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Salvage and Towage

What distinguishes towage from salvage?

Towage is usually a pre-agreed service at a fixed rate, while salvage is a voluntary service rendered to a vessel in danger, rewarded based on success.

Can a tug engaged in towage claim salvage?

Yes, if unforeseen circumstances place the tow in danger and the tug performs services beyond the scope of the original towage contract.

What is the SCOPIC clause?

SCOPIC is a clause in salvage contracts that guarantees the salvor payment for expenses incurred to prevent environmental damage, even if the salvage operation fails.

Who pays the salvage reward?

The reward is paid by the owners of the salved property (ship, cargo, and bunkers) in proportion to their respective values.

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Introduction: Salvage and Towage in the Maritime Industry

Salvage (rescuing a ship) and towage are two fundamental but distinct institutions of maritime law. Their correct legal structuring is critical for shipowners, cargo owners, and insurers. When a ship is in distress, time is of the essence, and decisions are often made in seconds. However, an improperly executed contract can lead to millions of dollars in losses or disputes over the Salvage Reward. In Georgia, where maritime trade is active, towage and salvage operations are carried out regularly. Legal.ge offers high-quality legal support in these complex processes, whether it involves signing an emergency contract or a subsequent dispute over the amount of the reward.

What Does the Salvage and Towage Service Cover?

Legal.ge specialists help you resolve the following issues:

  • Salvage Contracts (LOF): Operational execution of Lloyd's Open Form and other standard contracts, and analysis of "No Cure - No Pay" terms.
  • Towage Contracts: Drafting commercial towage contracts (e.g., Towcon, Towhire) and allocating risks between the tug and the tow.
  • Determination of Reward Amount: Disputes over the salvage reward amount based on the criteria of the 1989 Salvage Convention (value of salved property, degree of danger, salvor's efforts).
  • General Average: Allocation of salvage-related costs between the ship and cargo.
  • Environmental Compensation: Triggering the SCOPIC (Special Compensation P&I Club) clause and reimbursement of costs incurred to prevent environmental pollution.

Common Scenarios and Needs

Salvage and towage are relevant in various crisis situations:

  • Engine Failure at Sea: A ship loses propulsion and needs a tow to the nearest port. It is important to determine whether this is simple towage or a salvage operation.
  • Grounding: A ship is stuck on a shoal and needs refloating. The salvor demands signing an LOF, which implies a large financial obligation for the shipowner.
  • Fire on Board: A fire breaks out on a ship in port. Neighboring ships and port tugs help extinguish it and subsequently claim a salvage reward.
  • Wreck Removal: Removal of sunken property at the request of the state, which requires complex contractual and environmental regulation.
  • Reward Dispute: The salvor claims 50% of the ship's value, while the shipowner believes the danger was minimal. The dispute goes to arbitration.

Georgian Legal Framework

In Georgia, this field is regulated by the Maritime Code of Georgia (Chapter XV - Towage of Vessels and Chapter XVI - Salvage of Persons, Vessels and Other Property at Sea). Georgia is also a party to the International Convention on Salvage, 1989. This convention establishes the salvor's right to receive a fair reward if the operation is successful. Legislation clearly distinguishes between towage (service provided at an agreed rate) and salvage (action during danger, compensated in proportion to the value of the salved property). Dispute resolution often takes place in London maritime arbitration (if LOF is used), although Georgian courts also hear similar cases regarding incidents in local waters.

Service Process Step-by-Step

The involvement of Legal.ge specialists includes:

  1. Rapid Consultation: Immediate advice to the captain or owner in a crisis (e.g., during an accident): whether to sign the proposed contract (LOF)?
  2. Contract Execution: Agreeing on towage or salvage terms to protect the client's interests.
  3. Security Negotiation: After the salvage operation, the salvor demands security. The lawyer helps formulate and negotiate this security.
  4. Valuation: Determining the market value of the salved property (ship, cargo, bunkers) through experts.
  5. Dispute Resolution: Negotiation or arbitration to determine the final reward amount.

Why Choose Legal.ge?

Salvage and towage are among the most high-budget and risky areas of maritime law. A wrong step can lead to colossal financial losses. Legal.ge connects you with lawyers experienced in working with Lloyd's Open Form and international maritime practice. Through our platform, you will find professionals who ensure the protection of your assets in critical moments. Trust Legal.ge experts.

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