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Marine Salvage and the Environment: New Zealand and the 1989 Salvage Convention

Danielle Aberdein

.<; : 4 I INTRODUCTION :.' :;.' . A,...,.., The of salvage has formed a central part of the wider maritime law relating to marine perils and safety at sea since early times. In recent years, however, salvage law has undergone some significant changes. With the development of large tankers and the shipment of potentially hazardous cargoes the threat to the marine environment has increased. Traditional notions of salvage law -most notably the principle of 'no cure -no pay' 1 - are not able to take account of these environmental concerns satisfacto- rily. The NCNP principle means that a salvor is not entitled to an award for salvage assistance rendered if that assistance does not result in the actual recovery of some property, such as or . Under this principle, a salvor who is successful in averting substantial environmentaldamage will not be rewarded for her efforts if she does not successfully salve any property. The 1989 salvage convention2attempts to address this issue, and in doing so makes a number of revolutionary changes to the , It is the purpose of this paper to examine: first, the problems raised by the interaction of salvage principles and environmentalconcerns; secondly, the practical effect of some of the central provisions of the Convention; and

1 Hereafter referred to as WCNF. 2 Herder referred to as 'the Convention".For the text of the Convention, st?e M, J* J. Gaskell, 'The 1989 dialvage Convention ansl the Lloydes $pen Foam @OQ %lvae Apement 1990' (1991) 16 Sitlane h&r LJ 77-90. 36 (1994) 10 MLAANZ Joumal -Part 1 Marine Salvage & the Environment 37 thirdly, the reasons why New Zealand should incorporate the Convention NCNP. The reasons for these modifications are discussed in Part 11 of this provisions into its domestic law. paper. 1 The courts take a number of factors into account in assessing a fair and reasonable salvage award in the circumstances of the case. Kennedy's Law I1 ENVIRONMENTAL CONCERNS AND THE LAW OF 2. of salvnge7sets out a framework of the elements which are relevant to & SALVAGE calculating the award. This framework is used in the assessment of virtually all modem salvage awards, and includes as relevant factors: the degree of A Introduction danger to the salved property; the degree of danger to the salvor' s property; the skill and conduct of the salvors; and the value of the property as salved. Salvage rests on the principle that those who voluntarily come to the The presence and extent of these and other factors will influence the size of assistance of in distress at sea should be rewarded for their efforts. the award to which the salvor is entitled.8 Traditionally, the right to a salvage award arose where: (i) a legally recognized subject of salvage B Implications of NCNP for the Environment (ii) had come into a position of real danger of damage or destruction, and (iii) a person acting as a volunteer (the 'salvor') While the law of salvage has remained essentially constant over time, the (iv) was successfulin saving at least part of the property from that dangec3 last 30 years have seen a number of significant changes in the shipping industry. The development of very large vessels and greater shipment of It is the requirement of success which gives rise to the principle of potentially hazardous cargoes - especially oil -have increased the pos- NCNP. The importance of the requirement is illustrated in the case law of sible threat to marine and coastal life. Oil may escape from ships for a many countries, including New Zealand and England. For instance, in The variety of reasons, including collision, grounding, fire, explosion or struc- Tojo Maru4 Lord Diplock stated thak5 tural failureg The 1989 grounding of the Exxon Valdez off the coast of Alaska demon- The first distinctive feature [of the law of salvage] is that the person rendering salvage services is not entitled to any remuneration unless he saves the property strated the devastating effect which a major oil spillage could have on the in whole or in part. This is what is meant by 'success' in cases about salvage. environment. The discharge of oil into the marine environment not only reduces the recreational and aesthetic value of the affected area, but can This requirement stems from the need to reward the salvor for her also kill large numbers of fish, seabirds and other species. The Exxon Valdez services. 'T%e salvor's award is paid from a fund constituted by the salved incident caused extensive damage to the Alaskan coast, and estimates have property. If no property is salved, no fund exists? placed the clean-up costs at 1.28 billion dollars.1° Although large spillages Before 1980, the strict NCNP principle was also reflected in both Lloyd's do not occur often, cases such as the Exxon Valdez are illustrative of their Standard Form of Salvage Agreement ('Lloyd's Open Form' or 'LOF') and potentially catastrophic nature.'' the Brussels Salvage Convention 1910. In recent times, however, the tradi- 7 D. W. Steel & F. D. Rose, Kennedy's LAW of Salvage (5th ed, Stevens & Sons, London, 1985) tional position has undergone some significant changes. Both LOP 1990 and 458-459. the Convention considerably modify the application of the principle of 1 8 See for example The Pubniw Virgo [I9751 1Lloyd's Rep 41 (Federal Court of Canada). 9 D. W. Abecassis & R L. Jarashow, Oil Pollutionfnnn Ships: International, 3 C. Hii, MmitimeLAw (2ed. Lloyd'sof London Press Ltd, London, 1985)183.Vessels,cargo and United States Lmu and Practice (2nd ed, Stevens &Sons, London, 1985) 61. and 'freight-at-risk' are all legally recognized subjects of salvage. In addition to actual r 10 H. Hughes, The Control ofoil Pollution in New Zenland -A Review ofthe System (Office of danger, the vessel will also be considered to have come into a ition of danger if there the Parliamentary Commissioner for the Environment, Wellington, 1991) 1. is a reasonable apprehension of damage or destruction (see XWh Mo 1) 119591 2 11 Many attempts have been made in both international law and domestic legislation to Lloyd's Rep 511), The element of voluntariness requires that there is no pre- existing duty prevent the pdution of the seas by the discharge of oil. Most such measures have not on the salvor to help preserve the ship. adequately addressed the environmentalproblem and in general provide only minimal 4 [19721AC242. protection for theseas and marine life, For example, the InterntionalConventimonCivil 5 e n.4,293. Liability for Oil Pollution Damage 1969 ("W),provides a basic strum tor 6 6 &we a3,189. interntionat law concerning oil pollution. In theory, CLC allows the plaintiff to recover 38 (1994) 10 MLMJournal -Part 1 Marine Salvage & the Environment 39 As noted above, the principle of NCNP may have particularly harsh consequences if applied to salvage operations where there is a risk of Coastal states and the general public have a valid concern in ensuring that A strict application of the principle provides no incentive to salvage operations are undertaken and carried out in a manner which the salvor to conduct salvage operations in a manner which takes account recognizes the importance of protecting the environment.13 The import- of the need to protect the environment. First, a salvor who averts substantial ance of the coastal areas of the world - as a source of food, a recreational environmental damage will not be rewarded for his efforts if he is unable resource, and for the plant and animal life they support -provides more to recover any property. Secondly, in practice, the award made to the salvor than an adequate ground for encouraging salvors to protect the marine seldom even approaches 50 per cent of the salved assets. This limits the environment to the greatest extent possible.14 Furthermore, the shipowner potential size of the award available from the outset. The effect of the NCNP himself may actually derive a benefit from the actions a salvor takes to principle is that the salvor has a financial incentive to sacrifice environmen- prevent pollution when salving his ship. By averting or minimizing envi- tal concerns in order to save as much of the imperilled property as possible, ronmental harm, the salvor may effectively protect the shipowner from and so increase the size of the award to which he is entitled. liability for ensuing claims for pollution or other damage (so-called 'liabil- With recent developments in the shipping industry, however, it is clear ity salvage'). that 'success' in the traditionalsense should not be the only important The case of the Atlantic Empress provides a clear illustration of the in the law of salvage. The owners of the salved property are not always the inequitable results which can arise from a strict application of the NCNP only party who may benefit from the performance of a salvage service. principle in situations where the marine environment is at risk. In July 1979, two supertankers, the Aegean Captain and the Atlantic Empress collided off the costs of preventing or minimizing the effects of the spill, the cost of restoring the sea, the coast of Tobago, in the Caribbean. Following the collision the Aegean the loss of &of resoirces and 'envi&nmental damagel:In practice, however, daims f& , Captain was towed to safety with limited loss of cargo, but the Atlantic environmental damaee are seldom successful under the CLC reeime. Often this amears Empress was leaking badly and engulfed in flames. To avoid potential to be because the pLintiff is not able to establish a suffid&t legal interestz& the damage to the coastal environment of the region, salvors towed the stricken environment or because the damage is simply too difficult to quantify. While CLC encourages the protection of the environment to an extent, its effect is largely to ship 300 miles out to sea. Eleven days after the initial collision, the Atlantic compensate plaintiffs for the most basic and necessary costs of dean-up. It is also limited Empress was ripped apart by explosions which caused one death and the in application to pollution damage caused within the territorial jurisdiction of a loss of valuable salvage and fire-fighting equipment. The salvors were contracting state. New Zealand is a signatory to CLC, and Part IV of the Marine Pollution Act 1974 gives effect to the majority of Convention provisions. Other efforts have also working under a LOF NCNP salvage agreement and received no remuner- been made to combat the problem of marine pollution by oil. In 1967, tanker owners ation for almost two weeks' extensive work and expense.15 entered into avoluntary agreement tocompensate governmentsforexpendihtreincurred It seems obvious that the reason for such a result is the equating of 'cure' in preventing or cleaning up oil spills which affected their coastlines. This agreement was or 'success' with some kind of property possessing an arrived salved value. known as 'Tovalop' (Tanker Owners Voluntary Agreement concerning Liability for Oil Pollution). Tovalop aimed to act as an incentive to encourage tanker owners to clean up The difficulty with this approach is that the salvor's efforts clearly did bring spillsvoluntarily, regardless of where legal liability rested. Although around 99 per cent about some 'benefit', by reducing damage to the local coast as well as of registered tanker owners are currently parties to the agreement, it has been protecting the shipowners from potential liability for ensuing claims for demonstrated that the Tovalo fund is not able to meet large claims. In 1971 many oil this companies entered into a sdragreement known as Tristal' (Contract Regarding an pollution damage. In wider sense there had been both 'benefit' and Interim Supplement to Tanker Liability for Oil Pollution), which attempted to meet some 'cure', and as a matter of public policy it seems on1 fair that the salvors of theinadquacies of i ova lop. Cristai aimed to provide supplementaj reimbursement should not have gone unrewarded for their efforts.12' to those who had sustained vollution damaae where the Tovalo~fund was insufficient. However, Cristal also has i& limitations. F& example, althoug6 the maximum amount payable from the Cristal fund is 30 million dollars, this is only alter several (often substantial) deductions have been made. Although both Tovalop and Cristal actively encourage shipowners to adquickly to restore the environment in the event of a spill, it 13 G.Brice, Maritime law ofSalvnge (Stevens dr Sons, London, 1983) 143. is important to note that both have inherent imitations and neither was ever intended to 14 H. A. Versteeg, 'The International and National Response ta the Problems of Marine gemmore than an interim function- In addition, neither a Pollution"(1978) 3 AULR 209,209. position or role of the salvor in cases involving oil pollution. 15 P. Gulthard, 'A New Cure for Salvors?-A Comparative Analysis of the LOF 1980 and 12 See far example above n.9,143-146. the CMIDraft Salvage Convention' (1983) 14 J Mar Law br Com 45,50, 16 Above n.15,51. 40 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 41

C A Common Law Basis for an Alternative Approach? cause any great damage' relevant in fixing a low salvage a~ard.~Finally, in The ~te~erso:~the salvors were denied recovery for salvage services which The availability of awards for 'liability salvage' - where the salvor's were not rendered voluntarily. However, the court calculated the salvage actions remove the prospect of the shipowner being subjected to claims for payment which would have been awarded had the criterion of voluntariness damage sustained by third parties which were caused by her ship has - been satisfied on the facts. In doing so, they noted the 'potential liability' to possible implications for the environment. If salvors are rewarded for third which the salvee was able to avoid through the salvor's actions.= efforts which allow the salvee to avoid liability there is a greater incentive The Whi@ngham was not referred to in any of these cases. for them to carry out salvage operations in a manner which prevents the The cases do indicate a possible basis for liability salvage in , shipowner incurring liability for pollution damage. Clearly, such opera- but their authority on this point may be questionable. First, The tions would aim to cause minimal damage to the environment. Whi~inghamdiffers from the other English liability salvage cases such as However, the status and availability of liability salvage remain doubt- The Bertil and The Gregerso, as the decision suggests that liability salvage is ful. The courts have given only limited consideration to the desirability of on its own sufficient to establish a valid salvage claim. Taken literally, this rewarding liability salvage, and two such cases are discussed below. A means that a salvor would not need to recover any property to be entitled restitutionary basis for liability salvage is also examined. to a salvage award, as long as he had enabled the shipowner to avoid liability. It seems unlikely that Bateson J intended to sweep away the 1 The Whippingham success requirement in the law of salvage without discussing this point in In The ~hippin~ham)~the plaintiffs tug came to the assistance of the depth. Even if this was the intended effect of The Mipingham, his Honour's defendant's ship in circumstances where there was both a threat to the ship , reasoning on this point has not been followed. It is submitted that the more itself as well as a danger that the ship could cause damage to other vessels conservative approach evinced in The Bertil, The Bu lo and The Gregerso is in the vicinity. If the defendant's vessel had caused such damage, the more plausible than that taken in The Mipinghnm.'This approach means owners faced possible claims from those affected third parties. that liability salvage is merely one factor which the courts will take into Bateson J held that the plaintiff's actions constituted a salvage service. account when fixing a salvage award. If this is correct, the cases still require By preventing the defendant's ship damaging other vessels, the plaintiff 'success' in the traditional sense to establish a valid salvage claim. They are effectively eliminated the possibility that the defendant would be subjected not authority for the proposition that the salvor should be able to recover to claims by third parties. By protecting the defendants from the prospect in situations such as the Atlantic Empress, where no property was salved. of liability, the plaintiff had established grounds for a salvage claim. His Furthermore, in all the cases considered here, the issue of liability salvage Honour did not cite any authorities for this proposition of law.'' is mentioned only briefly in the judgments. No consideration is given to the The WiHngham has not been followed or even considered by later courts. possible implications of altering the established position and rewarding the Although several subsequent English cases have considered the issue of salvor's actions in these cases. liability salvage in passing, none have afforded it the same significance it was Secondly, there may even be difficulties adopting the more conservative given in The ~hippin~hmn..'~For example, in The ~ufilo~~~salvors retrieved approach evinced in cases like The Bulfalo and The Gregerso, as there have several breakaway . In assessing the award, the court noted that there been very few such cases in which the factor of liability salvage was held was also 'the question of some damage to 0th in the river." In The to be even relevant to the size of a salvage award. BertilfZ the court considered the fact that the vessel was unlikely 'to sustain or

17 (1934)48 L1 L Rep 49. 18 For a discussion of The Whimrinphmn see above n.13,145-147. 19 A number of decisions rib; & 7'he Whippin* also considered the issue of liability 22 [I9521 2 Lloyd's Rep 176. sahrage to be a relevant'factor in fixing &e khrage award. See for example Five ~t&l 23 Above ~~31,182(emphis added). Barges (1890) 15 P D 142,146-147 and The Merannio (1927) 28 Ll L Rep 352,353. 24 119733 1QB 274. 20 20f1937)58LltReprn 25 Above n.24,28Qa 21 Above n.20,306 (emphasis added)* 26 Brice also submits that the. better approach is that taken in cases such as The Greg-. See above n.13,146. 42 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 43

With respect, the decision of the court in The Mimosa raises a number of In Allseas Marifime SA v ~~~imosa~~a United States court was faced with difficulties. First, the court appears to be saying that they would not permit a claim for liability salvage. In this case, the appellant salvor's tug had recovery for liability salvage on the facts of the case as this would allow the prevented the respondent's ship from colliding with nearby oil rigs and appellant's to recover twice for the same factor - the salved value of the platforms. As a result of the salvor's actions, the shipowner avoided poten- vessel ($400,000). This seems wrong. There is no good reason why the tial liability for damage to these structures, as well as liability for pollution salved value of the ship ($400,000) and the avoidance of potential liability damage to the local coast. In addition to a traditional salvage claim, the to third parties (also $400,000) should not both be relevant factors in salvor argued that the salvage award should reflect the avoidance of the assessing the salvage award. This would not allow the salvors to recover shipowner's liability to third parties as a result of the salvor's efforts. twice for the same factor, as the two amounts clearly represent different The court recognized that the appellant's actions had prevented The factors. Even if the owner's liability was limited to $400,000, the appellant's Mimosa from colliding with the oil rigs.28 However, the respondent ship- assistance still enabled the owners to avoid liability for this amount in owners had successfully limited their liability to third parties to an amount addition to the salved value of the vessel, and the salvor should have been not exceeding the salved value of the vessel after the col~ision.~~nthe facts given credit accordingly.32 of the case, this value was estimated at approximately $400,000. The Secondly, there are certain difficulties with the court's statement thatJ3 respondent's successful limitation of liability meant that even if The Mimosa had not been salved and had collided with an oil rig worth millions of While the owner of [The Mimosa] might not have benefited from the avoidance dollars, the shipowner would still have been liable for no more than of damage to third parties, the third parties surely did, and the salvor's $400,000. The court reasoned that this averted loss ($400,000) had already contribution should be recognized. been considered in fixing the salvage award, in the form of the salved value of the vessel. It was therefore held that the appellant's actions did not The court here seems to be suggesting that if the respondents had not protect the shipowner from any further liability to third parties, and their been able to limit liability, third parties who had benefited from the salvor's claim for liability salvage was accordingly rejected.30 actions should also compensate the salvor. This seems highly dubious. The However, the court recognized the value of liability salvage, noting grounds on which third parties could be required to compensate the salvor that3' for the avoidance of possible damage are tenuous. Restitution may provide a possible basis for requiring payment by thiid parties to the salvor. There is considerable merit, nonetheless, in the position that salvors should be compensated for liability avoided .. .While the owner of [The Mimosa] might However, there are also problems with a restitutionary framework for not have benefited from the avoidance of damage to third parties, the third liability salvage (see below Part Il C 3). parties surely did, and the salvor's contribution should be recognized. Thirdly, if vessel owners are able to limit their liability to the salved value of the vessel, as they are in the United States, the application of the Due to the respondent's successful defence of limitation of liability, the concept of liability salvage is limited. If the approach taken by the court in court was not able to give a definitive ruling on the legal validity of a claim The Mimosa is applied, the salvor will rarely be compensated for liability for liability salvage. However, the court's approach seems to indicate that 32 This suggested approach is in line with statements madeby the District Court ofCalifornia liability salvage awards are at least a possibility in cases where the ship- in WestmMarineSewices v Heerm Marine Contractors, SA 621 F Supp 1135 (DCCal1985). owner cannot limit liability. To date, The Mimosa has not been followed or The court applied the provisions of the Brussels Salvage Convention 1910 and held at considered by later courts: 1140 that liability salvage could not be considered as a relevant factor in the case as it did not come within the contemplation of the Convention. However, the court explainedthe 27 12 F 2d 243 (5th Cir, 1987). concept of liability salvage as the principle 'that salvors, in addition to being remunerated 28 Above ~1~27,245. out of the salved property fund for services to ship and cargo, should also be entitled to 29 Under the Limifatia $LaIi& Act 1851. See 46 USC 183-188 (1982). receive additional remuneration for relieving shipmers (and cargo interests) from 30 &we n.P.247. liability to third parties which they might oCherwise have but for the salvor's efforts' (emphasis added). 33 Above n,27,247. 44 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 45 avoided. However, even if the alternative approach suggested above is adopted, so that the salved value and liability avoided are considered to be 3 A restitutionary analysis separate factors, under United States law the salvor's award is unlikely to It is at least ar able that the underlying basis for a salvage award is be significantly increased. This is because the liability the salvor enabled restitutionq.% this is so, then it may be possible to fit the notion of the shipowner to avoid would be limited to the salved value of the liability salvage into the framework of the law of restitution, which would shipowner's vessel (in accordance with the Limitation of Liability Act 1851)~ help strengthen the concept's validity and status. and the incremental enhancement of the award would also be limited A restitutionary claim is established when: accordingly. This would not be such a problem in New Zealand, as the (i) the defendant has been enriched by the of a benefit; Shipping and Seamen Act 1952 provides that shipowners' liability is not (ii) the defendant has been so enriched at the plaintiff's expense; and based on the value of the ship (which if salved, may be very low), but on (iii) it would be unjust to allow her to retain the benefik3' its gross tonnage.= Furthermore, the New Zealand statute provides that This is the principle of unjust enrichment. The object of any restitution- claims for salvage and claims for oil pollution damage which are sub'ect3k to ary claim is to restore to the plaintiff any benefit which the defendant has the Marine Pollution Act 1974 are not subject to limitation of liability. This unjustly gained at the plaintiffs expense. means that under New Zealand law, any liability which the salvor may 'The main difficulty in fitting the law of salvage into a restitutionary frame- enable the shipowner to avoid is potentially higher than that possible under work lies in the fact that the salvage award does not merely aim to munerate the current United States legislation. the salvor's expemes, but also aims to reward her conduct in the circumstances. In conclusion, the decision of the court in The Mimosa does provide a Thf? court does not assess the amount of the salvage award merely by reference basis for rewarding claims for liability salvage. However, the fact that the to those benefits to the salvee which were obtained at the salvor's expense, as is decision has not been followed, and the problematic nature of much of what the case in restitutionary claims. Fa- such as the skill and conduct of the salvor was said in the case must cast some doubt on its authority. In any event, are considered in fixing the award. Furthermore, public policy considerations - the decision in The Mimosa indicates that the salvor must recover at least eqm5ally the need to encourage similar efforts in the future - will also be some property before a claim for liability salvage will be considered." relevant to the court in calculating the award. 'These fadors cast doubt on the Liability salvage is unlikely to be more than one factor which will enhance classification of salvage as grounded in the law of mtitution. At best, a an existing salvage award. The decision provides a possible basis for restitutionary basis for the general law of salvage is a possibilitytyPO increasing salvage awards in certain cases where only a small amount of Classdying liability salvage as restitutionary in character is open to the property is saved, but the salvor's actions enable the shipowner to avoid same objection which may be raised in respect of traditional salvage. As extensive liability to third parties for pollution damage. However, the mere noted above, the measure of the award is not assessed by direct reference possibility that a reward for liability salvage may be available is unlikely to the salvor's expenditure (as would be the case in a restitutionary claim), to be any great incentive to the salvor to make environmental considera- but also takes into account other policy factors. With liability salvage, this tions paramount when carrying out salvage operations. objection is even stronger. The salvor may have incurred no greater loss in enabling the salvee to avoid liability to third parties, but the concept of liability salvage demands that the salvor be rewarded for these actions. If 34 Above 11.29. 35 Section 461(l)(a)(ii)of the Shipping und Seamen Ad provides that a shipowner may limit her liability in respect of claims for damage her ship causes to property. The limits of 38 See for example, P. Birks, An Introduction to the Law of Restitution (Clarendon Press, liability are calculated using the gross tonnage of the ship and International Monetary Oxford, 1989) 307308. Fund (I?@)special drawing rights (s.463). The method of calculating these limits of 39 R Goff & G. Jones,The Law of Restitution (3rd ed, Sweet &Maxwell, London, 1986) 16. It liability is contained in s.462(3). is also possible for the plaintiff to claim restitution for the unjust enrichment of the 36 Sections 461(2)(a)(i)and 461(2)(a)(ii). defendant when such enridunent was brought about by doing some wrong to the 37 For a discussion of the dedsion in The Mimm, see J.T. Brown 'AlIseas fin'time SA v The plaintiff. A 'wrong' in this context means a breach of some duty (legal or equitable), and Mhw:Has the Keel Been Laid for Liability Salvage in the Fifth armit?"(1988) 19 1 Mar isnotlimiaed to the ' ' of the word, TI& aspect of unjust dhentis LAW & Corn 583. not relevant to this paper, and will not be considered here. 40 Aboven.38,305? 46 (1994) 10 MLAANZ Journal - Part 1 Marine Salvage & the Environment 47 the object of a restitutionary claim is to restore to the salvor those benefits which the salvee has obtained unjustly at the salvor's expense, rewarding 1989. It should be noted that changes which had been made to the LOF in liability salvage would seem to go far beyond this aim. This factor would 1980 played an important role in the content of the final Convention text." seem toweigh against a restitutionary underpinning for liability salvage. The aim of the Convention is set out in the Preamble. It affirms that the State Parties are 4 Conclusion It is difficult to establish a common law basis for an alternative approach Conscious of the major contribution which efficient and timely salvage operations can make to the safety of vessels and other property in danger and to the law of salvage. As already noted, it is difficult to find a basis in to the protection of the environment restitution for rewarding liability salvage. At best, it can be said that cases such as The Whippingham and The Mimosa provide a basis for enhancing and are aware of the need to provide 'adequate incentives' to salvors in salvage awards in cases where some property is recovered and the salvor's such cases. The Convention applies to any proceedings in a signatory actions also protect the shipowner incurring liability to third parties. How- stateP3 Although the Convention retains most of the traditional rules of ever, even if such an approach is adopted, under current law the size of the salvage, it also creates an important exception to the principle of NCNP by award is still limited to the value of the salved property?1 and any enhance- providing for the payment of 'special compensation' to the salvor who has ment of the award would be restricted accordingly. This fact also limits the been unsuccessful in saving property but who has made efforts to prevent significanceof liability salvage for the environment. A literal interpretation damage to the en~ironment.~Article 29(1), however, provides that the of The Whippingham, which indicates that liability salvage may on its own Convention will not be brought into force until one year after the date on constitute a ground for a salvage award must be regarded with scepticism, the which fifteen states have consented to be bound by its terms. This is a and decision has not received any subsequent judicial support. The comparatively high requirement to be met and it is unlikely that the dubious nature of this common law approach and its limited application Convention will enter into force for many years45At the time of writing, in the environmental context further increase the significance of the Con- only five states have acceded to the Convention's vention, which will now be considered. B Relevant Provisions

I11 THE MOVEMENT FOR CHANGE: THE CONVENTION 1 Article 1 -definitions Article 1sets out the relevant definitions for the purposes of the Conven- A Introduction tion. Article l(a) provides that a 'salvage operation' includes any action Traditional salvage principles were codified in the Brussels Convention on taken to assist a vessel 'or any other property' in danger. The definition of Salvage 1910, which received widespread international acceptance. How- 'property' in article I@) as property 'not permanently attached to the ever, since that time both the shipping and salvage industries have seen shoreline and includ[ing] freight at risk' appears to expand the traditional many changes in operation and practice. The increased carriage of large subjects of salvage. However, article 3 provides that the Convention does quantities of oil, the growing threat to the environment and the inadequa- not apply to oil rigs when in location and engaged in exploration. cies of the NCNP principle in certain situations were among the factors A significant definition is that of 'damage to the environment' in article which prompted the International Maritime Organization (IMO) to request l(d). This term means that the Comitd Maritime International (CMI) draft an updated Salvage Convention. Consequently, the CM Draft Convention was produced in 42 G. Brice, 'The New Salvage Convention: Green Seas and Grey Areas' [I9901 Lloyd's Mar & Corn L Q 32,32-33. 1981. After a number of alterations and amendments the new Salvage 43 Article 2 Convention was finally signed at the London Diplomatic Cmference in 44 Article 14. 45 For example, the limitation Convention 1976 the acqtanse of 12 states and 41 Abven,7,459. took ten years to enter into force. 46 Mexico, Nigeria, Egypt, Oman and Saudi Arabia. (1994) 10 MLAANZ Journal - Part 1 Marine Salvage & the Environment 49 substantial physical damage to human health or to marine life or resources in coastal or inland waters or areas adjacent thereto, caused by pollution, 2 Articles 6 and 7 -salvage contracts contamination, fire, explosion or similar major incidents. Article 6 preserves general notions of freedom of contract51but recognizes Several comments may be made about this definition. First, the damage the need for exceptions in certain cases. First, article 6(3) stipulates that the must be 'substantial', which indicates that the threat of small-scale pollu- parties cannot contract out of the duty to prevent or minimize damage to tion is not sufficient for the relevant provisions of the Convention to the environment contained in article 8. Secondly, article 7(a) provides that operate. Secondly, the environmental damage must occur in coastal or certain inequitable agreements may be annulled or modified by the Court. inland waters, which means that the Convention encompasses the territo- rial sea and possibly extends to include the exclusive economic zone.17 3 Article 8 -duties However, the definition excludes incidents on the high seas, where serious Article 8 sets out the obligations of the parties to the salvage operations. harm to the environment is still a possibility!8 Thirdly, the damage must Both salvor and salvee are now required to exercise 'due care' to prevent be caused by one of the 'major' causes listed. When the reference to 'major or minimize damage to the environment. Note should be taken of the use incidents' is read together with the earlier reference to 'substantial physical of 'due care' as opposed to the more common requirement that the salvor damage' it seems clear that widespread and serious damage is required use his 'best endeavours' to protect the environment. Both LOF 1980 and before the definition is satisfied. LOF 1990 (prima faciels2 use the 'best endeavours' obligation. The differ- It is submitted that the definition of 'damage to the environment' is ence between the two phrases is discussed below in Part 111 C of this paper. overly restrictive. The threat of pollution damage on a limited scale should The duties imposed under Article 8 of the Convention pose several not be excluded as a relevant factor to take into account in assessing a problems. Immediate questions are raised as to the legal nature of the salvage award. Rewarding such endeavours would not lead to excessive duties, and the means which will be used to enforce them. First, the awards for minor actions, as the size of the award would be ad'usted to a9 wording of article 8 makes it clear that the duties are only owed inter partes accord with the nature and size of the threat to the environment. and do not envisage enforcement by governments or other third parties. Furthermore, the definition is also restricted by its limited geographical This may appear unsatisfactory, but it is legally correct that the Convention application. The environmental damage envisaged by the Convention duties should bind only the parties to the salvage agreement.53Domestic must occur in 'coastal or inland waters or areas adjacent thereto', which legislation is a more appropriate place to provide for duties enforceable by encompasses a state's territorial sea and exclusive economic zone but does state and other interests not party to the salvage contract. not apply to the threat of pollution on the high seas. Although this may Secondly, there is the related problem that the Convention itself does appear to offer sufficientprotection to the environment of a coastal state, not provide for the imposition of penalties upon those who contravene the easeand speed with which an oil slick can drift and disperse means that duties owed under article 8, although in practice, it may be possible to the definition is arguably too restrictive.= impose penalties in respect of actions which are in breach of these duties. For example, if article 8 is enacted into domestic law, this may create a statutory duty, the breach of which may give rise to a claim for damages or 47 E. Gold, 'Marine Salvage: Towards a New Regime' (1989) 20 J Mar Law & Com 487,497. Under s.9 of the Territorial Sea and Exclusive Economic Zone Act 1977, New Zealand's an injunction. Furthermore, the incorporation of article 8 into LOF 1990 exclusive economic zone is 200 nautical miles from the baseline (low mark). 48 Above n.2,39. 51 Artide 6(1). 49 Above n.2,39. 52 LOF 1990 incorporates, inter alia, art 8 of the Convention. Article 8 imposes an obligation 50 The problem of pollution which occurs on the high seas has no easy answer. Even if it on the salvor to exercise 'due care' in the course of salvage operations to prevent or were possible to obtain compensation from shipowners for incidents occurring on the minimize environmental harm. However, d l(a)(i) of UIF 1990 requires that the salvor high seas, the difficultiesinvolved in assessing such compensation remain. There is alfo to use his 'best endeavours' to protect the environment while performing salvage a farrther question as to whom such com tion would be payable. Although spillages operations. This disa ancy is diiin detail in Part m[ C below. on the high seascan and do affedthecoastal environment,suchdamage may takemonh 53 Both the common IawTbrmne of @vity (see for example Tur&le v Ahrm(1861) 1B k or even years to manifest itself, and it may be difficult to establish that a patticulaa S 393; 121 ER 762) and the apeof the CoaMs (RBityI Act 1982 mean that in this incfdent actuaIty caused particular damage. sibation, a coastal state would not be able to enforce a salvage contract made by salvor and salvee. 50 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 51

means that breach of the duties in the LOF context will constitute breach of mental consequences will be sufficient to counteract this risk. Conse- contract, giving rise to contractual remedies such as damages. However, quently, it may be better to act cautiously and apply a narrow interpretation the present position is unsatisfactory. The existence of penalties for contra- of article 13(l)(b).This would encourage salvors to perform salvage oper- vention of the duty to protect the environment should not depend on the ations in any circumstances, while the possibility of enhancement under chance enactment of the duty or the use of LOF 1990 in a particular instance. article 13(l)(b)and special compensation under article 14 would still act as The Convention itself should provide for such penalties, perhaps by de- incentives to the salvor to take measures to protect the environment. creasing (or even nulhfying) the award payable to the salvor under article Article 13(2) of the Convention preserves the basic principle that each 13. This would further encourage the salvor to consider any environmental salved interest is to contribute to the salvage award according to the implications when performing salvage operations. proportion that its salved value bears to the total. Thus, both the shipowner and cargo interests are liable for payment of an article 13 award. Article 4 Articles 12 and 13 -conditions and for salvage award 13(2) also contains a further alteration to the current legal position relating Article 12 preserves the traditional principle of NCNP by making a 'useful to liability for salvage operations. Under current English and New Zealand result' a prerequisite to the payment of a salvage award under the 1989 law the salvor is required to proceed separately against vessel and cargo Convention. However, article 14 provides for certain exceptions to this interests in order to obtain Under article 13(2) the salvor may basic rule and is discussed below in Part I11 B 5 of this paper. now proceed directly against the shipowner for the full amount; the ship- The criteria relevant in assessing the salvage award are set out in article owner then claims contributions from cargo in .58 This 13. The factors listed are drawn largely from the case law and the Brussels Change essentially transfers the risk of recoverin contributions owed by Salvage Convention 1910, and include such traditional considerations as cargo interests from the salvor to the shipowner?'Given the fact that both the salved value of the vessel and other and the nature and the general law of salvage and the Convention aim to encourage salvors to degree of danger.55 The most significant change to the list of relevant carry out salvage operations, the transfer of risk seems justified. criteria is made by article 13(l)(b) which stipulates that in assessing the salvage award the court must take into account 'the skill and efforts of the 5 A&'cle 14 -special compensation salvors in preventing or minimizing damage to the environment'. Hence, Article 14 contains a vital exception to the traditional NCNP principle. It the size of the salvage award may be increased in recognition of the salvor's provides for compensation to the salvor in situations where the salvage efforts to protect the environment. There are no firm guidelines as to how award made under article 13 is insufficient to cover the salvor's expenses much the award should be increased and it seems to be a matter for the and extends to cover those instances in which no property is recovered by discretion of the court in each individual case. However, an award made the salvor. The effect of article 14 is that a salvor may recover 'special pursuant to article 13is restricted to the salved value of the vessel and other compensation' in two particular cases: property.56To this extent the traditional position remains intact. (i) Under article 14(1) the salvor is entitled to reimbursement of his Article 13(1)@)may also operate to diminish the award payable to the expenses if he has been involved in salvage operations where there salvor, It is possible to argue that a salvor who manifests a blatant disregard was a threat of environmental harm and he has not earned an award for possible environmental harm in carrying out salvage operations may under article 13 at least equivalent to his expenses. There is no find his award decreased by a court applying a liberal interpretation of requirement that the salvor recover any property to be entitled to such article 13(l)(b).The difficulty with this approach is that it risks discouraging compensation, nor is the salvor required to be successful in actually salvors from undertaking salvage operations where the threat of pollution exists. It is difficult to say whether the possibility of enhancement under article 13(l)(b)coupled with a high threshold test for disregarding environ- 57 See for example China-Pnfifc SA v Food Co~po~ntionof lndkt, The Winson [I9791 2 All ER 35. 54 Article lB(l)(a). 58 This is the practice in several states, including the Netherlands. 55 Mcle134 l)(d). 59 N. J. J. Caskell, The Enactment of the 1989 Salvage Convenficm in English taw: Polify tifi Article 13(3). Issues' [I9901 Lloyd's Mar br Corn LQ 352,358. 52 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 53 preventing or minimizing environmental damage - the mere existence of an environmental threat is all that is needed. will be made more frequently, as they will often be higher than their article (ii) Under article 14(2) a court or tribunal has a discretionary power to 13counterparts. Such a result would mean that cargo interests are less likely increase the award payable to the salvor under article 14(1) by up to to have to contribute to any payment made to the salvor under the Con- 30 per cent in cases where he has secured environmental success by vention. actually preventing or minimizing harm to the environment. The court To clarlfy the situation, a Rule of Interpretation was added to the text has a further power to increase the salvor's award by up to 100 per of the Convention in the form of a 'common ~nderstandin~'.~~The 'Com- cent if it deems it 'fair and just' to do so. As is the case with article 14(1), mon Understanding' adopts the second of the two approaches outlined under 14(2)the salvor is not required to save any property to be eligible above, and states that the court is not obliged to make an award under for the increased payment. article 13 up to the maxirnum salved value of the salved prgerty before Special compensation under articles 14(1) and 14(2) is payable by the assessing the special compensation payable under article 14. shipowner alone: cargo interests are not compelled to contribute. The total In order to demonstrate how article 13and article 14 operate in practice, special compensationavailable is payable only to the extent that it is vater let us consider a hypothetical situation where a salvor carries out salvage than any other amount recoverable by the salvor under article 13. This operations on a stricken oil tanker stranded off the New Zealand coast. The prevents the possibility of double recovery by the salvor under both article salvor prevents the ship from grounding, and the salved value of the 13 and article 14. property recovered is $100,000. Of this sum, $40,000 is the salved value of The relationship between articles 13 and 14 is central to the operation the ship, and the other $60,000 is represented by cargo interests. Further- of the Convention. While article 14(4) precludes double recovery by the more, the salvor is also successful in averting damage to the marine and salvor under the Convention, it does not resolve the question of how the coastal environment of the region. Her expenses 'reasonably' incurred in court is to assess the award payable under article 13. From the text of articles the course of the salvage operations are $50,000. 13 and 14 alone, the court has two options. The court will begin by assessing the salvor's award under article 13. The court's first option is to begin by making an award under article 13 The award will be fixed by taking into account factors such as the salved up to the maximum value of the salved property, before considering special value of the vessel and other property (article 13(l)(a));the salvor's skill compensation under article 14. If this approach were adopted, the court and effortsin preventing or minimizing damage to the environment (article would be obliged to fix high awards under article 13. It is likely that such 13(l)(b));and the salvor's expenses (article 13(1)(f)).Under article 13(3) the awards would be higher than any amount payable under article 14. As the salvor's award may not exceed the salved value of the property - in this salvor cannot recover under both provisions, the higher article 13 payment case $100,000. In such circumstances a court may decide that on balance, would prevail.61 In contrast with any special compensation payable under the salvor is entitled to an award of $40,000 under article 13. Ship and cargo owners will contribute rateably. Hence, $16,000 is payable by the ship- article 14, article 13 requires both the shipowner and cargo interests to an contribute to the award. This raised fears that the Convention would lead owner; $24,000 by cargo interests (article 13(2)). Such award does not to greatly increased awards against cargo interests, due to the relative contravene the Common Understanding, as the court has not made an award under article 13 up to the max& salved value of the property values of ship and cargo. The second, and more likely option for the court is to take into account ($100,000). the possibility of compensation under article 14 in determining what con- The court will then look at compensation payable under article 14. In stitutes an appropriate award under article 13. This approach would mean this case there are three possibilities as to the size of the final award. that awards made by the court under article 13 are likely to be lower than First, special compensation under article 14(1)is definitely available to the salvor. As the ship threatened damage to the environment and the if the first option was adopted. Consequently, payments under article 14 award made under article 13 ($40,000) is not at least equivalent to the

62 Attachment 1. 63 D. J. L. Watkins, 'The Salvage Convm~on1989- Who Pays?"lW] L10yd"s Mar & Corn LQ 416,418. 54 (1994) 10 MLAANZ Journal Part 1 - Marine Salvage & the Environment 55 salvor's expenses ($50,000), the requirements of article 14(1) are satisfied, and the salvor is entitled to have her expenses remunerated. Such compen- Secondly, cargo interests are not required to contribute to an article 14 sation is payable only to the extent that it is greater than any award payment. Although shigand cargo interests contribute rateably to an award under article 13, special compensation is payable only by the recoverable under article 13. This means that the shipowner is required to contnibute a further $10,000 in addition to the article 13 payment, to bring shipowner.66 If the shipowner is entered in a P & I Club, such liability is the salvor's award up to $50,000. Therefore, in total the shipowner is now covered, and no real problems of recovery arise. However, if this is not the required to contribute $26,000 ($16,000 plus $10 000), and cargo interests case and the shipowner has insufficient assets to meet the in personam claim $24,000. against him, there may be difficulties with an in rem action. This is because Secondly, the court may decide the salvor's actions deserve a greater 'special compensation' is not 'salvage' in the traditional sense, and would reward than is available under article 14(1). If so, they may increase the not form part of the list of maritime recognized at common compensation payable to the salvor under article 14(1)by 30 per cent. If this Furthermore, it does not seem equitable that cargo owners are not liable option is taken, the salvor is then eligible for a total of $65,000 in special to contribute to a special compensation payment under article 14. In the compensation ($50,000 plus 30 per cent of $50,000). Once again, this amount past, cargo owners have argued that they should not be liable for environ- is payable only to the extent that it exceeds any award made under article mental damage because they have no control over the actions of the carrier. 13. The article 13 award has already been fixed at $40,000. Hence, a further Consequently, cargo interests argue that they are an 'innocent' party to any $25,000 is payable by the shipowner if this option is used. Therefore, in total, incidents involving the carrier which cause pollution damage. However, the shipowner is now required to contribute $41,000 ($16000 plus $25,000), there are major policy objections which may be raised in response to such cargo interests $24,000. arguments. Fit, it is often the cargo rather than the ship which causes Thirdly, if the court deems it 'fair and just' they may increase the environmental damage. While it may be true that a cargo owner is unable compensation payable to the salvor under article 14(1)by 100 per cent. If to control the actions of the carrier vessel, cargo interests clearly form part this option is taken, the salvor is then eligible for a total of $100,000 in special of the overall commercial enterprise. They should therefore assume at least compensation ($50,000 plus 100 per cent of $50,000). Once again, this some responsibility for environmental damage inflicted in the course of amount is payable only to the extent that it exceeds any award made under that enterprise. Secondly, cargo owners may actually derive a benefit from article 13. Hence, a further $60000 is payable by the shipowner if this option salvage activities which protect the marine environment. There have been is used. Therefore, in total, the shipowner is now required to contribute several recent salvage operations in respect of ships which posed a threat $76,000 ($16,000 plus $60,000), cargo interests $24,000. to the environment which were undertaken only through the inducement There are several deficiencies and confusing aspects in the 'safety net' of the 'safety netf provision and which resulted in the recovery of a provided by article 14. First, there are no guidelines offered as to the sigruficant amount of cargo.68 circumstances which make it 'fair and just' for a court to increase the special C Interface with LOF 1990 compensation up to the maximum amount payable under article 14(2). This Clause 2 of LOF 1990 incorporates four key provisions of the 1989 Conven- matter is left to the court's discretion. However, it seems likely that it is tion: article 1 (definitions); article 8 (duties); part of article 13 (criteria for professional salvors who (because of their substantial investment in anti- salvage award); and article 14 (special compensation). Such incorporation pollution craft, equipment and employees), would be likely to be viewed gives these provisions contractual effect in all salvage operations carried as deserving of greater encouragement to continue providing their ser- vices.dq If this is true, this situation would be unlikely to arise in the New Zealand context, although the courts may also deem particularly meritori- ous efforts by amateur salvors to be worthy of an increased payment under 65 Article 13(2). article 14(2). 66 This is made clear by art 14(1). 67 However, the Admiralty Ad 1973 does not define 'maritime '. This means that it may be possible to extend the categories of claim which attract a lien under the Act to indude special compensation payable under art 14 of the Convention. 68 Above n.56, -501. (1994)10 MLAANZ Journal -Part 1 Marine Salvage & the Environment out under an LOF agreement. It also raises a number of problems of interpretation. corporated article 14 are limited to those which are available for breach of It is unclear whether the incorporation of article 1 and the Convention contract, such as damages. Such a remedy is also subject to all the problems definitions makes the definitions applicable to the whole of LOF 1990 or which are associated with an in personam action. merely to the other incorporatedprovisions. General contractual principles The incorporation of article 8 gives rise to a difficulty of interpretation. require that the incorporated terms are construed in the context of the This is caused by overlaps and possible conflicts between article 8 and the contract into which they have been incorporated. This means that the text of LOF 1990. The problem concerns the standard of care required of the incorporated terms will be taken to form part of the contract to the extent salvor. Under article 8 of the Convention, in carrying out the salvage that they do not conflict with anything in the incorporating document. Any operations the salvor must exercise 'due care' to prevent or minimize incorporated term inconsistent with the incorporating document will be damage to the environment. However clause 1 (a)(i) of LOF 1990 requires disregarded as in~ensible.~~In the case of LOF 1990 and the incorporated that in salving the property the salvor use her 'best endeavours' to protect Convention terms this would mean that the definitions do apply to the the environment from harm. The difference between the two phrases is not whole of the LOF contract, provided they are not incompatible with any- altogether clear. The obligation to use 'best endeavours' may require the thing in the form. For example, the Convention definition of 'damage to the salvor to exercise a greater degree of skill and care than a reasonable person environment' seems quite consistent with the provisions of the LOF, and would in the same circ~mstances.'~This is essentially a subjective test, and the phrase (undefined in LOF) is actually used in clause l(a)(ii)of the form. to an extent the standard is able to recognize the subjective capabilities of However, there are still problems when the effect of a particular defini- the individual salvor. tion or article is to broaden the scope of salvage in comparison with the The res onsibility to take 'due care' is more troublesome. It has been existing law. to which LOF 1990 is subjectV7OAs discussed above? it seems suggested8 that the 'due care' obligation is one of resonableness, which more than likely that until the general law is altered, the incorporated imposes an objective standard of care and considers general standards in Convention articles which alter the traditional position can have no more the salvage industry in determining whether the duty has been discharged. than contractual effect and cannot declare an operation to be 'salva e when If this is correct, the 'due care' undertaking is generally less onerous than that operation would not be classed as such under the general lawg;If this that of 'best endeavours'. However, it is unlikely that the requirement to take 'due care' is as objective as this interpretation suggests. There is is the case, no attaches to the salved property,73 and the salvor seek authority that the standard demands proper and sufficient care as the cannot to enforce payment through an action in rem by arresting and this if necessary selling the relevant property of the salvee (usually the ship).14 circumstances dict~te.~While duty of care is probably less demanding Consequently, the salvor's remedies for non-payment under the LOF-in- than that of 'best endeavours', in certain circumstances, the 'due care' obligation may and often does require extraordinary care?8 Therefore, while 'best endeavours' and 'due care' do not impose identical obligations 69 Thomas U"l")& Co Ltd v Portsea Steamship Co. Ltd [I9121 AC 1; Modem Buildings Wales Ltd on the salvor, there is perhaps less difference between the two standards v Limmerand Trinidad Ltd 119751 1WLR 1281. -and consequently less cause for concern- than there might at first seem. 70 Ciause l(g). If the terms do carry significantly different meanings, the terms of the 71 Part11 B3. 72 Above n.2.23-24. incorporating document ('best endeavours') prevail, and those provisions 73 It should be noted that in somecasesunder article 14therewill not beany salved property. of the incorporated document which conflict ('due care') will be ignored as This raises obvious problems: to what can any possible maritime lien attach, if there is inconsistent.79 no available res? Under the Admiralfy Act 1973 it may be possible to have an in rem action against a sister ship of a vessel on which salvage operations were unsuccessful (s 5(2)@)(ii)).However, the availability of this action would depend upon the inclusion of special compensation as 'salvage' under the Act, as s 5(2)@)(ii)requires the claim to be 75 Above n.7,53&539. of a type specified in certain provisions of s 4. These daims include 'any claim in the 76 Above n.2'41. nabre of salvage' (s 4(l)(i)). 77' Stn'chd v Hugh 163 S E 2d 24,26 (CA, NChCar, 1968). D, C.Jackson, EnfommtltofMaitimeClaims (Ll~yd%oofLoradonPm Ltd, London, 1985) 78 H. C. Campbell Black, BlackTs Law Dlctionn~y(6th ed, West Publishing Co, St Paul, 1990f 216. 499. 79 K. Lewison, The interpretation of Crmtracts (Sweet & Maxwell, London, 1989) 31. 58 (1994) 10 MLANZ~oumal - Part 1 Marine Salvage & the Environment 59 It should also be noted that while the Convention does not provide for any sanction for breach of the duties contained in article 8, incorporation It would seem clear that the adoption of an international document which of the duties in the LOF means that the appropriate remedy for contraven- provides a real incentive for salvors to take measures to protect the envi- tion of the duties is for breach of contract, and damages may be awarded. ronment in the course of salvage operations would be in the public interest Theinclusion of article 13 makes environmental considerations relevant of a coastal state like New Zealand. In their 1992 Review of the Shipping and to the assessment of the salvage award. The size of a salvage award may be Seumm Act 1952" the Maritime Division of the Ministry of Transport enhanced by the salvor's actions in preventing or minimizing damage to recommends that New Zealand adopt the Convention after first incorpo- the environment. This enhancement can arise in a wider range of circum- rating its provisions into domestic law. However, the practical effect of stances than was possible under LOF 1980 which only provided for the adopting the Convention provisions into New Zealand law may actually threat of oil pollution. Through article 1 (also incorporated) the environ- be more limited than the theoretical scope of the document. This is due to mental threat envisaged by the Convention also includes pollution by other a number of factors which are discussed below. substances. B The New Zealand Context The 'safety net' provided for by LOF 1980 is also extended by the incorporation of article 14. First, as with article 13, special compensation Salvage in the New Zealand context differs from the situation existing in also arises in respect of 'damage to the environment', which is a more other countries, such as England or the United States. These differences extensive concept than 'oil pollution'. Secondly, the increment by which must be considered, as they may have important implications for the the payment can be increased is greater than the 15 per cent payable under practical effect of an attempt to incorporate Convention provisions into LOF 1980, and in some cases may be up to 100 per cent of the expenses New Zealand law. incurred by the salv~r.~However, the 'Common Understanding' is not In contrast to states such as Singapore, England and the United States, included in LOF 1990.This omission is unlikely to have any practical effect, a professional salvage industry does not exist in New Zealand. This is as the Common Understanding merely reiterates what is probably the most because major salvage operations are required relatively infrequently in natural approach for a court to adopt in applying articles 13 and 14. New Zealand waters: there is erha s one incident a year necessitating The incorporation of Convention provisions into the text of LOF 1990 is substantial salvage assistance! Co&equently, there is insufficient de- not without difficulties. However, through the inclusion of key Convention mand for salvage operations to support a commercial salvage industry. articles, LOF 1990 represents a significant improvement on LOF 1980. It gives New Zealand salvage services tend to be performed by the regional harb- further recognition to the importance of protecting the environment in the our or port authorities (with respect to major casualties), or undertaken by course of salvage operations as well as recognizing the need to providesalvors individuals on a relatively informal basis (usually in the case of minor with sufficient incentives to do so. The incorporation of certain Convention operations). It should be recognized that the majority of salvage operations provisions into the world's most widely used form of salvage agreement is performed in New Zealand waters relate to much smaller vessels than large vital, as it is likely to be many years befort3 the 1989 Convention enters into container ships or tankers." It could be argued that the lack of a profes- force. In the interim period, fundamental aspects of the Convention gain at sional salvage industry in New Zealand means that any major casualties least contractual effect through their inclusion in the LOF. involving oil will be dealt with by harbour authorities who should not require any financial incentives to intervene in such cases: the desire to protect the coast from pollution damage should be sufficient incentive. IV SHOULD NEW ZEALAND ADOPT THE CONVENTION? However, it is submitted that this is not the case. While harbour authorities do have an interest in acting to minimize environmental damage to the A Introduction

Prima facie, the! incorporation of the Convention provisions into its domes- 81 Maritime Division of the Ministry of Transport Review of the Shipping and Sernn.cn Act tic law appears to present a very attractive propositim for New Zealand. 1952-Discusion Paper (Maritime Dvisionof theMlnistry Transport, Wellington, 1992) 99. So Article lrl(2). 82 P. Dab, 'avage on the klew 03 Above n.82,39, 60 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 61 New Zealand coast, they nevertheless deserve reimbursement of salvage expenses at a minimum. By the operation of articles 13 and 14, the 1989 The provisions of the Shipping and Seamen Act 1952 must be viewed in Convention provides that such actions will be remunerated. light of the approach taken by the courts in cases concerning salvage. The To date, there has not been a shipping accident in New Zealand waters New Zealand salvage cases are generally conservative in both the basic resulting in significant environmental damage. However, the potential for an approach taken and the size of salvage awards made by the court. Success been oil spillage of magnitude certainly exists. The main risk relates to the move- in the traditional sense has always a prere uisite to obtaining an ment of laden oil tankers off the New Zealand coast. Tanker casualties causing award for the performance of salvage services. 'Factors relevant for oil spillages may be the result of various events, including collision, break- consideration when assessing the size of the salvage award are the tradi- down and grounding. The risk of collision is connected to the density of tional elements contained in Kennedy's framework. The size of salvage 5 shipping traffic and is consequently unlikely to occur in New Zealand waters. awards made by the court is generall low -usually between and 10 per However, grounding is more closely related to prevailing weather conditions cent of the salved value of the ship.84' case and there is a real risk of a grounding incident occurring off the New Zealand The most recent New Zealand in which the legal principles of mari- time salvage were discussedand applied is Foster v The Yacht 'Dolphin ~ueen'.~ coast.M In addition, the potential environmental harm likely to result from a this grounded tanker is extensive. First, grounding often results in the loss of the In case the plaintiff had provided assistance to the defendant's yacht during the course of a cyclone. The plaintiff tendered advice to the defendants entire cargo of a laden vessel, unlike situations involving collisions. Very often by it is not the ship itself but its cargo which causes substantial harm to the and went on to ensure the safety of the Dolphin Queen boarding the vessel and removing her from the jetty to which she was mod.The defendants environment. Secondly, groundings are most likely to occur close to shore, $1000 causing widespread damage to coastal life.85 While the Marine Pollution Act had offered the plaintiff an award of for salvage services but in the action 1974 attempts to deals with the problems caused by oil pollution it is inade- before Anderson J the plaintiff was seeking an amount approaching half the as salved value of the vessel (the salved value of the Dolphin Queen being quate, it fails to take into account the potential importance of the role played $237,000). by the salvor in shipping casualties involving oil pollution. approximately Anderson J considered the New Zealand position regarding remuner- The Current New Zealand Position and Its Inadequacies ation for salvage services at both statute and common law. The judge held C that sections 356 and 357 of the Shipping and Seamen Act represented the common law as it had developed over time. Section 356 related to the savin 1 Salvage of life from any vessel and was not satisfied on the factsof the present case.& The New Zealand position regarding the law of salvage is set out in the However, section 557 concerned salvage services in respect of property and Shipping and Seamen Act 1952. Section 356 of this Act provides for situations was satisfied on the facts. His Honour found that the plaintiffs actions in involving lie salvage and section 357 provides for the salvage of property relation to the yacht were within the definition of 'salvage service' in in peril at sea. 'Salvage' is defined in section 2 to include all expenses Halsbury's of ~n~land~'as the possessed the requisite elements of properly incurred by the salvor in the performance of the salvage services." voluntariness, danger and success.91 The Act does not refer to the existence of environmental factors as being relevant to either the salvage service or to the size of the salvage award and Registry AD 1/88,22. as sections 356 and 357 were intended to codify the common law?q it is 88 See for example The Taiarm (1876) NZ Jurist (NS)16. clear that such factors are not relevant to salvage under the Act. 89 This is low even by common law standards. On average, English and Australian awards are reasonably high, and there is certainly more scope for a proportionately largersalvage in 84 For example, the groundings of the Wahine (1968), the Pacific Charger (1981), and the award in these jurisdictions than there is New Zealand. This is illushated by cases such Mikhail Lermontov (1988) illustrate this risk. as Island Tug b &ge Ltd v The Makedonia (Ckuners,J [1980] 1 Lloyd's Reps 481 (salvage award represented 17 per cent of the salved value of the vessel); 7% Lyrma (No 1) [1978] 85 Above n.l0,7. and Crew) 136 Under the Admimlty Ad 1973 a claim for salvage gives rise to a maritime lien on the salved 2 Lloyd's Reps 27(40 per cent); and Bankstme fOzuners* Master v 7% B1uebit;d property (and if applicable, also on any sister ship) which may be enforced by an action 119711 1 Lloyd's Rep 229 (72 per cent). 90 kt rern. See ss.2 4(1Xi), and 5. Aboven.87, 87 See Foster v The Yacht "phkn Queen' U rted, 8 Febmary 1991, High Court Rotoma 91 Above n.87,15. 92 (4th ed., Buttemoh, London, 1980) vol. 43, Shippinwara 1027, p 713, 62 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 63 Thejudge then went on to consider what would constitute an appropri- ate salvage award in the circumstances of the case. While the size of the With respect, it is submitted that the approach taken by Anderson J in award was a matter for the discretion of the court, certain guidelines have the Dolphin Queen is flawed. First, what constitutes a 'reasonable' salvage been laid down in earlier cases. Anderson J referred to the factors held to award should not be at all influenced by the view of the 'reasonable New be devant in BluflHarbour Board and Others v The coasterg4but noted that Zealander'. Such a statement runs contrary to the whole basis of the law of those criteria were not comprehensive and the court must look at all the salvage. Since early times, the salvage award has been fixed with a view to circumstancesin determining a reasonable awardg5His Honour indicated encouraging salvage services through the prospect of generous awards.lo2 that the size of salvage awards in English cases was not always relevant to This fundamental policy ground, together with a consideration of the the New Zealand situation, and went on to say% circumstances of the salvage service are the factors which are relevant in assessing a reasonable award, not what the 'reasonable person' might I take the view . . . that what is reasonable cannot be looked at in a social vacuum. think. The attitude of ordinary New Zealanders, the national ethos, must have some Secondly, his Honour's belief that it would be 'cynical' to believe that New bearing on perceptions of what is reasonable. There is an indication to this effect in &danders need financial incentives to come to the aid of those in trouble at sea the unreported decision of Mr Justice Quilliam in the case.. . of the Westwind V. is muvalistic and devalues the importance of the salvor's role. It is not 'cynical' This decision. . .determines that the general effect of the New Zealand cases must but reasonable to expect those who render valuable salvage assistance to others be taken as a more reliable guide than the English cases. The reason why, of course, to expect some reward for their time, effort, and possible expense. ?he approach is that perceptions of what is reasonable in our mmmunity wiU not necessarily taken by Anderson is undesirable, as it certainly does nothing to encourage reflect exactly the perceptions of a diffwent society on the other side of the world. J salvors to undextake potentially long and expensivesalvage operations, and may even discourage them. If this is so, then the decision is wen more objectionable Anderson J then considered awards made in past salvage cases in both ' to the fundamental policy basis of salvage law than it initially appears. New Zealand and England. He found that the amount of the average This type of conservatism is prevalent in the approach of New Zealand salvage award represented between 5 and 10 percent of the salved value of courts in cases involving salvage. The implications of such an approach for the vesseLg7His Honour noted that cases such as The Lyma (No 1)98 where the Convention, if adopted, are discussed in Part V C of the paper below. a relatively large salvage awardg9was made by the court involved far greater potential material loss and risk to the salvors than in the present case. Marine Pollution Consequently, Anderson 7 held that a reasonable award in the circum- stances was $23,700, or 10 per cent of the salved value of the Dolphin Queen. der New Zealand law, the issue of marine pollution is considered His Honour expressed the view that it would be 'cynical' to believe that tely from the issue of salvage. Relevant provisions may be found in modem day N~WZealanders require mercenary encouragement to lend the Marine Pollution Act 1974 and to a lesser extent in the Resource Manage- assistance to ships and mariners in distress at sea." The fact that the plaintiff was not a professional salvor also appeared to be a relevant factor 101 in keeping the award relatively low. (a) The Marine Pollution Act 1974 The Marine Pollution Act 1974 establishes a legislative base for the preven- 93 Above n.87,22-23. Hence the plaintiis daim for rem~erationundersection357surreeded. tion and regulation of the pollution of New Zealand waters. The Act is 94 [I9561NZLR 829,836. 95 Above n.87'24. structured to give effect to various intemationalconventions.These include % Above n.87,26-27. the International Convention for the Prevention of Pollution of the Sea by 97 As was the case in The Cwster, above n.94. Oil 195411962 (Part I of the Act); the International Convention on the 98 [1976]2 Lloyd's Reps 27. Prevention of Pollution by Dumping of Wastes and Other Matter 1972~~~ 99 h The Lylnm the salvage award amounted to 40 per cent of the salved value of the vessel. 100 Above n.87,27. (Part U of the Act); the International Convention Relating to Intewentim 101 Above n 87,29-32. There is authority for the proposition that the actions of professional salvoa deserve to bp rewarded more generously than the astiom sf amateur salvors. See 102 Above n.7'18. See also 171e Saw& [I9531 2 Lloyd's Reps 557#561. Qutm Elitabeth (1949)82 LI L Rep 803' 821. 103 These pmvifiom relating to ocean dumping are not relevant to this paper and will not be discused here. 64 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 65 on the High Seas in Cases of Oil Pollution Casualties 1969"~ (Part III of the Act); and the International Convention on Civil Liability for Oil Pollution permit the discharge of oil for the purpose of securing the safety of the ship Damage 1969 (Part IV of the Act). or preventing damage to the cargo, as well as discharges which occur as a The Marine Pollufion Act does not deal adequately with the problem of result of structural damage to the ship. The availability of these defences oil spillages from ships. On the whole, the conventions given effect to in restricts the effectiveness of Part I of the Act. the Act are relatively limited in scope and effect, as they provide only for Part III of the Act empowers the Minister of Transport to take measures flag state jurisdiction. This means that New Zealand can only enforce the to prevent pollution in respect of a ship inside or outside of New Zealand provisions of the convention or Act over things which are already within waters.'@ However, there are a number of preconditions to intervention their jurisdiction. Therefore, in general, the Marine Pollution Acf only ap- which substantially restrict the Minister's powers under the Act. First, the plies to the discharge of oil into New Zealand waters and any discharge by Minister's powers to intervene only take effect a* the release of oil has a New Zealand ship (including a discharge which occurs on the High Seas) occurred. Secondly, the situation must be such that the oil represents a -which limits its scope and effect considerably.105For instance, a foreign 'serious' risk of pollution to the New Zealand coast or New Zealand waters ship cannot be prosecuted under the Act for discharging oil just outside or to other 'related interestsl."%e Minister's powers are further circum- New Zealand waters.lo6 scribed by the fact that any person who suffers loss as a result of Ministerial The Act is also defective in other ways. For example, strict liability action taken in response to pollution may be entitled to receive Crown offences are created by both section 3, which covers the discharge or escape compensation if the action was not reasonably necessary in the circum- of oil into New Zealand waters from any ship, and section 4, which applies stances."' The effectof these restrictions means that the Minister is author- to the discharge or escape of oil by New Zealand ships on the High seas.''' ised to take action under the Act only where there is an extremely serious risk that the pollution in question will directly affect New Zealand wa- The ship's owner or master will be liable under the relevant section unless 112 she can prove a total absence of fault on her part or show that there is a ters. defence available under the ~ct."~Under the Act, the available defences Part IV of the Act essentially enacts the International Convention on Civil Liability for Oil Pollution Damage 1969."~under part N a shipowner may be liable for the cost of the removal of oil from New Zealand waters 104 (1970) 9 ILM 25. and also for pollution damage caused in those waters. Section 32 applies to 105 W. A. M~DD,The Marine Pollution Ad 1974: Is it Obsolete within Six Months of its situations involving ~nactmeni?:(1975) 2 AULR 23,31. 106 However, it should be noted that s.18 of the Marine Pollution Adprovides for the making (i) a ship which is carrying a cargo of ~ersistentoil in bulk and of regulations establishing shipping traffic controls '[flor the purpose of ensuring the (ii) the discharge or escape of oil frogthat ship without &e actual fault safety of navigation in New Zealand waters and in adjacent waters' (emphasis added). This provision attempts to extend the vicinity over which New Zealand has jurisdiction of the owner.''* toencompass areas beyond the outer boundary of New Zealand waters (the exclusive Under s.32 the shipowner is liable for all pollution damage within the economic zone). The legality of such a provision in international law may be dubious. The Iimited ministerial powers (Part III of the Ad) to intervene in marine casualties outer boundary of the territorial sea (currently 12 miles) attributable to the threatening the New Zealand coast also attempts to extend the traditionaljurisdiction in certain cases. the negligence or deliberate act of that pemn'. This defence cannot be used if the 107 'Oil' is defined in s.2 to include any mixture containing oil. 'New Zealand waters' are defendant did not take 'all reasonable steps' to prevent or reduce the escape of the oil or defined under s.2 to encompass the sea up to and including the exclusive economic zone pollutant (s.6(2)). of New Zealand, which under the Territorial Sea md Exclusiue Eamomic Zone Act 1977 is 109 Seftion25. 200 nautical miles (s.9). Under s.10 the penalty for these offences is a fine not exceeding 110 SectionB(8)defines 'related interests' to include 'interests directly affectedor threatened, $100,000 as well as the cost of cleaning up the oil. including (but without limiting the generality of this definition) maritime, coastal, port, 108 The available defences are contained in s.6 of the Ad, which provides that it is a defence or estuarine activities (including fisheries activities constituting an essential means of to a charge under ss.3,4 or 5 if the defendant can prove (i) that the oil or pollutant was livelihood of the persons concerned), tourist attractions, public health and welfare, and discharged 'for the pu- of securing the safety of [the] ship .. . or of preventing the conservation of living marine resources and of wildlife'. damage to any ship or cargo, or of saving life" medischarge must be necessary or 'a 111 Section27. peasonablestep to takein thg "fs.6(1));or(ii) thattheoiIorpollulantescapt?d 112 Above n.14,227-228, 'h consequence of major strum1damage to .. . the ship . . . whkh ocnured without 113 Hereafter referred to as TLC. 114 Section 32(lO). 66 (1994) 10 MLAANZ Journal -Part 1 Marine Salvage & the Environment 67 escape or discharge of 'persistent oi1'l15 from the ship. 'Shipowner' takes phenomenon of an exceptional, inevitable and irresistible character'."' It on a relatively narrow definition for the purposes of the section, and is is also a defence to a charge under either section if the shipowner can show confined to the registered owner, or if the vessel is unregistered, the actual that the spillage of oil was wholly caused by the acts or omissions of certain owner?16 The financial extent of the shipowner's liability is limited under parties (other than the servants or agents of the shipowner).llg ss.32(2) and 32(3), and his liability is further restricted under s.34. Section Secondly, the relevant environmental damage must occur within 'New 34(l)(a) bars all actions against the shipowner for pollution damage which are not brought under the Marine Pollution Act. This statutory bar applies Zealand waters', which for the purposes of s.32 is restricted to the territorial sea. Thirdly, s.32 applies only to 'persistent oil', which is narrowly de- regardless of whether or not the shipowner actually incurs liability under fined.'" Fourthly, claims brought under s.32 must be against the actual or s.32. registered owner of the ship who may not always be easily located. If the criteria required for the operation of s.32 are not satisfied, s.31 - Fifthly, the liability limitations applying to both ss.31121 and 32122 are applies. Section 31 applies both to ships which are not carrying a bulk cargo potentially inadequate given the enormous damage which is likely to be of persistent oil as well as to those vessels which are carrying such a cargo caused by an oil spill of any magnitude. Finally, the operation of s.N(l)(a) and to which pollution damage to the exclusive economic zone is attribut- able. Although the shipowner is once again liable for pollution damage means that a shipowner to which s.32 applies can only be liable for pollu- tion damage under that section. The practical effect of this is that no under this section, the definition of shipowner is much wider than it is common law or other statutory liability can attach even if the shipowner under s.32 and includes any person interested in or in possession of the ship does not in fact incur liability under s.32. and any agent of the ship's operators, managers or charterers.'" The shipowner is liable for all pollution damage in New Zealand or New The Marine Pollution Act fails to refer to the role of the salvor in cases involving oil spills other than in a negative sense: ss.34(1)@) and 34(2) Zealand waters which is attributable to the discharge or escape of oil from provide that a salvor is not liable for pollution damage which occurs in the the vessel. The owner's liability is also limited here as under s.32, but the course of salvage operations in respect of a vessel which falls within the s.34(1) restriction does not apply. However, s.43(2) provides that a salvor scope of ss.31 or 32. It is submitted that this position is correct. The performing salvage services in respect of a ship to which s.31 applies is not imposition of liability on salvors who cause environmental harm would liable for pollution damage arising from such operations. This is true probably act as a disincentive to salve, and the law should aim to encourage whether or not the owner actually incurs liability under s.31. salvage operations to the greatest extent possible. If the provisions of the Scrction 30 governs liability for the cost of removal of oil which has Convention are incorporated into New Zealand law, articles 13 and 14 escaped or been discharged from a ship into New Zealand waters. The would provide sufficient incentive to salvors to carry out salvage opera- section applies only to ships from States which are not parties to CLC, and tions in a way which aims to protect the environment. makes the shipowner liable for all amounts 'reasonably incurred' by the Minister of Transport, a Harbour Board, or a Port Company in removing the oil. In contrast with ss.31 and 32, neither defences nor limitation of (b) The Resource Management Act 1991 liability are available under s.30. The Resource Management Act 1991has limited application to cases concern- In practice, however, the civil liability regime established by the Act is ing oil pollution from ships. The relevant provisions are s.12 and s.15. not particularly effective. First, there are a number of wide defences to a Section 12 places certain restrictions on the use of the coastal marine area charge under either s.31 or s.32. For example, s.33 provides that liability The section provides, inter alia, that no person may destroy or damage any will not attach under either of these provisions if the discharge or escape foreshore or seabed (within the territorial sea) in a manner which has or is of 03in question was caused by events such as an act of war or 'a natural likely to have an adverse effect on plants or animals.123Section 15, inter 118 Section 33(l)(a). See 115 Under s.32(9) 'persistent oil' is defined to include 'crude oil, fuel oil, heavy diesel oil, 119 ss 33(l)(b)and (c). Iubricating oil, and whale oil'. 120 Above n.115. E is person as its 121 1500 francs per ton fs 31f3f). 116 the ship is State owned, then the owner the registered operator (s 32(9)). the 117 MonZ(1). 122 ZOOO francs per ton br 2i~kitlionfrancs, whithever is the lesser of twa (s.32(3)), 123 Section 12(l)(e). 68 (1994) 10 MLAANZ Journal Part 1 - Marine Salvage & the Environment 69 alia, prohibits the discharge of any contaminant into water. 'Contaminant' is given a wide meaning, as is 'water'.lu Section 338(1) makes the contra- Shipping and SamAct 1952 and the decisions of the New Zealand courts in vention of ss.12 and 15 an offence under the Act, and s.339 provides that salvage cases evince a conservative NCNP approach. The present law fails to any person who commits an offence under s.338(1) is liable to imprison- recognize the protection of the environment as a relevant factor to take into ment for up to 2 years or a fine not exceeding $200,000. account in assessing a salvage award and ignores the position of sigTuficance occupied by the salvor as htto reach the scene of an shipping casualty. The practical effect of these provisions is circumscribed, however. Sec- tion 343 states that none of the provisions of Part XII of the Act apply to the It is submitted that this position is inadequate. Ships in distress which discharge of a contaminantfrom a non-New Zealand ship. Sections 338 and present a major pollution threat are almost invariably those which have are also sustained substantial damage to the extent that they no longer present 339 both contained within Part XII of the Act. This means that the an discharge of oil from a foreign ship into New Zealand waters is not an attractive proposition to any salvor working on a strict NCNP basis. In offence under the Act, and the penalties contained in s.339 cannot be the wider public interest it is desirable that salvors be offered some incen- imposed. It thus appears that the provisions of the ResourceManagement Act tive to attempt salvage in otherwise unpromising situations where there is only apply with any force to oil spills emanating from New Zealand ships. a threat of oil pollution, and to restrict or remove that threat if at all This substantially restricts the effect and value of the Act in cases involving possible?28By incorporating the provisions of the Convention into domes- oil spillages from ships.125 tic law, New Zealand would go a long way towards remedying the defi- Furthermore, even as they apply to New Zealand vessels the provisions ciencies of the current position. of the Resource Management Act are of limited use. First, the potential D Practical Effeet of Incorporation penalties which may be imposed by s.339 (2 years imprisonment or a fine not exceeding $200,000) are grossly inadequate in light of the enormous On its face, the Convention appears to change the whole approach taken damage oil pollution can cause to the marine environment. Secondly, there by the courts in salvage cases by challenging traditional principles of are a number of defences available to a charge under the Act, including salvage law. However, adoption of the Convention by the New Zealand unforseen emergencies126 and acts beyond the control of the defendant legislature may not have such far-reaching effects in practice. A number of (including 'natural disaster[s]' -which would appear to encompass severe factors may limit the scope of the Convention including basic rules of storms and cyclones).127Thirdly,no provision is made for the salvor's role intemational law, inherent weaknesses in the document itself (already in marine incidents which involve a threat to the environment. discussed below in Part 111 B), and the Convention's operation in the limited New Zealand context. 3 Conclusion 1 Conventions and international law Under current New Zealand law, the potential contribution that may be In general, a coastal state has jurisdiction over ships of any nationality made by the salvor in preventing or minimizing oil pollution during the which are within its territorial sea. However, on the high seas vessels are course of salvage operations is not acknowledged. New Zealand law subject to the sole jurisdiction of their flag state. This is the basic principle isolates the issue of salvage from that of marine pollutionf and currently of international law known as 'flag state jurisdiction'. The effect of the rule regards the two mas as -¶te mattets. The relevant provisions of the of flag state jurisdiction means that it is difficult for domestic legislation to have any significant effect when dealing with the problem of oil pollution 124 'Contaminant' includes any substance which is likely to alter the physical, biological or from ships - as the foregoing discussion of the Marine Pollution Act 1974 chemical condition of any water it is discharged into. Water' means water in any form except when contained in a pipe, tank or cistern: see s.2(1). illustrates. Although intemational law is moving in favour of expanding 125 Et is likely that the Marine Pollution Act was intended to deal adequately with situations the areas over which a coastal state has jurisdiction, this shift is only involving foreign ships in New Zealand waters. gradual, and in general, the fundamental rule of freedom of the high seas 126 Sectionl8. ~till~revails.*~~This means that it is difficult for a state to have any control 127 Mon341(2)@). Other conditions also apply, but thee appear to be relatively easy to of shipping casualties invokving oil puution to provide a defence to most D. A. Kerr, The 1989 Salvage Convention: Expediency or Equiq?"l9(19) 20 J Mar Law charges under the Act. 128 & Corn 505,506. 70 (1994)10 MLAANZ Journal Part 1 - Marine Salvage & the Environment 71 over the foreign perpetrators of spills which occur on the high seas but The absence of commercial salvage operations in New Zealand waters eventually cause damage to coastal areas. This is a deficiency, but in occur involving major shippingcasualties is signrficant, as it is in these situations practical terms it may not be so important, as most major oil spillages that the LOF is most often used. LOF 1990 incorporates a number of close to shore.130 Convention provisions into the form. As the Convention is not yet in force, The rules of international law governing the operation of conventions this means that the use of LOF 1990 enables a limited de facto implementa- also limit their effectiveness. This is because, with very few exceptions, tion of the Convention to take place in salvage operations which are carried convention provisions are only binding on those parties who have acceded out under LOF terms. This results in an early practical application of the to them. Furthermore, they can only become enforceable against those principles of the Convention in those states where use of the LOF is parties when the requisite number of states provided for by the convention widespread, but in this country such application is restricted as the form have indicated their consent to be bound by the document's terms. If a is seldom used in salvage operations in~ewzealand waters."~his means particular convention has received widespread international support then that those principles of the Convention which are incorporated into LOF its principles may be accepted to have become part of customary intema- 1990 do not, for the most part, gain even contractual effect in the New tional law - which is binding on all states. However, the principles of Zealand context. This factor presents at least one reason why New Zealand customary international law in respect of oil pollution from ships are not should enact the provisions of the Convention into its domestic law. at all settled and leave considerable room for dispute.13' The current situation also leaves New Zealand in a potentially vulnerable The Convention does not take effect until one year after the date on position in the event of a shipping casualty necessitating foreign salvage which 15 countries have expressed their consent to be bound by its provis- assistance. Professional salvors will not be eager to lend aid and expertise if ion~.'~~such countries currently number only five, which indicates that the they are aware that New Zealand courts have a history of fixing low salvage Convention is unlikely to enter into force for some time. Furthermore, until ' awards and may be unwilling to give substantial weight to the salvor's role in the Convention receives sufficiently widespread international acceptance, protecting the environment. Such a situation is undesirable, and one way to a signatory state could only enforce its provisions against ships from other guard against its possibility is for New Zealand to enact the provisions of the states which have also acceded to the document. At the time of writing, this Convention into law. group encompasses only Mexico, Nigeria, Egypt, Oman and Saudi Arabia. However, given the approach that the New Zealand courts have histor- ically taken with regard to salvage cases and salvage awards it may be 2 The Convention and New Zealand doubted whether the Convention, if enacted as it stands, will actually have As noted above, New Zealand is not able to support a commercial salvage the radical effect it appears to. The conservatism evinced in the decisions industry. This fact would not preclude the Convention's application in of the New Zealand courts in salvage cases to date - with the relevant cases involving salvage operationsby New Zealand amateur salvors, as the salvage criteria strictly construed and the fixing of awards which are term 'salvor' is not defied in the Convention, and presumably includes relatively low in comparison with other countries - mean that the non-commercial salvors such as fishermen. However, the absence of a Convention's adoption and subsequent enactment is unlikely to achieve its salvage industry, combined with the fact that large-scale salvage operations full potential effect in the New Zealand context. occur relatively rarely in New Zealand waters, mean that even if enacted it If the Convention is incorporated into New Zealand law, it is possible is unlikely that the provisions of the Convention would be used on a regular that the major change in approach would be an alteration to the relevant basis. It is submitted that this is not significant: the possibility that the criteria for the assessment of an award. This would be due to the addition Convention may be used to protect the marine environment supports its of the salvor's efforts in protecting the marine environment as a factor to adoption by New Zealand. take into account under article 13(l)(b).The size of any salvage award made under article 13 is limited to the value of the salved propertyx34- whieh 129 M.N. Shaw, lntmtionnl Lmu (3rd ed., Grotius Publhtiom, Cambridge, 1991) 338, Above 130 n.9'63. 133 The LOF is most likely to be used in salvage operations in New Zealand waters where a 131 Above n-9,ll. shipping has occur. 132 Article 29(1). major casualty wmed or is katening to Such a siutisn would probably involve the use of foreign and professional salvors. (1994) 10 MLAANZ Journal - Part 1 Marine Salvage & the Environment limits the prospects for any radical transformation of the law of salvage by prevent or minimize harm to this country's marine environment justifies the operation of article 13alone. Furthermore, the inherent conservatism of its adoption. The inadequacies of the current law in this area provides a the New Zealand courts in this area may mean that in practice article 14 further argument in favour of adoption. Even if the courts do not give the will be used only to reimburse the salvor's most basic expenses.'" The widest possible effect to the provisions of the document, at least some courts may resist the use of their discretionary power under article 14(2)to consideration would then be given to a salvor's actions with respect to the inflate the salvage award. environment. In summary, New Zealand has little to lose by acceding to Despite the possibility that the courts may take a restrictive approach in the Convention, but potentially a great deal to gain. applying the principles and provisions of the Convention, it is nevertheless It is also submitted that New Zealand must take a more holistic view of submitted that New Zealand should incorporate the Convention into law. the benefits conferred by adopting the Convention. The direct and immedi- Even if the use of article 14(2) is resisted by the courts, article 13 and article ate benefit to New Zealand may not seem particularly compelling, but if it 14(1) are both mandatory provisions and the court is required to apply them. can gain sufficient international support the Convention will have a valu- Although there exists the possibility that a court wffl fail to accord sufficient able practical effect in a higher proportion of situations where the environ- weight to the salvor's skill and efforts in preventing or minimhhg envinm- ment is seriously threatened by shipping casualties. The indirect and mental there seems no way that this risk can be avoided. At a non-immediate benefit to New Zealand may be the continued survival of minixnum, a salvor who undertakes salvage operations in respect of a vessel a unique and vital part of the earth's environment -which may be of more presenting a major threat to the environment will be guaranteed reimburse- value than we realize. ment of his expenses?37

3 Conclusion I E Method of Enactment Notwithstanding the problems outlined above, it is submitted that New &re are basically two methods of enacting the provisions of the Conven- Zealand should accede to the Convention as soon as possible. From a publc tion into New Zealand law. First, the legislature can ensue that the existing policy viewpoint, the primary line of defence against pollution from ships law complies with the provisions of the document. As discussed above, is a regulatory framework promoting efficient and safe vessels. However, existing legislation is grossly inadequate in this area. The provisions of the the incorporation of the Convention into New Zealand law would comple- Shipping and Seamen Act 1952, the Marine Pollution Act 1974 and the Resource ment such a framework and remedy some existing weaknesses. Ideally the Management Act 1991 do not provide adequate protection against the prob- Marine Pollution Act and the Convention should operate to supplement lem of pollution from ships, and all three fail to acknowledge the potential each others' (often necessary) deficiencies. importance of the salvor in preventing environmental damage. Secondly, The Convention represents a significant advance on the current position the legislature could enact a new statute containing the provisions of the regarding salvage and the environment. Its favourable points far outweigh Convention. its deficiencies and its provisions may one day prove vital in preventing It is submitted that the most suitable method of enactment is the substantial environmentaldamage to the New Zealand coast. The fact that incorporation of the Convention text into an existing Act. As the Conven- the Convention would seldom be used is not a decisive reason for failing tion is a fairly specific instrument which is designed to be read in its to enact its provisions into law. The use of the Convention, even once, to entirety, it is desirable that the complete document be enacted in the form of a statutory Schedule. The most appropriate place for such incorporation 134 Article l3(3). would appear to be the Shipping and Seamen Act 1952, which is currently 135 Article 14(1).Even under art 14 there is still scope for the courts to apply a namw under review. The Maritime Division of the Ministry of Transport also interpretation of 'expenses' and restrict the amount recoverable by the salvor under art X4. Although 'expenses' are defined as all expenses 'reasonably incurred' by the salvor recommends incorporation along these lines. In the interests of clarity, in the salvage operations, precisely what is 'reasonable' in a given si-tion would appear other legislation which may conflict with Convention provisions should be tobe open to debate and possible hitationby the courts. updated to accord with the new law. This may entail the amendment of 1% Wnder art 13(l)(b). some parts of the Marine Pollution Act. For exmple, s.X(l)(a), which 137 Article 14(1). provides that a shipowner to which s.32 applies can only be liable for 74 (1994)10 MLAANZ Journal -Part 1 pollution damage under that section, may conflict with article 14 of the Convention, which makes the shipowner liable for special compensation to a salvor who restricts environmental damage in the course of salvage operations. This depends on whether liability for special compensation under article 14 is interpreted to be liability for 'pollution damage', but there appears to be scope for some overlap and possible conflict.

VI CONCLUSION Traditional principles of the law of salvage do not encourage salvors to protect the environment while performing salvage operations. The Con- vention makes a number of fundamental changes to traditional principles and practice of salvage law, including substantial modifications to the principle of NCNP. The Convention acknowledges that a salvor's action to protect the environment is a relevant factor in fixing a salvage award and provides for remuneration for such actions even if no property is salved. These represent important and long-needed changes to the law of salvage. While this country's immediate need for such a Convention may not appear great, and while New Zealand courts may be reluctant to apply the Con- vention provisions to their fullest extent, it is submitted that New Zealand should accede to the Convention as soon as possible and incorporate its provisions into domestic law. The benefits of incorporation far outweigh the disadvantages.