(CN) - Spain is the rightful owner of treasure found buried in a 200-year-old sunken warship, the 11th Circuit ruled, dealing a blow to the shipwreck-exploration company that had laid claim to the 17 tons of recovered silver and gold coins.
Odyssey Marine Exploration made the astonishing discovery in 2007 while searching off the coast of Gibralta, in international waters, for various shipwrecks.
The Tampa, Fla.-based company had invited the Kingdom of Spain to participate in the project, but Spain declined and did not authorize Odyssey to salvage any of its sunken vessels.
Nuestra Senora de las Mercedes, a Spanish Royal Navy Frigate, sank in 1804 en route from Peru to Spain after being attacked by the Royal British Navy in what was later called the Battle of Cape Saint Mary. British forces had laid siege against Spanish warships transporting treasure back to Spain in an effort to delay Spain's involvement in Napoleonic Wars.
But Odyssey dubbed its 2007 discovery the Black Swan, filed a verified admiralty complaint against the recovered artifacts and sought a warrant of arrest.
Odyssey, as custodian of the site, recovered 595,000 coins, 17 cannons and a number of other small objects.
After Spain heard about the Black Swan discovery, it claimed it was "indisputable" that the sunken treasure Odyssey found was from the Spanish warship Mercedes and filed a motion to dismiss Odyssey's action, vacate Odyssey's arrest and terminate Odyssey's appointment as custodian, as per the Foreign Sovereign Immunities Act (FSIA). This law provides that Spain's property is subject to sovereign immunity from all claims or arrest in the United States.
The Republic of Peru and 25 individuals also filed claims, stating they had rights to salvaged property.
Claiming that there was no way to ascertain that the unnamed wreckage it found was the Mercedes, Odyssey said Spain could not apply FSIA to the claims. A federal judge disagreed in December 2009 and ordered Odyssey to return the treasure to Spain under the United States' 1902 Treaty of Friendship with the nation, affording shipwrecked Spanish vessels the same protection as American military shipwrecks from unauthorized access and salvage.
Odyssey, Peru and the 25 individual claimants filed an appeal, which postponed the order to return the treasure.
On Sept. 21, the Atlanta-based federal appeals court agreed that Odyssey had improperly seized treasure from the Mercedes.
"The res was found within the zone Spain had plotted as the likeliest area of the Mercedes' demise, and no other naval vessels matching the Mercedes' type sank within that zone during the same time period," Judge Susan Black wrote for a three-judge panel, using the Latin word for a physical object. "The site, essentially a scattered debris field, is consistent with a vessel that exploded at the surface. Moreover, the composition of the examined sampling of coins found on the res matches that of the 900,000 mostly silver coins aboard the Mercedes: almost all the coins are silver; they were all minted in the late 18th and early 19th centuries and none were minted later than 1804; and they were almost exclusively minted in Lima and Bolivia. The 17 cannons found at the site, consisting of 6- and 12-pounder cannons, match the type the Mercedes would have carried. The site contains at least one bronze culverin, matching the distinctive cannons the Mercedes was carrying to be recycled. The site also includes large quantities of copper and tin ingots, matching the large quantity carried by the Mercedes, and contains copper plates like those used to sheath the hull of the Mercedes."
Odyssey had argued that the treasure it recovered must have belonged to a different ship because the Mercedes was supposed to have carried 900,000 coins and it recovered just 595,000.
This argument failed to sway the judges, however. "The failure to fully recover all artifacts carried by the Mercedes is understandable considering the Mercedes exploded at the surface, sank 1,100 meters, scattered over a large area, and has been sitting on the ocean floor for more than 200 years," Black wrote.
The court also disagreed that the treasure represents private property.
"No party has pointed us to any case or statute that directly answers the question of whether cargo aboard a sunken military vessel is entitled to the same sovereign immunity as the sunken vessel," Black wrote. "None of the cases cited by Odyssey in support of its argument that cargo is separate from a vessel concern cargo aboard a sunken military vessel."
"While various parties may have cognizable claims against parts of the recovered res, even by Odyssey's own estimate approximately 25 percent of the cargo, measured by value, was Spanish government property," she added. "Moreover, Spain has an even greater interest in the sovereign immunity of its sunken warships. Thus, the FSIA immunity from in rem suits in U.S. courts given to the Mercedes applies to the shipwreck as a whole, including the cargo, even if such cargo was owned by private individuals or has been salvaged from the wreck."
The judges similarly rejected claims that the Mercedes was not entitled to protection under the FSIA because it was on a commercial voyage when it sank.
"At the time it sank, the Mercedes was a Spanish Navy vessel," she wrote. "According to the 1804 official registry of ships of the Royal Spanish Navy, the Mercedes was assigned to the Spanish Navy fleet based at El Ferrol as one of nine frigate class ships. It was under the command of a Spanish Navy captain both when it left El Ferrol and when it was sunk. It delayed its departure from Lima to comply with Spanish Navy orders to prepare for war with the British. The crew was made up of Spanish Navy officers, sailors and marines, its armament was the standard armament of Spanish warships, and Captain Alvear's family and servants were traveling with official authorization. It was also carrying a substantial amount of Spanish government specie and cargo, including money at the minister of the treasury's disposal, war donations, and copper and tin ingots."
Odyssey said it wants the 11th Circuit to reconsider the case en banc. "We are certainly disappointed by the 11th Circuit's ruling," Odyssey Vice President and General Counsel Melinda MacConnel said. "We believe the U.S. Constitution and all other applicable laws give jurisdiction to the U.S. courts to determine the rights of Odyssey, Spain and all other claimants in this case. Furthermore, we believe this ruling contradicts other 11th Circuit and Supreme Court opinions."
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.