The claimant is a UK company formed in 2012 for the purpose of locating and salving valuable shipwrecks lying at depths which up until then had precluded salvage. It claims to have salved silver bars from the wreck of the SS Tilawa which was sunk in the Indian Ocean on about 23 November 1942 by two Japanese torpedoes. The current value of the silver bars is USD 43 million.

The alleged salvage was carried out in 2017 and the silver bars were taken to Southampton on 2 October 2017 where they were declared to the Receiver of Wreck. They are now held to the order of the Receiver of Wreck pursuant to s 236 of the Merchant Shipping Act 1995 (UK). Subsequently, on 14 September 2018, the Government of the Republic of South Africa (the RSA) claimed to be the owner of the silver bars. On 12 November 2018, the claimant advised the Receiver of Wreck that it was entitled to the silver as 'unclaimed wreck', but that if a claim to ownership were proven the claimant sought a salvage award. If an award could not be agreed with the owner the claimant advised that that 'would likely entail an application to the Admiralty Court to fix an award'.

On 1 October 2019, the claimant commenced an action in rem, seeking a declaration that it was the owner of the silver bars or, in the alternative, salvage. On 3 March 2020, the RSA entered an acknowledgment of service for the purpose of asserting its interest in the silver bars and for claiming immunity pursuant to the State Immunity Act 1978 (UK) (the SIA) and art 25 of the Salvage Convention 1989.

On 25 March 2020, the RSA issued an application notice seeking an order that the action be struck out or stayed on the grounds that the RSA was entitled to immunity from it. In the event that the RSA is not entitled to immunity, it also resists paying salvage to the claimant upon the grounds that, although it accepts that the silver bars were salved, it denies that it was the claimant who salved them. It also maintains that any claim for salvage is time-barred, the claim having been issued more than two years after the date on which the salvage services were terminated.

Held: The RSA is not entitled to immunity.

Following the introduction of the SIA, the common law doctrine of restrictive state immunity has been replaced by s 10 of the SIA. In the case of actions in rem against a ship the question is whether at the time the cause of action arose the ship was 'in use or intended for use for commercial purposes': see s 10(2). In the case of a sister ship arrest the question is whether both the ship which is arrested and the ship in connection with which the claim arose were 'in use of intended for use for commercial purposes': see s 10(3).

Section 10 of the SIA was passed in order to enable the UK to ratify the Brussels Convention for the Unification of Certain Rules concerning the Immunity of State-owned Vessels which had been agreed in 1926 by the UK but not ratified. Article 1 of the Brussels Convention provides that sea-going ships owned or operated by States shall be subject as regards claims in respect of the operation of such ships to the same rules of liability and the same obligations as those applicable in the case of privately-owned ships. But Article 3 provides that Article 1 shall not apply to 'ships of war, Government yachts, patrol vessels, hospital ships, auxiliary vessels, supply ships, and other craft owned or operated by a State, and used at the time a cause of action arises exclusively on Governmental and non-commercial service'.

It seems clear that the phrase 'in use or intended for use for commercial purposes' in the SIA was intended to describe in more general language the distinction drawn in arts 1 and 3 between those State-owned ships which are entitled to state immunity and those which are not. The phrase also echoes the distinction drawn by the Privy Council in The Philippine Admiral [1976] 1 Lloyd's Rep 234 between trading vessels and ships destined for public use. The phrase is readily applied to vessels. Vessels when at sea are used for the purposes for which they have been built. All that is necessary is to decide whether that use is for commercial purposes.

Section 10(4)(a) of the SIA provides that there is no immunity where, at the time the cause of action arose, both the cargo and the ship carrying it were 'in use or intended for use for commercial purposes'. Again, that phrase is readily applicable to ships which are used for the purposes for which they have been built, namely, carrying cargo. One only needs to examine whether the purposes are commercial. When applying the same phrase to cargoes, the task is not perhaps as easy. For cargoes, typically, are not put to the use for which they were grown or manufactured during carriage. They are only put to the use for which they have been grown or manufactured after the carriage has been completed and they are no longer on board the ship. It may be necessary to bear this difference in mind when applying s 10(4)(a) to State-owned cargoes.

It is appropriate to have regard to the status of the vessel and cargo in 1942 when deciding whether the vessel and cargo were, at the time the cause of action for salvage arose in 2017, in use or intended for use for commercial purposes. The status of the vessel and cargo in 1942 may not determine the status of the vessel and cargo in 2017, but it must be a relevant consideration.

Counsel for the claimant submitted that s 10 of the SIA should be interpreted consistently with the Brussels Convention in so far as possible to do so. This approach is consistent with the approach adopted by Brandon J when interpreting the admiralty jurisdiction provisions of the Administration of Justice Act 1956 (UK) which were said to give effect to the provisions of the Arrest Convention 1952. In I Congreso del Partido [1983] AC 244, Lord Wilberforce did not regard the provisions of the SIA, which only came into force after the events in issue, as evidence of what the limits to the restrictive theory of state immunity were in international law: see 260B-E. Lord Wilberforce also did not accept that the Brussels Convention was a statement of generally accepted international law. It was 'a limited agreement between a limited number of states': see 260E-H. However, the SIA applies to the facts of the present case and in circumstances where s 10 apparently enabled the UK to ratify the Brussels Convention, it seems appropriate, applying the principle referred to by Brandon J, to have regard to it.

Counsel for the claimant submitted that the Brussels Convention does not provide for immunity from the English Court's adjudicative jurisdiction in rem, even where the State-owned cargo was 'carried on board for Government and non-commercial purposes'. He relied upon the final para of art 3 which provides: 'Nevertheless, actions in respect of ... salvage ... relating to such cargo may be brought before the tribunal having jurisdiction under Article 2'. Article 2 provided that '[f]or the enforcement of such liabilities and obligations there shall be the same rules concerning the jurisdiction of tribunals, the same legal actions, and the same procedure as in the case of privately owned merchant vessels and cargoes and of their owners'.

Counsel for the RSA submitted that art 3 of the Convention was concerned with in personam claims.

The difficulty with the claimant's submission is that art 3.1 expressly states that State-owned cargoes shall not be subject to 'judicial proceedings in rem'. The difficulty with the RSA's submission is that the final para could have referred to in personam proceedings expressly but did not do so. (It may, however, be noted that in The Philippine Admiral, Lord Cross said that art 1 of the Brussels Convention covered not only actions in rem but also actions in personam: see 243.)

It is possible that the distinction drawn in art 3 and the final para is between the enforcement jurisdiction (by way of seizure, arrest or detention) and the adjudicative jurisdiction (determining whether a cause of action is established) which would include both a claim in rem where there was service but no arrest and a claim in personam.

Article 3 and the final para in the context of arts 1-3 as a whole are difficult to interpret. Counsel for the RSA also described the Brussels Convention as 'difficult to interpret' and counsel for the claimant did not address the interpretation of arts 1-3 and arts 2 and 3 in detail.

The Brussels Convention was agreed at a time when the restrictive theory of international law was in its infancy, and international law has developed since then. Moreover, the language and structure of s 10 of the SIA is different from the Convention. It may also be noted that, whilst customary international law provides for the restrictive theory of sovereign immunity, and so for the distinction between vessels used for commercial purposes and vessels used for governmental purposes, it does not identify precisely where the line is to be drawn. This is consistent with Lord Wilberforce's observation in I Congreso del Partido at 260D that the limits of the doctrine were still in the course of development and in many respects uncertain. Thus it must be for national legislatures and courts to decide where the line is to be drawn. England has sought to do so in s 10 of the SIA. For these reasons the Court should concentrate on interpreting the words of s 10 in their context rather than seek to interpret the different and difficult language of the 1926 Convention.

In the present case the claim which the claimant wishes to make in rem against the silver bars is a claim in salvage. It is a claim based upon the fact that a successful salvage service by the claimant conferred a benefit upon the RSA as owner of the salved property. A liability to pay salvage is an incident of maritime law, now enshrined in the Salvage Convention as part of English law, which can affect all those who contract for their goods to be carried by sea. When a State contracts for its goods to be carried by sea, a classic example of a commercial contract, there is no reason why, pursuant to the restrictive theory of sovereign immunity, it should not be exposed to the same liability in salvage as a private owner of cargo. To adopt the phrase used by Lord Cross in The Philippine Admiral to justify his preference for the restrictive theory of sovereign immunity, it is 'more consonant with justice' that the State should in such circumstances be exposed to the same liability in salvage as a private owner of cargo. As Gross J observed in The Altair [2008] 2 Lloyd's Rep 90 [57] 'there is no unfairness in a state, having enjoyed the benefit of salvage services, becoming bound to pay for them (subject to any particular questions as to enforcement)'.

When two matters are borne in mind, first, the circumstance that cargoes are typically not used during the voyage for the purposes for which they have been grown or manufactured; and, second, the lack of a principled reason for the application of the restrictive doctrine of state immunity in the context of the Court's adjudicative jurisdiction, it is right to conclude, notwithstanding the cogency of the argument to the contrary, that when a cargo is sold under an FOB contract and shipped on board pursuant to a 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 or intended for use for commercial purposes' when regard is had to the context of cargoes on board a ship, and also to the restrictive theory of state immunity which is the background against which the SIA is to be interpreted. The fact that the Government of the Union of South Africa intended to use the greater part of the silver to produce Union coinage in South Africa after the silver had been discharged from the vessel does not detract from that conclusion. Applying s 10(4)(a) of the SIA in its context, that of a cargo being carried by sea, it was in use for commercial purposes, namely, the purposes of the contract of carriage. It follows that the RSA is not immune in respect of the claim in rem against the silver bars.

Reliance was also placed by the RSA on art 25 of the Salvage Convention 1989 of which is part of English law pursuant to s 244 of the Merchant Shipping Act 1995 (UK). Article 25 of the Salvage Convention provides as follows:

Unless the State owner consents, no provision of this Convention shall be used as a basis for the seizure, arrest or detention by any legal process of, nor for any proceedings in rem against, non-commercial cargoes owned by a State and entitled, at the time of the salvage operations, to sovereign immunity under generally recognized principles of international law.

This article does not add to the debate. The cargo of silver bars was not a non-commercial cargo and the RSA is not entitled to sovereign immunity under generally recognised principles of international law or in the form in which they have been enacted by the SIA.

[For the unsuccessful appeal to the Court of Appeal, see Argentum Exploration Ltd v The Silver [2022] EWCA Civ 1318 (CMI2010).]