This year I’ve written about the Colombian government’s planned recovery of artefacts from the wreck of the San José, hailed as “the most valuable shipwreck in the world”. As an international investor-state arbitration proceeds in the Hague, the wreck continues to make headlines.

Reports earlier in the summer indicated that the first robotic exploration of the wreck site began in May this year. Researchers, those reports say, have hailed the latest haul as an “unprecedented set of archaeological evidence”. Further reports earlier this month noted that the Colombians have released videos of the San José, taken with submersible cameras. This footage appears to show the prow of a wooden ship, encrusted with marine life, a few bronze cannons scattered across the sand and blue and white porcelain and gold coins gleaming on the ocean floor.

But as I have also set out previously, debate continues about the ownership of the wreck and who owns the treasure which is reportedly on the seabed. This dispute has now entered its fifth decade. It is hard not to have sympathy for the opinion of Carla Rahn Phillips, an historian, who outlets quote as saying:

“It’s a great mess and I see no easy way out of this… The Spanish state, the Colombian government, the various indigenous groups, the treasure hunters. I don’t think there’s any way that everyone can be satisfied.”

Wager’s Action off Cartagena

Proceedings continue in the UN’s Permanent Court of Arbitration, and the US-backed outfit Sea Search Armada (SSA), which states that it is the successor in interest to the finder of the wreck, submitted an amended statement of case in June 2024. SSA’s pleadings contend that at the time of sailing the San José carried “the most valuable cargo ever to have shipped from the New World”, estimated to include over seven million pesos, 116 steel chests full of emeralds and 30 million gold coins.

This is a species of what is called ‘investor-state’ arbitration.

The essence of the dispute is that SSA contends that the state of Colombia has unlawfully expropriated and interfered with SSA’s rights to what it values at up to approximately USD$10 billion worth of treasure found by SSA’s predecessor in title, the Glocca Morra Company, Inc. (Glocca Morra).

In its amended statement of case SSA states that it has reconstructed the contents of the San José based on historical records, valued them and calculated its damages relating to its part of that treasure. SSA relies on the view of three experts and calculates its damages as between USD$3.5 to 9.1 billion. This is based on expert analysis of the historical period and context in which the San José was lost, and the estimates that between 43% and 70% of the coins and bullion on the San José were gold rather than silver and a view that it is likely that the site will contain rough emeralds, pearls and likely diamonds. The San José also carried chests of Chinese blue and white porcelain.

Some reports, however, challenge the figures which some have put forward. It is not clear whether she was commenting on that expert view particularly, but Rahn Phillips is quoted as saying:

“I try to resist giving present-day estimates of anything”, adding, “if you’re talking about gold and silver coins, do we make an estimate based on the weight of the gold now? Or do we look at what collectors might pay of these gold coins? To me it’s almost meaningless to try to come up with a number now. The estimates of the treasure hunters, to me, they’re laughable.”

Underscoring that this matter is now in its fifth decade, SSA pleads that in the early 1980s Glocca Morra, a company backed by predominantly US nationals, sought and obtained permission from the Colombian government to search for and report any discovery of the wreck of the San José in Colombian waters. The initial term of authorisation appears to have been two years.

SSA relies on a report dated 26 February 1982 which states that after searches and dives using what was then state-of-the-art technology they had found a large shipwreck which they identified as the San José and notified it to Colombian authorities.

SSA says that in July 1982 Colombia recognised the Glocca Mora Company (itself an assignee of the Glocca Mora Company, Inc.) as the ‘claimant’ of the discovery. It is said that under Colombian law the discoverer of treasure is entitled to 50% of the proceeds and preferential access to a salvage contract. It is claimed that the Glocca Mora Company and the Colombian government sought to negotiate such a contract, but negotiations stalled.

As I have emphasised before, I don’t hold myself out as a Colombian lawyer, but such rights of the salvor are recognisable from the perspective of a common law jurisdiction.

SSA’s statement of case argues that while Colombia was purporting to negotiate the salvage contract with SSA Cayman (another predecessor in interest), it was also seeking to modify the domestic legal landscape relating to shipwreck treasure to attempt to diminish the value of the finder’s interest.  In 1984, Colombia issued Presidential Decree No. 2324, purporting to, amongst other things, (i) reduce the percentage share of treasure that the finder of a shipwreck would receive from 50% of the treasure itself to 5% of the gross value of whatever was salvaged; and (ii) eliminate any preferential rights to a salvage contract to discoverers with exploration authorisation.

SSA argues that those changes could not retrospectively impact its legal rights. Indeed, inconsistently with that Decree, in November 1984 Colombia’s General Directorate of the Maritime and Port Authority (‘DIMAR’) sought to negotiate a contractual arrangement with SSA to divide the salvaged treasure on a sliding scale that ran as low as 20% and as high as 50% for SSA based on the value of what was salvaged.

SSA summarises what it characterises as the next two decades of wrangling (SSA acquired its rights in 2008) which culminated in a decision of the Colombian Supreme Court in 2007 that SSA had 50% of rights in the treasure which Glocca Morra had reported.  The Supreme Court noted that items of ‘cultural heritage’ would not constitute ‘treasure’, and it concluded that the Colombian government had never designated the San José wreck as ‘cultural heritage’. The Supreme Court was satisfied that the wreck was ‘treasure’ as defined in Colombian law: it was (i) human-made; (ii) buried or lost for a long time; and (iii) the owner was not known or could not be found at the time of the discovery.

The Supreme Court upheld the Constitutional Court’s holding that “not every sunken good is part of the national heritage, because it must be of historical or archaeological value to justify its incorporation into said heritage.”

Following that finding, on SSA’s version of events, on 23 January 2020, the Colombian Ministry of Culture issued Resolution No. 0085, which declared that the San José wreck site was not treasure but an ‘Asset of National Cultural Interest’, thereby sidestepping the jurisdiction of the Supreme Court, which SSA characterises as an “expropriation wholesale” of SSA’s rights to 50% of the value of the discovery, the figure of USD$10 billion.

SSA stipulates that Colombia’s actions breach its obligations under the TPA because Colombia has refused to compensate SSA for the value of its ‘investment’. It is also said that Colombia has breached other treaty obligations such as to accord fair and equitable treatment. It is argued that Resolution No. 0085 contravened SSA’s legitimate expectation that its right to 50% of the discovery would be upheld, and that Colombia’s sudden change of position constitutes arbitrary and unreasonable conduct in breach of the TPA and customary international law. It seeks reparation under which it calls the “full reparation” standard under which SSA should be placed in the same economic position they would have been in had Colombia not committed the alleged wrongful acts.

I note that Colombia replied to the Notice of Arbitration (in Spanish) with what I take to be a number of so-called Preliminary Objections including a contention that the wreck was actually discovered on 27 November 2015 by Maritime Archaeology Consultants Switzerland. I note that in June 2024 SSA filed an amended statement of case, and I assume that Colombia will file a defence in due course but it’s not clear at present which elements of the claim will be contested. Colombia appears to challenge the reference to arbitration on a number of grounds, including whether the terms on which Glocca Mora was entitled to explore were intended to confer any particular property rights (rights in rem) over the San José wreck.

As an aside, readers may recall observations which I have made elsewhere about the unclear status of sunken warships, as that factor has a bearing on the rights of the flag State. To that end, it is notable that the Kingdom of Spain sought leave to intervene in this arbitration as amicus curiae. Spain made a number of arguments. It said that that Spain contends that it has never abandoned its rights under international law as the flag State of the San José, whose rights derive from the “principle of sovereign immunity of state vessels, the main consequence of which is the maintenance of the property of the flag state, in other words, the Kingdom of Spain.”

The arbitral tribunal dismissed that application, largely on the basis that the ownership of the wreck – even as between Colombia and SSA – is not at issue in this case.

In terms of what we can take from this, I suggest the following:

1) Looked at from the perspective of English law, much of what SSA argues has a familiar ring to it. It essentially asserts an equity based estoppel which prevents one party from resiling from its representation where it has encouraged the other party to act to its detriment. Their contentions about the expropriation of assets without compensation are familiar from Protocol 1, Article 1 to the European Convention on Human Rights;

2) But, unusually, the basis of the arbitration is not ownership, or salvage rights. Instead, the question is whether under the United States-Colombia Trade Promotion Agreement SSA is a Qualifying Investor and has a ‘Covered Investment’. It is intuitively odd for us to see salvage rights as an investment but the terms of the TPA are broadly drawn. Under the TPA the relevant factors are (i) the commitment of capital or other resources; (ii) the expectation of gain or profit; and (iii) the assumption of risk;

3) Giving a prima facie view on a Preliminary Objection, the Court found itself unable to conclude that as a US-based enterprise, SSA was not an “investor of a Party” to the TPA, or that SSA’s rights under contract could not amount to an investment, for example the licence and permits which its predecessor in interest has from the Colombian State. On that basis the Court concluded that it had jurisdiction;

4) We await a conclusive determination as to the rights in international law of the flag State (at the time of sinking) over a sunken warship; and

5) Time will tell whether the Court accepts or rejects SSA’s characterisation of Colombia’s actions. There is a tension between a wish to encourage States to have the freedom to classify artefacts as cultural patrimony as they choose (and to put in place necessary protection), and the antecedent rights of those such as SSA which have invested capital in exploration on a basis of promises or a pattern of behaviour. The answer instinctively feels like it should be some form of restitution but, as set above, valuation in this context is very difficult.

Plainly we are not yet at the heart of this matter, with many more questions to be decided. I will continue to track proceedings in the Hague and will return to this issue in a future edition of Art, Antiquity and Law.

Image Credits:

Samuel Scott, Wager’s Action off Cartagena, 28 May 1708, pre-1772, Royal Museums Greenwich, public domain via Wikimedia Commons.