Salvage Charges

Salvage Charges refer to remuneration payable by the salved party to a third-party salvor who voluntarily renders salvage services and successfully preserves property when a ship or cargo encounters a peril such as a maritime accident in sea carriage or international trade. Such charges fall within the scope of general average or particular average and are usually apportioned among the beneficiaries, such as shipowners and cargo owners, in proportion to the value of the property salved. They are commonly encountered in marine insurance, charter parties, and risk allocation under trade terms such as CIF and FOB. Note: Salvage Charges differ from Sue and Labour Charges, which are expenses incurred by the insured itself to mitigate loss and are separately recoverable from the insurer; Salvage Charges are third-party salvage remuneration and are subject to the principle of 'no cure, no pay.' In addition, under Incoterms, if the trade term provides that the seller is responsible for carriage and insurance, Salvage Charges may be borne by the seller, but this depends on the specific clauses. Unlike general average contribution, Salvage Charges do not necessarily involve a common peril, and the salvor may assert a lien. Foreign trade practitioners should clearly specify in the contract which party bears Salvage Charges and insure against such risks under appropriate coverage, such as FPA or WA.