In October 2022 the English Court of Appeal held that the Republic of South Africa is not entitled to state immunity in the context of a claim relating to 2 364 bars of silver recovered from the seabed of the Indian Ocean, having been lost in the 1942 sinking of the SS Tilawa sailing from Bombay to Durban during the Second World War, after being hit by Japanese torpedoes.
The uninsured bars of silver were owned by South Africa. When the vessel sank the wreck and cargo were regarded as unsalvageable. With advances in technology the silver was salvaged by the claimant exploration company and taken to Southampton where it was delivered to the Receiver of Wreck and held pursuant to provisions in the Merchant Shipping Act 1995 (UK). The salvor brought proceedings in the Admiralty Court seeking a declaration that it was the owner of the silver. The Republic of South Africa sought to have the claim struck out or permanently stayed on the basis that the proceedings attracted state immunity.
Relying on the UK State Immunity Act 1978, the court found that the South African State was not immune because “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”. It was held that the use and intended use of the vessel and silver was for commercial purposes when it was on board the vessel. The relevant activity was the (i) entering into a contract of purchase on fob terms for the silver to be delivered onboard the vessel; and (ii) entering into the contract of carriage with the owners of the vessel to be carried by sea to South Africa. These were said to be non-sovereign activities under customary international law and activities for commercial purposes.
The better views seem to be that of the dissenting judgement that, at the time of the sinking, the silver was not “in use” and it was intended for use by the South African government for a non-commercial purpose. The silver had been purchased by the Republic of South Africa in order for 80% of it to be made into coin by the South African Mint established under the South African Mint Act 1941. The cargo was therefore intended in 1942 for predominantly sovereign use. It will be interesting to see whether there is an appeal because the majority decision appears contrived.