SMIT Salvage BV & Ors v Luster Maritime SA & Anor (MV Ever Given – Salvage Claim)

Parties may conclude a binding contract while contemplating a later formal document and further terms. Whether they have done so depends on an objective assessment of the whole course of their words and conduct. The party asserting the contract bears the burden of establishing an intention to be legally bound.

The absence of expressions such as “subject to contract” is not decisive. In the salvage context, mobilisation and assistance do not themselves imply a contract because salvors may act in anticipation of an agreement or rely on the general law of salvage. Agreement on remuneration alone therefore creates no binding interim contract where the exchanges remain consistent with an intention to be bound only after outstanding matters are agreed.

The owners of the Ever Given appealed from the Admiralty Court’s preliminary determination in [2023] EWHC 697 (Admlty). The vessel had grounded in and blocked the Suez Canal. The respondent salvors mobilised personnel and tugs and contributed to the successful refloating.

The parties agreed remuneration terms by email while continuing to negotiate a detailed Wreckhire contract. That contract was never finalised. The owners contended that the email exchange created a binding agreement fixing the salvors’ remuneration and precluding a salvage claim under the International Convention on Salvage 1989 or at common law.

The central issue was whether, viewed objectively in the context of the whole negotiation, the parties intended the remuneration agreement to be legally binding before the remaining contractual terms were agreed.

1. Appeal dismissed unanimously. The owners failed to establish that the parties had concluded a binding contract fixing the salvors’ remuneration. The exchanges fell considerably short of evincing an unequivocal intention to be bound. At the least, they were consistent with an intention that legal obligations would arise only after all outstanding matters had been agreed.

2. The applicable principles were those summarised from RTS Flexible Systems Ltd v Molkerei Alois Mueller GmbH & Co KG [2010] UKSC 14, Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601 and Global Asset Capital Inc v Aabar Block Sarl [2017] EWCA Civ 37. The whole course of negotiations must be examined objectively. A contract can exist although a formal document and further terms are contemplated, but the party asserting it bears the burden of proving the requisite intention. The absence of “subject to contract”, “subject details” or similar words does not determine the issue.

3. In a salvage setting, mobilisation or the provision of assistance does not by itself imply a contract. Such conduct may equally reflect an expectation that a contract will follow or a willingness to rely on the general law of salvage if none is concluded. The salvage-context decisions in The Kurnia Dewi [1997] 1 Lloyd’s Rep 552 and The Athena [2011] EWHC 589 (Admlty) turned on materially different facts and issues.

4. SMIT had consistently sought a comprehensive agreement covering the services, standard of care, payment and other detailed terms. Its demands for agreement did not show any change to a willingness to accept a binding contract concerned only with remuneration. Agreement on remuneration was a necessary stage in the negotiations, but was not objectively their intended contractual destination.

5. The reduced urgency after remuneration was agreed did not demonstrate that a contract existed. The failed refloating attempt strengthened SMIT’s commercial position and increased the likelihood that its assistance would attract a salvage award if negotiations failed. This objectively explained its continued mobilisation without an interim contract.

1. Court of Appeal (Civil Division): By [2024] EWCA Civ 260, unanimously dismissed the owners’ appeal and upheld the determination that no binding remuneration contract had been concluded.

2. High Court, Admiralty Court: By [2023] EWHC 697 (Admlty), Andrew Baker J determined the preliminary issue in favour of the salvors. He held that the parties did not objectively intend their agreement on remuneration to become legally binding before the remaining terms were agreed.