Marine Salvage in Greece
The law
Greece has ratified the International Convention on Salvage of 1989 as of the year 1997 (hereafter referred to as “the Convention”). As the heading denotes, this article does not deal with an analysis of the Convention, for which one can find abundant literature but it shortly comments on certain issues from the perspective of Greek law and practice, although some general knowledge is unavoidably included for better comprehension of these comments.
The provisions of the said Convention will apply to any salvage claim that will be brought before a Greek court, irrespective of the nationality of the parties or other contacts of the case. Only in connection with issues that are not regulated by such Convention, the Court may seek to apply domestic or other international laws. In matters not covered by the Convention, the court will determine the applicable law pursuant to the provisions of EU Regulation 593/2008 (Rome I).
It should be noted that according to the said Regulation, the apportionment of the salvage reward between the owner, master and the crew in the service of the salving vessel shall be determined according to the law of such vessel’s flag.
Jurisdiction
In case that no jurisdiction clause has been agreed by the parties, the jurisdiction will normally be determined according to EU Regulation 1215/2012. Moreover and in respect of salvage of cargo or freight, this last Regulation provides also for the special jurisdiction of the court (art. 7 par. 7) under the authority of which the cargo or freight has been arrested to secure payment or could have been arrested but security has been posted, provided that the defendant has an interest in the cargo or freight.
If the defendant is not a resident of a EU State -in which case EU Regulation 1215/2012 may not apply-, a Greek court will address the matter of jurisdiction pursuant to the provisions of the Greek Code of Civil Procedure.
In any case, a Greek court would consider itself competent to hear a salvage claim if the salved vessel has been delivered by her salvors in a Greek port and such Greek court was first to seize of the case on its merits.
The salvage operation
As salvage operation qualifies only that which is carried out voluntarily by a third party in connection with a vessel (or other floating on the waters object except for platforms and drilling units) that is encountered by a peril that poses a serious and real threat either to the vessel herself, or her crew or the environment. In light of Greek case law, the danger may not need to be imminent but it suffices to be very probable in the near future by an objective assessment. Salvage reward is offered only if a useful result was achieved by the assistance offered.
The salvage contract
In urgent and dangerous conditions, the parties involved will probably sign a salvage contract on a “No Cure – No Pay” basis. The most known type of such contract is the Lloyd’s Standard Form of Salvage Agreement (LOF). The master of the vessel in peril is considered to have the authority to sign the salvage contract on behalf of the owner of the vessel. Naturally, the LOF or any other contracts of that sort, allows parties to reach a swift agreement on contractual terms when a vessel is in distress and are ideally suited to emergency situations in order to save precious time from negotiations.
If time and circumstances allow it, the parties will normally choose and sign a contract tailored to their needs that will be probably provide for a fee on a daily rate or on a lump sum basis. Thus, if a vessel is drifting due to engine problems in calm weather conditions and there are no other circumstances that pose an imminent threat or if she is resting lightly aground in sheltered waters and a refloating may by possible by her own means, other type of contracts may be the best option (TOWCON/TOWHIRE, WRECKFIXED/WRECKHIRE etc.).
In any case, the terms of a salvage contract should not be abusive and against bonos mores, as it might be the case in which the salvor has exploited unfairly the situation of the vessel in distress.
In case that a salvage operation is carried out without a signed contract, a tacit agreement is presumed to have been reached between the interests of the vessel in distress (owner, cargo owner, freight beneficiary etc) and the salvor/s, unless the former have notified the latter of their express and reasonable prohibition to the rendering of any salvage services.
Salvage reward
In case, that the quantum of the salvor’s reward has not been contractually fixed, a Greek court will calculate the same by applying the criteria set out in article 13 of the Convention (e.g. the salved value of the vessel or other property, the skill and efforts of salvors, the measure of success, the nature and degree of the danger etc.).
The salvor that was first engaged in the salvage operation is obliged to accept the participation of other salvors, if the interests of the vessel in distress requires it. However, if the request of the latter was not reasonable, in the sense that the additional assistance was unnecessary, the salvor that was first engaged is entitled to a full reward.
It should be noted that the nearby coastal State is not deprived of its authority to give directions about the handling of the casualty or even to participate in the operation by its own means, if necessary, in which case it may also claim reimbursement for the cost generated from such involvement.
It is very difficult to make any predictions about the quantum of a possible reward in Greece for several reasons. Among others, there are no guidelines or uniform practice to be followed by judges, the claims for salvage have been brought over the years before different local courts throughout Greece and such claims are not eventually many in number since a great number of salvage cases end up usually to arbitration tribunals upon an agreement of the parties. And of course every salvage case presents unique characteristics that will be the object of evidence proceedings.
Based on judicial precedents and rather as a statistical indication, it is noted that rewards have substantially varied, starting from as low as 0.5% of the salved value, while in rare cases, they have amounted to as high as 40%. There are quite a lot in the region of 2%-15% usually involving salvage of sailing boats.
The salved property is estimated at its market value at the port of delivery. The value of the ship will be calculated on her market value prior to the casualty, as same is further reduced by the cost of full repairs without including any beneficiary time-charter. The cargo is calculated on CIF value as reduced by the cost of restoration, further transportation and transshipment. Freight is taken on its net value unless it has has been included in the value of the cargo.
It should be noted that the article 14 of the Convention provides for a special compensation of the salvor that averted or minimized damage to the environment which may exceed the normal reward as same is calculated on the basis of article 13 and the criteria set forth therein. Moreover, if the salvor has carried out a salvage operation with respect to a vessel which by herself or her cargo threatened damage to the environment, he may be able to claim a compensation up to the limit of the compensation of article 13, even if no useful result was achieved.
The article 14 of the Convention will apply when the efforts for the prevention of the pollution take place in the context of and in relation to an operation for the salvage of a vessel, otherwise, the Convention of Brussels 1969 on civil liability for oil pollution damage or the Convention of London 2001 on civil liability for bunker oil pollution may apply.
Since the calculation of the compensation on the basis of article 14 may present difficulties, the shipping industry from an early stage has resorted to the practice of including in the salvage contracts clauses that provide for an alternative way of determination of the salvor’s remuneration based on a pre-agreed cost (SCOPIC clauses).
The master of the vessel that rendered salvage services is considered to represent the crew of the vessel in the pursuit of the reward, if such crew has not filed a separate claim. The salvor has a lien on the salved property and he can prevent the departure of the salved vessel from the port of delivery if no sufficient security has been posted.
Security
The salvors may apply to the Greek court of the port of delivery in summary proceedings for security as per art. 21 of the Convention, even if the Greek court has no jurisdiction over the claim. They will normally ask the maximum possible security but the court will determine freely and on the balance of probabilities what a reasonable amount of security may be in the circumstances, such that may cover the possible award to the salvors plus expenses, losses, judicial cost and interest to be accrued until they get paid. As a basis for the calculation of a satisfactory security is basically taken into account the value of the salved property. Needless to say, that the ruling of the court on security will not be binding in any way on the ruling of the tribunal that will decide the salvage reward.
The security granted by a court will necessarily be either in the form of a bank guarantee issued by a Bank operating in Greece (in case that the owner does not cooperate with a Greek bank, he may need to arrange it through his foreign bank which will in turn instruct and counter-guarantee the correspondent Greek bank incurring hence the cost of a periodical commission) or in the form of a deposit of an equal amount to the security awarded to the “Deposit & Loans Fund” (a public Fund controlled by the State). Alternatively, the salvors may voluntarily accept a letter of undertaking from a private entity, as it is a P&I Club, but they can not be forced to do so, neither would a Greek court grant that sort of security.
It is further accepted that according to the correct interpretation of the art. 21 par. 2 of the Convention, the owner of the salved vessel is not obliged to provide security for the cargo as well but he should ensure nevertheless that no cargo will be taken away from the ship before security for the same has been provided, unless of course the removal of the cargo has been ordered by the court or port authorities. Otherwise, the owner may be found liable to compensate the salvors.
Contrary to the above, there have been decisions of Greek courts supporting the position that the salvors are entitled to sue the owner for their whole reward and the latter can only seek subsequently reimbursement from the cargo interests as regards the contribution of the latter to the reward.
Proceedings on the merits
Apart from summary proceedings aiming at obtaining security, the salvors will naturally lodge a lawsuit to the competent court for the award of their remuneration. If the competent forum happens to be in Greece, it is possible to bring the case before the Piraeus court even if some other local court of Greece would be in principle the proper venue. The litigants should submit their main pleadings and supporting documentation within 130 days as of the filing of the lawsuit, and a hearing should be fixed within the next 60 days, though in practice such time frame can not always be observed due to the heavy bulk of work of the courts. In short, it would be expected that the hearing of the lawsuit would take place after 6-8 months from the filing of the same and a decision in first instance proceedings would normally be expected within the following 3 to 5 months’ time.
The defeated party is entitled to file an appeal and the time required for second instance proceedings to be concluded, would be rather shorter, given that there is no pre-hearing stage. The decision of the Appellate court is final and enforceable and the same applies for the first instance decision, if no appeal is filed. An interim payment however can be possibly awarded by the first instance court upon request pending the proceedings.
Finally, the litigants can challenge the decision of the Appellate court before the Supreme Court but only on grounds of legal flaws, namely the Supreme Court can not re-evaluate the evidence and factual admissions. An appeal before the Supreme Court does not suspend in principle the enforcement of the contested decision, though a suspension may be granted until the conclusion of the relevant proceedings upon a separate petition on the ground that the immediate enforcement of the decision would cause irreparable damage to the appealing party.
Forced auction of the salved property
Whether a salvage claim is equipped with a privilege in case of the auction of the salved vessel, is decided according to the law of the vessel’s flag. If the vessel flies a Greek flag, the claim is privileged.
Furthermore, if the salvage claim is privileged and the auction takes place in Greece, the ranking of such claim in relation to others will always be determined pursuant to the Greek law (lex fori). In this respect, Greek law provides that the salvage claim which is privileged will rank in priority immediately after the judicial expenses made for common benefit, taxes, maintenance expenses and the wages of the crew of the salved vessel.
The present article should not be regarded as a substitute for asking professional advice and the author will not accept any liability for any information provided or views expressed. Copyrights reserved.