The Ocean Crown was a handysize bulk carrier laden with 49,850.6 mt of copper concentrates. The vessel ran aground in the Canal Darwin near Chile. Five Oceans Salvage Consultants Ltd (the respondent) was engaged under a salvage agreement on the Lloyd's Open Form (LOF) to salve the vessel and its cargo. The remuneration would be determined by arbitration in London. The respondent successfully redelivered the vessel and the cargo after 107 days and at a cost of USD 18 million. The total value of the salvage fund was USD 166,185,830.79.

The appeal arbitrator awarded the respondent USD 40,750,000 plus interest and costs. In granting the award, the appeal arbitrator took into account the skill of the respondent, the size of the salvage fund, the expenses incurred by the respondent, and the risk of a future economic downturn in the salvage industry.

The owners of the Ocean Crown and its cargo interests (the appellants) appealed. On appeal, among others, the two questions the Court was asked to examine were:

1. Whether the tribunal could take into account, as an enhancing feature in the assessment of salvage remuneration, the possibility that the salvor and/or the salvage industry might experience difficult economic conditions in the future; and

2. If, in principle, it was relevant to take such matters into account, whether it was permissible to take into account the actual economic conditions experienced between the date of termination of the services and the date of the award.

Held: Appeal allowed.

Article 13 of the Salvage Convention 1989 provides that:

1. The reward shall be fixed with a view to encouraging salvage operations, taking into account the following criteria without regard to the order in which they are presented below:

(a) the salved value of the vessel and other property;

(b) the skill and efforts of the salvors in preventing or minimizing damage to the environment;

(c) the measure of success obtained by the salvor;

(d) the nature and degree of danger;

(e) the skill and efforts of the salvors in salving the vessel, other property and life;

(f) the time used and expenses and losses incurred by the salvors;

(g) the risk of liability and other risks run by the salvors or their equipment;

(h) the promptness of the services rendered;

(i) the availability and use of vessels or other equipment intended for salvage operations;

(j) the state of readiness and efficiency of the salvor's equipment and value thereof.

The Salvage Convention 1989 confirms the judicially promoted policy of encouraging salvage operations by the prospect of assessment of the reward in a generous way. The Court accepts that there is necessarily a 'future' element in the principle of 'encouragement'. It does not, however, follow that the risk of future economic downturns is or should be a specific factor serving to enhance salvage remuneration. There is no mention of this risk in the criteria enumerated in art 13 of the Salvage Convention 1989. By contrast, those criteria look to the position pertaining at the commencement of, during or at the termination of the salvage services in question, rather than to future risks. The position accordingly is that salvage operations are to be encouraged for the future, by reference to factors prevailing at the time of the salvage in question. No account shall be taken of actual economic conditions experienced between the termination of services and the appeal award.