Marine Salvors Today
Even with all the modern technology yachts are susceptible to the elements of the sea and can become stranded by running aground or some other misadventure. In some circumstances you may able to do little more than don a lifejacket, transmit a mayday message and prepare your crew to abandon ship. Both you and your vessel are now completely reliant on the goodwill of others to come to your aid and salvage the vessel.
Salvage is a term that is widely misunderstood and while evoking colourful images of looting and plundering shipwrecks, in reality the modern day salvor is likely to be skippering a tugboat as they assist the stranger at sea. The salvage operation is an essential part of the seascape, saving lives, property and environmental habitats. Thankfully, with modern technologies, strict safety standards and fast coordinated responses, loss of life at sea is becoming increasingly rare. However, whether or not a vessel or its cargo can be saved is a different story. For a country with a large coastline it is a question of time, risks and available resources, with most salvage attempts requiring specialised assistance and specific equipment to keep a sinking vessel afloat. Given the costs associated with salvage are usually worn by the vessel’s owner it is important to have a basic understanding of the law of salvage.
THE LAW OF PREVENTATIVE SALVAGE
Salvage is an ancient maritime concept originating from the seafaring Rhodians some 3,000 years ago. In an attempt to discourage pirates and looters from interfering with commercial trade, Rhodian law held that those who rescued property lost at sea were entitled to a percentage of the goods as reward for their services. This percentage varied depending on the dangers involved in the recovery efforts, which encouraged individuals to sift through flotsam and jetsam in exchange for generous compensation. From these obscure beginnings the law of salvage evolved to become a cornerstone of our unique system of Admiralty law.
The modern definition of salvage, in the 1989 International Convention on Salvage, branches out significantly from its Rhodian roots. In a world of electric pumps, powered crafts and global positioning systems, salvage is now less about the recovery and more about the measures taken to prevent the loss. However, despite the modern definition one aspect of salvage remains unchanged, unlike land locked law that focuses on punitive actions, salvage laws continue to reward the good deeds of individuals. Where the man off the street voluntarily rescues property from a blazing house fire and does not receive any benefit for his selfless actions the same individual would be entitled to a significant financial reward for preventing loss to the owner’s property in territorial waters, even if the aid is given without the request or consent of the owner. This curious discrepancy can be justified on economic grounds as successful ‘user-pay’ salvage attempts minimise costly insurance claims, reduce potential litigation and encourage professional salvage operations, saving the state and taxpayers from providing similar infrastructure.
Despite salvages increasingly being carried out by experienced commercial entities, anyone who comes to the aid of distressed vessels and provides them with salvage services has the right to financial reward under well-established equitable principles. In order to succeed in such a claim the courts have identified three elements that must be satisfied.
First, a ship, its cargo or crew must be in some form of maritime peril. The danger does not need to be immediate, but must be real or at least based on a reasonably held belief. The courts have been fairly liberal in their interpretation of what constitutes danger, with examples ranging from the threat of piracy, to the loss of a propeller whilst being towed.
Once danger has been established, it must then be shown that aid was voluntarily provided by persons with no prior interest in the vessel or its cargo. The traditional interpretation is that there cannot be a contractual or legal relationship which compels the individual to act. This means the distressed vessel’s captain or crew cannot usually be regarded as salvors as they already have a duty to maintain the boat.
Finally, the salvor must succeed or at least partially in their salvage efforts. This is based on the well-established Roman concept of ‘No cure, No pay’. As is made clear in the Convention, where a salvage attempt fails to produce a ‘useful result’, the salvor will typically not be entitled to any reward for their efforts, unless they are attempting to prevent further environmental damage, such as an oil spill.
Overall, anyone who voluntarily provides successful preventative salvage services should be able to tick all the above boxes to be entitled to a financial payment by the salvee. This amount may be agreed upon privately, however the courts are best suited to make this determination, taking a number of factors into consideration including the time used, promptness of services rendered and the salved value of the vessel. However, in practice most salvage attempts are initiated through formal contractual agreements.
Although the law of salvage historically operated outside the realm of contract law, almost all modern-day salvages are now carried out by professional salvors with vast resources and large commercial fleets around the world. Out of commercial necessity, these organisations use standardised salvaging contracts, the most popular of which is Lloyd’s Open Form (LOF) developed by insurers, salvors and shipping agents in the late 19th Century, these ‘open’ agreements acknowledge the highly-stressful, time-sensitive nature of the operation and the vulnerability of the signing party. To overcome the potential issues relating to mistake, duress or manipulation, the LOF allows parties to defer discussions of cost and makes provisions to agree to be bound to an amount of compensation calculated by a neutral arbiter after the event. The benefit of such a system is that emergency services can be immediately delivered without being bogged down by legal issues or complications.
It should be noted that these operations do not fall within the traditional laws of salvage as commercial salvors are not volunteers and often get paid regardless of the outcome. Further, one major downside to using the LOF in Australia is that all arbitrations must be heard in London under English law. Nevertheless, these uniform and virtually universal agreements have been adopted by nearly all professional salvors.
SCAVENGING OR SALVAGING?
In some situations vessels and their cargo cannot be saved however, contrary to popular belief the sinking of property is not enough in itself to rob the owner of his or her legal title. Goods are only subject to the well-loved principle of ‘finders keepers’ if they have clearly been jettisoned or otherwise abandoned. In all other cases the established principles of salvage still apply. When the British container ship MSC Napoli ran aground in 2007 spilling its cargo across a beach in South Devon, the hundreds of looters who took off with thousands of pounds worth of goods seized possession but not ownership as there had been no clear abandonment. Under salvage law the shipping company was forced to pay the looters a reward for their services, in exchange for the return of the goods. However, in cases where goods would have significantly depreciated in value it is worth considering whether salvage is economically feasible.
Salvors play an invaluable humanitarian, commercial and environmental role in the 21st Century, making sea voyages safer and reducing the impact of maritime disasters. However, their services come at a cost such as saving a sinking yacht in the middle of the sea could be as high as 50% of the yacht’s salvaged value, especially if lives are saved in the process. While it is possible to question the continued appropriateness of what is effectively an antiquated user-pay system, this generous economic compensation is essential to ensure the growth of the salvor industry and to ensure private mariners will continue the long-held tradition of aiding others mariners in distress.
Yacht Racing and the Law
The New Zealand Millennium Cup is back on the agenda with a fleet of yachts showing off on the emerald waters of the Bay of Islands. In these circumstances it seems very fitting to discuss the rules of yacht racing and how it actually applies to the law of sea.
While I would love to talk about when yachting goes smoothly, the sad truth of my profession is the law tends to only get involved when things go wrong. Maritime accidents happen and when they do legal ramifications are likely to arise. Whether it be a fight with insurance companies, seeking compensation or even criminal action, there must be certainty as to law the skipper follows. If this accident occurred during a yacht race, the actual law to be followed is not as simple as one would imagine.
THE INTERNATIONAL REGULATIONS FOR PREVENTING COLLISIONS AT SEA
When on the water you should be familiar with The International Regulations for Preventing Collisions at Sea 1972 (‘COLREGS’). These regulations are known as the ‘rules of the road’ for vessels at sea to prevent collisions.
It is the international standard, widely adopted across the globe and applies to many different types of vessels in different types of waters on different types of voyages.
In Australia, it is adopted as law on the waters of New South Wales. It is hidden away in section 5 of Marine Safety (General) Regulation 2009 (NSW) and needs to be read in conjunction with section 10 of the Marine Safety Act 1998 (NSW). In New Zealand it is found in Part 22 of the Maritime Rules.
THE RULES OF RACING
This all may sound simple so far. But, yachts in a yacht race can be treated differently under the law. It can cause a headache to the poor souls whose yacht race goes from a dream to a nightmare.
The simple fact is that the COLREGS were never intended to govern a fleet of yachts sailing in close proximity to each other. The COLREGS intended purpose is to provide a broad set of rules covering all vessels at sea. Yet, bulk carriers and alike share as much similarity to a yacht as an Airbus A838 to a kite.
The Racing Rules of Sailing (RRS) are based on the COLREGS but with slight variances that take into account the unique circumstances that racing yachts find themselves in. Like the COLREGS, they are adopted worldwide for the sport of sailing.
Importantly, the law can give effect to the RRS over the COLREGS, but only in very specific circumstances.
WHY ARE THE DIFFERENCES IMPORTANT?
You may be asking yourself “Why does it matter which one applies?” This is quite a valid question. Sure there are differences in the rules discussed above. But what does it actually mean for you?
For starters, every skipper of a racing yacht should be familiar with both sets of rules. Preventing a collision would avoid unnecessary and costly heartaches. Besides, it’s a race; avoiding a collision and being first to cross the line goes hand-in-hand with each other. Yacht racing is not a game of dodgem cars.
But, like I said, lawyers tend to only get involved when things are not smooth sailing. In the event of a collision and without even touching on the criminal aspect of breaching the rules, the importance lies in determining who is at fault in the event of a collision.
A key commercial factor between the two rules is how actual liability is worked out.
Under the RRS, if a yacht collides with another racing yacht then typically, one yacht will be found entirely at fault for the collision. Whereas, if you were to follow the COLREGS then you will find that both vessels are somewhat at fault and the question becomes who is more at fault.
The importance of this cannot be understated. In the event of a claim for compensation the payout figure would likely be a percentage under the COLREGS. And when is comes to yachts this can run into the many millions!
Under general maritime law, however, fault will be allocated between the parties on a percentage basis. And fault in a maritime collision is almost never allocated 100% to one party.
DETERMINING WHICH ONE APPLIES?
Which set of rules applies? Competing laws are no friends of lawyers. Dealing with one set of law is hard enough let alone dealing with two and figuring out which different set of laws prevail. The answer here largely depends on where you are, if the event organisers did their job properly and the circumstances of the race.
The COLREGS were never intended to govern racing vessels. The COLREGS applying to a yacht-racing event seems bizarre. The simple logistics of following the COLREGS during a race will, at least in my opinion, dampen the excitement of a race.
But this has been the subject of many court decisions in both the UK and the USA. When millions of dollars are at stake there is very likely going to be some court decision on it. The issue is the law is not clear.
The default position here in New South Wales is the COLREGS apply unless the governing authority (here being Maritime Services) says otherwise. Racing events must be approved by Maritime Services as races are regarded as an ‘aquatic activity’ and rightly so. The law is framed so as to allow the COLREGS to be overruled by the RRS if the aquatic activity licence actually states that the RRS applies.
It is important to note that even if the RRS applies to a race, the racing vessels must follow the COLREGS to avoid collisions with non-racing vessels. This is built into the RRS itself.
However, the law in New South Wales seems to go further, that the COLREGS apply even if there is a risk of colliding with non-participating vessels. The Courts have not determined how broad this risk needs to be. By literal interpretation of the law, if you have a vessel on Sydney Harbour, there is always the risk of colliding with another non-participating vessel. It seems that in a busy area of water, the COLREGS will almost always apply, significantly narrowing the circumstances when the RRS can apply.
HOW DO YOU KNOW WHICH ONE APPLIES TO YOUR RACE?
Ask the event organiser!
In New South Wales the law is framed so that the COLREGS automatically apply. The only way to be certain of which one applies is to ask the organiser of the event if there is an aquatic licence (there should be!) and ask specifically if the aquatic licence states that the RRS applies. If it does then it is likely that the RRS applies when it comes to determining which rules to follow when encountering another racing vessel.
But the law in New South Wales goes further than this and states that COLREGS will apply even if there is risk of collision with another vessel not involved in the activity. How broad this risk has to be is a question for the courts and a question that causes a needless headache for yacht owners, skippers and lawyers alike.
The Boat Insurance Policy MADE FROM FIRE
• FROM PANTAENIUS - SAIL AND MOTOR YACHT INSURANCE
Often it takes a disaster to bring about real change and growth. Such was the case with Pantaenius’ water up, all-risk and agreed value insurance policy. The Phoenix metaphor gets used a lot, but in the case of Pantaenius, it is beyond true. It was the very genesis for the base policy that allows Pantaenius to cover everything from global cruisers to sports fishing, as well as yacht racing and super yachts.
A large fire in a winter storage shed in Hamburg, Germany, in the 50’s destroyed several delightful wooden yachts that were in perfect condition. The owners were friends of one, Harald Baum, who was in commercial marine insurance at the time. Their insurers acknowledged the accident, but were only prepared to offer Harald’s friends the cost of the yachts on the current market, which was nowhere near enough to replace these magnificent examples from another era.
“The owners could not afford to replace their craft with something similar. Their insurance company failed to protect their assets. Now it would be this very notion and the lack of a true, waterborne yacht insurance policy at the time that sparked the idea for my father to develop the product we have today. Forty years on it is the one standard for yacht insurance in Europe and beyond. We now have over 90,000 yachts insured around the globe,” said Harald’s son, Martin, who is now the group’s managing director.
“This has meant that we have become the only true, worldwide yacht insurance provider, all under the one policy document. So when it comes to cruising the world, Pantaenius supports you with local knowledge in the same time zone 24/7, courtesy of own employees here in Australia, as well as the USA and throughout Europe.”
Today, Pantaenius is still very much a family company, with Martin’s siblings also involved in the business and Harald still goes to work each day. This family ethos, coupled with a genuine and strong nautical affliction, means Pantaenius is ostensibly without equal the world over.
Now into its fourth year of operation in Australia, Pantaenius has its growth stemming from these very cornerstones and the fact that each staff member is a dedicated boaty in their own right. This makes Pantaenius a very unique player in the local, Australia-Pacific scene. The ever-increasing contingent of global cruisers, especially in multihulls, were some of the first to adopt Pantaenius here. Soon after it was ocean racing boats and inshore sailors. More recently, all manner of powerboats form long-range cruisers to sports fishermen.
“Our staff have sailed all over the world, been around various types of craft being built and moored in more marinas than we can count up. In addition to that, they have a network of contacts that surpasses enviable. Coupled with our global collection of surveyors, riggers, mechanics, yards and all services, you have a powerhouse of assistance waiting for you. It is all of these that will ensure your boat and mooring are fully sorted, so that you can get on with enjoying your favourite pastime,” said Baum.
Australia and the Pacific Rim are very important to Pantaenius collectively. In a way, the world has become smaller, with more people taking to the seas to complete life-long ambitions and dreams. They are covering great distances as they go from Europe to the Pacific or Australia to the Caribbean. It is no surprise that Pantaenius wanted to have a ‘local’ presence in an area that covers the Asian powerhouse, Australia and the vastness of the South Pacific.
“We saw that in our opinion, Australia was not getting the level of service it demanded, nor the best insurance offering. Back then the time was more than right and today we are fortunate to have so many clients confirm that theory by providing us with their business.”
The Pantaenius Team l-r: Jayah Simmons, Maike Muth, Michaela Backes,
Jamie MacPhail, Adam Brown, Danielle Blackmore, Vicky Millynn.
“Australia is not more price sensitive than other markets, but in addition to service, the local market required fairness and honesty. We feel our agreed value, optional new for old replacement and the due diligence performed before contract is signed sets up this classic Aussie handshake deal making.”
“Of course, legalities mean that there is paperwork to be completed, but here too our policy documentation is written in plain English and the exclusions take less than one page. The ever increasing complexity of compliance rules are making it harder to provide the client service that we are used to, so this is where we put our attention and effort to deliver best practice,” added Baum.
Now one of the things that many clients comment on is how they get to deal directly with the person who sold them the insurance. No matter whether it is changing your cruising locale or making a claim, you speak with a Pantaenius team member. Indeed it is this level of service that has many clients now as advocates, especially those who have suffered a total loss.
Why? Simple. Fast response and claim settlement times, but even more importantly, it is the lack of deductions form the final payout that has them so very pleased. The number on the front of the policy documentation is the one they receive. As one client said after his horrific accident, “You know there is always a silver lining and thank God mine came in the form of the team at Pantaenius. They were just bloody brilliant!”
Baum spends a lot of time in Australia each year. He said of the similarities and differences, “All the segments are similar, with all manner of sail and motor yachts. One difference would be that superyachts in Australia start from AU$1.5m, whereas in the USA and Europe they are bigger, say 24m plus and are above €5m sum insured. It might be smaller by volume here in Australia, but it is growing more rapidly than those other markets.”
“We do not have the sports fishermen segment in Europe and I have been not only captivated by it, but also impressed. The fishermen play an integral role in helping to analyse and maintain the fish stocks in the around this island continent. Depending on the species, up to 97% of the catch is tagged and released, which is just great. Until the recent NSW Game Fishing Association Interclub Championship I did not know that it was the oldest in the world!”
In closing, Baum said “I was asked to talk about Pantaenius as a brand during ASMEX. Specifically, this relates to our global expansion, by virtue of the experiences and problems we have faced along the way. The idea is that other companies in the yachting industry may benefit from our learnings and that maybe it will help them to make the right decision on their way to expanding their own businesses both here and overseas.”
AIMEX was thrilled to have Pantaenius guiding force Martin Baum speak at ASMEX 2016 conference at the Intercontinental Hotel Sanctuary Cove on May 17. Theirs is a story of a robust business that is an exemplar to the marine industry and ties in the ASMEX 2016 theme of ‘Building Better Business’ for our Australian marine industry.
Now no one could know your boat as well as you do.
Pantaenius will ensure you know it even better with a policy designed to reflect your needs and boating lifestyle.
Call +61 2 9936 1670 or go to www.pantaenius.com.au and find out why it is so.
Loan Advice for New Boat Finance
from Rapid Finance - gorapid.com.au
MAKE SURE YOU GET THE BOAT FINANCE THAT SUITS YOUR NEEDS
Whether you’re buying your first boat or looking to upgrade, getting the right kind of financing can be incredibly important. When it comes to any kind of large financial expense like car loans, home loans, and boats loans, making sure that the loan details are suitable for you could end up saving thousands of dollars over the life of the loan.
With that in mind, here is some general advice on how to find a boat loan that is suitable for you. Always get advice from a financial professional before taking out a boat loan.
SECURED OR UNSECURED FINANCE
Secured and unsecured loans each have their own advantages and disadvantages, so the one that you choose will likely come down to a matter of preference, and depend on which suits you better.
Secured boat loans – These use the boat as security for the loan. This means that the lender has the right to repossess the boat if you default on the loan. However, this also means that the loan is a lower risk for the lender which means that the interest rates are usually lower than unsecured loans. This also means that a secured boat loan will likely be less flexible than an unsecured loan since a secured loan can only be used to purchase the asset that secures it.
Unsecured boat loans – An unsecured boat loan will mostly likely be a personal loan that you use to buy a boat. Because it is unsecured, it may have a higher interest rate than a secured loan or you may get approved for a lower loan amount. However, you will also have the flexibility to use the loan for other things, for example, you could take out a loan to buy a boat with enough left over to pay for new fishing equipment.
FIXED OR VARIABLE INTEREST RATES
This is another option that will likely come down to a matter of preference. Both fixed rate and variable rate loans have their own advantages and disadvantages, so your choice depends on whether you prefer stability and predictability or the possibility of future savings.
Fixed rate loans – Because the interest rate doesn’t change during the loan term, you’ll always know what your repayment amounts are, as they won’t change. This makes it easier to budget for your loan repayments in the long term which some people find to be very helpful and important. However, if interest rates drop in the future, you might ‘miss out’ on potential saving s on your repayments.
Variable rate loans – A variable rate loan might end up being cheaper or more expensive than a fixed rate loan, depending on the direction of interest rates over the loan term. This makes it more difficult to budget for your repayments, but you might end up saving money as well.
TIPS FOR GETTING BOAT FINANCE WITH BAD CREDIT
Having bad credit isn’t the end of the world, you may still be able to get approved for a boat loan. There are several things you can do to demonstrate to lenders that your current financial situation is good, even if you have bad credit, and make your application more attractive to them. These include:
• Always be honest in your application
• Make sure your bank accounts don’t get overdrawn or dishonoured
• Save at least a little bit every time you get paid.
GET PROFESSIONAL FINANCE ADVICE
Getting help from a finance broker is always a good idea, whether you have bad credit or not. They will be able to give you tailored advice for your boat loan so that it matches your needs. And if you need to upgrade the car that’s going to tow your new boat, they will be able to help you with a car loan as well. And if you do have bad credit, a good finance broker will be able to advocate the strengths of your application to lenders on your behalf.