Introduction

On 8 May 2024, the UK Supreme Court delivered its judgment in Argentum Exploration Ltd v. Republic of South Africa ([2024] UKSC 16). The case revolved around state immunity in relation to a claim for salvage rights over a sunken cargo of silver, originally owned by South Africa. This ruling provides critical insights into sovereign immunity, salvage claims, and the commercial use exception under UK law.

Background of the Case

In 1942, the SS Tilawa, carrying 2,364 bars of silver, was sunk in the Indian Ocean by enemy action. The silver was owned by the Union of South Africa (now the Republic of South Africa) and intended for minting into coins.

Between January and June 2017, Argentum Exploration Ltd recovered the silver from a depth of 2.5 km. Upon arrival in the UK, Argentum initiated an in rem claim over the silver, arguing for ownership or, alternatively, salvage compensation. South Africa challenged the claim, asserting state immunity under the State Immunity Act 1978 (SIA).

Key Legal Issues

1. State Immunity: Whether South Africa could claim immunity under Section 1(1) of the State Immunity Act 1978.
2. Commercial Use Exception: Whether the silver fell under the Section 10(4)(a) SIA exception, which denies immunity for state-owned cargo “in use or intended for use for commercial purposes.”
3. Salvage Rights: Whether Argentum had a valid claim under UK maritime law and the International Salvage Convention 1989.

UK Supreme Court Judgment

1. State Immunity Affirmed
   • The Court held that South Africa is entitled to immunity, rejecting Argentum’s claim.
   • Rationale: The intended use of the silver in 1942 was predominantly sovereign (minting coins), not commercial.
2. Commercial Use Exception Not Applicable
   • The Court ruled that merely being transported via a commercial contract does not classify the silver as “in use” for commercial purposes.
   • The majority distinguished between intended use and contractual logistics, favoring sovereign immunity.
3. Salvage Rights Dismissed
   • Since South Africa retained ownership, Argentum had no valid ownership claim.
   • The claim for salvage compensation remains unresolved, as state immunity precluded adjudication.

Legal Implications

• Reaffirmation of Sovereign Immunity: The ruling reinforces the principle that state-owned property intended for sovereign purposes remains protected.
• Clarification of Commercial Use Exception: A cargo’s transportation method does not alter its sovereign nature.
• Impact on Future Salvage Claims: Salvors must verify the ownership and immunity status before undertaking recovery operations.

Conclusion

The Argentum v. South Africa decision highlights the strict interpretation of sovereign immunity in UK law. It provides a precedent for similar maritime disputes and underscores the limitations of salvage claims against state property. Future claimants must carefully navigate jurisdictional and immunity challenges before asserting rights over recovered assets.

Case: Argentum v Republic of South Africa [2024] UKSC 16 (Argentum Exploration Ltd (Respondent) v Republic of South Africa (Appellant) – UK Supreme Court)