This case arose out of a collision between the Andakang 3699, owned by Fujian Andakang Shipping Co Ltd (Andakang), and the Niacus. Following the collision, the Niacus sustained damage below the waterline, resulting in flooding. Momentum Maritime SA, as the vessel manager, concluded a salvage contract on behalf of the shipowner on the same day.

Guangdong Branch of Yongcheng Property Insurance Co Ltd (Yongcheng), as insurer, after indemnifying the loss, brought a claim against the vessel manager seeking recovery of salvage expenses and related losses, and further sought to hold Andakang, Kang Qiusheng, and Lin Yuanyong (the defendants) liable for 30% of the losses.

The first instance Court dismissed all claims. On appeal, the second instance Court held that the vessel was in danger after the collision and that salvage was necessary. The defendants, dissatisfied with the appellate judgment, applied for a retrial to the Supreme People's Court of the PRC. 

Held: Retrial application dismissed.

The applicants argued that the Niacus was not in danger and therefore fell outside the scope of the Salvage Convention 1989, and that there was no causal link between the salvage expenses and the collision.

On the applicable law, the Court held that it was appropriate to apply the Convention. Article 6.2 of the Convention provides that the master shall have authority to conclude contracts for salvage operations on behalf of the owner of the vessel. The master or the owner of the vessel shall have authority to conclude such contracts on behalf of the owner of the property on board the vessel. Article 175.2 of the Maritime Code of the PRC is based on this rule and provides that the master of the ship in distress or its owner shall have the authority to conclude a contract for salvage operations on behalf of the owner of the property on board.

The Court further noted that the damage to the Niacus below the waterline and the resulting flooding constituted an uncertain but significant risk. The fact that the vessel retained some degree of navigability was insufficient to negate the danger at the time of the incident. In such circumstances, the master or the shipowner is entitled to assess, based on the condition of the vessel, weather and sea conditions, whether salvage is necessary and to conclude a salvage contract. The conclusion of the salvage contract on the same day was consistent with art 6.2 of the Convention and art 175.2 of the Maritime Code. The salvage expenses were therefore not independent of the collision, but arose directly from it.