Svitzer Salvage v Z Energy Limited and Another [2013] NZHC 2585: The Interaction between the Law of Salvage, the Law of Contract and the Salvage Convention in Circumstances of Duress

• Author: Alistair Sullivan
• Position: Alistair Sullivan, BCom, LLB, is a Master of Laws student at the University of Queensland and a member of the Marine and Shipping Law Unit student cohort
• Pages: 70-74

(2015) 29 ANZ Mar LJ

70

Svitzer Salvage v Z Energy Limited and Another [2013] NZHC 2585

Alistair Sullivan

*

With ongoing environmental protection developments in the maritime industry and the associated changes to the

way in which salvage services are conducted, questions arise as to how the peculiar and ancient principles of

salvage law should interact and develop with other areas of the law. These issues and developments were

discussed in relation to a question of duress in conclusion of a salvage contract in the recent New Zealand High

Court decision of Svitzer Salvage v Z Energy Ltd.1 The issues arising in light of this decision demonstrate the

complex interaction between the common law, Admiralty law and the Salvage Convention 1989,2 in these

circumstances and indicate the possible ways in which the law may evolve. The relationship between these three

areas of law is nuanced and without the Court being able to discuss these matters in great detail due to the fact

the decision was on an application for summary judgment, a discussion as to the various approaches that a court

might ultimately take, given consideration of the rationale of salvage law and its place in the maritime world

today, is warranted. Although the Court was unable to fully explore these approaches the case demonstrates the

importance of salvage law today and how it may apply where duress is claimed in circumstances such as those

encountered in the case.

Facts

The Svitzer Salvage case arose from the grounding of the container ship the MV Rena. The Rena grounded on

the Astrolabe Reef, off the Port of Tauranga in the Bay of Plenty, New Zealand on October 5 2011 at

approximately 2.20am.3 The Rena, a 256 metre fully laden ship with a gross tonnage of 37 209, was travelling at

approximately 17 knots at the time of the grounding.4 The response to the risk of significant environmental

damage was initiated quickly, with the vessel declared ‘hazardous’ in accordance with the New Zealand

Maritime Transport Act5 the day after it grounded.6 On that same day Svitzer was appointed as salvor of the

Rena, by way of an LOF contract.7 Pending risk of a major environmental disaster, Svitzer then sought to

acquire the services of the bunker tanker Awanuia, to remove fuels and oil from the Rena urgently. The

Awanuia, which was on a long-term ex clusive charter to Z Energy, was being used to transport oil from the

Marsden Point refinery for the bunkering of ships in Auckland Harbour.8 The second defendant Seafuels was

the owner of Awanuia. Svitzer and asso ciated parties entered into negotiations with Z Energy and Seafuels for

the temporary release of the Awanuia from its existing contractual obligations. At the time there were no other

appropriate vessels that would have been able to safely conduct the required salvage services.9 Svitzer entered

into a short-term charterparty with Seafuels under protest, on the grounds that the terms were exorbitant and

unfair.10

Following the salvage operation, Svitzer brought an action against both Seafuels and Z Energy on three

grounds. First, it was alleged that the charterparty between Svitzer and Seafuels was entered into under duress in

accordance with the law of contract; secondly, it was submitted that the charterparty was unjust, inequitable and

exorbitant and therefore warranted equitable intervention in the Admiralty jurisdiction, and thirdly, it was

contended that the charterparty was entered into under duress and was therefore able to be modified or annulled

in accordance with the Salvage Convention 1989.11

Duress and the Law of Contract

The claim of duress in accordance with the common law of contract was dismissed.12 The Court found that the

actions of Seafuels were not illegitimate in the circumstances and that the negotiation of terms was unable to be

* Alistair Sullivan, BCom, LLB, is a Master of Laws student at the University of Queensland and a member of the Marine and Shipping

Law Unit student cohort.

1 Svitzer Salvage v Z Energy Limited [2013] NZHC 2585 (4 October 2013) (‘Svitzer Salvage’).

2 International Convention on Salvage 1989, 1989, 1953 UNTS 165.

3 Svitzer Salvage [2013] NZHC 2585 (4 October 2013) [3]; Svitzer Salvage v Z Energy Limited [2012] NZHC 1650 (20 July 2012) [1].

4 Svitzer Salvage v Z Energy Limited [2012] NZHC 1650 (20 July 2012) [1].

5 Maritime Transport Act 1994 (NZ).

6 Svitzer Salvage v Z Energy Limited [2013] NZHC 2585 (4 October 2013) [5].

7 Lloyd’s Open Form contract (with SCOPIC clause invoked).

8 Svitzer Salvage v Z Energy Limited [2013] NZHC 2585 (4 October 2013) [8].

9 Ibid.

10 Ibid [48].

11 The Maritime Safety Act 1994 (NZ) incorporates the International Convention on Salvage 1989 into New Zealand law.

12 Svitzer Salvage v Z Energy Limited [2013] NZHC 2585 (4 October 2013) [178].