Lloyd's Maritime and Commercial Law Quarterly

Edited by Professor Francis D Rose

Document

SALVAGING THE LAW OF AGENCY

The Choko Star

The power enjoyed by the master of a ship to bind cargo owners to salvage agreements he purports to enter into on their behalf has for long concerned salvage specialists. The conflicting decisions handed down by Sheen, J., in the Admiralty Court,1 and by the Court of Appeal in Industrie Chimiche Italia Centrale and Cerealfin S.A. v. Alexander Tsavliris & Sons Maritime Co. (The Choko Star) 2 point up perfectly the divergence between legal principle, on the one hand, and the practical exigencies of the commercial world, on the other. For the time being, legal principle may be said to have emerged the victor.

Briefly, Choko Star ran aground in the River Parano shortly after setting sail for Italy, laden with sunseeds and soya beans. The master entered into a Lloyd’s Standard Form of Salvage Agreement (LOF 1980) with salvors, the first respondents, on behalf of both the disponent shipowners and the owners of the cargo. The salvors’ claim against the shipowners was settled. The dispute, therefore, solely concerned the liability of the cargo owners, who, while conceding that they would have been liable under general maritime law had the master simply engaged salvors to refloat the ship, disputed their liability to the salvors under the special terms of the LOF agreement purportedly entered into on their behalf by the master. At first instance Sheen, J., accepted the salvors’ argument that the cargo owners had no option but to recognize that, since circumstances could arise during a voyage that necessitated the assistance of salvors, they “will be primarily liable to pay their proportion of salvage reward” and that it was for the shipmaster to decide when assistance was actually necessary. This being so, the master’s authority arose in the following way:

… if [the master] has implied actual authority to engage salvors on reasonable terms on behalf of the shipowners, he must also have implied actual authority to enter into the same reasonable contract on behalf of cargo. The authority is necessarily implied into the contract of carriage.3

Moreover, Sheen, J., was prepared to fortify the master’s authority by answering in the affirmative the first respondents’ confusingly worded preliminary question to the effect that “the master of a ship has implied actual authority, and therefore apparent authority, to make reasonable contracts with salvors on behalf of owners

1. [1989] 2 Lloyd’s Rep. 42.

2. [1990] 1 Lloyd’s Rep. 516.

3. Supra, fn. 1, at p. 46.

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