Argentum Exploration Ltd v Republic of South Africa

Factual and Procedural Background

During the Second World War, a merchant vessel transporting 2,364 bars of silver (“the Silver”) from The City of Bombay to The City of Durban was sunk by enemy action on 23 November 1942. The Silver, owned by the Union of South Africa (now the Republic of South Africa) (“Appellant”), had been bought primarily for minting sovereign coinage. Between January and June 2017 a private salvage company (“Respondent”) recovered the Silver from a depth of about 2.5 km in the Indian Ocean and later landed it at Southampton, England, where it was declared to the Receiver of Wreck.

The Respondent began Admiralty in rem proceedings on 1 October 2019, initially claiming ownership of, or alternatively salvage over, the Silver. After conceding ownership, the Respondent pursued only its salvage claim. On 3 March 2020 the Appellant entered an acknowledgement of service solely to contest jurisdiction, invoking state immunity under section 1(1) of the State Immunity Act 1978 (“SIA”) and Article 25 of the Salvage Convention 1989. The High Court and a majority of the Court of Appeal held that no immunity arose because the Silver was “in use” for commercial purposes during the 1942 carriage. Judge Elisabeth Laing dissented, finding that the Silver was merely being carried and was intended for sovereign (non-commercial) use, so immunity applied. The Supreme Court heard the Appellant’s further appeal.

Legal Issues Presented

1. Whether, for the purposes of section 10(4)(a) SIA, the phrase “at the time when the cause of action arose” is to be assessed by reference to the 1942 voyage or the 2017 salvage.
2. Whether the Silver was “in use…for commercial purposes” when it was cargo on board the vessel in 1942.
3. Whether the intended use of the Silver is relevant to immunity under section 10(4)(a).
4. Whether, if immunity would otherwise exist, section 10(4)(a) must be read down under section 3 Human Rights Act 1998 to comply with Article 6 ECHR.
5. Whether immunity also arises under Article 25 of the Salvage Convention 1989.

Arguments of the Parties

Appellant’s Arguments

• The Silver was not “in use” in 1942; it was simply being transported, and its intended use was sovereign minting, a non-commercial purpose.
• Section 10(4)(a) requires both the ship and cargo to be in commercial use; while the ship was commercial, the cargo was not.
• The Court of Appeal’s reading collapses the distinction between in rem and in personam exceptions, defeating Parliament’s intent.
• Article 3(3) of the Brussels Convention, which section 10 implements, protects state-owned, non-commercial cargoes from arrest.

Respondent’s Arguments

• The Silver was “in use” for commercial purposes because it was subject to commercial contracts of sale and carriage.
• The focus should be on the nature of the activity (commercial carriage), not the ultimate sovereign purpose.
• Customary international law favours a restrictive theory; denying immunity here accords with that approach and avoids disproportionate interference with Article 6 rights.

Table of Precedents Cited

Court's Reasoning and Analysis

1. Relevant Time for Assessing Use
The Court agreed that the cause of action technically arose upon salvage in 2017; nevertheless, because there was no change in use between 1942 and 2017, the status of the ship and cargo during the 1942 voyage was the correct factual matrix for section 10(4)(a).

2. Meaning of “in use…for commercial purposes”
Applying Alcom and SerVaas, the Court held that “use” refers to how the state actually employs the property, not to the commercial relationships that produced it. A cargo merely sitting in a hold is not being “used” by its owner.

3. Importance of Intended Use
Section 10(4)(a) explicitly requires the court to consider both use and intended use. Evidence showed the Silver was predominantly intended for sovereign coinage. That sovereign purpose removed the case from the commercial-use exception.

4. Statutory Structure and Brussels Convention
If “commercial carriage” alone sufficed to defeat immunity, section 10(4)(a) would collapse into section 10(4)(b), contrary to Parliament’s deliberate choice to create a stricter test for in rem actions. Such a reading would also conflict with Article 3(3) Brussels Convention, which preserves immunity for state-owned, non-commercial cargo even when carried on merchant ships.

5. Human Rights Act Argument
Denying an in rem action did not violate Article 6 ECHR: the Respondent retained an in personam route, and the immunity corresponded with widely recognised international rules. Reading down section 10(4)(a) was therefore unnecessary and impermissible.

6. Salvage Convention
Article 25 confirms that non-commercial, state-owned cargoes are immune from arrest or in rem actions absent consent. The Court’s interpretation aligned with this provision.

Holding and Implications

APPEAL ALLOWED.

The Appellant enjoys state immunity against the Respondent’s Admiralty in rem claim. Because the Silver was intended for sovereign coinage, the commercial-use exception in section 10(4)(a) SIA was not met, and Article 25 of the Salvage Convention independently confirms immunity. The Respondent may still pursue an in personam salvage claim, but no broader precedent restricting state immunity was set; rather, the judgment re-affirms the statutory distinction between in rem and in personam proceedings and aligns domestic law with the Brussels Convention and customary international law.