17th Dec 2020
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  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.