Tom Snelling comments on today’s Supreme Court judgment in Argentum Exploration Ltd v Republic of South Africa and state immunity

By Tom Snelling

Partner Tom Snelling comments on the unanimous Supreme Court judgment in Argentum Exploration Ltd v Republic of South Africa regarding state immunity, highlighting the importance of the judgment as a guide for future cases.

Tom commented: “Interestingly, South Africa has succeeded with its argument that the English High Court had no power to hear Argentum’s claim for salvaged silver as a result of state immunity. This outcome (and it is a unanimous one of the Supreme Court) may be of surprise to some practitioners as it is contrary to the view of the High Court and a majority in the Court of Appeal. Those judges found in favour of the salvage company on the basis that the silver being shipped from India in 1942 was ‘in use for commercial purposes’ (an exception under section 10(4)(a) of the State Immunity Act 1978) when the vessel sank having been torpedoed by a Japanese submarine.The parties agreed that the silver was for the sovereign (not commercial) purpose of minting currency, but Argentum argued that the commercial arrangements under which it was being shipped to South Africa gave it a commercial purpose then.The Supreme Court strongly disagrees. In their view the silver: “was not in use for commercial purposes when it was simply being carried as cargo”.

“Ultimately, the judgment is more for the guidance of future cases than this one. The parties told the Supreme Court last week that they had reached a settlement between them – perhaps suggesting that both sides wanted to strike a bargain on their terms rather than following today’s hand down of the judgment. The Supreme Court decided to hand down judgment in any event. That makes more interesting the strength of the criticism from the Supreme Court of the majority of the Court of Appeal. Their view as to the operation of the sovereign/non-sovereign distinction in customary international law was described in today’s judgment as “an over-generalisation”.

Tom noted: “Some will breathe a sigh of relief as they felt the view of the Court of Appeal risked restricting the immunity of States, calling London’s status as a commercial and legal hub into question. The Supreme Court’s judgment has allayed those concerns, but its motivation may equally be understood as something less political and more prosaic: the logical consequence of having found there was a lack of commercial use when the silver was cargo being shipped 82 years ago and after the parties had already agreed in the litigation that the intended use was ultimately a sovereign, non-commercial one.”

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