Salvage and Wreck: What the Law Expects When Cargo or a Vessel Is Lost at Sea

A ship in trouble produces three different claims. Only one of them is a loss to the cargo owner. The other two can still send a bill.

By Sidoman  |  Tuesday, 27 October 2026

The call usually comes late. A vessel has taken water off a coast, or grounded on an approach channel, or declared general average after a fire in a hold. The cargo is still aboard, or part of it is, or none of it is. The importer wants to know one thing: is the goods lost, and who pays?

The honest answer is that the sea keeps three ledgers, and they do not add up the same way. General average is a contribution among the interests that were saved. Salvage is a reward to the person who saved them. Wreck removal is the cost of clearing a sunken or abandoned ship from the place where it is doing harm. A single container can appear in all three. Knowing which is which is the difference between a claim you can make and a bill you did not expect.

This column sets out what Kenyan and international law expects in each case, what the recent casualties show, and what an importer should do before the next shipment leaves the origin port.

General average: the sacrifice that is shared

General average is older than most of the statutes that now sit around it. Its logic is simple. If the crew throws part of the cargo overboard to save a ship that would otherwise be lost, the owners of the property that was saved should share the loss, rather than leave the owner of the jettisoned goods to bear it alone.

Kenya's Marine Insurance Act, Cap. 390, sets out the concept in statute. Under section 66(2), a general average act is one in which any extraordinary sacrifice or expenditure is voluntarily and reasonably made. Under section 66(1), a general average loss is a loss caused by, or directly following from, such an act, and it includes the expenditure as well as the sacrifice. The classic test, set out by the US Supreme Court in Barnard v Adams, asks three questions: was there a common peril, was the sacrifice voluntary, and did the attempt to avoid the peril succeed? The last question matters. A sacrifice that fails to save the venture does not generate a contribution.

The arithmetic is done under the York Antwerp Rules. Those are not a statute. They are a set of rules the shipping trade has agreed to apply, and bills of lading and charter parties usually incorporate them by reference. The first version dates from 1864, and the Rules have been revised in 1890, 1950, 1994, 2004 and 2016. The Comité Maritime International approved the 2016 version in May 2016, with guidelines that are not binding. A cargo owner who is asked to contribute should check which version the contract names, because the result can depend on it.

Three recent casualties show the mechanism at work. The Ever Given grounded in the Suez Canal on 23 March 2021. Its owners declared general average, and refloating and salvage costs were shared among cargo owners in proportion to the value of their goods. The Dali lost power and struck the Francis Scott Key Bridge in Baltimore on 26 March 2024. Six men died. Its owner declared general average, and the contract of carriage contained a New Jason Clause, which required cargo to contribute even though the ship's side had caused the casualty. Under default US law, cargo would not normally have to contribute where the carrier's fault caused the event. The clause changes that result, and it is the kind of term that sits unread in a bill of lading until a claim arrives. The Maersk Frankfurt, a containership on the India bound FI3 service, caught fire in July 2024 and burned for several days. Maersk said the owner had declared general average and appointed adjusters to collect security. Cargo was held at a safe location and not released until the cargo interests provided that security.

For the importer, the practical point is the bond. Carriers will often refuse to release cargo until a general average guarantee is in place, usually provided by the cargo owner's insurer. An importer who is uninsured may be asked for a cash deposit, which is a painful demand for a business that has already paid for the goods, the freight, the duties and the port charges. Adjustments of major casualties take months or years, so the final figure may arrive long after the goods have been delivered.

Salvage: no cure, no pay

Salvage is a different concept. It is not a sharing of a loss among the people who were saved. It is a reward to the people who saved them. Under section 65(2) of the Marine Insurance Act, salvage charges are those recoverable under maritime law by a salvor independently of any contract. The principle at the centre of the modern law is "no cure, no pay". A salvor who saves a ship or its cargo is rewarded, usually by a share of the value saved. A salvor who tries and fails is, in the ordinary case, not paid for the effort.

The International Convention on Salvage, 1989, which entered into force on 14 July 1996, extends the principle to environmental salvage. Where a salvor prevents or limits damage to the environment, the Convention provides for special compensation, even where the ship or cargo itself is not saved.

In practice, most salvage operations run on a standard contract. The Lloyd's Open Form is the best known. The Lloyd's Market Association and the International Chamber of Shipping published a revised version on 29 January 2026, with a guidance note. The revision applies wherever "Salvage Assistance" is needed and makes the Lloyd's Open Form the default emergency contract in more situations than before. Under the guidance, an owner acting in good faith who cannot reach the Lead Underwriter may proceed with another contract after 48 hours. Commentators have pointed out that the revised drafting says little about brokers or P&I clubs, which matters to cargo interests, because the salvage bill ultimately lands on the cargo.

The Ever Given litigation shows how far a salvage award can travel. In SMIT Salvage BV v Luster Maritime S.A. [2024] EWCA Civ 260, the English Court of Appeal held that salvage remuneration is not capped by a negotiated services agreement, so the salvor could claim more than the figure first agreed. For cargo owners, the lesson is that a salvage bill is not a fixed fee. It is an award a court or arbitrator can assess, and where it is charged to the cargo it joins the general average pool.

Kenya's own law addresses salvage in Part XIV of the Merchant Shipping Act, 2009. It brings in the International Convention on Salvage, 1989. As a rule there is no reward without a useful result (section 329). The criteria for a reward include the salvor's work to protect the environment (section 335), and special compensation is covered in section 338. Every salved interest, cargo included, pays in proportion to its salved value (section 336). Salvors also hold a maritime lien (section 342), and claims must be filed within two years after the operations end, although a court can extend this (section 357).

Wreck: who clears up, and who pays

When a ship cannot be saved, someone has to deal with what is left. A wreck can block a channel, leak fuel, or release hazardous cargo. Clearance costs can be substantial, and a vessel that blocks an approach can halt traffic for days. The grounding of the Ever Given is the best known example of that disruption.

Kenya's Merchant Shipping Act defines a wreck to include a part of a ship that is lost, abandoned, stranded or in distress, and a vessel abandoned without hope or intention of recovery. Its wreck provisions cover the duties of the receiver of wreck, notice of wreck, the claiming and sale of wreck, and removal of wreck in port and on the coast. The public task of making a hazard safe is one question. The private allocation of its cost, among shipowner, insurer and cargo, is another. The two are connected but they are not the same. Anyone who takes possession of wreck must deliver it to the receiver of wreck (section 315). The receiver posts a notice within 48 hours (section 317), and the owner can claim within six months (section 318).

The international framework is the Nairobi International Convention on the Removal of Wrecks, 2007. It was concluded in Nairobi on 18 May 2007 and entered into force on 14 April 2015. It gives the coastal state power to require the removal of a wreck that is a hazard to navigation or to the marine environment. It makes the registered owner responsible for the cost, requires the owner to maintain compulsory insurance or other financial security, and gives states a right of direct action against the insurer. That last feature matters. A state does not have to chase a single ship company that has already disappeared. It can pursue the insurer.

The UN Treaty Collection lists Kenya as a party to the Convention since 2015. Anyone advising on a wreck in Kenyan waters should still confirm how it is applied with the Kenya Maritime Authority.

For the cargo owner, the important point is that a wreck removal bill is usually the registered owner's bill, backed by the owner's insurance. Cargo is not the first target. It can be drawn in where it is part of the wreck, or must be removed with it, or where a port holding cargo on site seeks to recover its costs from the goods. Those risks belong to the adjustment and the contract of carriage, and they should be read with them.

What it means for the cargo owner

Put the three ledgers side by side and the importer's position becomes clear.

Claim	Who pays	What the cargo owner should expect
General average	Ship, freight and cargo, in proportion to the value of what was saved	A bond or insurer's guarantee before release. Uninsured cargo may have to pay a cash deposit. Final figures can take months or years.
Salvage	Owners of the salved ship, cargo and equipment, in proportion to the value saved	A share of the reward if your goods were saved, with security demanded before release. The award is assessed, not fixed.
Wreck removal	The registered owner, backed by compulsory insurance under the Nairobi Convention where it applies	Usually the owner's bill. Cargo may be drawn in if it is part of the wreck or must be removed with it, or if a port seeks to recover costs from it.

Some edges of the law are worth naming, because they are where the arguments start. If nothing was saved, there is generally no salvage reward and no general average contribution, since both depend on a common adventure that was preserved or property that was salved. If your cargo was sacrificed and the ship was saved, you are the claimant in general average, subject to the adjuster's figures. If your cargo was saved while other cargo was sacrificed, you are a payer. If the ship is lost and your goods go to the bottom, you are looking at a cargo claim against the carrier, governed by the bill of lading. Under the Hague and Hague Visby Rules, where they are incorporated, suit against the carrier generally has to be brought within one year of delivery, and carrier liability per package is limited to 666.67 Special Drawing Rights under the Hague Visby limit. You are not, in the ordinary case, the person who pays to lift the hull.

Four consequences follow. Carriers will not release cargo until security is given. Salvage awards are assessed by someone other than the carrier. General average adjustments are slow. And the time limits for claims are short and can run from the date of delivery, so claims should be notified early and documents kept until the adjustment closes.

Marine insurance: the policy that decides the outcome

In a general average or salvage casualty, the cargo owner's insurance is usually the difference between a manageable bill and a serious loss. Three features of Kenyan law shape that protection.

First, the insured must have an insurable interest. Under section 5(1) of the Marine Insurance Act, a person has an insurable interest if they are interested in a marine adventure. Under section 6(1), the interest must exist at the time of the loss, not necessarily when the policy is taken out. A cargo owner who has sold the goods before the casualty, or who does not own them at the moment of loss, may find that the policy does not respond.

Second, general average and salvage charges are not recoverable under the suing and labouring clause, according to section 78(2). A policy must therefore cover them expressly. The Institute Cargo Clauses are generally written to respond to general average and salvage, but the wording, the sum insured and the exclusions all need checking against the shipment.

Third, Kenya now requires local marine cargo insurance. Section 16A of the Marine Insurance Act, added through the Finance Act, 2017, requires anyone with an insurable interest in marine cargo to insure with a local insurer. The first directive from KRA and the insurance regulator took effect on 14 February 2025, and digital enforcement now requires the insurance certificate to be submitted to the Integrated Customs Management System before clearance. Notices have given different start dates for that step, so importers should confirm the current date and procedure with KRA before shipping, rather than relying on any single date.

Critics have argued that local insurance limits the choice of insurer for sellers on CIF terms and buyers on FOB terms, could weaken price competition, and may create difficulty for existing international policies. Others doubt that local insurers can absorb large risks. For the importer the immediate consequence is simpler: a certificate that does not open the entry is no certificate at all, and the uninsured importer meets a general average or salvage bill from its own cash.

The current disruption adds weight to all of this. According to The EastAfrican, more than 1,200 cargo vessels carrying goods worth about $125 billion were stranded after the Strait of Hormuz was closed earlier this year. Long detentions, rerouting and congestion raise the chance of an incident and the length of any adjustment. A policy that looks adequate for an ordinary voyage can be stretched by a crisis of that kind.

What to do before the next casualty

1. Read the bill of lading. Note the York Antwerp Rules version it incorporates, whether it contains a New Jason Clause, and what the carrier may do with cargo held as security.
2. Place marine cargo insurance with a local insurer before the goods ship, and confirm that the policy covers general average and salvage. Keep the certificate with the shipment file.
3. When a casualty is declared, separate the claims. Ask whether it is general average, salvage, wreck removal, or a simple loss of your goods. They are different claims with different payers.
4. Notify your insurer the same day. Do not sign a general average bond, agree salvage security or pay a cash deposit without understanding what you are securing.
5. Ask for the basis of any demand: the adjustment, the contract, the calculation and the security sought.
6. Preserve evidence. Keep the bill of lading, invoice, packing list, insurance certificate, survey reports, photographs, seal records and all notices.
7. Diary the time limits. Under the Hague and Hague Visby Rules, where they apply, a claim against the carrier generally has to be brought within one year of delivery. Check the limits that apply to your own contract.
8. Seek advice early where sums are material, goods are perishable, or a release is urgent.

Closing

Maritime law is old because the sea is old. A sacrifice made to save the venture is shared. A rescue that succeeds is paid for out of what was rescued. A wreck that blocks a channel is lifted at its owner's cost, and the Nairobi Convention exists to make sure that cost does not fall on the port. None of these rules is a punishment. Each is a price.

For the cargo owner, the lesson is short. Know which ledger you are in. Insure the goods before they leave the factory, with a local insurer. And when the late call comes, ask for the nature of the claim before you ask for the amount. The amount is a number. The nature decides whether you pay it, claim it, or read about it in someone else's file.

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Sources

1. Marine Insurance Act, Cap. 390 (Kenya), sections 5, 6, 16A, 65, 66 and 78: Kenya Law
2. Merchant Shipping Act, 2009 (Kenya), Part XIV, Wreck and Salvage: Kenya Law
3. York Antwerp Rules 2016, Comité Maritime International
4. International Convention on Salvage, 1989
5. Nairobi International Convention on the Removal of Wrecks, 2007: UN Treaty Collection; IMO
6. SMIT Salvage BV v Luster Maritime S.A. [2024] EWCA Civ 260 (Court of Appeal of England and Wales)
7. Barnard v Adams (1850), US Supreme Court, on the elements of general average

General information, not legal advice.

Sidoman Logistics, Mombasa