A cargo of 2,951 mt of complex fertiliser NPK in bulk was carried on the defendant's vessel, Sava Star, from Heroya, Norway, to Immingham, England. The plaintiff was the cargo owner and named consignee in the bill of lading. The vessel was voyage chartered to Norsk Hydro AS (Norsk Hydro), the plaintiff's parent company. The cargo began to decompose during the voyage, causing fire and fumes. The master agreed LOF 90 with a contractor, United Towing Ltd, on behalf of the owners of the vessel, its cargo, freight, bunkers, stores, and any other property. The vessel and the cargo were salved through the services provided by the contractor and the plaintiff. The contractor was awarded salvage remuneration by an arbitrator appointed under LOF 90.

The question before the Court was whether, assuming that the services rendered by the plaintiff were in the nature of salvage services and that they were successful or contributed to the success, the plaintiff, as cargo owner, was entitled in law to salvage remuneration.

The plaintiff argued that there was no reason based on either authority or principle which prevented or should prevent it from recovering salvage remuneration. It was the policy of the law and to the benefit of both the maritime community and the environment that salvage services should be encouraged. The reason cargo owners have not historically claimed salvage is that they were not in a position to render any service to the casualty. That has changed as a result of modern communications. The plaintiff relied on a number of cases in which the owner of a salved ship was entitled to salvage from cargo owners.

The defendant contended that neither principle nor authority supported the proposition that cargo owners were, or should be, permitted to claim salvage from shipowners carrying the cargo. There was no case in which cargo owners advanced a claim for salvage. Cargo owners were not within the recognised categories of salvor, and there was no good reason to allow them to claim salvage. They were bound up in the maritime adventure with the shipowners, and as such, they owed a duty to render such assistance as they could to salve ship and cargo. There was no need to encourage a cargo owner to salve ship and cargo by awarding salvage remuneration. Self-interest was inducement enough. Further or alternatively, a cargo owner who rendered what would otherwise be salvage services acted in self-preservation or in the preservation of its own property and, as such, should not be treated as a volunteer. Moreover, allowing the plaintiff to succeed would open the floodgates to a plethora of undesirable claims. The defendant also claimed that the cases relied on by the plaintiff were wrong or could be distinguished and, in any event, were less analogous to the present case than those which considered claims for salvage by passengers.

Held: The plaintiff cargo owner is entitled to salvage remuneration from the defendant shipowner.

Clarke J considered the relevant cases and found that the following propositions have been accepted by both practitioners and judges over a very long period: (1) A shipowner is not entitled to claim salvage against itself. (2) Where ship and cargo are salved by a vessel in the same ownership as the salved ship, the master and crew of the salving ship are entitled to salvage against the owners of the salved ship and the owners of its cargo. (3) In such cases, the shipowners are entitled to salvage against the owners of the cargo on the salved ship unless the casualty which necessitated the salvage services was wholly caused by an actionable breach of contract on the part of the plaintiffs. (4) Subject to (1) above, the fact that salving and the salved ships are in common ownership or common management is relevant to the quantum of the salvage award.

The previous sister-ship decisions are based upon sound principles and are correct for the following reasons. First, many insurance policies contain sister-ship clauses, which enable a shipowner to claim salvage from its insurers. That shows that both shipowning and hull insurance interests recognise the desirability of sister-ship salvage.

Second, art 5 of the Salvage Convention 1910 and art 12.3 of the Salvage Convention 1989, which are widely accepted in the international maritime community, support the conclusion that the sister-ship cases have proceeded on a correct basis. Article 5 of the Salvage Convention 1910 provides: 'Remuneration is due notwithstanding that the salvage services have been rendered by or to vessels belonging to the same owner.' That provision was never enacted in England, and no procedure was available to enforce such a claim. Article 12.3 of the Salvage Convention 1989 provides: 'This chapter shall apply notwithstanding that the salved vessel and the vessel undertaking the salvage operations belong to the same owner.' The Salvage Convention 1989 came into force in the UK on 1 January 1995 and applies to events after that date. Therefore, it does not apply to the facts of this case. It remains to be seen how art 12.3 affects proposition (1) above.

Third, the Court should encourage, not discourage, sister-ship salvage in an appropriate case, given the considerations set out in the Kafiristan (1937) 58 Ll L Rep 317.

It was correct that in none of the relevant cases was the plaintiff a cargo owner seeking salvage from the owner of the carrying ship. However, there is no logical reason why, if a shipowner is entitled to claim salvage against the owner of cargo carried in its ship, a cargo owner should not be entitled to claim salvage against the owner of the ship carrying its cargo.

There are no rigid categories of salvor; they include any volunteer who renders service of a salvage nature; and there is no reason why they should not include cargo owners who personally rendered salvage services.

The submission that cargo owners are not volunteers should be rejected; the limiting criterion cannot be solely that to be debarred from claiming salvage, the person concerned must owe a duty to the particular owner of the salved property because it could not properly be held that such a duty was owed either to the shipowners or to the cargo owners to render any services at all; the crew or passengers could not recover in respect of services which they could ordinarily be expected to carry out in their capacity as crew or passengers; the same principle ought to apply to a cargo owner. The reason why the master and crew could not ordinarily recover was that they were performing services ordinarily to be expected of them in their capacity or capacities as master and members of the crew, respectively.

Except in restricted circumstances where the cargo owner did no more than was to be expected of it as a cargo owner, the cargo owner was a volunteer and, as such, in principle, was entitled to salvage remuneration. The respondent, in this connection, relied on arts 8.2.a and 8.2.b of the Salvage Convention 1989, which provide as follows:

The owner and master of the vessel or the owner of other property in danger shall owe a duty to the salvor:

(a) to cooperate fully with him during the course of the salvage operations;

(b) in so doing, to exercise due care to prevent or minimize damage to the environment.

Clarke J stated that the true scope of those duties may have to be determined in a future case. It has not been necessary to hear full argument on the point in the instant case, but it does seem that a cargo owner who is doing no more than discharging his duty under art 8.2 should not be treated as a volunteer. However, whether that is correct or not, does not affect the decision in this case. The Judge also did not accept the defendant's submission that a cargo owner should not be entitled to salvage because of self-interest or because it has a motive for self-preservation and that inducement or encouragement is enough. The motive of the salvor is irrelevant. There is no reason, based in principle or authority, why cargo owners should not be able to claim salvage from shipowners in an appropriate case.