Law Reform in the International Regime of Salvage: The Insurance Perspective

Abstract: As the case of the Deepwater Horizon reveals, the consequences of an oil spill or any other marine incident can be devastating. Although pollution from ships implies a much lesser scale, nevertheless there must be maximum efforts for preventing the possible risks and consequences of marine casualties. For centuries salvors have remained the ones who will provide the fastest response to a ship in distress. A successful salvor is to be remunerated for his services, while the amount of his reward cannot exceed the value of the salved fund. Traditional justification for salvage remuneration evolved from the principles of unjust enrichment. Those who act on behalf of another in an emergency should be compensated for doing so. At the same time, a salvage award has never been limited merely to the law of restitution, as there has always been a sound public policy for encouraging rescues at sea. As long as the salvage subjects were mainly limited to the maritime property, it was relatively easy to identify the meaning of success and estimate contributing values. However, beginning from the late 1960s environmental and liability aspects became dominant in a salvage operation, and that triggered serious shifts in the whole system. It became evident that the main beneficiaries should be looked for not on the part of property owners and their insurers, but on the part of shipowners and liability underwriters, who avoid potential claims due to salvors’ intervention. The further evolution of the law of salvage will largely depend on the outcome of the negotiating process between the two groups of underwriters – property insurers and P&I Clubs. So far, to adjust the salvage practices to the contemporary challenges, the solutions of contractual nature have been found. As the pressure rises for further changes, it is important to grasp the rationales behind the negotiating parties’ positions in order to analyze where that development can take salvage law to.