Marine Salvage in Greece
The law
The law Greece ratified the International Convention on Salvage 1989 (the “Convention”) in 1997. This article does not seek to provide a comprehensive analysis of the Convention, on which extensive literature is available. Instead, it comments briefly on selected issues arising under Greek law and practice, while including such general background as is necessary to place those comments in context.The Convention applies to salvage claims brought before the Greek courts, irrespective of the nationality of the parties or any other connections the case may have. For matters not regulated by the Convention, a court may need to consider domestic law or other applicable international instruments. In matters falling outside the Convention’s scope, the applicable law is determined in accordance with EU Regulation No. 593/2008 (“Rome I”).
Under that Regulation, the apportionment of a salvage reward among the owner, master and crew serving on board the salving vessel is governed by the law of the vessel’s flag.
Jurisdiction
Where the parties have not agreed on a jurisdiction clause, jurisdiction will generally be determined in accordance with EU Regulation No. 1215/2012. In claims concerning the salvage of cargo or freight, that Regulation also provides for special jurisdiction under Article 7(7) in the courts of the place where the cargo or freight has been arrested to secure payment—or could have been arrested but for the provision of security—provided that the defendant has an interest in the cargo or freight.
Where the defendant is not domiciled in an EU Member State, and Regulation No. 1215/2012 may therefore not apply, a Greek court will determine jurisdiction under the Greek Code of Civil Procedure.
A Greek court may also consider itself competent to hear a salvage claim where the salved vessel has been delivered by the salvors to a Greek port and that court was the first to be seised of the merits of the case.
The salvage operation
A salvage operation is one carried out voluntarily by a third party in respect of a vessel—or another object floating on the water, other than a platform or drilling unit—that faces a serious and real danger to the vessel itself, its crew or the environment. According to Greek case law, the danger need not necessarily be imminent; it may be sufficient that, on an objective assessment, the danger is highly likely to materialise in the near future.
A salvage reward is payable only where the assistance provided has achieved a useful result.
The salvage contract
In urgent and dangerous circumstances, the parties will often enter into a salvage contract on a “No Cure – No Pay” basis. The best-known form is Lloyd’s Standard Form of Salvage Agreement (LOF). The master of the vessel in peril is generally considered to have authority to enter into a salvage contract on the vessel owner’s behalf. LOF and similar standard-form contracts enable the parties to agree terms quickly when a vessel is in distress, making them particularly suitable for emergencies in which time spent negotiating must be kept to a minimum.
Where time and circumstances permit, the parties may instead choose a contract tailored to their needs, providing for remuneration at a daily rate or as a lump sum. For example, where a vessel is drifting because of engine trouble in calm weather, with no other circumstances creating an imminent threat, or where a vessel is lightly aground in sheltered waters and may even be refloated by its own means, a different form of contract may be more appropriate, such as TOWCON/ TOWHIRE or WRECKFIXED/ WRECKHIRE.
In all cases, the terms of a salvage contract must not be abusive or contrary to bonos mores (good morals). This may be relevant, for example, where a salvor has unfairly exploited the distressed vessel’s situation.
Where a salvage operation is undertaken without a signed contract, a tacit agreement is presumed to exist between the salvor or salvors and the relevant interests in the vessel in distress, including the vessel owner, cargo owner and freight beneficiary, unless those interests have expressly and reasonably prohibited the provision of salvage services.
Salvage reward
Where the amount of the salvage reward has not been fixed by contract, a Greek court will determine it by applying the criteria set out in Article 13 of the Convention. These include, for example, the salved value of the vessel and other property, the salvors’ skill and efforts, the degree of success achieved, and the nature and seriousness of the danger.
The salvor first engaged in the operation must accept the participation of other salvors where the interests of the vessel in distress so require. However, if the request for additional assistance was unreasonable because that assistance was unnecessary, the first salvor may be entitled to the full reward.
The relevant coastal State retains the authority to issue directions concerning the handling of the casualty and, where necessary, to participate in the operation using its own resources. In such circumstances, it may also seek reimbursement of the costs incurred.
It is difficult to predict the amount of a salvage reward in Greece. There are no judicial guidelines or uniform practice consistently followed by the courts; salvage claims have been brought before different local courts across the country; and relatively few claims proceed to judgment, as many are referred to arbitration by agreement between the parties. Each case also has its own characteristics, which must be assessed on the evidence.
Judicial precedents indicate that rewards have varied considerably, from as little as 0.5% of the salved value to, in rare cases, as much as 40%. Awards in the region of 2%–15% are the most common, particularly in cases involving the salvage of sailing boats. These figures should be treated as a general statistical indication rather than a prediction of the outcome of any particular case. The salved property is valued at its market value at the port of delivery.
The vessel’s value is assessed by reference to its market value before the casualty, reduced by the cost of carrying out the necessary repairs; any beneficial time-charter value is excluded. Cargo is valued on a CIF basis, less the costs of restoration, further transportation and transshipment. Freight is valued net, unless it has already been included in the value of the cargo.
Article 14 of the Convention provides for special compensation where the salvor has prevented or minimised damage to the environment. Such compensation may exceed the ordinary reward calculated under Article 13.
In addition, where the salvor has carried out salvage operations in respect of a vessel which, by itself or through its cargo, threatened damage to the environment, the salvor may be entitled to compensation up to the limit determined by reference to Article 13, even if the operation did not achieve a useful result.
Article 14 applies where the pollution-prevention efforts take place in the context of, and in connection with, an operation to salvage a vessel. Otherwise, the 1969 Brussels Convention on civil liability for oil pollution damage or the 2001 London Convention on civil liability for bunker oil pollution may be applicable.
Because calculating compensation under Article 14 can be difficult, the shipping industry has adopted contractual provisions offering an alternative method of determining the salvor’s remuneration by reference to agreed costs. These provisions are commonly known as SCOPIC clauses.
The master of the vessel that rendered the salvage services is generally considered to represent the crew in pursuing the reward, unless the crew has brought a separate claim.
The salvor has a lien over the salved property and may prevent the salved vessel from leaving the port of delivery unless sufficient security has been provided.
Security
Under Article 21 of the Convention, salvors may apply in summary proceedings to the Greek court at the port of delivery for the provision of security, even where that court has no jurisdiction to determine the underlying salvage claim.
Salvors will generally seek the highest security reasonably available. The court, however, determines the appropriate amount in light of the circumstances and the available evidence. The security should be sufficient to cover the potential award, together with expenses, losses, legal costs and interest accruing until payment. The value of the salved property is a principal consideration when assessing the adequacy of the security.
The court’s decision on security does not bind the tribunal or court that ultimately determines the amount of the salvage reward.
Security ordered by a Greek court must generally take the form of either a bank guarantee issued by a bank operating in Greece or a deposit of the relevant amount with the Deposits and Loans Fund, a public fund controlled by the State. If the owner does not have an established relationship with a Greek bank, it may need to arrange the guarantee through a foreign bank, which would instruct and counter-guarantee a correspondent Greek bank; this may involve periodic commission charges.
Alternatively, salvors may voluntarily accept a letter of undertaking from a private entity, such as a P&I Club. They cannot, however, be compelled to accept such an undertaking, and a Greek court would not order security to be provided in that form.
On the accepted interpretation of Article 21(2) of the Convention, the owner of the salved vessel is not required to provide security for the cargo as well. Nevertheless, the owner should ensure that no cargo is removed from the vessel before security has been provided in respect of it, unless the removal has been ordered by the court or the port authorities. Otherwise, the owner may be held liable to compensate the salvors.
Some Greek court decisions, however, have taken the view that salvors are entitled to claim the entire reward from the vessel owner, who may then seek reimbursement from the cargo interests for their respective contribution.
Proceedings on the Merits
In addition to summary proceedings to obtain security and in the absence of an arbitration agreement, salvors may bring a claim before the competent court for payment of their remuneration. Where the competent forum is in Greece, proceedings may be brought before the Piraeus court even, if another Greek local court would ordinarily be the appropriate venue.
The parties are required to submit their main pleadings and supporting documents within 150 days of the filing of the claim, if the defendant is a non Greek resident and supplementary pleadings in rebuttal to the claims of the adverse party within 15 days of filing the main pleadings. The court hearing should take place within 210 days of the filing of the claim but in practice this time limit may not always be met because of the courts’ heavy workloads. As a general indication, a hearing may take place seven to nine months after the claim is filed, with a first-instance judgment typically expected within a further three to five months. The unsuccessful party may appeal.
The appeal proceedings may be concluded more quickly, as there is no pre-hearing stage. The appellate court’s decision is final and enforceable, as is the first-instance decision if no appeal is filed in time. Subject to the applicable requirements, the first-instance court may also order an interim payment while the claim is still under appeal. Finally, the parties may challenge the appellate court’s decision before the Supreme Court, but only on grounds of legal error. The Supreme Court does not re-examine the evidence or reassess findings of fact. An appeal to the Supreme Court does not, as a rule, suspend enforcement of the challenged decision. A stay may nevertheless be granted, on a separate application, where immediate enforcement would cause irreparable harm to the appellant.
Forced Auction of the Salved Property
Whether a salvage claim enjoys privileged status in the event of an auction of the salved vessel is determined by the law of the vessel’s flag. If the vessel flies the Greek flag, the salvage claim is privileged. Where the claim is privileged and the auction takes place in Greece, its ranking against other claims is determined by Greek law (lex fori).
Under Greek law, a privileged salvage claim ranks immediately after judicial expenses incurred for the 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. The author will accept no liability for any information provided or views expressed. Copyrights reserved.