The South African government’s bid to evade paying a “salvage reward” to a British treasure hunter for the recovery of 2,364 bars of silver worth about R775m has been dealt a blow in a UK court.
On Tuesday, the Court of Appeal dismissed the government’s appeal against a ruling by the Admiralty Court in December 2020 which rejected its application for state immunity from the jurisdiction of the court.
SA has been embroiled in a protracted legal spat with British former racing driver Ross Hyett over the precious cargo which was on board the merchant ship SS Tilawa that was en route to SA from then Bombay in India.
For almost 72 years, the silver lay undisturbed in the hull of the ship at the bottom of the Indian Ocean after it was torpedoed by a Japanese submarine on November 23 1942.
In 2017, Hyett’s company, Argentum Exploration, recovered the silver from the wreck which was lying at a depth of 2.5km on the seabed.
The company shipped the silver to Southampton and declared it to the Receiver of Wreck, a UK government agency that, according to its website, ensures “the interests of both salvor and owner are taken into consideration”.
A year later, SA claimed ownership of the silver bars, which the former Union of South Africa had bought in 1942 from the Bombay mint in India. The silver was destined for the mint in Pretoria.
The 60 tonnes of cargo was transported on the British-registered vessel, which was also carrying 958 people, 732 of them passengers .
After the SS Tilawa was torpedoed northwest of the Maldives, the HMS Birmingham responded to distress calls and took 678 survivors back to Bombay. About 280 people drowned.
Hyett, 67, is a former executive director of the British Racing Drivers’ Club, which owns Silverstone race circuit, and twice completed the 24 Hours of Le Mans race.
Argentum, which has accepted that SA is the owner of the silver, brought a claim in court for an unspecified salvage award but SA, in turn, asked it to dismiss the Argentum claim.
In their 56-page judgment handed down on Tuesday, judges Andrew Popplewell and Geraldine Andrews dismissed SA’s appeal, while judge Elisabeth Laing gave a dissenting judgment.
According to the UK’s State Immunity Act of 1978, a state is not immune from the court’s jurisdiction “if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes”.
Christopher Smith KC, acting on behalf of the South African government, argued that in 2017 when the silver was salvaged, it “was not in use or intended for use at all”.
According to the judgment, SA’s position was that the silver was “wreck and not cargo” and the vessel was a “wreck and not a ship”.
But Popplewell said derelict ships and derelict cargoes remain ships and cargoes.
He said he agreed with the presiding judge in the initial case, Sir Nigel Teare, that “the consequences of RSA’s arguments are surprising, in that ship and cargo would be immune from a claim for salvage when they sank despite both vessel and cargo having been in use for commercial purposes”.
“Mr Smith had abandoned his earlier position on use of the ship and was contending, consistently, that the vessel was not in use in 2017 during salvage or at its completion.”
Popplewell said “it makes no difference whether it was salved within hours of becoming wreck or after 75 years”.
He said it was accepted that the SS Tilawa was used for commercial purposes in 1942.
“RSA entered into the contract of carriage, and contracting with a merchant ship for carriage of goods by sea is ‘for commercial purposes’.”
But Laing said she did not agree with Popplewell’s conclusion that when the ship sank the silver was “in use” by SA for commercial purposes.
“I do not agree that, as a matter of ordinary language, a cargo of silver which was sitting in the hold of the ship was being used by RSA for any purpose, commercial or otherwise. It was being carried, and that is all.”
SA would not have been obliged to pay a “salvage reward” if it had been granted state immunity and the Receiver of Wreck would have had to deliver the silver to it.
Justice department spokesperson Chrispin Phiri said SA’s solicitor-general Fhedzisani Pandelani is preparing a briefing to cabinet on the outcome of the appeal.
“It is expected that the solicitor-general shall take his cue from cabinet and decide whether to appeal.”
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