SA wins $40m shipwreck treasure battle

One of Britain’s top hedge fund managers lost a legal fight over the salvage of $40m of silver from the wreck of a ship sunk by a Japanese submarine in World War II, reports News24. The UK’s Supreme Court last week declared that the SA Government could assert state immunity in a suit brought by a company controlled by hedge fund chief Paul Marshall. At stake was a cargo of 2 364 bars of silver, once destined for the SA Mint, that lay hidden two and a half kilometres below the surface of the Indian Ocean for decades until it was found and lifted by Marshall’s Argentum Exploration. The firm had argued it was owed a substantial salvage figure and said it wanted a court to ‘fix an award’, but the judges said they were informed that the two sides had since agreed to a settlement. The treasure haul was aboard the SS Tilawa, which was sailing from Mumbai on its way to Durban in 1942, when it was struck by two torpedoes and sunk with the loss of 281 passengers and crew. The sinking has been dubbed ‘India’s Titanic’ for the scale of the tragedy.

Marshall has been pursuing the riches of the deep alongside a younger executive at his hedge fund Anthony Clarke, who may be the most successful shipwreck hunter of modern times. According to News24, Clarke said he had conducted about 30 wreck salvages in all, often with his companies working on behalf of a client. Among them is the SS Tilawa. The vessel was first discovered at the bottom of the Indian Ocean in 2014, before being salvaged in a secret expedition three years later. The silver was brought to Southampton before being locked up in a secure warehouse, where it has remained ever since. Pretoria had argued that that it not only still owns the silver, but that it should not have to submit to the lawsuit at all. The Supreme Court judges agreed, saying that the silver was a non-commercial cargo and the government was entitled to immunity. The ruling overturned two prior court decisions, with a judge previously saying that the government had probably ‘forgotten’ about the bullion.

See also A Matter of Justice column below

Full News24 report

UK Supreme Court judges David Lloyd Jones and Nicholas Hamblen, writing for a unanimous court, ruled in SA’s favour, says a Business Day report. The judges noted that the determination of whether cargo is being ‘used’ for commercial purposes to meet the exception is to look at the time the cargo was lost, namely the 1940s. Argentum argued that in 1942, the silver was in use for commercial purposes because it was on a commercial ship and part of a commercial contract between the ship and the government at the time. However, the judges dismissed this. ‘Argentum’s submission encounters a difficulty,’ the judges wrote, ‘to say that the silver was ‘in use’ by the government while it was being carried on the vessel simply does not accord with the ordinary and natural meaning of those words.’ The judges said it was merely ‘siting in the hold of a ship’ and would be a ‘distortion of language’ to claim that, just because it was on a commercial ship, it was being ‘used’ for commercial purposes. They held that the SA Government ‘is immune’ because the cargo was intended for ‘non-commercial purposes’. The judges also noted that UK courts – and courts in general – ought to be cautious when deciding on ‘property of foreign states’ that will be used ‘for sovereign purposes’. This could lead to ‘impermissible interference with sovereign functions of the foreign state’. The UK court ruling on silver intended for SA’s Mint was cited as an example. The judges found that the SA Government is ‘entitled ... to immunity’ from Argentum’s salvage costs claims. Importantly, the judges noted a settlement had been reached between the government of SA and Argentum that has to be made public. This settlement will spell out SA’s next steps, which could involve recovery of the $43m worth of silver.

Full Business Day report