo nor freight, and the owner alone bears the reward, up to the value of the boat saved.
In yachting cases, court practice produces rewards that represent a fraction of the boat’s value, varying with the danger and the resources used: a few per cent for towing, in manageable weather, a boat with a simple propulsion failure, more for a night refloating on a rocky coast with risk to the rescuers. An invoice claiming ten or fifteen per cent of the value of a cruising boat for two hours of towing in a calm sea is off the scale, and that is what the court will say.
The special compensation of article L. 5132-5, due to a salvor who prevented or limited damage to the environment caused by a vessel threatening it, which can reach 30% and then 100% of the expenses incurred, rarely concerns pleasure craft, but it may apply to a motor yacht whose fuel tanks threaten a protected area.
A contract signed in an emergency can be revised
Most salvage companies have a document signed on board, in the emergency, fixing the price or referring to a rate card. The master may sign it on the owner’s behalf, since article L. 5132-2 gives him that power, and the commitment binds the owner. It does not bind him for good.
Article L. 5132-6, one of the few mandatory provisions of the chapter, allows a salvage contract or some of its clauses to be annulled or modified in two cases: where the contract was entered into under undue influence or the influence of danger and its terms are inequitable, and where the payment agreed is far too high or far too low for the services actually rendered. This is article 7 of the 1989 Convention, and it is the basis of most successful challenges. An hourly rate signed on the deck of a boat drifting towards the rocks at one in the morning is almost by definition agreed under the influence of danger; it still has to be shown that its terms are inequitable, which means comparing the price with the criteria of article L. 5132-4.
By contrast, the standard international market form, the Lloyd’s Open Form salvage agreement, sets no price and refers to arbitration in London on criteria identical to those of the Convention. It is rarely used for yachts in the Mediterranean, but a superyacht owner may be presented with it, and its arbitration clause will then apply.
The salvor’s duties and liability
The right to a reward has a counterpart. Article L. 5132-10 requires the salvor to carry out the operations with due care, to exercise due care to prevent or minimise damage to the environment, to seek the assistance of other salvors when circumstances reasonably require it, and to accept their intervention when reasonably requested by the master or owner. A salvor who breaks the bow pulpit while passing the towline, who tows a boat too fast in a chop until the deck opens up, or who runs the ship aground while trying to shelter her, is liable for that damage, and the amount is deducted from its reward or goes beyond it. Its liability may be limited under the 1976 Convention on limitation of liability (articles L. 5132-12 and L. 5132-13), on the basis of a tonnage of two thousand where it is not acting from a ship.
The salved party also has duties, set out in article L. 5132-11: to cooperate fully with the salvor, to exercise due care to prevent or minimise damage to the environment, and to accept redelivery of the vessel once it has been brought to a place of safety and the salvor reasonably requests it. An owner who leaves his boat at the salvor’s yard for three weeks while arguing about the invoice will be charged storage costs he could have avoided.
Pay, challenge, act: the useful chronology
The time limit is short. Any claim for payment of a salvage reward is time-barred if judicial or arbitral proceedings have not been brought within two years from the day on which the salvage operations were terminated (article L. 5132-9). The debtor may extend that period by a declaration to the claimant, and sometimes has an interest in doing so to obtain an amicable settlement rather than a writ. An unpaid salvor also has the right to arrest the vessel, a salvage claim being a maritime claim within the meaning of article L. 5114-22 of the Transport Code, and the summary judge grants it on mere assertion of a claim that appears well founded.
The owner’s first reflex, when the invoice arrives, is to notify the claim to his insurer. Yacht policies generally cover salvage and assistance costs for the vessel, sometimes up to the insured value, sometimes up to a separate limit, and they often make cover conditional on the insurer’s prior agreement to the amount. An insurer that pays is subrogated and then conducts the discussion with the salvor; an insurer that refuses on the ground that the policy excludes salvage or that an aggravation of risk was not declared opens a second dispute.
The second reflex is to gather the evidence: logbook, recording of VHF exchanges with the CROSS, weather bulletins at the time, position records, photographs of the boat and the towing gear, statements from those on board, and the signed document, if there is one. The challenge turns on three questions: was there danger, what result was achieved, and is the price proportionate to the statutory criteria. These three questions are judged in the light of the facts at the time, not of the reconstruction the salvor will produce.
The competent court is the judicial court, or the commercial court if the salved party is itself a professional, and the claim for reduction of the price or annulment of the contract is based on article L. 5132-6. It is usefully combined with depositing the undisputed sum, which cuts short any argument of bad faith and deprives the salvor of the arrest.
What the firm does
We act as soon as the invoice is received, to characterise the operation, calculate what is reasonably due under the criteria of article L. 5132-4, organise notification to the insurer and negotiate with the salvor on that basis. When negotiation fails, we apply to the court to revise the contract or set the reward, and we defend the owner against the arrest of his boat. We also advise professional salvors and stations that want their documents and practices to withstand the court’s scrutiny, because a fair agreement made at sea is worth more than a case won ashore.
The general salvage regime for merchant ships, the salvor’s reward and challenges to salvage invoices are covered in detail on the page marine salvage and assistance.
For a complete picture, our practical guide Operating a yacht in France: charter, crew, berth, accidents, what rules and what risks? brings together the ten building blocks of a lawful operation, from commercial status to crew contracts, berth and insurance; it can be downloaded free of charge. To have your own situation reviewed, contact the firm.
Frequently asked questions
What is the difference between towage and salvage at sea?
Danger. Salvage is any act undertaken to assist a vessel or property in danger (London Convention of 28 April 1989, article 1; articles L. 5132-1 et seq. of the Transport Code). It gives a right to a reward fixed according to the criteria of article L. 5132-4. Towage of a boat that is not in danger is an ordinary contract, paid at the agreed price.
Do I have to pay if the salvage failed?
No. Article L. 5132-3 of the Transport Code makes the reward conditional on a useful result; no payment is due if the operations had no useful result, subject to the special compensation of article L. 5132-5 for a salvor who limited damage to the environment.
Can I refuse the help of a salvage launch that turns up?
Yes, if the refusal is reasonable. Services rendered despite the express and reasonable prohibition of the owner or master give no right to a reward (article L. 5132-3, II, of the Transport Code). The refusal must be clear, expressed by VHF and recorded in the logbook.
Does the SNSM charge for its interventions?
Rescue of persons is free, and no reward is ever due for persons saved (article L. 5132-8 of the Transport Code). For assistance to property, the SNSM asks for reimbursement of the expenses incurred, not a commercial rate, under the Transport Code.
How is the salvage reward calculated?
According to the ten criteria of article L. 5132-4 of the Transport Code: value of the property salved, danger, success obtained, efforts and skill, time and expenses, risks run, promptness, resources used and efficiency of the equipment. It may not exceed the value of the vessel and property salved, and it is payable in proportion to the value of each.
I signed a contract on board during the breakdown: am I bound?
Not definitively. Article L. 5132-6 of the Transport Code, a mandatory provision, allows a contract entered into under undue influence or the influence of danger to be annulled or modified where its terms are inequitable, or where the agreed payment is far too high for the services actually rendered.
Within what period must the salvor sue for payment?
Two years from the end of the salvage operations, failing which the claim is time-barred (article L. 5132-9 of the Transport Code). The debtor may extend that period by a declaration to the claimant. The salvor may also apply to arrest the vessel under article L. 5114-22.
Does my yacht insurance cover the invoice?
Most often yes, as salvage and assistance costs, within the limit set by the policy and subject to prompt notification and, frequently, the insurer’s prior agreement to the amount. An insurer that pays is subrogated to the owner’s rights to discuss the reward with the salvor.
Hervé Guyader, avocat at the Paris Bar, doctor of law.
Faced with an invoice or an arrest of the vessel, the firm can be reached through its contact form.
On the same subject, the status of the vessel: illegal charter and its consequences; the port: marina berths; damage: accidents on board a yacht.