Towage and salvage are maritime assistance services that use the same physical asset (a powerful tug and an experienced master) but operate under fundamentally different legal and commercial frameworks. Towage is a contracted service rendered at an agreed rate to a vessel that does not need to be in peril. Salvage is an intervention in response to real or threatened danger, paid only if the property is saved, under the no-cure-no-pay principle codified in the International Convention on Salvage 1989. This article covers the towage-salvage legal distinction, the Salvage Convention 1989 (Articles 12-14), Lloyd’s Open Form (LOF 2020) and its SCOPIC clause, the BIMCO towage forms (TOWCON 2021 and TOWHIRE 2021), the Nairobi International Convention on the Removal of Wrecks 2007, IMO places-of-refuge policy, and the interaction with general average under the York-Antwerp Rules. The companion calculator for LOF-SCOPIC rate estimation is at /calculators/salvage-lof-scopic, and the SCOPIC invocation trigger is at /calculators/salvage-scopic-trigger. The bollard pull requirements that underpin both services are covered in the companion article on tug operations and bollard pull.
Towage versus salvage: the legal distinction
The distinction matters commercially. A towing contractor under TOWHIRE earns the daily hire rate even if the operation takes four times as long as expected. A salvor under LOF earns nothing if the vessel sinks before reaching a place of safety, with the limited exception of Article 14 special compensation for environmental salvage.
Towage exists when one vessel provides motive power, escort, steering assistance, or similar service under a contract that fixes the consideration in advance, and the assisted vessel is not in peril. The canonical forms are ocean tows (offshore platforms, semi-submersibles from yard to field, dead-ship deliveries from lay-up), harbour towage, and coastal escort of vessels through restricted waters. The towed vessel is in normal operating condition; the towage is a chosen commercial method.
Salvage exists when three classical elements are present: the vessel or cargo is in actual or apprehended danger; the salvor renders service voluntarily, outside any pre-existing contractual duty owed to the property; and the operation achieves a useful result. All three are questions of fact on the evidence. Article 12 of the Salvage Convention 1989 states the basic rule: salvage operations that have a useful result give right to a reward; no reward is payable if the operations have had no useful result, subject to Article 14.
The boundary between the two categories is contested in two recurring fact patterns. First, a tug under a routine TOWCON contract encounters conditions during a voyage tow that alter the nature of the service, for example, a parting towline in Force 11, flooding in the tow, or an engine-room fire. TOWCON 2021 Box 24 and TOWHIRE 2021 Clause 22 expressly preserve the tug owner’s right to claim salvage reward for services rendered in excess of the contracted towage in circumstances not within the reasonable contemplation of the towage agreement. Whether those circumstances in a given case fall outside the contractual scope is argued on the contract terms and the facts.
Second, a vessel in peril reaches a verbal or written agreement with a tug for “lump sum salvage” rather than LOF. The legal effect depends on whether the agreed sum is a fixed-price reward that displaces the Article 13 calculation or a contracted tariff that converts the arrangement into towage. English courts apply the substance test: a pre-agreed sum paid only on success is salvage; a pre-agreed rate paid regardless of outcome is towage.
BIMCO towage contracts: TOWCON 2021 and TOWHIRE 2021
BIMCO published the current editions of both principal towage forms in 2021. Both replace the 2008 editions and incorporate the 2020 BIMCO standard clauses for sanctions, cybersecurity, and force majeure.
TOWCON 2021 is the lump-sum form: a single fixed price for the complete ocean towage service from the departure port to the delivery location. The tug owner bears the time risk. Delays from weather, mechanical breakdown of the tow, or need to divert add no entitlement to additional hire. Box 23 sets out the cargo/tow description, the route, and the agreed lump sum. The form allocates risk on a knock-for-knock basis: each party bears its own losses from the tug owner’s negligence or from the tow’s own defects, as defined.
TOWHIRE 2021 is the daily-hire form: the tug owner earns hire at the Box 15 rate for every day (or pro-rated hour) that the tug is on hire, from the commencement event defined in Box 17 to the termination event in Box 18. The charterer bears the time risk. Both forms require the tug owner to maintain the tug in class and to provide a tug with the Bollard Pull stated in Box 10. For the calculation of required bollard pull based on tow resistance, see /calculators/tug-bollard-pull-selection.
TOWCON 2021 Clause 12 is the seaworthiness clause. The tug owner warrants that the tug will be seaworthy and fit for the agreed service at departure, and the tow owner warrants the tow’s condition. Breach of the tow’s seaworthiness warranty typically relieves the tug owner of liability for tow damage resulting from the defect. Clause 18 (weather routing) requires the master to follow the recommended meteorological route and restricts deviation absent a defined emergency.
TOWHIRE 2021 Clause 13 carries the same knock-for-knock structure. Clause 16 addresses the salvage rights preservation, matching the TOWCON 2021 Box 24 mechanism. Clause 20 is the 2020 BIMCO Sanctions Clause that allows either party to terminate if performance would violate applicable trade sanctions, without triggering a breach claim.
Beyond TOWCON and TOWHIRE, BIMCO’s HEAVYCON 2007 governs dry-tow of heavy-lift units; BIMCO PROJECTCON 2020 covers project cargo tows. Both follow the TOWCON lump-sum economic model with additional provisions for load-out, seafastening inspection, and the specialized insurance requirements for high-value units.
International Convention on Salvage 1989: architecture and scope
The Salvage Convention 1989 was adopted in London on 28 April 1989 under the auspices of the IMO and entered into force on 14 July 1996. It replaced the Brussels Salvage Convention of 23 September 1910, which had governed international salvage law for 86 years. The 1989 Convention was specifically designed to respond to the environmental casualties of the preceding two decades, including the Torrey Canyon (1967), Amoco Cadiz (1978), and the regulatory and financial inadequacy of the no-cure-no-pay rule in large tanker groundings where the property value was small relative to the pollution risk.
The UK implemented the Convention through the Merchant Shipping (Salvage and Pollution) Act 1994, which incorporated it into domestic law. Most major maritime states are parties: France, Germany, Greece, the Netherlands, Italy, Japan, China, Australia, and Canada are all bound. The United States signed in 1992; the Convention applies in US courts under federal maritime law.
The Convention applies to all salvage operations unless excluded by agreement in a non-maritime country state (Article 2). Mandatory provisions are those in Articles 14 (special compensation), 16 (salvage of persons), and 17 (prohibition on altering rights by prior contract in a non-LOF context). Article 6 allows parties to contract out of any provision except Articles 14-17, which is why LOF 2020 can validly modify Article 13 by giving the Lloyd’s arbitrator authority to fix the reward by discretion rather than strict formula.
Article 11 requires coastal states parties to take “the necessary measures” to ensure that salvage authorities give due weight to salvors’ interests when ordering a vessel to take refuge. This is the treaty-level basis for the IMO places-of-refuge regime described later in this article.
Article 13: salvage reward criteria
Article 13(1) sets out the criteria the tribunal applies to fix the reward, “with the objective of encouraging salvage operations.” The provision lists them without priority ranking:
- The salved value of the vessel and other property (the “salved fund” in English practice);
- The skill and efforts of the salvors in preventing or minimising damage to the environment;
- The measure of success obtained by the salvor;
- The nature and degree of the danger;
- The skill and efforts of the salvors in salving the vessel, other property, and life;
- The time used and expenses and losses incurred by the salvors;
- 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;
- The state of readiness and efficiency of the salvor’s equipment and its value.
In Lloyd’s arbitration practice, the Article 13 reward is typically expressed as a percentage of the salved fund. The salved fund is the aggregate of: the vessel’s sound market value at the place of safety, adjusted for any damage sustained during the casualty; the market value of the cargo at the nearest appropriate discharge port; and the value of the bunkers on board. For a modern containership with a high-value multi-party cargo, the salved fund can exceed $500 million, producing large awards even at modest percentages.
The percentage applied across documented cases runs roughly 1-2% for low-risk harbour refloatings to 15-20% for sustained high-risk offshore interventions with significant environmental threat. The Lloyd’s Appeal Arbitrator’s reasoning in the cases of the MV Triton (1992 LOF arbitration, unreported) and the MSC Flaminia (2012 fire casualty) illustrates the weighting given to risk and difficulty. There’s no published tariff or formula; the arbitrator applies the 10-factor list to the specific facts.
The environmental factor under Article 13(1)(b), the salvors’ skill and efforts in preventing or minimising environmental damage, has grown in weight since the 1990s as pollution liability frameworks have hardened. An Article 13 reward enhanced for environmental performance is conceptually distinct from Article 14 special compensation: the former is part of the property-based reward, the latter is a separate liability-reducing payment.
Article 14: special compensation for environmental salvage
Article 14 is the Convention’s most significant innovation. It addresses the incentive gap in the original no-cure-no-pay principle: under pure no-cure-no-pay, a professional salvor confronting a laden tanker aground on a reef with negligible hull value but enormous pollution potential had no rational financial reason to mobilise expensive equipment that would earn nothing if the vessel broke up.
Article 14(1) provides that where a salvor has carried out salvage operations in respect of a vessel that by itself or its cargo threatened damage to the environment, and has failed to earn a reward under Article 13 at least equivalent to the special compensation assessed under Article 14, the salvor is entitled from the owner to special compensation equivalent to his expenses.
Article 14(2) adds an enhancement: where the salvor by his salvage operations has prevented or minimised damage to the environment, the special compensation payable under Article 14(1) may be increased up to 30%, and in exceptional cases up to 100% of the expenses, where it is fair and just to do so.
The treaty text “failed to earn a reward under Article 13 at least equivalent” means the Article 14 figure is a floor, not an addition. If the Article 13 award is higher, there is no Article 14 entitlement; Article 14 only fills the gap.
The House of Lords in The Nagasaki Spirit [1997] AC 455 (affirming [1997] 1 Lloyd’s Rep 323) interpreted “fair rate for equipment and personnel actually and reasonably used” in Article 14(3) as a reasonable rate of remuneration, not a profit-based commercial rate. The decision cut the practical value of Article 14, because salvors found that a “fair rate” for the equipment often yielded less than full cost recovery when allowances for risk and overhead were excluded. The industry’s response was SCOPIC.
Lloyd’s Open Form (LOF 2020)
Lloyd’s Open Form is the globally dominant salvage contract. The first LOF version was published in 1908; subsequent revisions include LOF 1980 (which first incorporated the Salvage Convention by reference), LOF 1990, LOF 1995, LOF 2000, and LOF 2011. The current edition is LOF 2020, published by the Council of Lloyd’s.
LOF is a one-page document. The master of the casualty vessel signs it on behalf of the owners of all salved property, accepting the salvor’s terms. There is no negotiation of the reward at the time of signature: the consideration is “LOF terms,” meaning the arbitrator will later fix the reward by applying the Article 13 criteria to the facts. LOF is designed for speed: in a casualty situation, the master can sign within minutes of first contact with the salvor, and the salvor can begin work with security that it will be paid if successful.
LOF 2020 incorporates the Salvage Convention 1989 in Article 1 by reference. It contains the standard wording for SCOPIC incorporation (the SCOPIC tickbox in the LOF box grid) and the SCOPIC invocation clause. The 2020 revision, compared to LOF 2011, adds: an express cyber-risk provision; updated sanctions wording; clarification that SCOPIC may be invoked only after services have commenced; and a clearer definition of the SCR’s role.
Salvage arbitrations under LOF are heard before the Lloyd’s Arbitrator (a senior Queen’s Counsel specializing in Admiralty law), sitting in London. The Lloyd’s salvage arbitration procedure is governed by the Lloyd’s Salvage Arbitration Branch (SAB) procedures. Parties may appeal to the Lloyd’s Appeal Arbitrator, and on a point of law, to the courts under the Arbitration Act 1996.
LOF is not the only salvage contract form. Many large-casualty operations are conducted under ad hoc commercial agreements (sometimes called “fixed price” or “daily rate” salvage contracts), particularly where the salvor is confident of the outcome and the owner or insurer prefers price certainty. BIMCO’s SALVCON (2005) and BIMCO SALVHIRE are alternatives. However, LOF remains the default because it can be signed in minutes and immediately engages the Lloyd’s arbitration machinery.
SCOPIC: Special Compensation P&I Club clause
SCOPIC was introduced in August 1999 as a contractual response to the limitations of Article 14 identified by The Nagasaki Spirit. It is a standard clause (the “SCOPIC Clause”) that can be incorporated into LOF by ticking the box, and can then be invoked by either party at any time after the casualty-response services have begun.
The SCOPIC schedule sets out daily tariff rates for different categories of equipment and personnel: fire-fighting tugs (by bollard pull category, ranging from under 50 tonnes to over 200 tonnes), non-fire-fighting tugs, portable salvage equipment, personnel categories, and the 25% uplift applied to the total tariff sum. The schedule is revised periodically by negotiation between the International Salvage Union (ISU) and the International Group of P&I Clubs. The current operative version is the 2020 SCOPIC, which updated the equipment tariff rates to reflect current market costs.
When SCOPIC is invoked, the remuneration is calculated from the SCOPIC tariff, running from the date of invocation to the end of operations. The SCOPIC amount is compared to the Article 13 reward:
- If SCOPIC is higher than Article 13, the salvor receives SCOPIC (Article 13 award is subsumed);
- If Article 13 is higher than SCOPIC, the salvor receives Article 13, but with a 25% reduction applied to the excess of Article 13 over SCOPIC (the “SCOPIC penalty”).
The penalty mechanism is deliberate. Without it, a salvor would always invoke SCOPIC as a floor, removing its downside. The 25% penalty calibrates the invocation decision: a salvor that invokes SCOPIC when the operation is likely to generate a high Article 13 award pays a material price for that insurance.
The Special Casualty Representative (SCR)
The SCR is the property-side monitor of SCOPIC operations. Under SCOPIC, within 5 days of invocation, the owners’ P&I Club is required to send a surveyor (the SCR) to the casualty site. The SCR’s role is defined by the SCOPIC clause: he has the right to attend on board the salvage vessels, inspect the operation, and review the salvor’s records and the resources being deployed. He cannot direct or override the salvor’s operational decisions, but he can (and does) challenge in arbitration any equipment deployed that he considers unreasonable or excessive.
The SCR provides the P&I Club with a running assessment of the likely SCOPIC liability, which feeds the Club’s reserving decisions. Where the SCR forms the view that SCOPIC has been invoked but the operation is unlikely to produce environmental benefit justifying continued SCOPIC expenses, he can recommend termination. The salvor can terminate SCOPIC at any time by giving notice, reverting to pure Article 14 special compensation.
The practical effect of SCOPIC on the salvage industry has been positive. It resolved the Nagasaki Spirit problem by providing assured cost recovery plus a 25% uplift for environmental work, replacing the Article 14 “fair rate” ambiguity with a tariff. Professional salvors point to SCOPIC as the mechanism that makes it commercially viable to maintain dedicated environmental-response tug fleets worldwide.
Salvage award calculation: applying Article 13 in practice
The Lloyd’s Arbitrator is not constrained by a formula. He applies the 10 Article 13 factors to the facts found on the evidence, and the result is an award expressed as a sum (not a percentage, although the percentage provides a check on proportionality).
The starting point in English LOF practice is the salved fund. For a fully-laden VLCC (very large crude carrier) with a hull value of 200 million, the salved fund is approximately 28 million; a 5% award produces 30 million and cargo of 55 million.
The arbitrator then assesses the Article 13 factors. Key drivers in practice are:
Risk to the salvage team and equipment: High-angle grounding with breaking seas, fire risk from cargo or bunkers, or structural instability of the casualty all increase the award. The MSC Flaminia fire casualty (2012) involved a container ship fire mid-Atlantic with explosions; the salvor Tsavliris Salvage received an award widely reported at approximately 10-12% of the salved fund.
Environmental threat: Article 13(1)(b) requires positive assessment of efforts to prevent or minimise environmental damage. The arbitrator considers the nature of the cargo (crude, fuel oil, chemicals, fertiliser pellets), the proximity to the coast, the prevailing current and wind, and what the salvors actually did to contain or remove the pollutant threat.
Duration and complexity: A 72-hour harbour refloating of a grounded ferry differs from a 45-day deep-water oil-well intervention or a 6-month wreck removal. Prolonged operations with large specialist fleets attract higher absolute awards even at lower percentages.
Success measure: Article 12 requires “useful result.” Partial success (saving the cargo but losing the vessel, or saving the vessel but losing half the cargo) produces partial award. The arbitrator has no formula for partial success; he applies the factor under Article 13(1)(c) to the proportion of the total value actually saved.
The arbitrator also reduces the award if the salvor contributed to the casualty (negligence, delay in mobilisation) or if the casualty vessel’s owners contributed to their own salved position by cooperating fully and facilitating salvage access. The current conventions and case law give no specific discount fraction; it is another factor-by-factor assessment.
Environmental salvage and the pollution liability interface
Environmental salvage sits at the intersection of three legal regimes: the Salvage Convention 1989, the CLC 1992 (the International Convention on Civil Liability for Oil Pollution Damage, 1992 Protocol), and MARPOL.
CLC 1992 imposes strict liability on the registered owner of a ship for oil pollution damage caused by the escape or discharge of persistent oil from a tanker. The maximum liability is about 89.7 million SDR for the largest tankers (vessels above 140,000 GT of limiting tonnage). The CLC 1992 civil liability framework and the IOPC Fund structure that overlies it are separate from the salvage award.
The interaction arises because a successful salvage that prevents a spill reduces or eliminates the CLC liability exposure. The property owner’s P&I Club therefore has a strong interest in funding aggressive SCOPIC operations even where the hull value is low, because the avoided CLC/Fund liability dwarfs the SCOPIC cost. The Club’s exposure under SCOPIC is capped at the total SCOPIC remuneration actually payable; the CLC exposure can be orders of magnitude larger.
The Bunkers Convention 2001 (the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001) extends strict liability for bunker oil spills to all ships above 1,000 GT, not just tankers. This widened the class of vessels for which environmental salvage under Article 14/SCOPIC produces a Club interest in intervention from tankers to the entire commercial fleet above 1,000 GT.
MARPOL Annex I imposes the operational and structural pollution-prevention standards. The interaction with salvage arises in the reporting obligations: if a casualty involves or threatens a MARPOL discharge, the master’s MARPOL reporting obligation under Regulation 37 of Annex I runs in parallel with the LOF salvage process. The salvor is not relieved of MARPOL compliance obligations by the LOF contract.
Nairobi Wreck Removal Convention 2007
The Nairobi International Convention on the Removal of Wrecks 2007 (WRC 2007, also referred to as the Nairobi WRC) was adopted at a Diplomatic Conference at Nairobi on 18 May 2007 and entered into force on 14 April 2015. As of 2024, over 50 states, representing more than 50% of world gross tonnage, are parties.
Prior to WRC 2007, coastal states had legal authority under UNCLOS Article 56 to impose wreck-removal obligations in their exclusive economic zones (EEZ), but there was no harmonised treaty framework with defined liability caps, insurance requirements, or direct-action rights against insurers. The MV Tricolor sinking in the Dover Strait (2002), which created a 27-metre-high obstruction in one of the world’s busiest shipping lanes, demonstrated the practical gaps.
WRC 2007 applies to wrecks in the EEZ of a state party (the “Affected State”) and, by optional declaration, in the territorial sea. A “wreck” is defined in Article 1(4) to include the sunken or stranded ship itself, any part of the ship, its cargo, and any object lost at sea. The Convention does not apply to warships or government non-commercial vessels.
Article 9 requires the Affected State, when a wreck is determined to be a hazard, to notify the registered owner, who has the primary obligation to remove the wreck or render it harmless. If the registered owner fails to act within the period specified by the Affected State, the State may take measures to remove the wreck itself and recover its costs from the registered owner or the insurer.
Article 12 imposes compulsory insurance: the owner of a ship above 300 GT registered in a state party must maintain insurance (or equivalent financial security) covering the registered owner’s liability under the Convention. The insurance must cover up to the limitation of liability established under the LLMC 1976 (as amended by the 1996 Protocol). The minimum LLMC limits for wrecks are based on the ship’s tonnage using the Article 6(1)(b) formula for non-personal-injury claims. For a 50,000 GT bulk carrier, the LLMC 2012 limit is approximately 13.4 million SDR (about $18 million at 2024 SDR/USD rates).
Article 12 also provides a “WRC Blue Card”: the insurance certificate issued by the insurer confirming financial security. It is analogous to the CLC Blue Card but covers wreck removal liability. Flag states must not permit ships to operate without a valid Blue Card once WRC 2007 applies.
The Nairobi wreck removal insurance calculator on this site calculates the compulsory insurance floor as a function of vessel GT.
WRC 2007 interacts with the Salvage Convention in that the removal of a wreck may be a salvage operation (if a sufficient part of the vessel remains to have property value) or a pure wreck removal (where the vessel is a constructive total loss and only the removal cost is in issue). For the case of the Costa Concordia wreck off Giglio, removed over 2013-2014 at a cost of approximately EUR 1.2 billion, the operation was governed by a commercial contract rather than LOF, and there was no Article 13 salvage award because the hull value was negligible against the removal cost.
The article on the Nairobi Wreck Removal Convention 2007 on this site covers the full treaty architecture in depth.
General average interaction with salvage
General average is the doctrine under which extraordinary sacrifices and expenditure incurred for the common safety of the ship and cargo are shared ratably among all contributing interests. The York-Antwerp Rules 2016 (YAR 2016) are the governing rules in practice, incorporated by clause in most bills of lading and charter parties. The general average and York-Antwerp Rules article covers the GA framework in detail.
The interaction with salvage is significant. Under YAR 2016 Rule B, general average acts are “the extraordinary sacrifice or expenditure that is intentionally and reasonably made or incurred for the common safety.” Salvage charges paid by the shipowner under LOF are allowable in general average under Rule VI, which provides: “Expenditure incurred by the parties to the adventure in the nature of salvage, whether under contract or otherwise, shall be allowed in general average provided that the salvage operations were carried out for the purpose of preserving from peril the property involved in the common maritime adventure.”
This means that where a vessel carrying cargo is saved by a professional salvor under LOF, the LOF award is typically treated as a GA sacrifice. The GA adjuster apportions the award between hull, cargo, and bunkers on the basis of their respective contributed values. Cargo owners whose goods are saved contribute to the salvage award in the same proportion as the value of their cargo bears to the total salved fund.
The practical consequence is that after a major casualty under LOF, the average adjusters (typically professional GA adjustment firms: Richards Hogg Lindley, Stichting Schade- en Verliesfonds, or Unitas in the Netherlands) take over the apportionment calculation. Cargo owners receive a GA average bond and GA average guarantee demand; their cargo insurer provides the guarantee. The salvage award is not settled directly between the salvor and cargo owners but flows through the GA adjustment process.
YAR 2016 Rule VI also preserves any Article 14 special compensation in GA: if SCOPIC is invoked and the SCOPIC amount is paid, that too flows into the GA adjustment.
IMO places of refuge: Resolution A.949(23)
IMO Resolution A.949(23), “Guidelines on Places of Refuge for Ships in Need of Assistance,” was adopted on 5 December 2003 by the 23rd Assembly. It provides non-mandatory guidance on the process by which a coastal state should consider whether to grant a distressed vessel access to a place of refuge (a sheltered anchorage, port, or other location) where salvage operations can be conducted.
The resolution identifies three categories of action available to the coastal state: (1) admission to a port or anchorage; (2) admission to a position near the coast in sheltered waters; (3) denial of access. It establishes a decision-making framework requiring the coastal state’s Maritime Assistance Service (MAS) to carry out a risk assessment weighing the danger to the vessel and its people, the environmental threat from its cargo or bunkers, and the risk of damage to the coastal state’s infrastructure and resources.
Places of refuge became a critical policy issue after the Erika (1999) and Prestige (2002) casualties, in which distressed tankers were denied refuge by France and Spain respectively and subsequently sank in unfavorable positions, causing far greater pollution than would likely have resulted from controlled grounding in a sheltered location. The resolution directly reflects the maritime industry’s and IMO’s response to those events.
The legal framework for places-of-refuge decisions is not compulsory under the resolution: A.949(23) is advisory, not binding treaty. The EU responded with Directive 2002/59/EC (Maritime Traffic Monitoring and Information Directive), Article 20 of which requires EU member states to draw up plans for accommodating ships in distress. The UK implemented this through the Merchant Shipping (Distress Message by Ships) Regulations 2003 as amended.
A coastal state’s refusal to admit a vessel to a place of refuge does not attract direct liability under existing international law. The state has broad discretion under UNCLOS over access to its internal waters and territorial sea. However, where the denial of access results in a spill that would have been prevented, the moral and diplomatic pressure is substantial; the post-Prestige litigation in French and Spanish courts resulted in criminal convictions of officers and civil awards against the classification society Bureau Veritas (later overturned on appeal) on facts that included the denial of refuge.
The connection to salvage law is that Article 11 of the Salvage Convention 1989 imposes on state parties the obligation to take “the necessary measures” to ensure that their competent authorities consider, when issuing orders or giving directions to salvors, the need not to prevent, hinder, or make more difficult the carrying out of salvage operations. This provision is the treaty basis on which the IMO A.949(23) regime is founded.
Salvage of persons: Article 16
Article 16 of the Salvage Convention 1989 provides that no remuneration is due from persons whose lives are saved. A salvor who saves both property and human life receives salvage reward for the property under Article 13; there is no additional reward for life salvage. Where a salvor saves lives but no property (for example, pulling persons from a sinking vessel that is then lost), the salvor receives nothing under the Convention.
This reflects the longstanding maritime law principle that saving human life is a moral and legal obligation on every master (codified in SOLAS Chapter V Regulation 33), not a commercial service. However, Article 16(2) entitles a life salvor to a “fair share” of the property-salvage award where property was also salved and the same salvor participated in both. The allocation is made by the Lloyd’s Arbitrator in LOF arbitrations.
The interaction between life salvage and property salvage is relevant in complex casualties where Coast Guard vessels, dedicated SAR (Search and Rescue) assets, and commercial salvors are all present. The SAR assets operate under public-law obligations without entitlement to reward; commercial salvors who participate in combined life-and-property operations under LOF can seek the Article 16(2) allocation.
The professional salvage industry
The professional salvage industry has contracted sharply over 40 years. The combination of no-cure-no-pay revenue uncertainty, the capital intensity of maintaining high-bollard-pull response tugs worldwide, the growing environmental liability of failed operations, and the consolidation pressure of large-casualty LOF contracts has reduced the field to a handful of major groups.
Boskalis (Netherlands), trading through its Smit Salvage subsidiary (Smit Internationale having been acquired by Boskalis in 2010 for EUR 1.065 billion), is the largest single entity. Boskalis Smit operates a global fleet of response tugs and specialist salvage vessels, including the Smit Determination and Smit Resolution (both AHTs above 200 tonnes bollard pull), stationed at Rotterdam, Singapore, and Cape Town. The 2011 wreck removal of the Costa Concordia was executed jointly by Titan Salvage (a Crowley company) and Micoperi, representing a transatlantic consortium model.
T&T Salvage (now part of the Bisso Marine group) is the primary US-based operator, particularly active in the Gulf of Mexico and Caribbean. Resolve Marine Group and Donjon Marine serve the North American coastal market. For the Asia-Pacific region, Tsavliris Salvage Group (Athens), POSH Semco (Singapore), and Nippon Salvage (Tokyo) are the principal operators.
The International Salvage Union (ISU), headquartered in London, publishes annual statistics on salvage activity. The ISU 2022 Annual Review reported that ISU members concluded 141 new casualty assistance contracts, of which 30 were LOF cases. The combined salved value across all ISU operations in 2022 was approximately 260 million across all contract types.
The contraction of the industry’s geographic reach is a systemic concern. The IMO’s Places of Refuge guidelines and the SCOPIC system were both designed in part to ensure that professional salvors remain financially able to maintain stationed response capacity. Where no salvor is within 48 hours of a casualty, the cost of the resulting environmental damage can dwarf what a stationed response would have cost.
Notable casualty case studies
The Nagasaki Spirit [1997] AC 455 (HL) was an Article 14 case arising from a collision and fire in the Malacca Strait in September 1992. The tanker Nagasaki Spirit and the cargo vessel Ocean Blessing collided; the Nagasaki Spirit caught fire and drifted burning for days. The salvor Semco Salvage & Marine received an Article 13 award but claimed enhanced special compensation under Article 14(2) for averting environmental damage. The House of Lords held that “fair rate” in Article 14(3) meant a rate of remuneration, not a commercial profit rate, substantially reducing the Article 14 figure. The case directly motivated the drafting of SCOPIC.
The Sea Empress grounded at the entrance to Milford Haven, Wales, on 15 February 1996. Despite 72,000 tonnes of crude oil being released, salvors (Smit Tak in consortium) recovered approximately 60,000 tonnes of cargo before final refloating. The operations lasted 8 days in difficult weather. The LOF award reflected partial success and the significant environmental-prevention effort; the Welsh coastal pollution resulted in Marine and Environmental damage costs of approximately GBP 50 million, borne partially through the IOPC Fund.
The Hanjin Pennsylvania suffered a major container-fire and explosions in the Indian Ocean in November 2002. Smit Salvage attended and salved the vessel. The LOF award, reported in the trade press at approximately US$32 million, was at the time one of the largest under LOF in absolute terms, reflecting the high salved value of the containership and the risk and duration of the fire-fighting operation.
The Costa Concordia grounding off the island of Giglio, Italy, on 13 January 2012, with the loss of 32 lives, was not a classical salvage under LOF but a wreck-removal contract. Titan Salvage and Micoperi executed the parbuckling and refloating over 19 months at a reported total cost of EUR 1.2 billion, the largest wreck-removal operation in history by cost at the time. No WRC 2007 Blue Card was required for Italian territorial waters as Italy had not yet declared the Convention applicable there; the legal basis was the contract with the Costa Cruises/Carnival group.
The Ever Given grounding in the Suez Canal on 23 March 2021 blocked the canal for 6 days. Boskalis Smit led the dredging and tug operations that refloated the vessel on 29 March 2021. The Suez Canal Authority initially claimed approximately 9.6 billion of trade was delayed per day the canal was blocked, per the Lloyd’s List Intelligence analysis.
The X-Press Pearl (May 2021) fire off Colombo, Sri Lanka, carrying nitric acid and polyethylene pellets, resulted in total loss despite a salvage attempt by T&T Salvage. The resulting beach contamination with plastic pellets affected approximately 200 km of Sri Lankan coastline. The case was significant for Article 14/SCOPIC analysis because the property was ultimately lost, leaving the salvor’s recovery dependent entirely on the SCOPIC tariff rather than any Article 13 award.
Comparison: towage versus salvage, and LOF versus commercial contract
The table below summarises the key structural differences across the service types.
| Dimension | Towage (TOWCON/TOWHIRE 2021) | LOF 2020 Salvage | Commercial salvage contract |
|---|---|---|---|
| Vessel condition | Not in peril; routine operation | In actual or threatened danger | In danger; pre-agreed price |
| Payment basis | Contracted lump sum or daily hire | No cure, no pay; award by arbitrator | Fixed sum or daily rate; paid on success |
| Award determination | Contract; no arbitration required | Lloyd’s arbitrator; Article 13 criteria | Contract; dispute by arbitration or court |
| Article 14/SCOPIC | Does not apply | Applies; SCOPIC optional | May apply if Convention not excluded |
| Legal risk to salvor | Limited by knock-for-knock | Full risk of no award on failure | Partial (price certainty reduces risk) |
| Regulatory basis | BIMCO standard forms; national maritime law | Salvage Convention 1989; LOF 2020 | Salvage Convention 1989; ad hoc contract |
| Typical use case | Ocean tow; harbour escort; dead-ship | Casualty; grounding; fire; flooding | Major casualty; insurer preference for certainty |
Limitations
Several caveats govern the practical application of the framework described in this article.
The Salvage Convention 1989 does not apply automatically to all states. Approximately 70 states are parties as of 2024, but a number of significant flag states (some Caribbean open registries, certain West African flag states) are not parties. In those cases, the domestic salvage law of the state (often based on the 1910 Brussels Convention or general maritime law) governs.
LOF 2020 arbitrations are confidential. Awards are not formally published by the Lloyd’s Salvage Arbitration Branch; the percentage and factual reasoning cited in this article and in the trade press are drawn from reported appeals and summaries published by the ISU. The specific figures cited should be treated as illustrative of the order of magnitude, not as authoritative precedents.
WRC 2007 optional territorial-sea declarations are made separately from EEZ accession. A state may be a WRC party for its EEZ but have not extended the Convention to its territorial sea. The Blue Card obligation under Article 12 applies to vessels registered in state parties operating in the waters of state parties; it does not automatically apply in the territorial sea of non-party states.
The SCOPIC tariff rates are periodically revised by ISU-IGPNI negotiation and are not publicly available in full. The calculator at /calculators/salvage-scopic-trigger uses published reference rates; the operative rates in a given LOF arbitration are those in the current SCOPIC schedule, which should be obtained from the ISU or via the LOF legal team.
Places of refuge decisions under IMO A.949(23) remain non-binding. Despite the post-Erika/Prestige regulatory development, no international treaty imposes a compulsory obligation on coastal states to grant refuge. The EU Directive 2002/59/EC applies to EU member states; outside the EU, the A.949(23) framework is entirely voluntary.
See also
Related wiki articles
- Tug Operations and Bollard Pull
- General Average and York-Antwerp Rules
- WRC Nairobi 2007: Wreck Removal Convention
- Maritime Lien and Ship Arrest
- CLC 1992: Civil Liability for Oil Pollution Damage
- Bunkers Convention 2001
- MARPOL Annex I Oil Pollution Prevention
- Force Majeure in Shipping
- Voyage Charter Party
- Heavy Weather Operations
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