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Monday, January 22, 2018

Salvage & Recovery: Treasure and Artifacts

Maritime Activity Reports, Inc.

August 23, 2012

Jim Shirley, legal counsel to the American Salvage Association.

Jim Shirley, legal counsel to the American Salvage Association.

The recent dispute between Odyssey Marine Exploration and the Kingdom of Spain over the treasure and artifacts Odyssey recovered from the Nuestra Senora de las Mercedes has recently been given considerable coverage in the popular press as well as in the maritime press.


This has probably reinforced the belief of some people that marine salvage, by definition, is the recovery of sunken treasure. Actually, of course, that is only a small component of marine salvage. It has nonetheless been a growing component over the past three or four decades thanks to increased capabilities in deep ocean search and recovery as a result of improved technology and substantial investment being directed at such endeavors.

The law of salvage applies to treasure and artifact salvage just as it does to traditional salvage of ships and cargoes. The threshold requirements for both are that the subject property be exposed to a marine peril from which it is successfully rescued by someone not obligated to do so. The 1989 Salvage Convention does not distinguish treasure or artifact salvage (hereinafter referred to together or separately as "treasure salvage") although it does permit signatory states to reserve the right not to apply the convention to maritime cultural property of prehistoric, archaeological, or historic interest.   Still, there are nuances based upon national law or judicial precedent applicable in treasure salvage cases that are rarely if ever applied in traditional salvage cases.  These may vary among nations.  In the United States there may even be variations among the judicial districts or appellate circuits.


Law of Salvage or Law of Finds
One such distinction is the American law of finds, pursuant to which the salvor is presumed to be the owner by right of property he recovers that has been abandoned. That is, the salvor has full title to that property. However, if a putative owner satisfies the court that the property was not truly abandoned, thereby rebutting the presumption of abandonment, the salvor will be entitled only to a lien against the property for the amount of his salvage award. This distinction was drawn in the case of the 1857 sinking of the S.S. Central America. She and her cargo rested on the sea floor 8000 feet deep 200 miles off the coast of South Carolina for 130 years before a salvor began recovery of her cargo of gold.


However, when three tons of her gold cargo were delivered into the court's custody, a number of insurers stepped forward and claimed ownership based upon their rights of subrogation for having paid claims for the loss 130 years earlier. For the most part, they lacked subrogation receipts and had to rely largely on old newspaper accounts to prove they had paid the claims. Some of the insurers were no longer in business and their claims were filed by successors in interest. The insurers also could not show they had been actively searching for and trying to recover the treasure they claimed not to have abandoned. These are the constituent facts that a court may typically look at in order to determine "abandonment."

The district court found for the salvor (finder) on these facts, but in a 2 to 1 decision, the court of appeals found for the insurers because there had been no affirmative act or declaration of abandonment of title to the property. The appellate court nonetheless took into account the underlying facts and circumstances and in its remand of the case to the district court it did so with an admonition that the salvage award should be substantial. The district court awarded the salvor 90% of the portion of the gold that had been insured, and that award was sustained by the court of appeals.

The requirement that there be an affirmation of abandonment of the recovered property for it to be treated as a "find" may not apply in all other circuits, and the 2 to 1 decision in the Central America case suggests there may be persuasive arguments why it should not. Irrespective, the holding of "salvage" rather than "find" can have a number of ramifications. Among those may be the salvor's loss of control over the recovered property and, in the case of treasure, loss of control over the marketing of the treasure to maximize return on his investment in the search and recovery. In the Central America case, the court made the award in specie, and the parties settled on the percentages to take into account that portion of the treasure that had not been insured and therefore could not be claimed by the insurers who were the only parties claiming title to any of the treasure. This settlement gave the salvor approximately 92-1/2% of the total treasure recovered to market as they saw fit, largely ameliorating the risk referred to above.


Constructive In Rem Jurisdiction
There are several aspects of jurisdiction that are unique to salvage in general, and perhaps particularly to treasure salvage.  A court cannot enforce any ruling it makes against property (in rem) or persons (in personam) not within its jurisdiction.  In traditional salvage cases, the owners of salved property may post security by way of a bond or other means that will be satisfactory to the salvor as a substitute for the vessel and cargo, insuring payment of the salvor's eventual award. The vessel and cargo may then continue on their mission of trade. That would work as well in treasure salvage cases after the property is recovered, but would not protect the salvor during the period of days, months, or years he must spend recovering the treasure. In the United States, this protection is provided by the court exercising constructive in rem jurisdiction over the wreck site. This process is begun by the salvor bringing into the court's jurisdiction some portion of the vessel or something from it (a lump of bunker coal sufficed in the Central America case) when he files his claim against the vessel and the cargo. On the basis of its constructive in rem jurisdiction, the court will designate the salvor as "salvor in possession" and enjoin all others from encroaching on his operations on site, whether or not he is present on site, so long as his work at the site is deemed continuous and systematic. Of course, this order of the court is not enforced by gunboats at the site, and can only be enforced against persons who are themselves before the court or other courts that will give full faith and credit to the court's order.

Only after the recovered property has been deposited in the court's registry can the court make an award of the property to the salvor as a "find" or determine the salvage award to which he is entitled. The court's constructive in rem jurisdiction does not enable it to make any award of the unrecovered treasure or other property because that property is not before it. However, the court's injunction will protect the salvor from losing some portion of his trove to others whether or not he is on site, so long as he acts sufficiently to maintain his status of "first salvor" or "salvor in possession." That is, although the court cannot make an award of or against the unrecovered treasure, by means of its constructive in rem jurisdiction it does maintain some control over that property sufficient to protect the "first salvor" from recovery actions by interlopers. The primary justification for the court exercising this extra-territorial jurisdiction in international waters is that it is necessary to preserve wrecks of historical significance from plunderers, protect the rights of the first salvor, and to encourage salvage operations that will return lost property to economic usefulness. 


Treaties and Legislation
This column addressed the euphemistically named "UNESCO Convention on the Protection of Underwater Cultural Heritage" in the August 2011 issue of this magazine. The primary thrust of that article was, however, directed at the ambiguities in the language of the treaty and its unintended consequences with respect to its impact on traditional salvage operations. Unfortunately, there will be unintended consequences on treasure salvage as well. They will likely be less devastating because they will simply discourage investment in recovery operations, thereby satisfying one of the treaty's stated purposes. That may prevent indefinitely many recovery efforts, resulting in many sunken vessels and their contents eventually giving way fully to the environmental perils of the sea.  The problem is, one will never know what has been lost to mankind because of this. For this column, it is enough to say that most countries, including the United States, already have laws protecting vessels and sunken treasure and artifacts lying within their territorial waters.  The UNESCO Convention just takes that "protection" into international waters for signatory nations.

The signature legislation on this subject in the United States is the "Abandoned Shipwreck Act of 1987" (ASA). Pursuant to that statute, the United States claims title to any abandoned shipwreck that is embedded in the submerged lands of a state or in corralline formations on the submerged lands of a state, and in some other circumstances.  Such title is then transferred to the state unless the property is found on the public lands of the United States, in which case the United States retains title. Importantly, the finder of an abandoned shipwreck to which the ASA applies cannot seek a declaration of ownership under the law of finds or a salvage award under the law of salvage. In its 25 year history there have been a number of court cases in which states or the federal government invoked the ASA, and generally courts have strictly interpreted the statutory language. We cannot in retrospect over the past 25 years tell how many searches and recoveries, or how valuable they might have been, have simply not been undertaken because of the ASA. Surely the ASA, like the UNESCO treaty, is not furthering the goal of treasure salvage law to encourage salvage operations that will return lost property to economic use.


Science and technology have opened up the world of treasure salvage to persons willing to take the economic and physical risks involved in searching for and recovering abandoned shipwrecks and sunken treasure. The law has developed through the courts to encourage this process. Meanwhile, treaties and legislation have been adopted that will discourage this good conduct, possibly leaving great wealth and knowledge that could be gleaned from recovered shipwrecks, treasure, and artifacts to become completely lost to the ages.


+ (Published in the August 2012 edition of MarineNews - + 

Jim Shirley is a Master Mariner, a former salvage master and retired maritime lawyer who specializes in maritime casualty and salvage matters. He now serves as legal counsel to the American Salvage Association and as Principal Consultant in JTS Marine LLC.

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