Introduction

The case of Argentum Exploration Ltd v Republic of South Africa ([2024] UKSC 16) addresses pivotal issues concerning state immunity under the State Immunity Act 1978 (SIA) and the International Convention on Salvage 1989 (Salvage Convention). Central to the dispute was the ownership and salvage rights of 2,364 bars of silver (the "Silver") recovered from the wreck of the SS Tilawa, sunk in 1942 in the Indian Ocean. Argentum, acting as the salvor, sought ownership or salvage rights, while the Republic of South Africa (the Government) invoked state immunity to block the claim.

The crux of the legal battle revolved around whether the Silver was "in use or intended for use for commercial purposes" at the time the cause of action arose, as stipulated in section 10(4)(a) of the SIA. The Supreme Court's interpretation set a significant precedent in the realm of maritime law and state immunity.

Summary of the Judgment

The Supreme Court upheld the Government's entitlement to state immunity, dismissing Argentum's in rem claim for salvage. The majority held that the Silver was not "in use for commercial purposes" but was intended for a sovereign purpose—specifically, minting coins by the South African Mint. Consequently, section 10(4)(a) of the SIA barred the action in rem, affirming the Government's immunity. The dissenting opinion argued that mere carriage under commercial contracts should render the Silver as "in use" commercially, but this view did not prevail.

Analysis

Precedents Cited

The judgment extensively referenced historical and contemporary cases shaping state immunity and maritime salvage law. Key among these were:

• Jurisdictional Immunities of the State (Germany v Italy) [2012] - Emphasized state immunity as a cornerstone of international law.
• The Philippine Admiral [1977] - Established the restrictive theory of state immunity in admiralty actions.
• Trendtex Trading Corpn v Central Bank of Nigeria [1977] - Reinforced the application of restrictive immunity based on the nature of transactions.
• I Congreso del Partido [1983] - Affirmed that both in rem and in personam claims must assess the nature of state activities.
• SerVaas Inc v Rafidain Bank [2012] - Clarified the distinction between property origin and intended use in state immunity.

These cases collectively underscored a shift from absolute to restrictive immunity, focusing on the nature and purpose of state activities rather than their sovereign status alone.

Legal Reasoning

The Court examined the interpretation of "in use or intended for use for commercial purposes" under section 10(4)(a) of the SIA. It concluded that the relevant timeframe for assessing "use" was when the Silver was being carried on the vessel in 1942, not during its salvage in 2017. The majority found that, although the Vessel was used commercially, the Silver itself was intended for a sovereign, non-commercial purpose—minting coins. Thus, the Silver did not qualify for the exception under section 10(4)(a), and the Government's immunity stood.

The dissenting judgment emphasized a literal interpretation of "in use," suggesting that mere carriage under commercial contracts should suffice for commercial use, arguing against the significance of the intended non-commercial purpose. However, the majority reframed "use" to encompass both current use and intended future use, aligning with the Convention's provisions and ensuring that state-owned property intended for sovereign purposes remains immune.

Impact

This judgment reinforces the restrictive theory of state immunity, particularly in maritime contexts. It delineates clear boundaries between commercial and sovereign uses of state-owned property, ensuring that sovereign purposes are shielded from commercial claims. Future cases involving state-owned cargo and maritime salvage will reference this precedent to determine immunity, potentially limiting the scope of commercial claims against states.

Furthermore, by aligning the SIA with international conventions like the Brussels Convention and the Salvage Convention, the Court ensured consistency between UK law and international maritime law, promoting predictability and stability in international salvage operations.

Complex Concepts Simplified

State Immunity

State immunity is a principle of international law where a sovereign state is exempt from the jurisdiction of foreign courts. It protects states from being sued in other countries' courts without their consent.

In Rem vs. In Personam Claims

• In Rem: Actions directed against a property itself, regardless of ownership. For example, claiming damages against a ship, irrespective of who owns it.
• In Personam: Actions directed against a person or entity, concerning personal obligations or liabilities.

Restrictive Theory of State Immunity

Unlike the older absolute theory, restrictive immunity distinguishes between sovereign and commercial activities of a state. Under this theory, states are immune from jurisdiction only for their sovereign activities, not for commercial transactions.

Salvage Claims

Salvage refers to the rewards given to those who voluntarily aid a ship in distress. Under maritime law, successful salvors are entitled to a reward, which can create a maritime lien—a right attached to the salvaged property.

Maritime Lien

A maritime lien is a privileged claim against a vessel for services rendered or damages caused. It is enforceable against the ship, often giving salvor priority over other creditors.

Conclusion

The Supreme Court's decision in Argentum Exploration Ltd v Republic of South Africa underscores the continued evolution and application of the restrictive theory of state immunity within UK law, particularly in maritime contexts. By affirming that state-owned property intended for sovereign purposes retains immunity against commercial salvage claims, the judgment aligns domestic law with international conventions and customary international law principles.

This ruling provides clarity on the application of state immunity, ensuring that sovereign functions are protected from commercial liabilities. It sets a robust precedent for future cases, balancing state sovereignty with commercial interests, and reinforcing the structured interplay between domestic statutes like the SIA and international maritime law.