Client alert: UK Supreme Court grants Republic of South Africa State immunity in silver salvage case, reversing Court of Appeal’s decision

On 8 May 2024, the UK Supreme Court handed down judgment in Argentum Exploration Ltd (Respondent) v Republic of South Africa (Appellant) [2024] UKSC 16, unanimously granting South Africa immunity in respect of a claim in rem by the Respondent, Argentum, which claimed to be the salvor of a cargo of silver bars sunk in the Indian Ocean during the Second World War. In so doing, the Supreme Court construed UK legislation by reference to international treaties to which the UK is a party and recognised that to grant immunity in this case conformed with and was required by general principles of public international law.

Background

The background to the case is straightforward. In 2017, Argentum recovered the silver from the seabed, carried it to the United Kingdom and commenced an action in rem against the silver, including claiming salvage. By the time the claim reached the Supreme Court, there was no dispute between the parties that South Africa was the owner of the silver. It is also uncontroversial that States and their property enjoy a general immunity from the jurisdiction of the UK courts, subject to certain specific exceptions set out in the State Immunity Act 1978.

The commercial purpose exception

The exception at issue in this case is contained in s. 10(4)(a) of the 1978 Act, which provides that:

“A State is not immune as respects … an action in rem against a cargo belonging to that State 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.”

The majority of the Court of Appeal concluded that the silver was, at the time the cause of action arose (i.e. when the ship sank) “in use” for commercial purposes and therefore not immune. The Supreme Court reversed that decision.

It was common ground between the partes that the vessel was in use for commercial purposes and that the ultimate intended use of the silver cargo (minting coins) was a non-commercial, sovereign purpose. The critical finding of the Supreme Court was that the silver cargo was not “in use” at all while being carried aboard the vessel, finding inter alia that “as a matter of ordinary language a cargo which was sitting in the hold of a ship was not being used for any purpose, commercial or otherwise”. In construing s. 10(4)(a) of the 1978 Act, the Supreme Court made extensive reference to the International Convention for the Unification of Certain Rules concerning the Immunity of State-owned Ships (the “Brussels Convention”), finding that “one purpose of the enactment of the SIA was to enable the United Kingdom to ratify the Brussels Convention”.

Article 6 ECHR

The Supreme Court further held that it was not necessary to read down section 10(4)(a) under section 3 of the Human Rights Act 1998 to be compatible with the right of access to a court under article 6 of the European Convention on Human Rights. Having provided useful clarity that the grant of immunity in the circumstances of the case conformed with and was required by general principles of international law, it concluded that “whether one considers that article 6 of the ECHR is not engaged because immunity is required by international law or that compliance with international law is a justifiable interference with article 6 rights, the answer is the same”.

Commentary

While historically the English courts have been vigilant in upholding international law, recent judgments of the UK Supreme Court (such as in Basfar v Wong [2022] UKSC 20 and Benkharbouche v Secretary of State for Foreign and Commonwealth Affairs [2017] UKSC 62) have indicated an erosion of the protections of state and diplomatic immunity afforded under English law. The decision in Argentum, albeit concerning an action in rem rather than in personam, provides a welcome clarification of the importance of principles of public international law in the English law of State immunity.

Volterra Fietta partner Robert Volterra was interviewed about the case and related international law issues in a Bloomberg podcast hosted by Stephen Carroll and Yuan Potts, an hour after the judgment was handed down. The interview can be accessed here (from 5:00). The same day, Robert was also quoted in the Times (“‘Finders aren’t always keepers’: £32m treasure hunter loses in court”). The article is available here (paywall applies).

For further information, contact info@volterrafietta.com.

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