B-131206, APRIL 26, 1957, 36 COMP. GEN. 745

B-131206: Apr 26, 1957

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GENERAL AVERAGE - LEGAL SERVICES PROCURED BY VESSEL OWNER - GOVERNMENT CARGO - CONTRIBUTION IN SALVAGE CLAIMS LEGAL SERVICES WHICH ARE PROCURED BY A VESSEL OWNER AND RENDERED FOR THE GENERAL BENEFIT OF SHIP AND CARGO. THE VALUE OF THE LEGAL SERVICES RENDERED BY UNITED STATES GOVERNMENT ATTORNEYS IN THE SETTLEMENT OF SALVAGE CLAIMS FOR THE GENERAL BENEFIT OF SHIP AND CARGO SHOULD BE REFLECTED AS A GENERAL AVERAGE EXPENSE FOR WHICH THE GOVERNMENT CARGO INTEREST WILL RECEIVE A CREDIT WHILE THE OTHER CARGO INTERESTS WILL BE MADE TO CONTRIBUTE. 1957: OUR OFFICE IS IN RECEIPT OF A LETTER DATED MARCH 20. COUNSEL FOR MSTS CONTENDS THAT A GOOD CLAIM IN GENERAL AVERAGE LIES AGAINST THE GOVERNMENT AND THAT THE VARIOUS ITEMS OF EXPENSE FOR WHICH CLAIM IS MADE IN GENERAL AVERAGE ARE REASONABLE AND PROPER WITH THE EXCEPTION OF THE CLAIM FOR CONTRIBUTION FOR ATTORNEY'S FEES.

B-131206, APRIL 26, 1957, 36 COMP. GEN. 745

GENERAL AVERAGE - LEGAL SERVICES PROCURED BY VESSEL OWNER - GOVERNMENT CARGO - CONTRIBUTION IN SALVAGE CLAIMS LEGAL SERVICES WHICH ARE PROCURED BY A VESSEL OWNER AND RENDERED FOR THE GENERAL BENEFIT OF SHIP AND CARGO, INCLUDING GOVERNMENT CARGO, IN THE SETTLEMENT OF A SALVAGE CLAIM MAY BE CONSIDERED AS A PROPER EXPENSE ITEM FOR CONTRIBUTION BY THE GOVERNMENT UNDER GENERAL AVERAGE, NOTWITHSTANDING THAT THE GOVERNMENT HAS ITS OWN LEGAL STAFF. THE VALUE OF THE LEGAL SERVICES RENDERED BY UNITED STATES GOVERNMENT ATTORNEYS IN THE SETTLEMENT OF SALVAGE CLAIMS FOR THE GENERAL BENEFIT OF SHIP AND CARGO SHOULD BE REFLECTED AS A GENERAL AVERAGE EXPENSE FOR WHICH THE GOVERNMENT CARGO INTEREST WILL RECEIVE A CREDIT WHILE THE OTHER CARGO INTERESTS WILL BE MADE TO CONTRIBUTE.

TO THE SECRETARY OF THE NAVY, APRIL 26, 1957:

OUR OFFICE IS IN RECEIPT OF A LETTER DATED MARCH 20, 1957, FROM THE COUNSEL, MILITARY SEA TRANSPORTATION SERVICE, DEPARTMENT OF THE NAVY, ENCLOSING A STATEMENT OF GENERAL AVERAGE SUBMITTED BY MARSH AND MCLENNAN, INC., GENERAL AVERAGE ADJUSTERS, ON BEHALF OF AMERICAN EXPORT LINES, INC., AND ACCOMPANYING INVOICE FOR GENERAL AVERAGE CONTRIBUTION IN THE AMOUNT OF $27,540.38 AND REQUESTING A DECISION OF OUR OFFICE CONCERNING CERTAIN CHARGES THEREIN.

THE CLAIM REPRESENTS THE GENERAL AVERAGE CONTRIBUTION ON DEPARTMENT OF DEFENSE CARGO ABOARD THE S.S. EXPORTER FOR EXPENDITURES MADE FOR GENERAL AVERAGE PURPOSES IN CONNECTION WITH THE STRANDING OF THE VESSEL ON FEBRUARY 6, 1952, AS PROVIDED FOR UNDER SHIPPING CONTRACT NO. MST 80. COUNSEL FOR MSTS CONTENDS THAT A GOOD CLAIM IN GENERAL AVERAGE LIES AGAINST THE GOVERNMENT AND THAT THE VARIOUS ITEMS OF EXPENSE FOR WHICH CLAIM IS MADE IN GENERAL AVERAGE ARE REASONABLE AND PROPER WITH THE EXCEPTION OF THE CLAIM FOR CONTRIBUTION FOR ATTORNEY'S FEES. IT IS STATED THAT THE VESSEL OWNER EXPENDED APPROXIMATELY $18,000 FOR ATTORNEY'S FEES AND ALLIED COSTS IN AN ATTEMPT TO REDUCE THE SALVAGE CLAIM AGAINST THE VESSEL AND CARGO AND THAT THE GOVERNMENT'S CONTRIBUTORY SHARE IS APPROXIMATELY $6,000.

IN COMPLIANCE WITH COMPTROLLER GENERAL'S DECISION B-121169, DATED JUNE 15, 1955, 34 COMP. GEN. 676, REQUIRING THE SUBMISSION TO THE GENERAL ACCOUNTING OFFICE FOR DECISION OF ALL PREVIOUSLY UNRESOLVED QUESTIONS OF LAW, THE SUBMISSION IS MADE TO SECURE A PRECEDENT DETERMINATION ON THE QUESTION OF THE PROPRIETY OF CONTRIBUTING TO THE VESSEL OWNERS EXPENDITURES FOR ATTORNEY'S FEES UNDER THESE CIRCUMSTANCES.

THE SALVAGE SERVICES IN THE INSTANT CASE WERE RENDERED BY THE FRENCH NAVY UNDER A CONTRACT OF ASSISTANCE IN WHICH NO SPECIFIC REMUNERATION WAS SET OUT BUT WHICH REMUNERATION WAS TO BE SETTLED BY MUTUAL AGREEMENT BETWEEN THE PARTIES OR IN ACCORDANCE WITH THE BRUSSELS CONVENTION OF 1910 FOR FRENCH LAW. SINCE NO AGREEMENT COULD BE EFFECTED BETWEEN THE PARTIES AS TO THE AMOUNT OF SALVAGE, THE AWARD WAS FIXED BY LITIGATION IN THE FRENCH COURT, WHICH, IN THE INSTANT CASE, RESULTED IN A REDUCTION OF THE SALVAGE CLAIM TO $97,687.52 FROM THE ORIGINAL DEMAND OF THE SALVOR OF NEARLY $348,000. CONSEQUENTLY THE AMOUNT OF CARGO CONTRIBUTION WITH RESPECT THERETO WAS SIMILARLY REDUCED.

GENERALLY, SALVAGE CLAIMS ARE FIXED UPON CONSIDERATIONS OTHER THAN THE MERE VALUE OF THE SERVICES RENDERED IN ORDER THAT THE SALVOR MAY BE COMPENSATED IN AN AMOUNT CALCULATED TO COVER THE AMOUNT OF ALL THE RISKS INVOLVED IN THE SALVAGE OPERATION, I.E., LOSS OF PAYMENT IN CASE OF AN UNSUCCESSFUL SALVAGE OPERATION, AND/OR LOSS OF SALVAGE VESSEL, OR EQUIPMENT. SINCE ALL THE RISK FACTORS CANNOT BE ASCERTAINED UNTIL AFTER THE SALVAGE OPERATION IS COMPLETED, SALVAGE CLAIMS ARE USUALLY FIXED AFTER THE SALVAGE OPERATION HAS BEEN COMPLETED BY NEGOTIATION AND AGREEMENT, BY ARBITRATION, OR BY COURT ACTION. MANIFESTLY LEGAL SERVICES ARE NECESSARY IN THE SETTLEMENT OF THESE CLAIMS AND THE COST OF SUCH LEGAL SERVICES ARE PROPERLY TO BE REGARDED AS PART OF, OR INCIDENT TO THE SALVAGE CLAIM AND CONSEQUENTLY WOULD BE ALLOWABLE AS A PROPER EXPENSE UNDER GENERAL AVERAGE.

CUSTOMARILY EXPENSES OF GENERAL AVERAGE AND SALVAGE ARE INCURRED BY THE VESSEL OWNER FOR THE ACCOUNT OF SHIP AND CARGO. THEREFORE, LEGAL SERVICES PROCURED BY THE VESSEL OWNER AND RENDERED FOR THE GENERAL BENEFIT OF SHIP AND CARGO IN THE SETTLEMENT OF A SALVAGE CLAIM IN GENERAL AVERAGE WOULD CONSTITUTE SUCH SERVICES AS A PROPER ITEM FOR CONTRIBUTION UNDER GENERAL AVERAGE BY THE GOVERNMENT NOTWITHSTANDING THE GOVERNMENT HAS ITS OWN LEGAL STAFF AVAILABLE FOR ASSISTANCE IN THESE MATTERS. HOWEVER, SHOULD THE SERVICE OF ATTORNEYS OF THE UNITED STATES GOVERNMENT BE UTILIZED IN THE SETTLEMENT OF SALVAGE CLAIMS FOR THE BENEFIT OF ALL INTERESTS INVOLVED, THE VALUE THEREOF SHOULD BE INCLUDED IN THE EXPENSES UNDER GENERAL AVERAGE FOR WHICH CONTRIBUTION WILL BE MADE, AND REFLECTED AS A CREDIT TO THE GOVERNMENT CARGO INTEREST.