An appellate court has upheld a lower court decision that ordered American treasure-hunter Odyssey Marine Exploration to return to Spain some 594,000 gold and silver coin valued at roughly $500 million recovered on the ocean floor from a sunken Spanish Galleon. The United States government supported the Spanish in the claim and the coins are supposed to be returned to Spain within ten days.
Here is how the Court described the case in an earlier ruling:
Odyssey is a deep-ocean exploration and shipwreck recovery business. In 2006, Odyssey began what it called the Amsterdam Project, researching ships that sank in a heavily-traveled area, which included an area off the coast of Gibraltar. Odyssey developed a list of target vessels to search for, one of which was the Nuestra Senora de las Mercedes (Mercedes), a Spanish vessel that sank in 1804. According to Odyssey, it “recogniz[ed] that Spain may have had a cultural (if not legal) interest in vessels that may be located within the Amsterdam area, [and] invited Spain to participate in the project.” Odyssey’s Resp. to Spain’s Motion to Dismiss, Dkt. 138 at 3. Odyssey’s CEO and counsel then met with a representative from Spain’s Ministry of Culture. What occurred at the meeting is disputed, but both Odyssey and Spain agree Spain did not give Odyssey approval to salvage any sunken Spanish vessels.
In March 2007, while Odyssey was surveying the Amsterdam area, Odyssey discovered a shipwreck in international waters 100 miles west of the Straits of Gibraltar at a depth of 1,100 meters. The remains of the shipwrecked vessel were spread over the seabed in an area 368 meters long and 110 meters wide. Odyssey conducted a detailed survey of the shipwreck before disturbing any artifacts on the ocean floor and then began to recover objects from the site. Odyssey ultimately recovered approximately 594,000 coins and a number of other small artifacts.
The company claimed that the size of the debris field made the origin of all of the coins impossible to determine. However, the U.S. courts disagreed. The company called the ship The Black Swan but the court found the identity of the vessel was the Nuestra Señora de las Mercedes sunk by the British off Cape St. may, Portugal in October 1804.
The court found that the company was looking for the Mercedes and found the Mercedes — noting that all of the coins were minted in Lima, Peru and all of the cannon matched those believed to be on the Mercedes.
Here is how the district court described the life and demise of the ship:
The historical prelude to the Mercedes’s fateful, October 5, 1804, encounter with a British squadron near Cape Saint Mary, Portugal is well documented and is the obvious starting point for correlating the res to the Mercedes. Within a decade, Spain fought with the British against revolutionary France (Guerra de la Convencion or War of the Convention — 1793-1795); ended those hostilities with the Peace of Basel (1795); quickly signed another treaty pledging support to France (Treaty of San Ildefonso — August 1796); and reaffirmed this alliance in a second treaty that demanded it cede Louisiana to France (Second Treaty of San Ildefonso — 1800). (Doc. 131, Ex. C PP18-19.) In 1802, after years of constant strife, the European powers settled into a temporary respite with the Treaty of Amiens. (Doc. 131, Ex. C P 20.) But this lull [**17] did not allay Spain’s concerns about France. Fearing France’s invasion, yet knowing that Britain would consider Spain’s actions a cause for attack, Spain sought to appease France by secretly agreeing to pay a monetary subsidy in lieu of furnishing the military aid required by the first Treaty of San Ildefonso. (Doc. 131, Ex. C PP 21-22.) In short, Spain needed all its resources for these tumultuous times; accordingly, it dispatched frigates to collect “specie and precious produce” from its American Viceroyalties. (Doc. 131, Ex. A at PP 15-16.) One was the Mercedes. (Doc. 131, Ex. A at P 15.) By the time the Mercedes reached El Callao (near Lima, Peru), France and Britain were already at war. (Doc. 131, Ex. A at P 14; Doc. 131, Ex. C at P 24.) Madrid’s June 8, 1803, dispatch to the Viceroy of Peru (the Marquis of Aviles) captures the fluidity of the political events:
The political circumstances in Europe and the declared War between England and France require every Commander of the King’s vessels to increase their care and vigilance to be prepared just in case H[is] M[ajesty] found himself in the difficult circumstance of taking part in this [conflict] …; but in the meantime and to not [**18] endanger the existing specie in that Realm and give time to examine [*1133] the state that European political affairs are acquiring, as prudence dictates, H[is] M[ajesty] has found it proper to resolve that Y[our] E[xcellency] suspend the departure from Callao of the frigates, Asuncion, Clara, and Mercedes, which have gone [there] for specie ….
(Doc. 131, Ex. C at P 24.)
The following summer, the Mercedes and three other frigates (the Clara, the Medea, and the Fama), set out from Montevideo bound for Cadiz. (Doc. 131, Ex. C at PP 27-28.) Spain undoubtedly anticipated a conflict with the British. (Doc. 131, Ex. C at P 27.) On the morning of October 5, 1804, only a day’s sail from Cadiz, a British squadron forewarned of the mission intercepted the four frigates south of Cape Saint Mary. (Doc. 131, Ex. A at P 23; Doc. 138, Ex. E at Annex 27.) The British demanded their surrender; the Spaniards refused.
As soon as the [British] officer returned with an unsatisfactory answer, I fired another shot a-head of the Admiral, and bore down close on his weather-bow. At this moment the Admiral’s second a-stern fired into the Amphion; the Admiral fired in to the Indefatigable; and I made the signal for close battle, which was instantly commenced with all the alacrity and vigour of English sailors. In less than ten minutes, la Mercedes, the Admiral’s second a-stern, blew up along-side the Amphion, with a tremendous explosion.
Captain Graham Moore, Indefatigable 6
The force of the blast blew part of one of her quarterdeck guns into the Amphion’s rigging. 7 More than 250 perished, including its Captain (Jose Manuel Goycoa) and the family of Second Squadron Leader Diego de Alvear. (Doc. 131, Ex. A at PP 9, 25.) The remaining Spanish frigates surrendered, were taken to Great Britain, and impounded. (Doc. 131, Ex. A at P 26; Doc. 131, Ex. D at P 19.) Two months later, Spain declared war against Britain and sealed its fate by an allegiance to France. (Doc. 131, Ex. A at P 27.)Of course, that battles pales in comparison to the carnage in federal court over ownership of the coins.
The long litigation involved some interesting historic cases and rivaling claims. It was Chief Justice Marshall who first ruled on the underlying doctrine of sovereign immunity in a case involving another Napoleonic War vessel — finding that the courts of the United States lacked jurisdiction over an armed ship of a foreign state in a United States port. The Schooner Exchange v. M’Faddon, 11 U.S. (7 Cranch) 116, 146-47, 3 L. Ed. 287 (1812). He enforced a rule that sought to protect the “perfect equality and absolute independence of sovereigns, and th[e] common interest impelling them to mutual intercourse.” Thus the case turned on the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C.S. § 1602 et seq. The lower court held:
Unquestionably, the Mercedes is the property of Spain — constructed in 1788 by Navy Engineers in the shipyard of the Spanish Navy in Havana, Cuba; commanded by officers and crewed by sailors of the Royal Spanish Navy throughout its service; and designated as a Spanish frigate of war. (Doc. 131, Ex. A at PP 7, 9, 12). It remains on the Royal Navy’s official registry of ships. (Doc. 131, Ex. [**38] A at P 7.) As such, 1609’s plain reading limits Odyssey to arguing the Court has jurisdiction under “existing international agreements” or as permitted by 1610 and 1611. None of these exceptions apply here, as Spain urges and Odyssey’s silence concedes. 17 Instead, Odyssey sidesteps § 1609’s exceptions by claiming: § 1609 does not shield property outside the United States; Spain must actually “possess” the res; the cargo should be partitioned to satisfy the descendants’ claims to the private lots; and other provisions of the FSIA deny Spain sovereign immunity from in personam claims. These contentions are without merit as all evade the FSIA’s goals, its statutory scheme, and the special status accorded warships per the various treaties and agreements § 1609 necessarily incorporates.
This is a video of the actual claims of the Odyssey sinking in the Florida courts.
Source: Daily Mail
I think Demdude and Jay raise a valid point. Spain suing for the recovery of items they looted from someone else is not much different than a thief suing the PD for recovery of the stolen property incidental to his arrest because the thief had written his name on it. The rulings smell of political machination and favoritism.
If the coins were minted in Peru, would Peru not have a better claim to them than Spain? Why would the Peruvians not claim that Spain looted their gold and it is rightfully theirs.
If I’m reading this correctly, the coins were minted in Peru. Since the gold was taken from South America, shouldn’t they be the one suing for recovery of gold taken from them?
@Bron, puzzling: The US is not going to default at all. Our national debt is about one year’s worth of GDP.
The average person in the USA is in deeper debt; the average house, car and credit card debt is something like five times their annual take home pay, and as long as they have a job they aren’t hurting. The equivalent of a job for the USA is the GDP; that isn’t going to collapse in the next five years either.
On top of that, the country borrows money at a real interest rate of less than 1%. If normal consumers could borrow at that rate, they would be in far deeper debt.
Our debt is not “crippling.” Although inflation hurts the poor and those on fixed incomes (mostly the elderly and retirees), it hurts the pocketbooks of the rich even more. That is true for two reasons:
a) Inflation reduces the value of held cash assets. The poor and middle class do not (on average) have much in the way of held cash assets, so inflation is a wealth tax on the rich.
b) Inflation reduces the value of outstanding loans. If you owe money, as most of the middle class does, inflation reduces the value of the amount you owe. Look at a mortgage payment: When the house is bought, the buyer has to work five days of every month to make the mortgage payment. Halfway through, he is working only three days of every month to make the mortgage payment: The payment is the same, but if her wages keep pace with inflation, the amount of work needed to make the payment will decline about 3% per year.
But who OWNS the outstanding loans? Primarily the wealthy, and for them, the less inflation the better for them, and the worse for those that have debt to pay off.
*******************
Ideally, we could manage most of the impact on the poor and fixed-income class by tying both the minimum wage and government based social security and other retirement benefits (e.g. the military) to inflation. The middle class already demands value for its labor, so its wages increase with inflation. That would put the burden of inflation almost entirely on the wealthy, which is where it belongs.
In the meantime, sub-1% interest on a single year’s worth of gross income is nothing to be concerned about, either for a country or for an individual. It could be three times that and I would not worry.
Of greater concern to me is how it is being used. Debt by a person is a good thing when it is used to buy infrastructure: House, car, education, equipment to live and be productive, even medical care and clothes for work. Those things enable higher productivity and returns. They can be very enjoyable, but what is important logically is their longer term utility as tools, by the time these kinds of debts are paid off they will have paid for themselves many times over.
Debt is bad when the benefits are emotional or psychic. A vacation is not an “investment,” dinner out is not an investment, an elaborate entertainment system is not an investment. Those are indulgences.
On some things, lines must be drawn between necessity and indulgence: A car is a necessity, for most people a $60,000 car is an indulgence.
We have to do the same thing as a country: A military is a necessity. A military ten times larger than anybody else’s is an indulgence, especially when the rest of our infrastructure is crumbling from negligence.
To coin a golden phrase: “law is a function of power, and power is a function of Smorgasbord, Inc.”
Frankly:
bad money drives out good money. Fiat dollars are inflationary and that is why gold has risen in value almost 300% since 2006.
You would know that if your mind wasnt as dry as burnt toast.
Frankly:
A moron I maybe but tis a far cry from being the Idol of idiot-worshippers tis thee.
@puzzling
“Funny how previous metals like gold keep their value over all decades and centuries. The same certainly can’t be said for government’s fiat money.”
Are the gold coins on these ships worth merely their value in gold by weight? Is their value due to being backed by the Spanish Government? Or is their value because of their history?
I suspect these coins have a value due to the experience they went through far beyond their weight in gold. (But I’m not looking it up.)
I am actually otherwise partial to gold standard arguments, not because there is something special about Au, but due to the pressure a reference places on governments.
But most of the economists I respect totally disagree.
A lawyer and historian seems to explain why and explains from his perspective as a historian why this is an excellent thing in that it preserves the record for historians to record.
http://www.history.navy.mil/branches/org12-7m.htm
DEPARTMENT OF THE NAVY — NAVAL HISTORY & HERITAGE COMMAND
UNDERWATER ARCHAEOLOGY BRANCH
In Defense of Perpetual Title to Sovereign Wrecks
Rand R. Pixa1
My father, an Army officer who sailed aboard Navy and merchant ships demised to the Federal Government during World War II, put it simply that ships belonging to the Government were a little piece of the United States and carried the rights of sovereign territory with them. At least that is as much as I can remember of his explanation of the subject to me when I was age ten or twelve. Of course, the strictures of international law are more sophisticated than that simple prescription, but the principles my father explained reflect the legal distinctions setting sovereign vessels apart from those privately owned or engaged in commercial service.
The thesis of this paper is that the investiture of sovereign rights in a ship changes its character as a result of that expression of sovereign intent and that it is the form of that intent thereafter that either clothes the ship with the incidents of sovereignty including perpetual sovereign title or removes or conditions the character of sovereignty, and that it is only the sovereign who can make that determination. It follows that sovereign rights, including all the rights of ownership, extend over sovereign property so long as the sovereign or its successor so intends. The consequence of that is that sunken sovereign ships should not be treated in the same manner as those that are privately owned in that the former are not subject to unintended abandonment, the law of finds, or unconsented salvage indefinitely after their loss, because unlike private ships their sovereign owners or their successors carry on indefinitely.
…
The principle of perpetual sovereign title to sovereign wrecks may well turn out to be one of the most important tools for historic preservation available at this time when almost all of the world’s wrecks have become accessible. Reinforcement and codification of the principle is vitally important.
My understanding as a landlubber (and yet issuer of the Black Dot) is that laws of abandonment aren’t relevant for naval ships (or perhaps other government assets.)
I think it’s a honor amongst thieves kind of thing.
A government navy ship can’t be abandoned. Although in this case, it’s interesting that it is still on the Royal Navy’s registry. There are lots of naval wessels that the Wiki lists as “struck from the registry” (http://en.wikipedia.org/wiki/Japanese_aircraft_carrier_Akagi)
I suspect the various governments still don’t think you can salvage them.
Bron,
The US will default, but in my view it will be through money printing and inflation. I think politics dictates that route, since it requires less courage than simply announcing that we have borrowed beyond any possibility of repayment.
Nations around the globe are doing more and more trade deals not denominated in US dollars. US dollars once held for trade will come back to us as the dollar steadily loses its reserve currency status, also adding to price inflation.
Seems like a spoil of war…..
I thought that maritime law provided that once a ship was “abandoned”, that is there was not an active attempt to recover it, it became the property of whoever could get to it.
Is that not true or is there something else used to decide this case?
Both you morons might want to note that fiat money also allows the economy to expand beyond the limited amount of gold and silver available. If we stuck with gold Russia (the largest producer of gold) and South Africa (the second) could control the American economy by simply reducing output. There isn’t enough gold available to support the world economy.
As for the US defaulting withing 5 years – I’m old enough to remember when Reagan claimed the same stupid thing. If we put Americans back to work again fiat money would pay off all that fiat debt.
@Bron: The philosophy that caused it is raw profiteering, endless war, and politicians engineering the government to let them act in their own selfish interest without any accountability or punishment. It is corporatism and corruption, pure and simple.
puzzling:
fiat money allows the welfare state to thrive and expand. Why have sound money when you can print funny money and expand the government to the detriment of productive citizens.
Prediction: the US government is broke and will default on it’s obligations within the next 5 years.
Cause: massive social welfare and unnecessary defense spending. Being the policeman of the world has its down side.
Philosophy(ies) that caused it? Progressive/Neo-Con.
I thought there was some law about international waters and salvage. What gives? Is this some political move?
That seems unfair to me; there should be some statute of limitations.
It is not as if Spain has been missing the money or looking for it for 200 years. Why does it belong to Spain and not the British, as spoils of war?
Somebody is getting a windfall, it ought to be the people that spent the time and resources and took all the risk to look for the lost treasure.
Funny how previous metals like gold keep their value over all decades and centuries. The same certainly can’t be said for government’s fiat money.
Related:
Maine crew set to recover sunken $3b in platinum
they can’t put them back where they found them?