Introduction

The case of SMIT Salvage BV & Ors v Luster Maritime SA & Anor (MV Ever Given - Salvage Claim) ([2024] EWCA Civ 260) adjudicated by the England and Wales Court of Appeal (Civil Division) on March 19, 2024, revolves around the critical issue of whether the parties involved had concluded a legally binding contract concerning the remuneration for salvage services rendered. The appellants, owners of the container ship M.V. Ever Given, argue that a contract was established, thereby negating the salvor's claim under the International Convention on Salvage 1989 or common law. Conversely, the salvors, represented by SMIT Salvage BV, maintain that no such contract exists, allowing them to pursue their salvage claims independently.

The Ever Given, a vessel measuring 399.98 meters in length, became globally infamous when it grounded in the Suez Canal on March 23, 2021, obstructing one of the world's busiest maritime routes. The urgent efforts to refloat the vessel set the stage for the legal dispute that ensued between the ship owners and the salvage company.

Summary of the Judgment

The Court of Appeal upheld the Admiralty Court's decision that no binding contract regarding the remuneration for SMIT Salvage's services had been concluded between the parties. The owners had contended that an exchange of emails established such a contract, thereby preventing SMIT from claiming salvage under the prevailing maritime laws. However, the court found that while there was an agreement on remuneration terms, the parties did not exhibit an intention to be legally bound until all contractual terms were finalized. Consequently, SMIT Salvage retains the right to pursue salvage remuneration under the International Convention on Salvage 1989 and common law principles.

Analysis

Precedents Cited

The judgment references several pivotal cases to elucidate the principles surrounding contract formation:

• RTS Flexible Systems Ltd v Molkerei Alois Mueller GmbH & Co KG [2010] UKSC 14: Established that the entire course of negotiations is crucial in determining contract intent.
• Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601: Highlighted that a binding contract can exist even if all terms are not fully agreed upon, provided there is clear intention to be bound.
• Global Asset Capital Inc v Aabar Block Sarl [2017] EWCA Civ 37: Reinforced the necessity of objective appraisal of parties' communications to ascertain contractual intentions.
• The Kurnia Dewi [1997] 1 Lloyd's Rep 552: Explored jurisdictional aspects of salvage contracts, emphasizing context-specific evaluations.
• The Athena [2011] EWHC 589 (Admlty): Demonstrated that exchange of agreements could imply incorporation of standard contractual terms, like arbitration clauses.

These precedents collectively underscore the court's reliance on the objective assessment of parties' communications and the context in which agreements are made to determine contractual obligations.

Legal Reasoning

The Court meticulously examined the sequence of communications between SMIT Salvage and the owners. While there was an exchange of emails indicating agreement on remuneration terms, the court found that essential elements of a contract were absent. Specifically:

• The agreement solely addressed remuneration without detailing the scope of services, standard of care, and other fundamental contractual terms.
• The parties anticipated that comprehensive contractual terms would be negotiated subsequently, implying an intention to finalize all terms before being legally bound.
• The "ultimatums" presented by SMIT Salvage were interpreted not as definitive acceptance of a partial agreement but rather as efforts to secure comprehensive contractual assurances.

The court determined that the mere agreement on remuneration did not suffice to establish a binding contract, as the parties did not exhibit an unequivocal intention to be bound in the absence of a full contractual agreement.

Impact

This judgment reinforces the principle that partial agreements, especially those lacking comprehensive terms, do not culminate in binding contracts. For the maritime salvage industry, it emphasizes the necessity for salvors to secure complete contractual agreements to ensure legal protection and clear remuneration terms. Furthermore, it underscores the importance of clear intent and comprehensive negotiations in contract formation, serving as a precedent for future cases where contractual obligations are contested based on partial agreements.

Complex Concepts Simplified

Conclusion

The Court of Appeal's decision in SMIT Salvage BV v Luster Maritime SA underscores the paramount importance of clear and comprehensive contractual agreements in maritime salvage operations. Merely agreeing on remuneration terms does not constitute a binding contract if essential elements such as the scope of services and standards of care remain unsettled. This judgment serves as a crucial reminder to maritime parties to prioritize detailed negotiations and clearly express their intention to be legally bound, thereby mitigating potential disputes in high-stakes salvage scenarios.