SILVER SALVAGE S.S. TILAWA | PART 1

By Joel Poultney

Britain's highest court said Tuesday it has agreed to hear South Africa's appeal seeking sovereign immunity against a claim for a salvage payment by a company that recovered silver from a cargo ship sunk during World War II.

The U.K. Supreme Court has granted the Republic of South Africa permission to appeal the ruling, which barred the country from claiming immunity from a salvage payment that Argentum Exploration Ltd. said it was entitled to.

The Court of Appeal ruled for the exploration company in October. Argentum had argued that the silver — more than 2,360 bars that had been bought to mint coins — was being used for a commercial purpose and that South Africa could not claim state immunity.

The South African government had contended the silver was not being used commercially because it was simply being shipped, so it was not being used at all when the ship sank. It also argued that minting coins is a non-commercial use.

A majority of the three-strong appeals panel said the ship was a commercial vessel and therefore South Africa could not claim immunity. But Justice Elisabeth Laing dissented, writing that the silver was meant for noncommercial purposes and that it was simply being carried in the ship.

But Supreme Court Justices Robert Reed, Andrew Burrows and Ben Stephens granted the South African government permission on Feb. 1 to appeal the lower appeals court ruling. The decision was not made public until Tuesday.

The court will determine whether the silver and the ship carrying it fell within a provision of the State Immunity Act that would mean South Africa is not immune if "both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes."

South Africa had originally bought the silver for the South African Mint to create coins and had arranged for it to be shipped from India.

The SS Tilawa, a cargo and passenger liner, carried the silver bars from Bombay, India, en route to Durban, South Africa, in November 1942, according to the October judgment. It also carried almost 6,500 tons of cargo and 732 passengers. Bombay is now named Mumbai.

Two Japanese torpedoes hit the ship, killing 280 passengers and crew. The Tilawa, owned and insured by the U.K. government, sank 2.5 kilometers to the Indian Ocean seabed with South Africa's silver in its bullion room.

The ship was found in 2014 by Advanced Maritime Services, which Argentum had contracted to salvage the silver and bring it to the British port of Southampton in October 2017. Argentum believed at the time that the U.K. government owned the silver.

The silver was put into secure custody after it arrived in Southampton, and South Africa claimed ownership of it in September 2018.

The British receiver of wreck declared South Africa the owner that October, and Argentum claimed it was entitled to a salvage award if South Africa's claim was proven. Argentum said that, if the claim was not upheld, it was entitled to the silver as unclaimed salvage.

The Court of Appeal upheld the Admiralty Court's finding that the silver was for commercial purposes.

Argentum Exploration is represented by Stephen Hofmeyr KC of 7 King's Bench Walk and Liisa Lahti and Cameron Miles of 3 Verulam Buildings, instructed by Tatham & Co.

South Africa is represented by Christopher Smith KC, Jessica Wells and Naomi Hart of Essex Court Chambers, instructed by HFW LLP.

The Transport Secretary and the receiver of wreck are represented by Christopher Staker of 39 Essex Chambers, instructed by the Treasury solicitor.

The case is Argentum Exploration Ltd. v. Republic of South Africa, case number UKSC 2022/0162, in the Supreme Court.

--Additional reporting by Ronan Barnard. Editing by Ed Harris.

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David Brown, Chief News Correspondent,
Thursday December 17 2020, 12.01am GMT, The Time

With a cargo of 2,364 bars of silver, the SS Tilawa survived the first torpedo attack by a Japanese submarine on a moonlit night in 1942. A second, however, sent her to the bottom of the Indian Ocean.

A secret salvage operation organised by a champion racing driver has now led to a court fight over the ownership of the 60 tonnes of treasure seemingly lost that night when the British India Steam Company liner was attacked 930 miles northeast of the Seychelles.

Contemporary reports told how the first explosion created panic among the 732 passengers, many of whom died in the rush to lifeboats. The ship remained afloat but, as the survivors attempted to reboard, the second torpedo struck. In all, 281 passengers and crew were lost.

In the cargo holds were silver bars valued at £32 million being shipped from Bombay to the South African Mint to produce coins.

The ship and its precious cargo were largely forgotten until Ross Hyett, 67, a champion racing driver and former executive director of the British Racing Drivers’ Club, set up Argentum Exploration in London in 2012 to locate shipwrecks lying at depths that had precluded salvage until then. His company hired Advanced Maritime Services to find the wreck of the Tilawa, which they did in December 2014. After two years of planning, a recovery began in January 2017 using the salvage ship Seabed Worker. The secret operation took six months and whenever the salvage ship entered the Omani port of Salalah for supplies the recovered silver was hidden in a basket lowered to the seabed in international waters to avoid it being seized.

The bars were shipped to Southampton via the Cape of Good Hope so that they would not enter Egyptian territorial waters through the Suez Canal. They were declared to the Receiver of Wreck, which oversees salvage law, and are kept in a secure warehouse.

The company believed the only possible claim would come from the UK government, which owned the wreck as a result of insurance arrangements. However, word had reached the South African government.

Yesterday Sir Nigel Teare, a judge at the Admiralty Court in London, compared the case to Buccaneer, a board game featuring rival treasure hunters.

The dispute was further complicated by a rival US salvage firm striking a deal with the South African authorities to locate the silver, unaware it had already been found by Mr Hyett. A representative of Odyssey Marine Exploration in Florida had approached them in September 2016. Under the plan, the South African government would receive 15 per cent of the value of the silver.

Yesterday Sir Nigel was asked to rule whether the silver had been intended for commercial enterprise or sovereign purpose, which the South African government claimed would give it state immunity and full ownership of the cargo.

Sir Nigel ruled that the bars were intended for commercial purposes and concluded: “The silver had, in all probability, been forgotten about until 2016 when the Republic of South Africa was informed of its existence by Odyssey.”

My Hyett is in discussion with the South Africans.

Source:
https://www.thetimes.co.uk/article/treasure-hunter-fights-to-keep-32m-hoard-of-sunken-silver-df7m3xjqp

Argentum Exploration Limited v 2391 bars of Silver formerly laden on board SS “TILAWA” and all persons claiming to be interested in and/or to have rights in respect of the Silver [2020]

EWHC 3434 (Admlty)

Stephen Hofmeyr QC, representing the Salvors of 2364 bars of silver recovered from the wreck of the SS TILAWA which was sunk in the Indian Ocean on 23 November 1942, has successfully defeated a claim by the owners of the silver, the Government of the Republic of South Africa, to immunity from suit pursuant to the State Immunity Act 1978 and the Salvage Convention 1989. Stephen’s clients, the Salvors, are seeking an award of salvage.

The Government of the Union of South Africa purchased the silver from the Government of India in 1942 for use in the South African Mint. They arranged for the carriage of the silver from Bombay to Durban on board SS TILAWA, a merchant ship owned by the British India Steam Navigation Company. Early in the morning of 23 November 1942 the vessel was torpedoed by the Japanese submarine I-29 and sank in deep water northwest of the Maldive Islands.

For more than 70 years the silver lay on the seabed at a depth of some 2.5 kms. However, in 2017 the Salvors successfully recovered the silver, brought it to Southampton, delivered it to the Receiver of Wreck and claimed salvage.

The Government’s response to the Salvor’s claim was that both it and the silver are entitled to immunity in accordance with section 10(4)(a) of the State Immunity Act 1978 and Article 25 of the Salvage Convention 1989. The key issue was whether SS TILAWA and the silver were “in use or intended for use for commercial purposes” when the cause of action in salvage accrued. The application engaged two different competing interests, the interests of the Salvors in access to justice and the interest of the Government in being immune from jurisdiction of the Admiralty Court.

There has been no previous decision on section 10(4)(a) of the State Immunity Act 1978 or Article 25 of the Salvage Convention 1989.

Sir Nigel Teare (sitting as a Judge of the Admiralty Court) concluded that the Government is not entitled to immunity. He held that, at the time of the sinking, both the ship and the silver were “in use … for commercial purposes”. The Government had chosen to have its cargo carried by sea pursuant to a commercial contract of

carriage just like any private owner of cargo and had therefore exposed itself to claims for salvage like any private owner of cargo. When a cargo is purchased under an FOB contract and shipped pursuant to a commercial contract of carriage contained in or evidenced by a bill of lading, it is used for commercial purposes. That is the ordinary and natural meaning of the phrase “in use … for commercial purposes” when regard is had both to the context of cargoes on board ships and to the restrictive theory of state immunity which is the background against which the State Immunity Act 1978 is to be interpreted. The learned Judge went on to conclude that nothing was done between the sinking, in 1942, and the salvage, in 2017, to change the status of the ship and cargo. Accordingly, both ship and cargo were in use for commercial purposes.

The judgment, which can be viewed here, is particularly important because of its careful consideration of the State Immunity Act 1978, the restrictive theory of state immunity in public international law and claims to state immunity in the context of Admiralty proceedings in rem.

A press report from The Times can be seen here

Stephen Hofmeyr QC was assisted by Liisa Lahti of Quadrant Chambers and Cameron Miles of 3VB. They were instructed by Stephen Askins of Tatham & Co.

Date added: December 17th, 2020

Source:
https://7kbw.co.uk/stephen-hofmeyr-qc-defeats-south-africas-sovereign-immunity-claim-against-salvors-of-sunken-2nd-world-war-silver/