Argentum Exploration Ltd v Republic of South Africa

JurisdictionEngland & Wales
Neutral Citation[2024] UKSC 16
Year2024
CourtSupreme Court
Supreme Court Argentum Exploration Ltd v The Silver and all Persons Claiming to be Interested in, and/or Have Rights in Respect of, the Silver [2024] UKSC 16

2023 Nov 28, 29; 2024 May 8

Lord Lloyd-Jones, Lord Briggs, Lord Hamblen, Lord Leggatt, Lord Richards JJSC

International law - State immunity - Statutory exception - Ship sinking while carrying cargo belonging to foreign state - Claimant salvaging cargo and bringing action in rem against cargo seeking salvage reward - Whether foreign state immune as respects such action - Whether statutory exception to immunity applying by reason of cargo and ship being “in use or intended for use for commercial purposes” when cause of action arising - State Immunity Act 1978 (c 33), s 10(4)(a)

In 1942 the South African Government purchased silver bars from the Indian Government for use in the South African Mint and arranged for the carriage of the silver on board a merchant vessel pursuant to an f o b contract of sale and a contract of carriage contained in or evidenced by a bill of lading. During the voyage the vessel was torpedoed by a submarine and sank in the Indian Ocean. In 2017 the claimant, a company which located and salvaged valuable shipwrecks, found the vessel and salvaged the silver, and delivered it to the Receiver of Wreck. The claimant brought an action in rem against the silver, seeking a salvage reward. The South African Government, which as owner of the silver was potentially liable to pay the salvage reward, applied for the action to be struck out on the ground that it enjoyed sovereign immunity from the jurisdiction of the courts of the United Kingdom, pursuant to section 1 of the State Immunity Act 1978F1 and/or article 25 of the International Convention on Salvage 1989F2. The judge in the Admiralty Court refused the application, holding, inter alia, that “at the time when the cause of action arose” both the silver and the vessel had been “in use … for commercial purposes”, within the meaning of section 10(4)(a) of the 1978 Act, which broadly enacted the provisions of article 3 of the Brussels Convention on the Immunity of State Owned Ships 1926F3 into domestic law, with the consequence that the exception to immunity set out in that subsection applied. The Court of Appeal, by a majority, dismissed the South African Government’s appeal.

On the South African Government’s further appeal—

Held, allowing the appeal, (1) that for the purposes of section 10(4)(a) of the State Immunity Act 1978 “the time when the cause of action arose” was the time when the cause of action itself arose, not the time when the events which later led to that cause of action arising had occurred; that, therefore, on an action in rem for salvage of cargo, “the time when the cause of action arose” within section 10(4)(a) could not be earlier than when the act of salvage had occurred; that, however, when determining whether a cargo and the ship carrying it had been, at the time a cause of action for salvage arose, “in use or intended for use for commercial purposes” within section 10(4)(a), it would be appropriate to have regard to the use and intended use of the cargo and the ship at the time when the ship had been carrying the cargo and to have regard to whether there had been any change in use or intended use in the intervening period; that, if there had been no such change in use or intended use in the intervening period, then it would be the status of the ship and the cargo at the time of carriage which would be determinative for the purposes of section 10(4)(a); and that, accordingly, in the present case, where there had been no such change, it would be necessary to determine whether the vessel and the silver had been “in use or intended for use for commercial purposes” when the silver was being carried on board the vessel in 1942 (post, paras 6465).

(2) That, on a true construction of section 10(4)(a) of the 1978 Act, a cargo which was being carried on board a ship would rarely (if ever) be “in use” for any purpose, commercial or otherwise; that, in particular, it was not the case that a cargo was “in use … for commercial purposes” within section 10(4)(a) by virtue of the fact that it had been sold and shipped pursuant to an international commercial contract of sale on f o b terms, an international commercial contract of carriage and bills of lading issued thereunder; that, rather, in section 10(4)(a) it was the use or intended use to which the state had decided to put the cargo concerned, and not the transactions or activities from which the cargo originated, which determined whether there was immunity; that the true construction of the section 10(4)(a) exception (i) accorded with the ordinary and natural meaning of the words “in use”, (ii) did not distort the statutory scheme by negating the distinction between the two limbs of section 10(4), which respectively related to (a) actions in rem against state-owned cargo and (b) actions in personam for enforcing claims in connection with state-owned cargo, the former being far more intrusive into a state’s property rights than the latter, and (iii), by drawing that distinction, accurately gave effect to article 3(3) of the Convention on the Immunity of State Owned Ships 1926; that, in the present case, the silver had therefore not been “in use … for commercial purposes” when being carried as cargo on the vessel and it was not in dispute that the silver had not been “intended for use for commercial purposes” at that time since its intended use had been the sovereign purpose of minting currency; and that, accordingly, applying ordinary rules of construction, the statutory exception to immunity contained in section 10(4)(a) of the 1978 Act did not apply and the South African Government was entitled to immunity under section 1 of that Act (post, paras 6970, 7887, 90, 9298, 101103, 108, 110).

Dicta of Lord Clarke of Stone-cum-Ebony JSC in SerVaas Inc v Rafidain Bank [2013] 1 AC 595, paras 16–21, SC(E) applied.

I Congreso del Partido [1983] 1 AC 244, HL(E) and Alcom Ltd v Republic of Colombia [1984] AC 580, HL(E) considered.

(3) That any interference with the claimant’s right of access to a court under article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms constituted by the South African Government being entitled to immunity would be justified since section 10(4)(a) of the 1978 Act pursued the legitimate aim of giving effect to the restrictive theory of immunity in international law so as to enable it to become a party to the Convention on the Immunity of State Owned Ships and was proportionate to that aim since section 10(4)(a) applied only to proceedings in rem and did not preclude proceedings in personam; that, in any event, article 6 was not engaged since, in the circumstances, the grant of immunity from proceedings in rem on the basis of the intended use of the property for sovereign purposes conformed with and was required by general principles of international law in order to prevent unjustifiable interference with a foreign state’s public property; that, therefore, it was not necessary to read down section 10(4)(a) of the 1978 Act pursuant to section 3 of the Human Rights Act 1998 so as to deny immunity to the South African Government; that, accordingly, the South African Government was entitled to immunity in respect of the claimant’s in rem claim against the silver; and that this result accorded with article 25 of the International Convention on Salvage 1989, since the silver was a non-commercial cargo owned by a state and entitled, at the time of salvage operations, to sovereign immunity under generally recognised principles of international law (post, paras 114118).

Per curiam. The phrase “in use or intended for use for commercial purposes” in section 10(4)(a) is a convenient composite expression applied to both the ship and its cargo. In reality, it is likely that “use” will generally apply to the ship and “intended for use” will generally apply to the cargo (post, para 70).

Decision of the Court of Appeal [2022] EWCA Civ 1318; [2023] KB 195; [2023] 2 WLR 209 reversed.

The following cases are referred to in the judgment of Lord Lloyd-Jones and Lord Hamblen JJSC:

AIC Ltd v Federal Government of Nigeria [2003] EWHC 1357 (QB); 129 ILR 571

AIG Capital Partners Inc v Republic of Kazakhstan [2005] EWHC 2239 (Comm); [2006] 1 WLR 1420; [2006] 1 All ER 284; [2006] 1 All ER (Comm) 1; [2006] 1 Lloyd’s Rep 45

Af-Cap Inc v Republic of Congo (2007) 475 F 3d 1080

Al-Adsani v United Kingdom (Application No 35763/97) (2001) 34 EHRR 11, ECtHR (GC)

Alcom Ltd v Republic of Colombia [1984] AC 580; [1984] 2 WLR 750; [1984] 2 All ER 6; [1984] 2 Lloyd’s Rep 24, HL(E)

Alfred Dunhill of London Inc v Republic of Cuba (1976) 425 US 682

Aro Co Ltd, In re [1980] Ch 196; [1980] 2 WLR 453; [1980] 1 All ER 1067, CA

Benkharbouche v Embassy of the Republic of Sudan [2017] UKSC 62; [2019] AC 777; [2017] 3 WLR 957; [2017] ICR 1327; [2018] 1 All ER 662, SC(E)

Bold Buccleugh, The (1851) 7 Moo PC 267

Burns, The [1907] P 137, CA

Cia Naviera Vascongada v Steamship Cristina (The Cristina) [1938] AC 485; [1938] 1 All ER 719, HL(E)

Charkieh, The (1873) LR 4 A & E 59

Claim against the Empire of Iran (1963) 45 ILR 57

Congreso del Partido, I [1983] 1 AC 244; [1981] 3 WLR 328; [1981] 2 All ER 1064; [1981] 2 Lloyd’s Rep 367, HL(E)

Connecticut Bank of Commerce v Republic of Congo (2002) 309 F 3d 240

Cudak v Lithuania (Application No 15869/02) (2010) 51 EHRR 15, ECtHR (GC)

EM Ltd v Republic of Argentina (2007) 473 F 3d 463

FG Hemisphere Associates LLC v Democratic Republic of Congo [2010] HKCA 19; [2010] 2 HKC 487

Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234, CA

Fogarty v United Kingdom (Application No 37112/97) (2001) 34 EHRR 12, ECtHR (GC)

Gas Float Whitton (No 2), The [1896] P 42, CA

Ghaidan v Godin-Mendoza [2004] UKHL 30; [2004] 2 AC 557; [2004] 3 WLR 113; [2004] 3 All ER 411, HL(E)

Goring, The [1988] AC 831; [1988] 2 WLR 460; [1988] 1 All ER 641; [19...

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