This was a dispute between the owners of the tug Grigoriy Lintsov and its salvors, the Federal Budgetary State Institution 'Morspassluzhba' regarding the collection of a debt under a salvage agreement concluded between them.

On 18 October 2022, the tug Grigoriy Lintsov caught fire. The vessel’s crew sent out an SOS signal, which was received by the master of another vessel, who informed the port authority of the seaport Temryuk and stated that they were ready to assist the vessel. They received the answer from the salvors' vessel that their help was unnecessary because the vessel’s crew had been saved by another vessel, the Tyumen-1.

Eight hours after the signal was sent, two of the salvors’ vessels arrived at the place of the incident. By that time, the fire had allegedly been extinguished naturally without any help from the salvors. On 20 October 2022 (two days after the incident and one day after the completion of salvage operations), the shipowners and the salvors concluded a salvage agreement. They also signed a memorandum of acceptance of works performed by the salvors. These included fire extinguishing, towage, and the visual inspection of the vessel’s hull. The salvage reward under the contract was RUB 5,000,000.

On 10 November 2020, the vessel was inspected by a surveyor of the Russian Ship Maritime Registry (the Russian classification society) and an independent assessment expert. Both the surveyor and the assessment expert concluded that the vessel was a constructive total loss and recommended selling it as scrap. On 24 May 2021, the vessel was deleted from the State Ship Registry due to its constructive total loss. On 20 December 2021, the vessel was sold as scrap.

The shipowners refused to pay the salvors. They argued that the salvage operation did not have a useful result as stipulated in arts 12.1 and 12.2 of the Salvage Convention 1989 and arts 341.1 and 341.2 of the Merchant Shipping Code of the Russian Federation (the MSC RF).

The Court of first instance found in favour of the shipowners. It stated that the mere conclusion of a salvage agreement does not give rise to the salvors' right to a reward if the salvage does not have a useful result. In the present case, the salvage did not have a useful result.

The Court of Appeal revised the judgment of the Court of first instance. It agreed with the finding that the salvage had had no useful result. However, it noted that, under art 343.1 of the MSC RF and art 14.1 of the Salvage Convention 1989, If the salvors carried out salvage operations in respect of a vessel which threatened damage to the environment and failed to earn a reward under art 341 of the MSC RF (or art 12 of the Salvage Convention 1989) at least equivalent to the special compensation assessable in accordance with this article, they were entitled to special compensation from the owner of that vessel equivalent to their expenses. The special compensation should be paid only for actual and reasonable measures taken by the salvors.

The Court of Appeal held that the vessel threatened environmental damage, and that the salvors were entitled to special compensation. The Court of Appeal found that it was not proved that the salvors carried out the services other than towage of the vessel to the safe port. The special compensation was calculated at RUB 767,025, being reasonable towage costs.

The salvors submitted a cassation appeal. They argued that the shipowners signed the salvage agreement and the memorandum of acceptance of works performed after the actual salvage had been carried out. Thus, the shipowners contractually agreed, knowing which services were actually rendered, to pay a salvage reward in the amount of RUB 5,000,000. Alternatively, the salvors stated that they carried out additional services for mobilisation of personnel and equipment to the incident area, deboarding the crew from the vessel Tyumen-1, and onboarding of the crew on the tug to wait for the arrival of the speed boat.

Held: The judgment of the Court of Appeal was upheld.

The Commercial Court of the North-Caucasus District (the Court of Cassation) agreed with the conclusions of the lower Courts that the salvage had had no useful result. It stated that the mere fact of the conclusion of a salvage agreement does not create a right of the salvors to a reward. A reward is to be paid only if there is a useful result from the salvage operations (arts 342.1 and 342.2 of the MSC RF, arts 12.1 and 12.2 of the Salvage Convention 1989), except for the special compensation stipulated in art 343 of the MSC RF and art 14 of the Salvage Convention 1989. The fact that the salvage agreement and the memorandum of acceptance of works performed were signed after the salvage operations had been carried out is irrelevant to the dispute.

The Court also stated that special compensation is due only for reasonably incurred costs of services and a fair rate for equipment and personnel actually and reasonably used in the salvage operations (art 343.3 of the MSC RF, art 14.3 of the Salvage Convention 1989). The salvage agreement did not specify services for mobilisation, deboarding and onboarding of the crew. Therefore, these services were not part of the salvage operations and did not form part of the expenses reasonably incurred during the salvage operations.