This was an appeal from a decision of the District Court for the Southern District of New York, making awards to Greek shipowners and crews for salvage services to US naval vessels: see CMI2617.

The US disputed the District Court's ruling on its defence of sovereign immunity, the salvage award to the crew, and its allegedly excessive amount.

Held: Decree modified and affirmed.

The salvors' right to sue depended on whether the Greek courts would entertain an action by a US national for salvage services to a Greek Navy vessel. The Court below held that Greece would permit US nationals to sue for salvage services to a Greek naval vessel. However, the United States argued that certain treaty provisions supported a different conclusion.

The Salvage Convention 1910, to which both the US and Greece are parties, was manifestly irrelevant. Article 14 of this Convention provides that it 'does not apply to ships of war or to government ships appropriated exclusively to a public service'. That simply remitted claims for salvage of such ships to local law free of any obligation under this treaty.

The Immunity of State-Owned Ship Convention 1926, to which Greece was a party but the US was not, was relevant. This Convention begins with a broad acceptance of liability for 'sea-going vessels owned or operated by states' in art 1. Article 2 subjects claims against such vessels to the same procedures, including procedure in rem, as exist for claims against privately owned vessels. Article 3.1 first excepts warships, supply vessels and other State-owned or operated vessels employed exclusively in a governmental and non-commercial service, but goes on to permit in personam actions in the courts of the State which is the owner or operator for three types of claims in respect of such vessels, including claims arising out of assistance and salvage. Then art 6 provides in relevant part:

Extension of Provisions to Non-Contracting States - Reciprocity

The provisions of the present Convention may be applied in each Contracting State for the benefit of non-contracting States and their nationals only on the basis of reciprocity.

Both in this translation and in the official French text, art 6 seems to constitute an agreement by the Greek Government not to allow a non-contracting party - here the US - to benefit from a waiver of immunity which Greece makes in favour of contracting parties unless the US reciprocates to Greece.

The US argued that this condition of reciprocity was not satisfied. The US waived immunity to a country that has waived immunity in favour of the US, but the Immunity of State-Owned Ship Convention 1926 forbids Greece to waive immunity in favour of the US unless the US has waived it as to Greece. Thus, an endless circle was created since neither Government has taken the necessary first step. However, the Court held that there was no reason to frustrate the willingness of both Governments to allow suits by nationals of the other by any such Gaston-Alphonse approach. The condition of reciprocity was sufficiently met.

The US argued that the crew of the salving vessels should receive nothing, since crews of professional salvors are hired for the precise purpose of rendering salvage, and thus lack the voluntary character universally held required for a salvage award. Although the consideration urged by the US weighed against the crew's claims, circumstances may arise in which the conscience of admiralty may be moved in favour of making a modest award. Circumstances that were appealing in the instance case were the high value of the salved vessels, the crews' receipt of wages corresponding to those on port tugs, and the existence of some peril. However, the award of three months' wages was excessive.

In view of the traditional principle of liberality in awards to professional salvors a substantial award to the owners was warranted. However, the award of three months' expenses was overly generous.

The awards to the shipowner were thus reduced to two months' expenses, and the awards to the crews to the equivalent of one month's wages.