The right to a salvage reward arises independently of whether there is a contract or not. However, salvage contracts when appropriately drafted can significantly clarify the duties of the parties during the salvage operation. Provisions for the place of redelivery as well as the conditions under which salvage can be terminated including agreement on the forum and the law of the contract can avoid further disputes and expenses. The Salvage Convention permits exclusion of many of its provisions by contract. The default position under the Salvage Convention is that it only applies to the extent that salvage contracts do not provide otherwise.
Thus, salvage contracts can substantially alter most of the conditions under the convention including the payment options and the time bar. However, the rights granted to courts to review salvage contracts (Article 7) as well as the environmental obligations put on the salvor and the salved property cannot be contracted out of.
Liability for a salvage reward can be a significant financial burden for the shipowner and the cargo owner. Therefore, it is not surprising that where the master has signed a salvage contract the cargo interests have sought to avoid liability for salvage by claiming that the salvage contract is not binding on the cargo owners because it has not been agreed with them. Of course, where a situation of danger exists, and assistance is successfully provided, the right to claim part of the salvage reward from the cargo owners arises independently of the salvage contract.
Under the Salvage Convention binding authority to sign salvage contracts is granted to the master of the vessel. This authority is binding both on the shipowner and the cargo owner. The wording of Article 6(2) provides binding authority only for the conclusion of contracts concerning salvage operations which must involve a ship or property in danger (Article l(a)). As a result, where danger is not present, salvage operations, as defined under the Salvage Convention, cannot take place and the master arguably has no authority to bind the cargo interests if he chooses to sign a salvage contract.
The extent of the master’s authority under Article 6(2) has not yet been interpreted by the courts. However, it appears that after a reasonable contract of salvage is concluded, further modifications agreed between the shipowner and the salvor will not necessarily be binding on the cargo owners. Similarly, it can be argued that where the master breaches the contract of salvage, for example, by unreasonably replacing the salvor, then the cargo owners would probably not be considered in breach of the original salvage contract or bound by the new contract, leaving the shipowner to pay for the contractual breaches.
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