Odyssey Marine Loot: the Treaty of Paris (1763) and ‘Sea Hunt vs. Spain’

It’s not often that, at the end of the day, I find myself parsing the formalistic language of the Treaty of Paris (1763). This Treaty ended the Seven Years’ War (including the North American hostilities thereof, known as the French and Indian War) which involved all the major European Powers of the day and was identified by Winston Churchill as the first “world war” due to its global scope.

What has the Treaty of Paris to do with Spain’s claim on the estimated $500 million in gold and silver coins recovered by Odyssey Marine Exploration’s tech-savvy treasure hunters?

Everything. (Dramatic, eh?)

In my initial comments on this story, I outlined the fight brewing between Spain and Odyssey Marine over rights to the loot. Since then, I’ve read Sea Hunt vs. Spain (4th Circuit, 2000) – a case that may weigh heavily upon the outcome of this battle. 

In Sea Hunt, a marine salvage / treasure hunting company (Sea Hunt, Inc.) located two Spanish naval vessels, La Galga (wrecked in 1750) and Juno (wrecked in 1802) off the coast of Virginia (in the territorial waters of the state). Virginia and Sea Hunt worked together, with Virginia claiming sovereignty over the wrecks per US law, and then authorizing Sea Hunt to salvage the wrecks. Sea Hunt filed an action in Federal District Court, whereupon Sea Hunt was granted exclusive rights as salvor of the wrecks. At this point the United States and Spain both intervened in the case attempting to establish Spanish sovereignty over the vessels, citing the 1902 Treaty of Friendship and General Relations between the United States and Spain.

The 1902 Treaty of Friendship states that sunken vessels of the Nation are not abandoned by their sovereigns unless by an express act of abandonment — meaning that the mere passage of time is insufficient to imply abandonment. This also happens to be the standard international law on wrecked vessels: only express acts (including the refusal to file a claim) can cause a shipwreck to be considered abandoned.  

Here’s where the Treaty of Paris (1763) comes in. The District Court had found that Juno had NOT been expressly abandoned, but that La Galga HAD been in the Treaty of Paris — and thus Sea Hunt had exclusive rights to La Galga. On appeal to the 4th Circuit, the Court examined the Treaty of Paris to check the District Court’s conclusion of abandonment, and found that the District Court had got it wrong:

As sovereign vessels of Spain, LA GALGA and JUNO are covered by the 1902 Treaty of Friendship and General Relations between the United States and Spain. The reciprocal immunities established by this treaty are essential to protecting United States shipwrecks and military gravesites. Under the terms of this treaty, Spanish vessels, like those belonging to the United States, may only be abandoned by express acts. Sea Hunt cannot show by clear and convincing evidence that the Kingdom of Spain has expressly abandoned these ships in either the 1763 Treaty or the 1819 Treaty of Amity, Settlement and Limits, which ended the War of 1812.

The 4th Circuit wrote that Sea Hunt, Inc., must show express abandonment by clear and convincing evidence, and that this burden was not remotely met when there was no mention of ships or shipwrecks in the relevant section of the 1763 Treaty.

I checked the Treaty of Paris myself, and I agree with the 4th Circuit. Here’s the relevant passage:

XX. In consequence of the restitution stipulated in the preceding article, his Catholick Majesty cedes and guaranties, in full right, to his Britannick Majesty, Florida, with Fort St. Augustin, and the Bay of Pensacola, as well as all that Spain possesses on the continent of North America, to the East or to the South East of the river Mississippi. And, in general, every thing that depends on the said countries and lands, with the sovereignty, property, possession, and all rights, acquired by treaties or otherwise, which the Catholick King and the Crown of Spain have had till now over the said countries, lands, places, and their inhabitants; so that the Catholick King cedes and makes over the whole to the said King and to the Crown of Great Britain, and that in the most ample manner and form. … It is moreover stipulated, that his Catholick Majesty shall have power to cause all the effects that may belong to him, to be brought away, whether it be artillery or other things.

There’s no way to wring an express abandonment of shipwrecks out of the treaty, especially considering the present-day governments of both Britain and Spain submitted formal Diplomatic Notes explaining their mutual understanding that shipwrecks were not intended to be covered (a fact the Court noted and gave near-conclusive weight). The 4th Circuit discusses this passage in detail, and finds nothing but support for the position that sovereignty in shipwrecks is retained.

In more general observations, the 4th Circuit notes:

Under admiralty law, where an owner comes forward to assert ownership in a shipwreck, abandonment must be shown by express acts. See Columbus-America Discovery Group v. Atlantic Mutual Ins. Co., 974 F.2d 450 (4th Cir. 1992). “[S]hould an owner appear in court and there be no evidence of an express abandonment,” title to the shipwreck remains with the owner. Id. at 461. This principle reflects the long standing admiralty rule that when “articles are lost at sea the title of the owner in them remains.”

The wreck currently being salvaged — codenamed “The Black Swan” — by Odyssey Marine has only been described as a 17th Century vessel (by the AP on CNN — I can find no such reference on the Odyssey website). If so, this predates the Treaty of Paris by 60-160 years. Some important legal questions arise:

1.) Was this a national vessel (such as a ship of the Spanish navy), or a private vessel? (Claiming to have not yet verified the ship’s identity, Odyssey has been deliberately obscure about this — which may have several implications (see below)).

2.) If it is a Spanish naval vessel, did Spain do anything to expressly abandon the vessel either before, or in the Treaty of Paris (1763), or thereafter? (If not, it seems likely Spain would retain the rights in a Spanish naval vessel and its cargo.)

3.) Does the likelihood that this wreck is in international waters rather than the territorial waters of any Nation impact the ownership interests in this case? (I haven’t seen anything to indicate that it matters, yet.)

Odyssey, in its press releases, seems to rely on “salvage fees” as a backup plan if actual ownership of the wreck doesn’t pan out due to legal challenges. But Sea Hunt throws a major monkey-wrench into Odyssey’s idea of “salvage fees.” The Court writes:

We affirm the district court’s denial of a salvage award to Sea Hunt. The district court found, “It is the right of the owner of any vessel to refuse unwanted salvage. Sea Hunt knew before bringing this action that the JUNO [already salvaged] was a Spanish ship and that Spain might make a claim of ownership and decline salvage. . . . Because Sea Hunt had prior knowledge of Spain’s ownership interests and had reason to expect Spain’s ownership claim and refusal to agree to salvage activity on JUNO, Sea Hunt can not be entitled to any salvage award.” (my emphasis)

That has to be a horrifying passage to Odyssey Marine. So what happens to the $500M of recovered coins? The above passage could explain why Odyssey has been very slow to ascertain the identity of the wrecked ship, focusing instead on the removal of the loot. Their legal game-plan could be that they won’t run afoul of the above quotation if they didn’t know who might have a claim on the ship – and therefore they’ll avoid the empty-handed fate of Sea Hunt, Inc., and instead receive a salvage award.

To wrap up, I’ll say that having read Sea Hunt vs. Spain I’m very skeptical of Odyssey’s confident pronouncements in press releases on its ability to retain the treasure (or at least the lion’s share) in the legal arena. But I’ll continue to read on this issue and report more as I learn and hear more — my background is light on admiralty law. Any comments are, of course, welcome.

B