Prize money refers in particular to naval prize money, usually arising in naval warfare, but also in other circumstances. It was a monetary reward paid in accordance with the prize law of a belligerent state to the crew of a ship belonging to the state, either a warship of its navy or a privateer vessel commissioned by the state. Prize money was most frequently awarded for the capture of enemy ships or of cargoes belonging to an enemy in time of war, either arrested in port at the outbreak of war or captured during the war in international waters or other waters not the territorial waters of a neutral state. Goods carried in neutral ships that are classed as contraband, being shipped to enemy-controlled territory and liable to be useful to it for making war, were also liable to be taken as prizes, but non-contraband goods belonging to neutrals were not. Claims for the award of prize money were usually heard in a prize court, which had to adjudicate the claim and condemn the prize before any distribution of cash or goods could be made to the captors.
Other cases in which prize money has been awarded include prize money for the capture of pirate ships, slave ships after the abolition of the slave trade and ships trading in breach of the Navigation Acts, none of which required a state of war to exist. Similar monetary awards include military salvage, the recapture of ships captured by an enemy before an enemy prize court has declared them to be valid prizes (after such ships have been condemned, they are treated as enemy ships), and payments termed gun money, head money or bounty, distributed to men serving in a state warship that captured or destroyed an armed enemy ship. The amount payable depended at first on the number of guns the enemy carried, but later on the complement of the defeated ship.
