Odyssey Marine Exploration, Inc. v. The Unidentified Shipwrecked Vessel
RESPONSE to motion re 131 MOTION to dismiss Amended Complaint or for summary judgment filed by Odyssey Marine Exploration, Inc.. (Attachments: # 1 Appendix Index of Exhibits to Odyssey's Response to Spain's Motion, # 2 Exhibit A-1 Kingsley Part 1, # 3 Exhibit A-2 Kingsley Part 2, Annex 1, # 4 Exhibit A-2 Kingsley Part 2, Annex 2, # 5 Exhibit A-2 Kingsley Part 2, Annex 3, # 6 Exhibit A-3 Kingsley Part 3, Annex 4, # 7 Exhibit A-3 Kingsley Part 3, Annex 5, # 8 Exhibit A-3 Kingsley Part 3, Annex 6, # 9 Exhibit A-4 Kingsley Part 4, Annex 7, # 10 Exhibit A-5 Kingsley Part 5, Annex 8, # 11 Exhibit A-4 Kingsley Part 4, Annex 9, # 12 Exhibit A-5 Kingsley Part 5, Annex 10.1-10.2, # 13 Exhibit A-5 Kingsley Part 5, Annex 10.3-10.6, # 14 Exhibit A-5 Kingsley Part 5, Annex 11, # 15 Exhibit A-6 Kingsley Part 6, Annex 12 to 13.1, # 16 Exhibit A-7 Kingsley Part 7, Annex 13.2 to 13.3, # 17 Exhibit A-8 Kingsley Part 8, Annex 13.4 to 13.7, # 18 Exhibit A-9 Kingsley Part 9, Annex 14, # 19 Exhibit A-10 Kingsley Part 10, Annex 15, # 20 Exhibit A-11 Kingsley Part 11, Annex 16, # 21 Exhibit A-11 Kingsley Part 11, Annex 17, # 22 Exhibit A-11 Kingsley Part 11, Annex 18, # 23 Exhibit A-12 Kingsley Part 12, Annex 19, # 24 Exhibit A-12 Kingsley Part 12, Annex 20, # 25 Exhibit a-13 Kingsley Part 13, Anex 21, # 26 Exhibit A-13 Kingsley Part 13, Annex 22, # 27 Exhibit B Sinclair, # 28 Exhibit C Etchevers, # 29 Exhibit D Stemm, # 30 Exhibit E-1 Carlisle Part 1, # 31 Exhibit E-2 Carlisle Part 2, Annex 1, # 32 Exhibit E-2 Carlisle Part 2, Annex 2, # 33 Exhibit E2- Carlisle Part 2, Annex 3, # 34 Exhibit E-2 Carlisle Part 2, Annex 4, # 35 Exhibit E-2 Carlisle Part 2, Annex 5, # 36 Exhibit E-2 Carlisle Part 2, Annex 6, # 37 Exhibit E-2 Carlisle Part 2, Annex 7, # 38 Exhibit E-2 Carlisle Part 2, Annex 8, # 39 Exhibit E-2 Carlisle Part 2, Annex 9, # 40 Exhibit E-3 Carlisle Part 3, Annex 10, # 41 Exhibit E-3 Carlisle Part 3, Annex 11, # 42 Exhibit E-3 Carlisle Part 3, Annex 12, # 43 Exhibit E-3 Carlisle Part 3, Annex 13, # 44 Exhibit E-3 Carlisle Part 3, Annex 14, # 45 Exhibit E-3 Carlisle Part 3, Annex 15, # 46 Exhibit E-3 Carlisle Part 3, Annex 16, # 47 Exhibit E-3 Carlisle Part 3, Annex 17, # 48 Exhibit Ej-3 Carlisle Part 3, Annex 18, # 49 Exhibit e-3 Carlisle Part 3, Annex 19, # 50 Exhibit E-3 Carlisle Part 3, Annex 20, # 51 Exhibit E-4 Carlisle Part 4, Annex 21, # 52 Exhibit E-4 Carlisle Part 4, Annex 22, # 53 Exhibit E-5 Carlisle Part 5, Annex 23, # 54 Exhibit E-5 Carlisle Part 5, Annex 24, # 55 Exhibit E-5 Carlisle Part 5, Annex 25, # 56 Exhibit E-6 Carlisle Part 6, Annex 26, # 57 Exhibit E-6 Carlisle Part 6, Annex 27, # 58 Exhibit E-7 Carlisle Part 7, Annex 28, # 59 Exhibit E-8 Carlisle Part 8, Annex 29, # 60 Exhibit E-9 Carlisle Part 9, Annex 30, # 61 Exhibit E-9 Carlisle Part 9, Annex 31, # 62 Exhibit E-10 Carlisle Part 10, Annex 32, # 63 Exhibit F-1 Flayhart, Part 1, # 64 Exhibit F-2 Flayhart Part 2, Annex 1, # 65 Exhibit F-2 Flayhart Part 2, Annex 2, # 66 Exhibit F-2 Flayhart Part 2, Annex 3, # 67 Exhibit F-2 Flayhart Part 2, Annex 4, # 68 Exhibit F-2 Flayhart Part 2, Annex 5, # 69 Exhibit F-2 Flayhart Part 2, Annex 6, # 70 Exhibit F-3 Flayhart Part 3, Annex 7, # 71 Exhibit F-3 Flayhart Part 3, Annex 8, # 72 Exhibit F-3 Flayhart Part 3, Annex 9, # 73 Exhibit F-3 Flayhart Part 3, Annex 10, # 74 Exhibit F-3 Flayhart Part 3, Annex 11, # 75 Exhibit F-4 Flayhart Part 4, Annex 12, # 76 Exhibit F-4 Flayhart Part 4, Annex 13, # 77 Exhibit F-4 Flayhart Part 4, Annex 14, # 78 Exhibit F-4 Flayhart Part 4, Annex 15, # 79 Exhibit F-4 Flayhart Part 4, Annex 16, # 80 Exhibit F-4 flayhart Part 4, Annex 17, # 81 Exhibit F-5 flayhart Part 5, Annex 18, # 82 Exhibit F-5 Flayhart Part 5, Annex 19, # 83 Exhibit F-5 Flayhart Part 5, Annex 20, # 84 Exhibit F-5 Flayhart Part 5, Annex 21, # 85 Exhibit F-5 Flayhart Part 5, Annex 22, # 86 Exhibit F-5 Flayhart Part 5, Annex 23, # 87 Exhibit F-5 Flayhart Part 5, Annex 24, # 88 Exhibit F-5 Flayhart Part 5, Annex 25, # 89 Exhibit G Goni Etchevers and Fuentes Camacho, # 90 Exhibit H Tedesco, # 91 Exhibit I Tsokos, # 92 Exhibit J Amrhein)(Von Spiegelfeld, Allen)
JOSÉ LUIS GOŃI ETCHEVERS and VICTOR FUENTES CAMACHO
AN ANALYSIS OF PRIVATE INTERNATIONAL LAW RULES ON THE APPLICABILITY OF SPANISH LAW TO THE CASE OF THE CARGO OF THE BLACK SWAN By José Luis GOŃI ETCHEVERS (Gońi & Co Abogados, Madrid) and Victor FUENTES CAMACHO (Professor of Private International Law of the University Complutense (Madrid) INTRODUCTION This case presents us with a typical scenario for the application of private 1. international law and its regulations. This is due to the international character of the case where the facts cross the border of one sovereign State and touch two or more States with distinct laws that differ significantly on various points. Without entering into a consideration of what could be the connecting factors with other States, it cannot be denied that there is at least a minimum connection with the US and with Spain. As a starting point, and without taking into consideration other relevant connecting factors and we will return to consider some of these the connection with said two States is due to the presence in the US litigation of the Spanish Government and an American company with its principal place of business in the US. 2. The abovementioned international character of the case allows the Government of Spain to formulate a challenge on the substantive action based on private international law; specifically, in relation to the determination of the law applicable to the case (in classic terminology "conflict of laws"). Said in more direct terms, the possibility that certain provisions of Spanish law may benefit the Kingdom of Spain could cause the Government of Spain to argue their application. 3. For the reasons we have stated, it seems sensible that a legal analysis focused on considering the problem of Private International Law relating to the applicability of Spanish law to this case be undertaken. Said legal analysis can be taken from the hypothetical point of view of a Spanish court hearing the case on the substantive action. The analysis would try to verify whether and if so, to what extent Spanish law would favor the position of the Spanish Government and within said law, what specific legislation is relevant through the analysis of the various arguments that could be raised by the Spanish Government to defend the application of said law. It would seem that until now, Spain is working on the hypothesis that the vessel and the cargo constitute one single unit. We believe that contrary to said hypothesis, the cargo and the vessel must be treated as totally independent assets and because of this, subjected to distinct legal regimes. This duality of possible arguments creates the need to divide this present legal opinion into two parts, dedicated to setting out the consequences and the evaluation of the viability of each one of the possible arguments. And, in turn, within the section of the report that corresponds to treating the cargo of coins as totally independent of the vessel, there will be a further subdivision to allow the analysis of the consequences that arise from the consideration of the cargo as an asset under the special protection of the Spanish Cultural Heritage Act 13/1985, 25th June (from hereinafter referred to as the Spanish Cultural Heritage Act) and alternatively as assets that are not afforded such protection. 1
PART I: ANALYSIS OF THE ARGUMENT THAT THE CARGO SHOULD BE TREATED AS INSEPARABLE FROM THE VESSEL. 4. According to the information that has been supplied by the Spanish press, the Spanish Government persists in the idea that there is a vessel and that said vessel and her cargo should be treated as a matter of law as one unit. This is not a view we can share with Spain: firstly, because what has been found and excavated is not a vessel but a cargo that also appears to have no physical connection with the carrying vessel, whose identity we are told is unknown or unconfirmed; secondly, for the hypothesis that even if such a vessel had been found and identified, in the present case the coins in dispute would never have constituted one unit with the vessel, since they are assets that deserve a legal treatment as a cargo clearly independent of the carrying vessel. Assuming these two premises, we will continue, nonetheless, to examine the theory of the unity of vessel and cargo so as to be able to specify the consequences and determine to what extent such an argument can be defended in our particular case. 5. In Spanish law the radical separation of the concepts of vessel and her cargo are beyond question. Only at an academic level one person, who also happens to be one of the authors of this report Victor Fuentes Camacho has defended the theory that certain assets that have been found underwater can be considered as a matter of law as an integral part of the vessel to which they belonged. Said theory was defended in the case of the bell of the "Santa Maria", relating, as with the present case, to an object that was found on the seabed; but that, as we will see, has some very significant differences with the case of the cargo of coins from the "Black Swan". This was an argument that arose from a review of certain cases in which there had been a debate on the possibility that, for the purpose of determining the applicable law, sections removed from certain immovable objects could be classified as immovable objects by destiny. Since there is no Spanish case law clarifying the issue of assets that are considered "immovable by destiny", a certain amount of light can nonetheless be shed on the issue by French case law (which, as is common knowledge, has a legal system very similar to that of Spain): the case Palazzi v Dame Lauth et Académie des sciences (Civil Court of Chaitre, July 1920), the case of StroganoffSherbatoff v Bensimon [Court of Higher Instance of the Seine, 12th January 1966; Court of Appeal of Paris 8th July 1970 and the Court of Cassation (1st Chamber), 3rd May 1973] and the case of Ville de Genčve et Fondation Abbeg v Consorts Margail [Court of Appeal Montpellier, 18th December 1984, and the Court of Cassation (Full Chamber) 15th April of 1988]. It was argued by the lawyers of some of the parties in each case (the defendants in the first case; the claimants in the second and third) that such a classification should be made, respectively, objects in question that were at the service of a castle, works of art that formed part of an estate and frescos that decorated the walls of a chapel and that had been separated from them. The said classification only prospered in the judgment on appeal in the third case. All the other judgments dictated as much in that case as in the other two held that it was unsustainable to classify said assets in dispute as immovable by destiny. These largely negative results were the consequence of legislation by which the character of immovable or movable was determined in the French legal system (Civil Code articles, 524, 525 and 526) defining the notion of immovable assets by virtue of a rather restrictive formula that, as occurred in the cases cited, can give rise to doubts as to 2
what type of asset deserves the classification of "immovable by destiny" including frescos that are lifted from the walls of a chapel causing a clear deterioration to the same. In his monograph of 1993, V. Fuentes Camacho, highlighted the fact that said interpretative doubts would not exist in the Spanish legal system, because the provisions of the Spanish Civil Code and the Spanish Cultural Heritage Act defining the notion of "immovable assets" for the purposes of both bodies of law employ very wide definition formulae, that cover a great range of assets1. And thus the Spanish Civil Code article 334 states, in the first place and in general terms that: "Immovable assets are: (...) 3rd. All that is united to an immovable asset in a permanent manner, in such a way that it cannot be separated without breaking of the matter or deterioration of the asset. 4th. The statues, reliefs, paintings or other objects for use or decoration, positioned on the buildings or estate of the owner of the immovable in such a way that they reveal the intention to unit them in a permanent manner to the estate" To compliment and with specific reference to the assets that form part of Spanish Cultural Heritage, the Spanish Cultural Heritage Act provides the following definition: "For the purposes of this Act immovable assets are, in addition to those listed in the Civil Code article 334, all those elements that can be considered to be consubstantial with the buildings and form part of the same or their surroundings, or were once part thereof, although in the case where they can be separated they constitute a total unit of easy application to other constructions or differing uses from the original, irrespective of the type of material of which they are made and although their separation does not visibly prejudice the historical or artistic merit of the immovable of which they formed part". Thirteen and fourteen years later, in the two successive versions of the commentary on the Judgment JPI nş39 of Madrid 6th March 2006 on the case of the bell of the "Santa Maria", the author transposes said idea of the unity of the asset in dispute to defend its inclusion as part of Spanish Cultural Heritage. According to the summary of facts published by the Spanish Gestion de Archivos y Subastas (Management of Archives and Auctions), said asset was the bell of the Spanish caravel "Santa Maria" (one of the three vessels in which Columbus discovered America) and was found by a professional diver Roberto Mazzara in the territorial seas of Portugal. As a result of said bell being taken by R. Mazzara to Spain, the Portuguese Government demanded its return before the Spanish courts. The position maintained by V. Fuentes Camacho in relation to this argument can be summarized in the following affirmation: contrary to a consideration of the bell as an isolated
vid. The illegal international traffic of cultural assets (Perspectives of Spanish Private International law), Madrid, Eurolex, 1993, in particular pages 181182.
object that would allow the bell to form part of Portuguese national heritage (being an "object without identified owner found in the sea of interest to the State" in the sense of the Portuguese legislation contained in Decree Law 416/70 of the 1st September 1970 article 1.1, in the revision undertaken in Decree Law 577/76 of the 21st July 1976), the interpretation of the bell as an integral part of the caravel "Santa Maria" would justify the inclusion in Spanish cultural heritage2. The legal fiction that the bell and the caravel should be considered as one integral unit served thereby to submit as much the bell as the vessel to the same law, in particular, Spanish law, applicable by virtue of the principle of the law of the flag as designated by Spanish conflict of laws rules contained in the Civil Code article 10.2,i.l ("the vessels, aircraft and carriage by rail, as well as all rights arising therefrom, are subject to the law of the place of the flag, license or registration"), despite the fact that the bell was found in the territorial sea of Portugal3. 6. From all said above, the main legal consequence of applying the theory of the unity that we have just reviewed can be clearly seen: for the hypothesis that the vessel had been located and identified, and the carrying vessel and the cargo were considered to be one unit, there would be applied to the cargo the same law as that of the vessel. This fiction would consist in assimilating the cargo to the vessel, and could be argued by the Government of Spain to try to justify the application of Spanish law as a favorable alternative to any of the two following pretensions: that the cargo could be covered by the privilege of sovereign immunity where the vessel enjoyed such a privilege, and, as a subsidiary argument, where there is no immunity, that the cargo be considered to be property of the Spanish State on exactly the same terms as those of any such proprietary rights in the vessel sustainable under Spanish administrative law relevant to the patrimony of the Spanish State (Act 33/2003 3rd November, of the Patrimony of the Public Administrations). 7. We believe that neither pretension can succeed. On the one hand, in relation to the alleged immunity of the vessel as could be argued by the Spanish State, the argument lacks substance since the immunity of the warships or of vessels of State is a right that only exists in relation to vessels that are apt for maritime navigation, and not to those vessels that have already sunk (with the only exception and not the case here that the sunken vessel is capable of being recovered shortly after the casualty and could then be returned to service following repairs at a reasonable cost). Further, for the hypothesis that it were to be treated as a vessel apt for maritime navigation, the immunity would require that the following five preconditions be satisfied cumulatively: 1st) that said carrying vessel be located and identified; 2nd) that it is proven that this be the vessel Nuestra Seńora de las Mercedes; 3rd) that said vessel was in fact a "vessel of the State"; 4th) that the cargo carried on board was not in private ownership and 5th) that at the time of the sinking the vessel was carrying out an exclusively military noncommercial operation
For more detail vid, "The case of the bell of the Santa Maria: an indisputable example of illegal inter EU Community traffic of cultural assets", initial version published in La Ley. EU, year XXVII, number 6494, 31st May 2006, pages 23 and revised version published in Art, Culture and Law, monographic volume of the Digest of the Department of Law of the University of Granada, 3 edition, number 10, 2007, pages 245250) 3 The case was subsequently resolved on other points of law
In the hypothetical situation that there were indeed a vessel, any ultimate argument that the vessel belongs to the Spanish State could be perfectly undermined by demonstrating that she was abandoned; a position we will tie in with the consideration of the cargo as assets that deserve a separate and independent legal treatment (infra, point 10). Finally, having justified the rejection of both concepts of immunity and ownership by considering each unit as separate, the rejection should be even more radical, if that were possible, in respect of any argument that the cargo be treated as integral to the vessel; pure and simply because we are dealing with a theory that in the case of the Black Swan cannot be defended at all (because the facts differ significantly). The reiterated theory of the unity is unsustainable if a comparative analysis is performed between the case of the Black Swan and that of the bell of the "Santa Maria" and even with the other cases referred to in which considered the possibility of classifying assets removed as immovable assets by virtue of the doctrine of "immovable by destiny". In respect of the later cases, suffice it to say that even if it were correct that definitions as wide as those in the Spanish Civil code article 334.3 and 4 and the Spanish Cultural Heritage Act article 14.1 could extend to cover the assets in dispute to be so classified, in those cases there were certain elements that do not occur here and function in turn as circumstances which are required by the said rules: on the one hand, the material elements constituted by the initial attachment to the immovable asset which was subsequently removed and, in that case, causing the deterioration of the principal immovable caused by such removable; on the other hand, the volitive element constituted by the intention of the owners of each immovable from which the objects were removed without or against their will to keep them united or incorporated thereto. It is precisely this note of attachment to sunken vessels of certain assets that have been found in them at the time of their sinking which lead V. Fuentes Camacho to argue in the case of the bell of the "Santa Maria" that the bell had an undeniable character as an integral component of the caravel that fully justified the consideration of both as one unit. Very much to the contrary, the coins in our case have a legal categorization as a cargo fully separated, independent of the vessel, which in its day carried the coins: at no time was there an attachment of these coins to what is at this time the unidentified vessel nor does there exist the will of any owner that the coins should go to form part of the vessel in a permanent fashion; as a result of which the separation of the cargo, probably, as a consequence of the sinking cannot signify any type of damage or deterioration to the hypothetical vessel. Consequently, the theory of the unity of vessel and cargo should be absolutely rejected, and such rejection allows us to consider the cargo with the independence it deserves. PART II: ANALYSIS OF THE ARGUMENT THAT THE CARGO BE TREATED AS ENTIRELY SEPARATE FROM THE VESSEL. 8. Having rejected all arguments that the cargo be considered to be an integral part of the hypothetical vessel, we now consider the two separately. As stated in the introduction of this report, from this second perspective the determination of the proper law of the coins in dispute will vary depending on whether they are afforded or not the classification of special protection under the Spanish Cultural Heritage Law.
9. The Kingdom of Spain could try to argue that the cargo is covered by the special protection contained in the Spanish Cultural Heritage Act. This special protection could extend to recognizing the ownership by the State of the cargo of coins, on the allegation that they form part of the archaeological heritage within the terms of the Spanish Cultural Heritage Act article 40.1 as "assets (....) of an historical character, capable of being studied with archaeological methodology, whether or not they have been extracted, and whether found on the ground or buried, in the territorial sea or the continental shelf". Spain could even also try to defend the existence of the right to ownership of the cargo as assets of particular significance as belonging to the Spanish Cultural Heritage within the definition of the Spanish Cultural Heritage Act article 29.1 if they were considered as having been exported illegally from Spain as set out in article 5 of the said law in connection with Article 29.1. As we will immediately see, none of the abovementioned possible consequences of the earlier arguments can be considered admissible. In the first place, the coins in dispute are not included within the scope of the definition of "assets belonging to the Spanish archaeological heritage" under the Spanish Cultural Heritage Act article 40.1. In the second place, there is also no "illegal exportation of assets that form part of Spanish Cultural Heritage" as defined by the Spanish Cultural Heritage Act article 5 as a precondition for article 29.1 to operate and have the substantive consequence of "automatically assigning the right of ownership over the asset to the State". The coins in dispute do not deserve a classification as assets forming part of the archaeological heritage of Spain within the meaning of the Spanish Cultural Heritage Act article 40.1 because they have not been found in any of the places where, in accordance with such legislation, such objects should be found to comprise the subcategory of assets of Spanish Cultural Heritage as defined therein. As has been recognized in the Spanish accepted scholarly writings, by J.L. Álvarez Álvarez, in his commentary on the Spanish Cultural Heritage Act article 40.1 from its last modification in the legislative process, this article has significantly extended the scope of what is to be considered to be Spanish archaeological heritage as compared to the earlier drafts, by including in that scope along with the territorial sea, the continental shelf4. But it should be noted that in any event it refers to territorial sea and continental shelf of the Spanish State; never to the territorial sea or the continental shelf of another foreign State outside Spain, and even less so, to international waters. Consequently, it is not possible to argue that we are dealing with assets that form part of Spanish archaeological heritage, as they are reported to have been found outside Spanish waters. Assuming the earlier premise, we should add that, even if treated as an asset within the terms of Spanish archaeological heritage, a claim by the Kingdom of Spain on these grounds can never prosper where based on the right to ownership of the asset under the Spanish Cultural Heritage Act article 29.1 in relation to article 5 in the event of an illegal exportation of the asset. It is true that, as pointed out by Professor J.D. Gonzalez Campos and Professor M. Virgós Soriano that the term "exportation" used in both articles should be
vid. Studies on Spanish Historical Heritage and the Law of 25th June 1985, Madrid, Civitas, 1989, pages 739742
interpreted in a very wide sense, so that it covers not only where the asset has abandoned Spanish territory, but also mere proof that such exportation is taking place without authorization5. Further, for whichever of the two hypothesis, the Spanish Cultural Heritage Act article 5 requires an exodus this having happened or not carried out completely of the assets in dispute from Spanish territory which is something that has not occurred in relation to the treasure of the Black Swan because the coins were not in waters under the sovereignty of Spain when they were found. If Spain wanted to base its arguments on the Spanish Cultural Heritage Act articles 29.1 and 5, the Spanish government will be forced to push beyond reasonable or acceptable boundaries the interpretation of the reiterated concept of the "illegal exportation" trying to make it apply to situations involving the entry of assets that never abandoned Spanish territory in another State distinct to that of Spain without the authorization of the competent Spanish authorities. For such a poor theory to prosper there would also have to satisfy a prerequisite that, as we will see, also does not arise in the case of the Black Swan. We refer to the significance that the assets included in the Spanish Cultural Heritage Act need to have to be included over and above others as deserving of an even greater special protection. In effect, the Spanish Cultural Heritage Act classifies the assets included within its terms establishing a clear distinction between the three following hierarchical categories: 1stly) the assets declared or capable of being declared as of Cultural Interest, by the order of the Act or by Royal Decree item by item (article 9.1); 2ndly) those assets included or capable of inclusion in the list of the General Inventory of the Ministry of Culture (article 26.1), and 3rdly) all other assets belonging to Spanish Cultural Heritage. It is also J.L. Álvarez Álvarez who is one of the authors who has best known how to define this issue of significance that distinguishes the assets covered by the first two categories from the third category, where he points out that, although in rather obscure language, that the Spanish Cultural Heritage Act article 1.3 "recognizes these three category of assets, given that the most significant assets are or will be declared of specific cultural interest or inventoried, and there exist others that are less relevant and are neither declared nor inventoried" (op.cit., page 111). At least the greater part of the cargo of coins of the Black Swan could be caught within the definition of the third category of assets referred to above. We are dealing here with a cargo that according to the information we have received consists of approximately 500,000 similar coins, of which, even in the best case scenario, only a minimum part could have any historical significance. Save for that minimum portion of the cargo, these coins lack the significance required to afford them the special protection granted in the Spanish Cultural Heritage Act for the first two more important categories for assets that either are declared or capable of being declared of Cultural Interest or are susceptible to inclusion in the list of the General Inventory of the Ministry of Culture. In addition, the Spanish Cultural Heritage Act does not allow in any event an interpretation that said coins enjoy significance for Spanish Cultural Heritage just because they are over one hundred years of age. This is not to ignore the fact that article 5.2 of said
cf. "Law and Practice of International Art Trade in Spain" in AA.VV International Sales of Works of Art La vente internationale d'oeuvres d'art (Coloquio, Gineva, 1416 April 1988) Paris, New York/ Deventer/ Boston, ICC Publishing and Kluwer, 1990, page 123
Act allows a degree of assimilation of the assets that are over one hundred years to those capable of being inventoried. But that assimilation is carried out only for the purposes of submitting some assets to the need for authorization prior to exportation; and never for the purposes of identifying assets of over one hundred years of age as having a significance that would offer them a greater degree of protection under the Act. Contrary to what occurred under previous drafts of the law, the Spanish Cultural Heritage Act article 26.1 in its latest version has opted to subordinate the special guardianship for assets susceptible of inclusion in the inventory exclusively on their unique significance, notable value, irrespective of other considerations included amongst which was the issue of antiquity. In this way, there came about the deletion of the reference to the one hundred year rule that was in fact included in the actual text of article 26 that was sent by the Government to the Parliament. And such a deletion obeyed reasoned explanations that are clearly set forth by J.L. Álvarez Álvarez in the following two passages from his study: "In the text sent by the Government there was an obligation, in article 26, to inventory all the assets that had more than one hundred years in age, and article 35.4 did not refer to this antiquity and referred, instead, to all assets (movable and immovable) that form part of Spanish Cultural Heritage, which was a very ambiguous position" (op.cit., page 200). "Article 26 of the Draft Act, as we have said, created more restrictions than in just article 35.4, given that it referred to those assets that had more than one hundred years of age. This is an arbitrary limit, but a classic one. It appeared already in the Acts of 26 and 33, and even in the Convention on the Measures that should be adopted to prohibit and impede the importation, exportation and transfer of illegal ownership of cultural assets, approved in Paris 14th November 1970 and ratified by the Spanish Parliament on the 21st June 1985, and was one of the criteria used by some of the amendments by the Popular Party, in particular amendment number 66. But this criteria was insufficient because it meant that it was necessary to inventory all assets, chairs, books, drawings, instruments and cultural creations that existed before 1885. Such a burden imposed on the citizens would have not been met, and the Administration could not have ordered, classified and utilized all that data even if they had received it. With the intention of protecting everything, they would have ended up protecting absolutely nothing and there would not have existed the possibility to create an Inventory, in a progressive manner" (op. cit., pages 201202). [The emphasis is our own]. In summary, insufficiency of the criteria of the antiquity of the coins leads us to close the analysis on the absence of any possibility that the coins be considered to be assets afforded special protection under the Spanish Cultural Heritage Act. 10. The inapplicability of the regime of the Spanish Cultural Heritage Act to these coins as assets of particular significance leads us, finally, to consider the cargo as assets that do not enjoy the special protection dispensed by said law. From this last point of view, the coins are to be considered as simple movable assets with the only peculiarity that at the time 8
of their extraction they were situated at the bottom of the sea. We consider this classification of the assets by far to be the most correct in order to determine the applicable law. In the Spanish system of Private International Law, since the reform of the Preliminary Title of the Civil Code carried out in 1974, the conflict rule set out in article 10.1, in its paragraphs I and II respectively, submits all assets whether movable or immovable and the real estate rights as well as the movable rights to the lex rei sitae6. By virtue of said rule, the right of property in the coins in dispute is governed by the law of the place they are found. That said, on having been found on the seabed, the application of the said rule of lex rei sitae creates a very specific problem in the determination of the connecting factors, consisting in identifying where exactly the situs of the assets is to be found. To resolve this problem, it is necessary to resort to the rules of Public International law regulating the delimitation of marine spaces subject to, or outside, sovereign territory; rules that are contained in the Convention of the United Nations on the Law of the Sea, signed in Montego Bay on the 10th December 1982. In accordance with the dispositions of said law, it is possible to establish a distinction between those spaces that are subjected to the sovereignty of coastal States and those others that are outside such limits. Only in the case of territorial sea (as understood as a column of water from the seabed and the subsoil, the existing natural resources and the overlying waters) can it be understood that there exists a lex rei sitae that can be identified, that would correspond with the coastal State that exercises sovereignty over said maritime space (Convention article 2, paragraphs 1 and 2)7. Beyond the twelve miles counting from the base line that measures the territorial sea, as much for all the assets sunken in the exclusive economic zone (including the contiguous zone) and the continental shelf, as for those sunken in international waters, there is no State that enjoys sovereignty and, consequently, the lex rei sitae is rendered unworkable. We are faced with a void in the law that, once you dismiss the legal fiction that assimilates the cargo with the carrying vessel and all possible consideration of the cargo as a cultural asset under special protection, can only be filled by resorting to the general criteria of the lex fori of the Spanish judge, which would be Spanish law. From the perspective of a Spanish judge seized with a consideration of the substantive action, said general criteria would be focused on the basic concepts of assets and their ownership as stipulated by Spanish civil law. The first principal or fundamental rule common for all movable assets as set out in the Civil Code is that for there to be ownership there must be possession of the object (this can be through another person who in one way or another recognizes that ownership). Possession and thereby ownership require that the asset be capable of appropriation (Civil Code article 437 "There can only be the subject of possession the things and rights that are susceptible of appropriation"). Where the asset is destroyed or lost, ownership is lost (Civil Code article 460.3: "The possessor can lose
cf. A. Remiro Brotóns, "Comentary on article 10.1 of the Civil Code" in AA.VV., Comentaries on the Civil Code and the forum complications, t. I, Jaen, Edersa, 1978, page 207) 7 vid, in Spanish scholarly writings of Prof. J.D. Gonzalez Campos, L.I Sanchez Rodriguez and P. Andres Saenz de Santamaria, Course of Public international law, 4th Edition revised, Cizur menor, Thomson Civitas, 2008, pages 683690
possession:... 3. By destruction or total loss of the thing, or because said thing is outside commerce") and there are no rules or law whatsoever that permits that any object that is "recovered", if it once again becomes capable of appropriation, the ownership will be restored to the original owner. Otherwise, in such a situation the asset would convert into an asset capable of "occupation" (Civil Code article 610 et seq.). In Spanish Civil law where an asset has been destroyed, lost, or is no longer capable of appropriation, it cannot be the object of ownership rights and the possession over it also disappears and along with the possession goes the ownership. It cannot be recovered with the means that existed at the time in history. In the case of a vessel or its cargo that sinks on the high seas, it is a case of destruction, loss and inappropriabilty; at least, up until recently, whilst there was no possibility to reach it to recover it. Consequently, ownership as much over the still as yet unidentified carrying vessel as over the cargo, disappeared and there are no rules in Spanish law that allows for the subsequent restoration, or that the owner "maintains" that ownership. It is a very different issue as set out earlier (point 7) where it contemplates the exception in Spanish law of a vessel that sinks but can be immediately refloated, in relation to which case the ownership is maintained unless it can be shown that there has been express or implied abandonment. There is abandonment by virtue of the passage of time as stipulated in the law [a maximum of 6 years for movable assets (Spanish Civil Code article 1962)]. Therefore the general basic principles of Spanish civil law lead us to conclude that the cargo of the Black Swan was destroyed or lost. Destruction or loss means that the asset ceased to be appropriable, by the standards at the time. In Spanish law, where an asset has been destroyed or lost, ownership disappears. To this it should be added that abandonment can be presumed in cases were no effort is made to recover the object lost. If later (excluding temporary loss or not knowing where the object was lost or that it is susceptible of recovery at a reasonable cost) the asset then "appears", on entering the world of commerce, the appropriabilty and the possession, would operate to the legal concept of "occupation" by virtue of which the party who enjoys the appropriation of the asset acquires ownership over it. In short, Spanish law would recognize the right of a finder over abandoned property such as the "Black Swan" treasure. 11. Lastly, in order to complete to the maximum this analysis, we consider the consequences that could result in relation to the coins in dispute under the Spanish law of succession mortis causa. In this respect, a good place to start is with a general overview of rights of the heirs. The Civil Code establishes in article 661: "The heirs succeed the deceased by virtue only of his death in all his rights and obligations" But, as we have seen, neither the deceased had in his possession the coins at the time of death, nor can the heirs exercise any right to inherit them the right to acquire the property; since possession is impossible, property cannot be transferred by the deceased nor acquired by the heirs. There is also the issue of time bar; that is to say, there is 10
no right to claim against the possessor once 6 years have elapsed [Civil Code article 1962: "The rights of actions over movable assets are time barred after 6 years from the loss of possession, (....) save in the cases of loss and public auction, and those of theft or robbery, in which the relevant legislation is set out in paragraph 3 of the same stated article (1955)"]. And, although in this Civil Code article 1955.3 there is a reference that could be understood to be susceptible to affecting the cargo if it were considered to be lost or the object of illegal deprivation, we consider that this position is clearly not applicable. The article is stated in the following terms: "In so far as the right of the owner to demand the movable asset lost or where it has been taken illegally (....) the regulation of article 464 of this code will prevail" However, we are not before any of the cases contemplated, given that the "loss" is of the asset or object that is temporarily outside the control of the owner; and the "illegal deprivation" is comparable in the same article 1962 to that which has been "stolen or robbed". In any event, the owner who could exercise the right to make a claim, in the case in point, is the owner at the time of the sinking of the cargo or by the heirs; but the first died centuries ago and the inheritance has not operated in favor of the heirs, as we have stated above. More specifically, in relation to the rights of succession of the State, the Civil Code establishes that in the absence of heirs to a will or testament or surviving family who have a right to inherit under the law, the State will inherit (article 913: "In the absence of heirs in a will, the Law defers the inheritance to the relatives of the deceased, to the widower or widow and to the State"; article 956: "In the absence of persons that have a right to inherit in accordance with that set out in the preceding Sections, the State will inherit..."). As the legal heir the State enjoys the same rights as those enjoyed by the other heirs (Civil Code article 957 "The rights and obligations of the State (...) will be the same as those of any other heir...."8 ). The Civil Code article 958 also adds the requirement which is important in our case: "For the State to be able to take over the inherited assets there must be a judicial declaration of inheritance, adjudicating those assets to the State as a result of the absence of legitimate heirs". In relation to said article we should point out that it is not enough for the State to consider themselves the legitimate heir of the deceased. It is necessary that the two preconditions be satisfied to acquire the property that forms part of the estate: that there be a judicial resolution in favor of the State and that in fact those assets have been appropriated de facto by the State. In our case both preconditions are not met given that the cargo of the Black Swan have previously passed to the possession of Odyssey Marine Exploration.
The said article prefaces ".... but it is understood to be always accept the inheritance in favor of the inventory, without the need for a declaration on this, to the effects as numbered in article 1023". The exception that the inheritance in favor of the State will always be understood "in favor of the inventory" (contrary to what occurs with other heirs) consists in that, in general terms, a reservation where the debts exceed the assets.
And in conclusion, it should be pointed out that as a matter of Spanish law there is no similar doctrine to that of "escheats", that is to say, there is no general principle that establishes that assets that do not have an owner belong to the State. It may be seen that even the Act of Mostrencos of 1835, derogated by the Civil Code, which by its name regulated this very issue ("mostrenco" is an asset that lacks an owner or has been abandoned) did not establish such a principle but rather specific situations in which the State would be recognized as having an interest in the assets. The Civil Code and subsequent specific legislation have followed the same reasoning to establish specific cases and to a good measure exceptions instead of a general principle of property in the State. No such specific legislation applies to the cargo of the Black Swan, so it has not escheated to the Spanish state. In short, we conclude that if issues of title or ownership to the Black Swan treasure were adjudicated in a Spanish tribunal, applying Spanish law, the Kingdom of Spain would have no colorable claim to ownership of the cargo, much less that which was owned and shipped by private parties on board. This analysis can be supplemented by reference to the legal texts, jurisprudence and scholarly writings and can be clarified or amplified as required. Madrid, 15th October 2008 (Original Signed in Spanish)