JAPANESE MARITIME LAW
Takayuki Matsui Attorney-at-Law Rie Akiba Attorney-at-Law Shigeru Akachi Marine Consultant


















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The Documentary Committee of The Japan Shipping Exchange, Inc.
Isssued 18/12/1980
Amended 5/16/1985
Amended 3/10/1991
Amended 25/11/2007
Copyright.
Published by
The Japan Shipping
Exchange, Inc
SALVAGE AGREEMENT
(No Cure - No Pay)
Salvage Agreement (Part I)
(1)
 Name of the Salvor
(2) Property to be Salved
 Vessel
Type:Name:
and her cargo and other property
(hereinafter referred to together as "the Property")
(3)
 Date of Agreement
(4) Place of Agreement
(5)
 Special Remuneration Clause:
[] incorporated[] not incorporated
(Select and mark either of the above two. If not marked, to be deemed as 'not incorporated'.)
(6)
 If the Special Remuneration Clause is incorporated, the rate as provided in paragraph 2 of Clause 5 of the said Clause is;
[] (i) the tariff rates for the Special Remuneration Clause publicized by the Salvor.
[] (ii) the tariff rates mutually agreed by the Owners of the Vessel and the Salvor.

_______________________________________________
(Select and mark (i) or (ii) and specify the rate if (ii) is selected.)

This Salvage Agreement is made and entered into by and between the Master of the vessel in Box (2) above ("the Vessel") for and on behalf of the Owners of the Property in Box (2) above (hereinafter referred to together as "the Property Owners") and the salvor in Box (1) above ("the Salvor") in accordance with the provisions of Part I, and if the parties have chosen to incorporate the Special Remuneration Clause in Box (5) above, Part II of this Agreement.

IN WITNESS WHEREOF, the parties hereto have signed and executed two originals of this Agreement and each party shall hold one original.

Master of the Vessel



___________________________
 Salvor



___________________________


Clause 1 (Salvage Services)
The Salvor agrees to use his best endeavours to render all necessary services to salve the Property and to take it to the nearest place of safety or other place to be agreed for delivery to the Property Owners. The Salvor further agrees, while performing the salvage services, to use his best endeavours to prevent or minimize damage to the environment (which means substantial physical damage to human health or to marine life or resources in coastal or inland waters or areas adjacent thereto, caused by pollution, contamination, fire, explosion or similar major incidents).

Clause 2 (Assistance from other Salvors)
Whenever circumstances reasonably require, the Salvor may seek assistance from other salvors. The Salvor shall further accept the intervention of other salvors when reasonably requested to do so by the Property Owners or the Master of the Vessel ("the Master"); provided however that the amount of the Salvor's remuneration shall not be prejudiced should it be found that such request was unreasonable.

Clause 3 (Co-operation of Property Owners)
The Property Owners and the Master shall co-operate fully with the Salvor in and about the salvage services including obtaining entry permits to the place stipulated in Clause 1 and providing the Salvor with information reasonably required by him regarding the Property, and in so doing, shall exercise due care to prevent or minimize damage to the environment. The Property Owners shall promptly accept redelivery of such of the Property as is salved at the place stipulated in Clause 1.

Clause 4 (Termination of Salvage Services)
Even if the Salvor has commenced the salvage services under this Agreement, the Owners of the Vessel or the Salvor shall be entitled to terminate the salvage services, when there is no longer any reasonable prospect of success leading to a salvage remuneration after consideration of every relevant factor, upon making a notice in writing to the other party with a reasonable period prior to the termination.

Clause 5 (Salvage Services rendered prior to the date of the Agreement)
In the event that the salvage services, or any part of such services, as defined in this Salvage Agreement, were rendered by the Salvor to the Property prior to the date of this Agreement, it is agreed that the provisions of this Agreement shall apply retrospectively to such services.

Clause 6 (Use of the Property by Salvor)
With the consent of the Master in advance, the Salvor and/or his employees may, without being held liable for any costs or expenses, and without any responsibility or obligation in respect of restitution, loss and/or damage, use the hull, engines, machineries, appurtenances of the Vessel and the whole or part of her cargo, and may also dismantle, sever and work upon any part of the Vessel and/or jettison the whole or any part of her cargo, which may be reasonably required for the purpose of the salvage services. However, in the event of urgent and unavoidable need, the Salvor may, at his own discretion and without obtaining the prior consent of the Master, resort to the aforementioned measures in such manner and to such extent as would be within the scope of reasonable necessity for the purpose of the salvage services.

Clause 7 (Daily Salvage Report)
The Salvor shall report daily to the Master and the Owner of the Vessel on the condition of the Vessel and the situation regarding the salvage services.

Clause 8 (Salvage Remuneration)
  1. In the event that the Salvor succeeds in salving the Property whether entirely or partially ("the Salved Property"), the Salvor is entitled to salvage remuneration from the owners of the Salved Property ("the Salved Property Owners").
  2. The amount of salvage remuneration shall be decided taking into account the costs and expenses reasonably incurred by the Salvor as a main factor, and further taking into account the value of the Salved Property and other factors collectively: these being the nature and degree of the danger to which the Salved Property was exposed, the degree of difficulties and dangers encountered by the Salvor, the skill of the Salvor in performing the services, the measure of success obtained by the Salvor, the promptness of the services rendered, the state of readiness and efficiency of the Salvor's equipment and the value thereof and the skill and efforts of the Salvor in preventing or minimizing damage to the environment. The amount of salvage remuneration shall not exceed the total value of the Salved Property at the time of termination of the salvage services, exclusive of any interest and legal costs (including costs of mediation and/or arbitration; should the same be applied as hereinafter provided).
  3. The Salved Property Owners shall each bear the salvage remuneration in proportion to the respective values of such of their property as is salved.
Clause 9 (Special Compensation)
  1. Notwithstanding paragraphs (1) and (2) of Clause 8, if the Salvor has carried out salvage services in respect of a vessel which by itself or its cargo threatened damage to the environment and has failed to earn a remuneration under Clause 8 at least equivalent to the special compensation assessable in accordance with this Clause, he shall be entitled to claim special compensation against the Owners of the Vessel equivalent to the expenses incurred by him as herein defined.
  2. If, in the circumstances set out in paragraph 1 of this Clause, the Salvor by his salvage services has prevented or minimized damage to the environment, he shall be entitled to claim special compensation against the Owners of the Vessel equivalent to the expenses incurred by him plus an increment of up to a maximum of 30% of such expenses. However, in exceptional circumstances if it should be fair and just to do so bearing in mind the relevant criteria set out in paragraph 2 of Clause 8, he shall be entitled to claim special compensation equivalent to the expenses incurred by him plus an increment of up to a maximum of 100% of such expenses.
  3. Expenses incurred by the Salvor for the purpose of paragraphs 1 and 2 of this Clause mean the out-of-pocket expenses reasonably incurred by the Salvor in the salvage services and a fair rate for equipment and personnel actually and reasonably used in the salvage services.
  4. The special compensation under this Clause shall be paid only if and to the extent that such total amount of the special compensation is greater than the amount of the remuneration recoverable by the Salvor under Clause 8.
  5. If the Salvor was at fault and has thereby failed to prevent or minimize damage to the environment, he may be deprived of the whole or part of any special compensation due under this Clause.
  6. Nothing in this Clause shall affect any right of recourse on the part of the Owners of the Vessel.
Clause 10 (Effect of the Special Compensation Clause and the Special Remuneration Clause)
The Salvor's services shall be rendered as salvage services upon the principle of "no cure - no pay" and any salvage remuneration to which the Salvor becomes entitled shall not be diminished by reason of any exception to the principle of "no cure - no pay" under the Special Compensation Clause or the Special Remuneration Clause.

Clause 11 (Security)
  1. Upon the termination of the salvage services, the Salved Property Owners shall on demand of the Salvor provide security of a reasonable amount to ensure payment of the salvage remuneration (inclusive of interest and costs). Until security has been provided, the Salvor shall have a maritime lien on the Salved Property. In case security is not provided within 21 (twenty-one) days after the date of termination of the salvage services, the Salvor is entitled to attach the unsecured property in accordance with his right of maritime lien. The Owners of the Vessel shall use their best endeavours to ensure that the cargo owners provide security before the cargo is released.
  2. The Salved Property Owners shall each provide the Salvor with security in proportion to the respective values of their property salved. The salvage security shall be provided to the Salvor irrespective of general average security.
  3. Where Clause 9 is likely to be applicable, the Owners of the Vessel shall on the Salvor's demand provide security of a reasonable amount for the Salvor's special compensation payable under Clause 9.
  4. In case the amount of security demanded by the Salvor under preceding paragraph (1) or (3) of this Clause is found to be excessive, the Salvor shall bear any additional costs of providing security in excess of a reasonable amount.
  5. The aforesaid security means cash money and/or a written guarantee issued by bank, insurance company, P&I Club and/or surety company, or any other form of guarantee equivalent thereto, acceptable to the Salvor. In case the security is in the form of a written guarantee issued by bank, insurance company, P&I Club and/or surety company, the amount of such guarantee shall be specified in Japanese currency unless otherwise agreed by the parties to the Agreement. In case the security is in cash and/or in any other forms equivalent thereto, such security shall be in Japanese currency or specified in Japanese currency.
  6. Unless otherwise specified, the aforesaid security shall be lodged with the Japan Shipping Exchange, Inc. ( "the JSE"). The JSE shall keep the security until such time as payment of the salvage remuneration or the special compensation is effected in accordance with the decision made either by amicable settlement, mediation, arbitration or otherwise. If expenses should be incurred in keeping the security, such expenses shall be borne by the party who has lodged the said security. No interest shall accrue upon the security. In case interest accrues upon the cash security lodged, the said interest shall be credited to the account of the depositor.
  7. The JSE shall not be responsible for any insufficiency arising from the difference between the amount of the security lodged and the salvage remuneration or the special compensation finally decided. Nor shall the JSE be liable for any loss caused by any fluctuation in value of stocks, bonds or any other investment securities which are deposited with the JSE.
Clause 12 (Payment of Salvage Remuneration and/or Special Compensation)
When the amount of the salvage remuneration prescribed in Clause 8 and/or of the special compensation in Clause 9 is fixed finally by amicable settlement between the parties, mediation or arbitration, the Salved Property Owners shall pay, in exchange for release of the salvage security provided under Clause 11, the said salvage remuneration and/or special compensation and interest due under Clause 15 to the Salvor within 28 (twenty-eight) calendar days after the date when the amount of salvage remuneration was fixed. If such payment is not made within 56 days after the date of fixing the amount of salvage remuneration, the Salvor is entitled to receive the same amount out of the cash deposit, enforce the security or enforce his possessory lien on the property.

Clause 13 (Mediation)
  1. In case the parties to the Agreement fail to agree on the amount of the salvage remuneration, and/or of the special compensation or any other dispute out of the Agreement has not been resolved, within 90 (ninety) days after the date of termination of the salvage services, except in the case the parties refer the case to arbitration in accordance with paragraph (1) of Clause 14, the parties shall file a claim with the Mediation Commission of the JSE ("the Mediation Commission") for mediation of the said dispute. However, if both parties in dispute so desire, the above-mentioned period may be changed.
  2. Mediation of the Mediation Commission shall be held in accordance with the Rules of Mediation Procedures instituted by the JSE.
  3. When the Mediation Commission, in accordance with the Rules referred to in the preceding paragraph, instructs the parties in dispute to continue their negotiations, the parties in dispute shall continue the negotiations, using their best endeavours to settle the case amicably.
  4. During the period of negotiation or mediation under this Clause, neither of the parties may foreclose or otherwise enforce his interest in the security by any available judicial procedure or refer to arbitration, except taking judicial procedure for preserving his claim.
Clause 14 (Arbitration)
  1. In case the mediation provided in Clause 13 ends in failure or both parties in dispute agree to refer to arbitration without mediating their dispute, the parties shall submit the case to arbitration at the JSE, whose award shall be final and binding.
  2. Appointment of arbitrators, arbitration procedure or any other matters concerning arbitration shall be in accordance with the Rules of Maritime Arbitration of the JSE.
Clause 15 (Interest)
Interest shall accrue on the amount of the salvage remuneration prescribed in Clause 8 and/or of the special compensation in Clause 9 from three months after the date of termination of the salvage services until the date of payment (or the date of a part payment if any). Interest shall be at 6% per annum unless otherwise agreed.

Clause 16 (Changes in the rates of exchange)
In deciding the amount of the salvage remuneration prescribed in Clause 8 and/or of the special compensation in Clause 9, the consequences of any changes in the relevant rates of exchange which may have occurred between the date of termination of the salvage services and the date on which such amount is fixed shall be taken into account.

Clause 17 (Currency in Mediation or Arbitration)
Where the dispute in respect of the amount of the salvage remuneration and/or of the special compensation has been submitted to Mediation provided in Clause 13 or to Arbitration provided in Clause 14, the amount fixed by Mediation or Arbitration shall be specified in Japanese currency unless otherwise agreed by the parties to the Agreement.

Clause 18 (Signature on behalf of the Property Owners)
The Master of the Vessel, or his agent or authorized signatory, by signing this Agreement shall conclude this Agreement for and on behalf of each of the Property Owners.

Clause 19 (Governing Law)
This Agreement shall be governed by and construed in accordance with Japanese law.

Salvage Agreement (Part II)
Special Remuneration Clause

Clause 1 (General)
This Special Remuneration Clause is supplementary to Part I of the Salvage Agreement ("Main Agreement") published by the JSE. If this Special Remuneration Clause is inconsistent with any provisions of the Main Agreement, the Special Remuneration Clause, once invoked, shall override such other provisions. Subject to the provisions of Clause 4 hereof, the method of assessing Special Compensation under Clause 9 of the Main Agreement shall be substituted by the method of assessment set out hereinafter. If this Special Remuneration Clause has been incorporated into the Main Agreement the Salvor may make no claim pursuant to Clause 9 of the Main Agreement except in the circumstances described in Clause 4 hereof.

Clause 2 (Invoking the Special Remuneration Clause)
If this Special Remuneration Clause has been incorporated into the Main Agreement, the Salvor shall have the option to invoke this Clause, by giving written notice to the owners of the Vessel, at any time and at the Salvorfs discretion regardless of the circumstances and, in particular, regardless of whether or not there is a threat of damage to the environment. The assessment of Special Remuneration Clause shall commence from the time the written notice is given to the owners of the Vessel. The services rendered before the said written notice shall be remunerated in accordance with Clause 8 of the Main Agreement.

Clause 3 (Security for Special Remuneration)
  1. The owners of the Vessel shall provide security for Special Remuneration to the Salvor within 2 working days, excluding Saturdays, Sundays and holidays, of receiving written notice from the Salvor invoking the Special Remuneration Clause. The security shall be in the sum of Japanese Yen 300 million, inclusive of interest and costs, in a form reasonably satisfactory to the Salvor such as a Letter of Guarantee issued by bank, insurance company, P&I Club or surety company or cash money or any other security equivalent thereto ("the Initial Security").
  2. If, after provision of the Initial Security, the owners of the Vessel or the Salvor reasonably assess the amount of the security to be excessive or insufficient, either party shall be entitled to request the other party to reduce or increase the amount of the security.
  3. In the absence of agreement, any dispute concerning the proposed guarantor, the form of the security or the amount of any reduction or increase in the security in place shall be resolved by the Mediation Commission.
Clause 4 (Withdrawal)
If the owners of the Vessel do not provide the Initial Security within the said 2 working days as provided in the preceding clause, the Salvor, at his option, and on giving notice to the owners of the Vessel, shall be entitled to withdraw from all the provisions of the Special Remuneration Clause and revert to his rights under the Main Agreement, including Clause 9 of the Main Agreement, as if the Special Remuneration Clause had not been incorporated from the outset. This right of withdrawal may only be exercised if, at the time of giving the said notice of withdrawal, the owners of the Vessel have still not provided the Initial Security or any alternative security which is satisfactory to the Salvor.

Clause 5 (Special Remuneration)
  1. Special Remuneration shall mean the total of the applicable tariff rates of personnel, tugs and other craft, salvage equipment, out of pocket expenses and bonus due.
  2. The remuneration in respect of all personnel, tugs and other craft and salvage equipment shall be assessed on time spent for the salvage services in accordance with the tariff rates agreed in the Main Agreement ("the Tariff Rates").
  3. Out of pocket expenses shall mean all those monies reasonably paid by the Salvor to any third party and includes the hire of men, tugs, other craft and equipment used and other expenses reasonably necessary for the operation. The amount due in respect of the hire of men, tugs, other craft and equipment shall be calculated in accordance with the Tariff Rates regardless of the actual costs. However if the Special Casualty Representative ("the SCR") (or if an SCR is not appointed, then the Mediation Commission) agrees and/or decides that the higher costs actually incurred were reasonable and necessary, the actual costs may be allowed in full.
  4. Special Remuneration payable to the Salvor shall include a standard bonus of 25% in addition to the Tariff Rates and out of pocket expenses assessed in accordance with paragraphs (2) and (3) of this clause. However, if the amount of actual costs allowed in accordance with the last sentence of the paragraph (3) of this clause exceeds the amount assessed according to the Tariff Rates in accordance with the second sentence of the same paragraph (3), the Salvor shall be entitled to receive the actual costs plus 10% of such costs or the Tariff Rate plus 25% of such rate, whichever is the greater, as the Special Remuneration payable to the Salvor in respect of the relevant out of pocket expenses.
  5. In case the Special Remuneration needs to be converted into Japanese Yen, the exchange rate prevailing at the Tokyo Foreign Exchange Market on the date of termination of the salvage services shall be applied.
Clause 6 (Salvage Remuneration)
  1. Even if the Salvor has invoked the Special Remuneration Clause, the remuneration for salvage services under the Main Agreement shall continue to be assessed in accordance with Clause 8 of the Main Agreement. Special Remuneration as assessed under Clause 5 above will be payable only by the owners of the Vessel and only to the extent that it exceeds the total salvage remuneration (or, if none, any potential salvage remuneration) payable by all Salved Property Owners under Clause 8 of the Main Agreement. In this case, the salvage remuneration shall be the amount of money before currency adjustment and before adding interest, even if the salvage remuneration or any of its part is not recovered.
  2. In the event of the salvage remuneration under the Main Agreement and Special Remuneration being in different currencies, the amount of each remuneration shall be converted for comparison into the same currency at the rate of exchange prevailing at the Tokyo Foreign Exchange Market on the date of termination of the salvage services under the Main Agreement, in order to calculate the amount in excess as provided in paragraph (1) of this clause.
  3. The salvage remuneration under Clause 8 of the Main Agreement shall not be diminished by reason of exception to the principle of "no cure - no pay" in the form of Special Remuneration.
Clause 7 (Discount)
If the Special Remuneration Clause is invoked under Clause 2 hereof and the salvage award under Clause 8 of the Main Agreement (including the salvage remuneration settled by the parties after completion of salvage services) is greater than the assessed Special Remuneration, then notwithstanding the actual date on which the Special Remuneration Clause was invoked, the said salvage award shall be discounted by 25% of the difference between the said salvage award and the amount of Special Remuneration that would have been assessed had the Special Remuneration Clause been invoked on the first day of the services.

Clause 8 (Payment of Special Remuneration)
  1. The due date for payment of Special Remuneration hereunder shall be as follows:
    1. If there is no potential salvage award under Clause 8 of the Main Agreement, the owners of the Vessel shall pay the undisputed amount of Special Remuneration within one month of the presentation of the claim.
    2. If there is a claim for salvage remuneration as well as a claim for Special Remuneration, the owners of the Vessel shall pay within one month 75% of the amount by which the assessed Special Remuneration exceeds the total amount of salvage securities provided by the Vessel and cargo. Any undisputed balance of the Special Remuneration shall be paid on or before the due date of payment of the salvage remuneration fixed in accordance with Clause 8 of the Main Agreement.
    3. In relation to the preceding paragraphs (i) and (ii) hereof, if the SCR dissents with the contents of the daily salvage report submitted by the Salvage Master, the owners of the Vessel shall, until the dispute is resolved, make a payment on account of Special Remuneration of the amount assessed in accordance with the Tariff Rates under paragraph (2) of Clause 5 of this Special Remuneration Clause for any equipment, personnel or work which the SCR considers appropriate.
    4. Interest on any Special Remuneration shall accrue from the date of termination of salvage services until the date of payment at US prime rate plus 1 percent.
  2. The Salvor hereby agrees to give an undertaking in a form satisfactory to the owners of the Vessel in respect of any possible overpayment in the event that the final amount of Special Remuneration due proves to be less than the sum paid on account.
Clause 9 (Termination)
  1. The Salvor shall be entitled to terminate the services under this Special Remuneration Clause and the Main Agreement by written notice to the owners of the Vessel with a copy to the SCR and any Underwriterfs Special Representative (if appointed), if the total cost of his services to date and the services that will be needed to fulfill his obligations to salve the Property under the Main Agreement (calculated by means of the Tariff Rates but before the bonus while paragraph (5) of Clause 5 hereof shall remain effective) will exceed the sum of:
    1. the value of the property capable of being salved; and
    2. the Special Remuneration to which he will be entitled.
  2. The owners of the Vessel may at any time terminate the obligation to pay Special Remuneration after the Special Remuneration Clause has been invoked under Clause 2 hereof, provided that the Salvor shall be given at least 5 clear daysf notice of such termination. In the event of such termination the assessment of Special Remuneration shall be made in accordance with Clause 5 hereof including the time for demobilization (to the extent that such time did reasonably exceed the 5 daysf notice of termination).
  3. The termination provisions contained in the preceding paragraphs (1) and (2) shall only apply if the Salvor is not restrained from demobilizing his equipment by national or local government, port authorities or any other officially recognized body having jurisdiction over the area where the salvage services are being rendered.
Clause 10 (Duties of Salvor)
The duties and liabilities of the Salvor shall remain the same as under the Main Agreement, namely to use his best endeavours to salve the Vessel and properties thereon and in so doing to prevent or minimize damage to the environment.

Clause 11 (Special Casualty Representative)
  1. Once this Special Remuneration Clause has been invoked in accordance with Clause 2 hereof, the owners of the Vessel may appoint an SCR to attend the salvage operation in accordance with the terms and conditions of Appendix 1 "Rules for Special Casualty Representative" ("Rules for SCR") attached to this Special Remuneration Clause.
  2. An SCR appointed under this Special Remuneration Clause shall perform the following duties on behalf of all the Property Owners, their insurers and other relevant interests:
    1. The SCR on site shall be entitled to be kept informed about the salvage operation by the Salvor and offer the Salvor his advice regarding the salvage operation as well as personnel, vessels and salvage equipment necessary for the salvage operation (Clause 4 (2) of the Rules for SCR).
    2. The SCR shall during the salvage operation review and assess the contents of the daily salvage report and shall issue his Special Remuneration Clause Final Report as soon as the salvage operation has been completed (Clause 4 (4) and (5) of the Rules for SCR).
Clause 12 (Underwriter's Special Representative)
After this Special Remuneration Clause is invoked, the hull and machinery underwriter (or, if more than one, the lead underwriter) and one owner or underwriter of all or part of any cargo on board the Vessel may each appoint an underwriter's special representative at their sole expense to attend the Vessel in accordance with the Appendix 2 "Rules for Underwriter's Special Representative". Such Special Representative shall be a technical person and not a practicing lawyer.

Clause 13 (Pollution Prevention)
The assessment of Special Remuneration shall include the prevention of pollution as well as the removal of pollutants in the immediate vicinity of the Vessel insofar as this is necessary for the proper execution of the salvage operation.

Clause 14 (General Average)
The Special Remuneration shall not be a general average expense to the extent that it exceeds the salvage remuneration under Clause 8 of the Main Agreement and the owners of the Vessel shall be solely liable to pay such Special Remuneration. No claim relating to Special Remuneration in excess of the salvage remuneration shall be made by the owners of the Vessel against the hull and machinery underwriter or any other salved interests for recovery under the relevant insurance policy, general average or by any other means.

Clause 15 (Mediation for Dispute Settlement)
Any dispute arising out of this Special Remuneration Clause or the services thereunder shall be referred to the Mediation as provided for under the Main Agreement.

APPENDIX
  1. Rules for Special Casualty Representative
  2. Rules for Underwriter' Special Representative


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