Coastal fire brigades and local authorities have been plunged into a financial dilemma by a new ruling that they are not entitled to claim salvage or expenses from stricken vessels even if they have been called out to fight on-board fires.
The decision by the Council of Lloyd's in a case involving the MV Kukawa is likely to result in local authorities rethinking their strategies on emergencies at sea off their shores.
For, without the prospect of a slice of the salvage money or payment of their expenses, local authorities could find themselves hundreds of thousands of pounds out of pocket.
The case centred on fire fighting expenses incurred by Guernsey and Cornwall Fire Brigades for the container ship Kukawa, which caught fire off the Channel Islands in December 1997.
In July 1998, an arbitrator made a salvage award which included out-of-pocket ex-penses run up by the two fire brigades.
Now though, in a landmark ruling, the Council of Lloyd's has overturned that decision and allowed an appeal by the owners of the ship's cargo against paying the fire brigades' expenses.
Arbitrator John Willmer QC held on appeal that under the provisions of the 1947 Fire Services Act, fire services are not legally entitled to salvage or their expenses, even though it has been generally accepted over the past 50 years that they are.
Ken Scott, a partner in marine law specialists Holmes Hardingham Walser Johnston Winter, who represented Howard Smith (UK), the salvage company that brought the fire brigades' claim as part of its own, says: "This is an important case with wide-ranging ramifications. What has happened to date is that underwriters have paid when fire services have asked either for their costs or claimed salvage.
"This time, for some reason the underwriters took the point that under the 1947 Fire Services Act they were not allowed to claim for fire fighting. The situation now is that firefighters, if asked to, would be happy to go. Local authorities, however, are going to be less than happy to send them because the local rate payers will have to pick up the bill."
Captain Mark Hoddinott, salvage manager for Howard Smith (UK), says : "The ruling cannot be in the public interest. In the short-term UK fire authorities which undertake fire fighting at sea will be cautious in committing resources for which they cannot charge or claim salvage. This translates into a reduction in capability. In the longer-term it is possible that local authorities will withdraw their fire brigades' capability for fire fighting at sea on financial grounds. It is difficult to see why underwriters decided to take the point concerning fire brigades. They, and the environment, will almost certainly suffer as a result."
Scott says: "Up to now the cost of fire fighting at sea has not been a drain on the local community because the fire services, prior to this case, would have got their money from the insurance underwriters.
"The situation created by this case is unfair because the people getting the benefit are the underwriters and the owners of the ship and the cargo. Local rate payers will be paying for the fire fighting to save money for the underwriters.
"What we are now trying to do is get the law changed in this respect. The coastguards can, at the moment, call on the fire services and the fire services guarantee a minimum response. Now the fire services are probably going to withdraw that guarantee.
"This is the first challenge of this nature in 50 years. This act has been there since 1947 and everyone has assumed, in my view rightly, that the fire services ought to be able to claim salvage.
"One of the problems of this decision is that now, even if an attempt was made to reach a prior arrangement before a fire service put to sea, the arrangement would be ultra vires in the light of the ruling and unenforceable."