Lloyd's Maritime and Commercial Law Quarterly
THIRD-PARTY AGREEMENTS IN THE SALVAGE CONTEXT
Bevan Marten*
Article 7 of the Salvage Convention 1989 permits contracts to be annulled or modified by a tribunal if they were entered into under undue influence or if the influence of danger and their terms are inequitable. This article discusses the applicability of Art.7 to contracts between salvors and third parties. While there is no question that Art.7 applies to contracts for salvage services between salvors and the owners of vessels or property in distress, it is arguable whether it extends to this third-party situation. The issue recently arose in litigation before the High Court of New Zealand relating to the Rena disaster. As this litigation settled out of court, the author has examined whether this argument was likely to succeed, and concludes that such contracts would not fit within the scope of the Convention.
1. Introduction
It has long been recognised that contracts made in the context of salvage operations have the potential to be unfairly one-sided. One party has a ship or other property in distress, and is facing serious loss of life or damage to the environment if things take a turn for the worse. The other party is not in distress, and happens to have the resources necessary to provide assistance. To address this imbalance of bargaining power both national courts,1 and more recently the international community by way of Art.7 of the Salvage Convention 1989,2 have adopted an approach whereby agreements made in the context of salvage can be assessed against what can be summarised as a broad “fairness” standard. If necessary, contract terms demanded by a salvor, and agreed to by the owner of a vessel or property in distress, can then be adjusted by a tribunal to reflect a more reasonable arrangement given the services actually rendered.3
* Lecturer, School of Law, Victoria University of Wellington. Thanks are due to David McLauchlan for his comments on an earlier draft.
1. See eg Post v Jones (1857) 60 US 150; Akerblom v Price (1881) 7 QBD 129 (CA); The Rialto [1891] P 175 (Adm Ct); The Port Caledonia and the Anna [1903] P 184 (Adm Ct); see also Richard Cooper, “The FS Dethridge Memorial Address 1996—Between a Rock and a Hard Place: illegitimate pressure in commercial negotiations” (1997) 12 MLAANZ J 1, 1–9; Olivia Lennox-King, “Laying the Mark to Port and Starboard: Salvage Under Duress and Economic Duress at Contract Law” (2007) 21 Aust & NZ Mar LJ 32, 46–48; Martin Davies, “Whatever Happened to the Salvage Convention 1989?” (2008) 39 JMLC 463, 499–500.
2. International Convention on Salvage, done at London 28 April 1989, 1953 UNTS 165 (hereafter “Salvage Convention 1989”); the Convention currently has 64 parties, representing 51% of world shipping tonnage, including Australia, Canada, New Zealand, the United Kingdom and the United States of America. The precursor to Art.7 of the Salvage Convention 1989 was Art.7 of the International Convention for the Unification of Certain Rules of Law related to Assistance and Salvage at Sea and Protocol of Signature, done at Brussels 23 September 1910 (1913) UKTS 4 (hereafter “Salvage Convention 1910”).
3. On the operation and interpretation of Art.7 generally, see Nicholas JJ Gaskell, “The 1989 Salvage Convention and the Lloyd’s Open Form (LOF) Salvage Agreement 1990” (1991) 16 Tul Mar LJ 1, 13–15; Lennox-King (2007) 21 Aust & NZ Mar LJ 32, 50–51 and 61; John Reeder (ed.), Brice on Maritime Law of Salvage, 5th edn (London, 2012) (hereafter “Brice”), [5.163–5.165]; FD Rose, Kennedy and Rose on the Law of Salvage, 8th edn (Sweet & Maxwell, London, 2013) (hereafter “Kennedy & Rose ”), [10.106–10.109] and [10.168–10.174].
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