Sailors need to know the difference between a salvage and tow before the worst happens

A few years ago while sailing in South Carolina I ran softly aground in a mud bank just north of Charleston. It happened as I circled to await the opening of a drawbridge.

Putting the engine in reverse didn't budge the keel, nor did trying to pull the stern off the shoal using the inflatable tender and small outboard.

Luckily, not 15 minutes elapsed before a friendly powerboater came along and offered to help. I gladly accepted and after three tries my chartered sloop was loose and afloat. We bid each other a good day and that was the end of the matter. But it could have turned out much differently, especially if the good samaritan decided to send me a salvage bill.

When I recently recounted that day's events to two maritime lawyers, both agreed the situation might have given rise to a salvage claim because my yacht was unable to maneuver in a navigable waterway under its own power and could have presented a peril to other boaters.

The good samaritan had also met the three criteria necessary to constitute salvage: he acted voluntarily, was successful in his efforts and the boat was stranded in a channel where it might have become a danger. Although my helper seemingly did not put himself at risk, an admiralty court might have found otherwise, which would further solidify any salvage claim.

Both attorneys emphasized that in my situation, the value of the yacht was probably not high enough to warrant the expense of pursuing salvage rights.

A more lucrative scenario unfolded last October in San Francisco, when Energy, the America's Cup challenger from France, broke loose from its dock after dark and was found drifting in the bay toward the Golden Gate Bridge. A good samaritan in a skiff lassoed the errant multimillion-dollar racing catamaran and towed it to safety.

The news media heralded the deed as an act of kindness. But only days after the incident, the man's attorney notified French authorities of a pending marine salvage claim for $200,000 plus procedural costs. The claim, now slated for arbitration, sparked debate over the difference between simple towing assistance and marine salvage and how to make a distinction.

So if I could have been in trouble when I accidentally grounded in Charleston and even America's Cup syndicates are not immune from salvage claims, how does the average sailor avoid an inadvertent salvage situation?
United States salvage rights law traces its roots to San Francisco on August 24, 1867 when the British ship Blackwall was discovered on fire in the harbor. According to maritime attorney Joshua Teitelbaum at the Georgetown University Law Center, the Blackwall remains a litmus test for marine salvage cases.
Blackwall's officers and crew abandoned ship before dawn and the city fire department and the steam tug Goliath put out the fire.

The owner and master of Goliath brought suit against Blackwall's owners in San Francisco's district court, seeking a salvage award for their efforts. The court determined salvage is the compensation allowed to those by whose assistance a ship or her cargo has been saved, in whole or in part, from impending peril on the sea. The Goliath was awarded $10,000, a decision affirmed on appeal.

Not much has changed since those days. Although the United States is a signatory to the Salvage Convention of 1989, an international treaty that attempts to standardize the law of salvage, most cases still lean heavily on Blackwall.
"Many misconceptions exist," Teitelbam said. "People have to understand contract salvage vs. chance salvage or what's also known as pure salvage."

If a stranger offers aid and provides aid, that is pure salvage, he said. "There are economic rationales for this doctrine. We want to encourage people to help each other at sea, which often means in remote places where accepting aid is your only option. Keep in mind that, in general, you have no duty to save someone else. So salvage provides mariners with an incentive."

Unlike chance salvage, contract salvage is an agreement struck between the vessel owner and the salvor. It often occurs when an assistance company such as TowBoatU.S. determines a member's vessel requires services beyond the scope of simple towing.

"The risk inherent in chance salvage is opportunism, the giving to people an incentive to help. If your boat breaks away and comes ashore during a storm, you don't have to be present or give your consent to the salvor," Teitelbaum said.

Maritime attorney Stephen F. White of Baltimore, a former U.S. Navy surface warfare officer, said gray areas exist in the realm of towing and salvage.

"There is no bright line rule," he said, noting some draw a line between soft and hard grounding. "What is a soft grounding? Are you stuck and just waiting for the tide? If so, then there is minimum marine peril. But what if the Queen Mary goes by while you're stuck and swamps you? It depends on lots of things. If two boats and two lines are required to free your yacht from a grounding, it would be considered a salvage."

The most important thing sailors should do is read the contract if they're already members of a towing and assistance company, or get an agreement in writing if negotiating on the spot with a potential salvor, the attorney advised.

"I have had people spend half a day towing me for free. Nine times out of 10, you are dealing with people who are not in the business and don't maintain a radio watch or specialized equipment that's ready to go. So you'll be OK," White said. "As a recreational boater, you should know if you want to decline assistance, you can do so. Ask ahead of time about the terms, the hourly rate and how long they estimate the tow will take. Get it in writing, even if it's on a napkin. It should state something like, 'You are going to tow me for X amount of dollars based on a per-hour rate.' If they won't sign it, you can expect the guy is going to send you a salvage bill."

White said some companies work full time at recreational salvage and have made significant investments in equipping their sturdy and powerful rescue vessels. These businesses have a stronger argument for salvage claim compared to the part-time or weekend salvor equipped with little more than a recreational powerboat and a rope.

Potential environmental damage can also play a key role in the outcome, and is the newest element introduced into the world of marine salvage as part of the 1989 SALCON treaty.

"If a boat runs aground in a marine sanctuary in the Bahamas, the longer it stays there the more chance there will be of a fuel or oil leak, or damage to the coral. Under modern doctrine, an admiralty court or arbitrator would take into account not only that the boat got saved, but that you saved the environment as well," White said. "Normally, if you are just drifting and waiting for a tow, you can turn down an offer of assistance from a salvor. But if a guy puts a boom around your boat because oil is spilling out of it in the wildlife sanctuary, he would have a salvage claim."
Adam Wheeler, vice president and director of towing services at the Boat Owners Association of the United States, emphasized every case is different. "When it comes to salvage vs. towing, there is no definitive answer 100% of the time."
Scott Croft, assistant vice president of public affairs at BoatU.S., said a single factor could change that dynamic, such as the approach of nightfall, foul weather or the vessel in distress begins to bounce on rocks. Vessels hard aground, on rocks, taking on water or sunk are considered salvage, as are collisions, fires and breakaways, he said, noting salvage can also be claimed if specialized equipment such as pumps and airbags are used, or divers are called, even if the boat is at the dock.

According to White, if the salvor saves the vessel, only to learn it is a total loss, or that its post-salvage value is insufficient to pay a meaningful salvage reward, other remedies to obtain payment may be sought. In cases where saving the vessel is hopeless, the salvor may be entitled to a "special compensation" award. These awards are designed to encourage salvors to use their best efforts to minimize environmental damage, primarily oil pollution, even if the vessel is a total loss. The salvor can expect to collect the fair value of his out-of-pocket expenses, plus a fair rate for his time and equipment use.

The difference in cost between towing and salvage can be enormous. Towing a grounded $150,000 boat could cost a few hundred dollars, but if a tow company determined that same boat was in peril because the weather is deteriorating or the grounding abuts a shipping channel, and no contractual agreement exists before services are provided, the company could demand and receive a salvage reward of $25,000 for doing essentially the same work, White said.

Tow companies on average charge $200 to $250 per hour for towing services, and often impose an additional charge for soft ungroundings, usually on a per-foot basis. If the situation requires a higher degree of risk and becomes a salvage job, the salvor can seek a "discretionary" fee based on a percentage of the value of the saved boat, or an "objective" fee based on an hourly or per-foot formula, with additional charges for services rendered in bad weather or perilous conditions.

Croft suggested boaters carry a copy of the BoatU.S. open form yacht salvage contract aboard, which assures any salvage claim will go before a local arbitrator if negotiations between the insurance company and salvor fail. Litigation in the courts is also an option for resolving a dispute, but it can be expensive, he said.

You can download a copy of BoatU.S.'s salvage contract at www.boatus.com/towing/salvage-p7.asp.