“Mayday, Mayday, Mayday. This is the sailing vessel Yellow Jacket. We need assistance, over.”

“Yellow Jacket, Yellow Jacket, this is Coast Guard Victoria. What is the nature of your emergency?”

Yellow Jacket, a 32-foot sloop, struck a log, which disabled her rudder. She was adrift and unable to maneuver.

The Canadian Coast Guard sent out a radio request that any vessel in the area stand by to assist Yellow Jacket. My wife and I were nearby in Endeavor, our 1984 Grand Banks trawler. We responded to the Coast Guard’s request for assistance. The Coast Guard radio operator asked some questions about our boat and our capability to assist, then designated Endeavor as the “on-scene assist vessel” for the SAR incident. We were given a “SAR incident number” and told to report to Coast Guard Victoria by radio every half-hour.

After locating and closing the disabled sloop and working out a plan with her owner, we rigged for towing and towedYellow Jacket 18nm to deliver the disabled sloop to a repair yard in Ladysmith Harbor on Vancouver Island. It was a long slow passage that took nearly six hours. But when we reported “mission accomplished” to our Canadian Coast Guard radio controller and closed out the SAR incident report we received a “Thank you and well done, Endeavor,” to record in our logbook.

SOME LESSONS LEARNED

Our experience towing Yellow Jacket into Ladysmith Harbor worked out just fine and the majority of similar “vessel assist” situations work out equally well. But the truth is, we were lucky.

In retrospect, I should have done some things differently. You see, when I’m not out cruising on Endeavor, I’m a maritime lawyer. I’m trained to anticipate maritime legal risks and I know that these incidents don’t always turn out so well.

What’s my excuse? Frankly, I got caught up in the urgency of the moment. Most skippers will respond to a “Mayday” call by trying to assist. It’s that “tradition of the sea” thing. Most skippers are decent, helpful people who feel an obligation to come to the aid of a vessel in distress.

Under maritime law, a simple request for a tow can quickly turn into a difficult and expensive legal problem for everyone involved. Admiralty case reports are filled with examples of recreational vessel owners calling for assistance and then foundering among the legal rocks and shoals of maritime salvage law.

THE BASICS OF SALVAGE LAW

The natural concern for safety of life at sea and the practical needs of maritime commerce came together centuries ago to forge a common goal: that vessels in danger be saved from the perils of the sea.

In maritime law a salvor, someone who saves a vessel from the perils of the sea, has a special and privileged position. If a salvor is even partly successful in saving a vessel, its cargo, or its crew, the salvor may claim a salvage award and enforce the claim in an admiralty court.

A successful salvage claim does not require that the vessel is abandoned or left adrift. A vessel may be subject to a salvage claim even when the crew remains aboard.

A salvage award is more than just payment for a salvor’s services, it’s ”a reward given for perilous services, voluntarily rendered, and as an inducement to seamen and others to embark in such undertakings to save life and property” from the perils of the sea. (1)

There are three elements to a maritime salvage claim: the vessel saved was in actual peril, the service was voluntarily rendered—not required by a prior duty or contract, and the service was a success, in whole or in part, in saving the vessel from the peril. (2)

The Salvage Award. Because a salvage award is a reward to the salvor, not a payment for services, admiralty courts normally award a successful salvor a percentage (usually between 15 and 25 percent) of the value of the vessel saved.

Accidental Salvors. A volunteer who saves your vessel from maritime peril may be entitled to claim a salvage award, even if the volunteer acted without your consent or without your knowledge.

In October 2005, when Hurricane Wilma blew through South Florida, several new boats were tied to floating docks at a dealer’s marina. The docks began to take on water and sink, pulling the boats under with them. Bystanders and maintenance workers from a nearby repair yard ran out onto the sinking docks, cut the boats loose or untied the mooring lines and saved the boats from sinking. The grateful yacht dealer rewarded each of these volunteer-salvors with payments of $250.

A year later, two of the repair yard workers filed a salvage claim in federal court. After a three-day trial, they received a salvage award of $290,700—15 percent of the nearly two-million-dollar market value of the three yachts they had saved. (3)

Contractual Salvage. Traditional, “voluntary,” or “pure” salvage is always provided on a “no cure, no pay” basis. But there is an alternative type of salvage agreement, an agreement for “contractual salvage” that eliminates the uncertainty of a salvage award claim months or years after the event. Contractual salvage occurs when the owner of a vessel in distress enters into a contract with a salvor to pay a given sum for specified salvage services. (4)

This type of salvage is based on a binding agreement to pay the salvor for his efforts, whether the service is successful or not. A binding salvage contract may be made orally, even over the radio, and an exact dollar amount is not necessary to form a binding agreement.

A contractual salvage agreement may be either a fixed fee, a maximum fee, an hourly fee or a per-diem fee agreement. The advantage of a salvage contract is certainty. It may be expensive, but at least you know where you stand. You won’t be surprised by an unexpected salvage claim seeking an award based on a percentage of the value of your boat. The disadvantage is that you pay the specified fee even if the salvage attempt is unsuccessful.

St. Yves, a Hatteras motoryacht, was purchased in Florida in August 1999. The new owner and two of his friends decided to cruise St. Yves from Florida to her new home in Boston. Late on the third night of the voyage, they attempted to enter the port of Savannah, Georgia.

With her owner at the helm, St. Yves struck the inshore side of the rock jetty that guards the northern flank of the Savannah River ship channel. The hull sustained severe damage, including numerous large holes and fractures at the bow.

At 2:43 a.m. the Coast Guard, responded to a “Mayday” radio call from St. Yves, and arrived to find the owner and crew in lifejackets, with their luggage packed, waiting for rescue.

The owner and his two crewmen (without their luggage) were transferred to the Coast Guard patrol boat. The Coast Guard directed the owner to arrange for a commercial salvage service to remove St. Yves from her position on the Savannah River jetty.

The owner called Sea Tow of Savannah by VHF radio. The Sea Tow salvage vessel, Wideload, arrived on scene around 3 a.m. By then, St. Yves was without power, grinding on the rocks and taking on water. Shortly after the salvage vessel arrived, St. Yves slid back off the jetty.

Wideload managed to get a line on the yacht, but as St. Yves filled with water, she rolled over to a keel-up position and continued to sink.

Wideload pulled the wreck out of the ship channel to a position of relative safety, attached an anchor and line, and set a strobe light above the partially submerged wreck. At the owner’s request, Sea Tow monitored the wreck around the clock for several days until it was removed from the waterway.

The owner refused to pay the salvage charges. He and his insurance company sued Sea Tow, claiming that the salvor’s negligence contributed to the total loss of the vessel.

The admiralty court, after hearing the testimony of several salvage experts, threw out the owner’s claims. The court found that the cause of the loss of St. Yves’ was an owner and crew that were “totally negligent in causing the sinking” and awarded Sea Tow their full contract damages plus the attorney fees and court costs. (5) The court found that when the owner called Sea Tow on the radio he agreed to a modified salvage contract. He was bound to pay for the services, even though the salvage attempt proved unsuccessful.

Avoiding a Salvage Claim

Beware of the form. Your vessel needs assistance. A marine towing company vessel arrives and offers to help. An employee of the towing company hands you a form and says, “Sign here.” You sign the form, not realizing that you are signing a salvage agreement. (6)

When you need assistance, you may be under a lot of stress. You may be exhausted, wet, frustrated, discouraged, and afraid. You may not be thinking clearly. This is not the time to “just sign here” without understanding exactly what you are signing.

Don’t rely on what the towing company employee tells you, either. In an admiralty court, a year or more after the event, the only thing that will matter is the written agreement that you signed. Since maritime law gives a privileged position to salvors, admiralty courts will strictly enforce the terms of a written salvage agreement.

Miss Jade II, (7) a 33-foot express cruiser, was rolled by a breaking wave and grounded herself upright on Long Island’s Atlantic Beach. The owner and his wife, both in their seventies, wet and exhausted, signed a towing company form agreement after an employee of the towing company told them that unless they signed the form, they and their boat would be left on the beach, at night in the rain, without assistance.

The morning after the owner signed the form, Miss Jade II was towed an uneventful six miles to her home marina. The towing company claimed a $15,000 salvage award, based on a percentage of the value of the boat, and filed a salvage lien againstMiss Jade II.

The owner refused to pay.

The towing company sued to enforce the arbitration provision of the salvage agreement. The agreement, copied from Lloyd’s Open Form Salvage Agreement, required arbitration of a disputed salvage award at Lloyd’s in London. After an expensive court battle in the U.S. District Court, the court ordered the dispute transferred to arbitration in London.

Miss Jade’s owner filed an appeal in the U.S. Second Circuit Court of Appeals. Although the court retained jurisdiction of the case for arbitration in the United States, Miss Jade’s owner lost the appeal. The court said, “[t]he lesson to be learned is that pleasure craft are just as much subject to the law of the sea, including the law of salvage, as their ocean-going commercial counterparts.”

TOWING COMPANY FORMS

There is inherent power in a pre-printed form. Its formal appearance contains a subtle “take-it-or-leave-it” message. Just because the form says “Salvage Agreement” in fancy bold print, you don’t have to accept it. Normally, a professional salvor will tell you that he cannot proceed without your signature on his form. But there are almost always alternatives. Under the MARSALV form commonly used in the United States, the alternatives are specified for you. Suggest to the tow company that you will agree to a towing contract for a fixed fee or a towing contract based on an hourly or daily rate, but you will not accept an open-ended salvage agreement.

You can modify the towing company form so that it says what you want it to say. Take the time to nail down the details and the costs of the services you require before the assistance starts. Don’t just sign a form agreement without fully understanding it. If you are not comfortable, or don’t understand every provision ask questions. Negotiate. Don’t just sign the form unless the only alternative is the loss of your vessel because once you sign, you’re stuck with whatever the form says.

SALVAGE AND MARINE INSURANCE

Most yacht insurance policies include a towing benefit, but the policy will normally have a strict dollar limit on the amount the insurance company will pay. If the tow to your home marina costs $1,000 and your emergency towing insurance benefit is limited to $500, the balance comes out of your pocket. Still, it is usually better to pay for an expensive tow than face the uncertainty of a potentially much larger salvage award.

If you need more than just a tow, most yacht insurance policies also include a “protection and recovery” clause that may provide a more flexible and generous benefit. Your insurer does not want to pay for the total loss of your insured vessel so the company will normally pay your reasonable expenses of protecting your vessel from a peril that otherwise may lead to a total loss.

Try to contact your carrier in advance for their approval. Take pictures and keep all the receipts or paperwork for your marine insurance adjuster.

THREE PRACTICAL STEPS

So what do you do if some dark and stormy night you find yourself in need of assistance to save your vessel? How do you get the help you need while avoiding entanglement in a possible legal claim for a salvage award?

First, assess your situation carefully. Stop for a moment and think. Is this really an emergency? Is life or property in immediate danger? Or, are you and your vessel in a difficult or unfamiliar situation that, with some time and the resources you have at hand, you may be able to work your way through and correct without assistance?

Second, define your needs. If your vessel needs a tow, you should specify that the assisting vessel is providing a towing service, not salvaging your vessel. If you need fuel, a mechanic, a diver or a repair part, define the specific need and arrange for delivery of the specific part or service.

Third, pay a fair fee for the services you need. You want to avoid the “reward” aspect of a traditional salvage claim by clearly defining the services you actually need and agreeing to pay a fair fee for those services.

Finally, if a real emergency occurs—when your boat is on fire, sinking, or a member of the crew has suffered a serious medical trauma—act at once to save your crew and yourself. Human life is irreplaceable. Everything else is insured.

(1) The Blackwall, 77 U.S. (10 Wall.) 1, 14, 19 L.Ed. 870 (1869).

(2) The Sabine, 101 U.S. 384, 384, 25 L.Ed. 982 (1879).

(3) O’Hagan v. M & T Marine Group, LLC, No. 10-12013 (11th Cir. 2011)

(4) Bay & Delta Tractor Tug Co. v. The Barge Pacific Trader, No. C-95-0107 (N. D. Cal. 1997)

(5) LaPlante and Northern Insurance Co. of New York v. Sun Coast Marine Services, Inc., 279 F.Supp.2d 678 (D. S.C. 2003).

(6) The most common form of salvage agreement worldwide is the Lloyd’s Standard Form of Salvage Agreement, also known as Lloyd’s Open Form (“LOF”). The LOF is a “no cure-no pay” salvage agreement in which the salvor agrees to use its best efforts to save a vessel in peril with the salvor’s compensation, if successful, to be determined by an arbitration proceeding at Lloyd’s in London, England.

In the United States most marine towing operators in the recreational (non-commercial) markets have dropped the Lloyd’s Open Form and adopted the U.S. Open Form Salvage Agreement (known as the MARSALV form) published by the Society of Maritime Arbitrators. The MARSALV form is less complex, uses four check boxes to indicate the compensation to be paid to the salvage contractor (no cure-no pay; no cure-no pay fixed fee; per diem/hourly at a specified rate; or other—whatever is agreed between the parties).

Both the Lloyd’s Open Form and the MARSALV form provide for arbitration of disputes, create a maritime lien against the vessel and cargo for payment of the salvage award, and provide for extra compensation if the salvor is required to expend resources to protect the environment.

Under the standard forms of maritime salvage agreements, if the vessel owner disputes the salvage claim and loses, in addition to his own attorney’s fees, he also must pay the salvor’s attorneys fees plus the arbitration fees and court costs.

(7) Jones v. Sea Tow Services Freeport NY Inc., 30 F.3d 360 (2nd Cir. 1994)