Argentum Exploration Ltd v Republic of South Africa

Key legal principles: Section 10(4)(a) of the State Immunity Act 1978 must be read by reference to whether the state’s property was "in use or intended for use for commercial purposes" at the relevant time; where an in rem action arises later (here, the salvage in 2017) it is appropriate to have regard to the use or intended use of the ship and cargo at the time of carriage (1942) provided there has been no intervening change of use. The words "in use" and "intended for use" are distinct: typically "use" will apply to the vessel and "intended for use" to the cargo.

The Brussels Convention (article 3(3)) and customary international law support immunity for state-owned cargo carried on a merchant vessel when that cargo is intended for governmental, non-commercial purposes; the second paragraph of that article preserves remedies in personam but does not remove immunity from in rem proceedings. Article 25 of the 1989 Salvage Convention, as implemented by the Merchant Shipping Act 1995, likewise protects non-commercial state cargo from in rem salvage proceedings absent consent.

Application to the facts: The Silver had been purchased to be minted into coin (a predominantly sovereign purpose). It was not "in use" for commercial purposes while carried but was intended for non-commercial sovereign use; accordingly section 10(4)(a) did not displace the general immunity in section 1(1) of the SIA and the Republic of South Africa was immune from the in rem salvage claim.

The case concerned an in rem salvage claim by Argentum in respect of 2,364 bars of silver recovered from the wreck of SS Tilawa (sunk in 1942). The silver had been bought by the Union of South Africa (now the Republic of South Africa) to be minted into coin. The cargo was recovered in 2017 and brought to the United Kingdom; Argentum sued in rem for salvage. The Government asserted state immunity under section 1(1) of the State Immunity Act 1978 and Article 25 of the Salvage Convention (implemented by the Merchant Shipping Act 1995).

Procedural history: The claim reached the High Court (Teare J), went to the Court of Appeal ([2022] EWCA Civ 1318) where a majority held the silver was "in use" for commercial purposes and so not immune; one judge dissented. The Government appealed to the Supreme Court.

Nature of the claim and relief sought: Argentum sought a declaration of ownership or, alternatively, a salvage award in rem. Argentum now accepts the Government is owner and pursues salvage only. The Government sought dismissal of the in rem claim on state immunity grounds.

Issues for decision:

• Whether "the time when the cause of action arose" in s.10(4)(a) SIA should be tied to the maritime circumstances giving rise to a salvage claim or to the chronological moment when salvage occurred.
• Whether the cargo was "in use or intended for use for commercial purposes" when carried in 1942.
• Whether intended use in 1942 is relevant to s.10(4)(a) in the cargo context.
• Whether s.10(4)(a) must be read down under the Human Rights Act 1998 to comply with article 6 ECHR.
• Whether article 25 of the Salvage Convention bars in rem proceedings.

Court’s reasoning, in brief: The Supreme Court accepted that although the legal cause of action in salvage crystallised in 2017, it is appropriate to consider the use/intended use of the ship and cargo at carriage in 1942 where there has been no change of use. The Court rejected Argentum’s contention that "in use" should be read so as to make almost every state-owned cargo carried on a merchant ship non‑immune; a cargo being carried is often not literally "in use" and the statute deliberately couples both "in use" and "intended for use" so that intended use generally controls for cargo. The Court read s.10(4)(a) consistently with article 3(3) of the Brussels Convention and with customary international law: article 3(3) protects state-owned cargo carried on merchant ships when intended for governmental non-commercial purposes and preserves only in personam remedies for a limited set of claims. The court also concluded that denying immunity for in rem proceedings in such circumstances would unduly intrude on sovereign rights and was not required by international law; the Human Rights Act argument therefore failed. Applying these principles, the Silver was intended for sovereign non-commercial use (minting) and the Republic was immune from the in rem salvage claim; article 25 of the Salvage Convention likewise supported immunity.

Result: The Supreme Court allowed the Government’s appeal and held that the Government was immune from the in rem salvage claim. The parties subsequently informed the Court they had settled on 26 April 2024 but asked that judgment be handed down, which the Court did.

Appeal allowed. The Supreme Court held that section 10(4)(a) of the State Immunity Act 1978 must be applied by reference to the use and intended use of the ship and cargo at the time of carriage where there has been no change of use; the Silver was intended for governmental, non-commercial use (minting) and therefore the Republic of South Africa was immune from the in rem salvage claim. This interpretation accords with article 3(3) of the Brussels Convention and article 25 of the Salvage Convention; there was no need to read down s.10(4)(a) under the Human Rights Act.

On appeal from the Court of Appeal ([2022] EWCA Civ 1318). The case originated as an in rem claim issued in the High Court (Teare J). The Court of Appeal gave a majority decision for Argentum with one dissent; the Supreme Court allowed the Government’s appeal.