A VERY ELUSIVE TREASURE San Jose`s Shipwreck Judicial Development By: Juan Carlos Uribe and Jaime Escobar

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1 A VERY ELUSIVE TREASURE San Jose`s Shipwreck Judicial Development By: Juan Carlos Uribe and Jaime Escobar During three (3) months, the San Jose military vessel was loaded with tons of gold, silver and precious stones, ready to be transported to his majesty Philippe the Fifth. By that time, England and the Netherlands had spies all over the Caribbean, which informed them the arrival and departure of the Spanish commerce fleets, with special interest in the San Jose`s fleet, given that this was one of the biggest military vessels of the Spanish army and it was presumably filled with a multimillionaire treasure. Experts affirmed that said treasure was approximately of USD$ and up to USD$ worth at today`s value. The sailing day arrived. Under a clear sky and perfect weather, the crew and captain of the vessel, Jose Fernandez de Santillan, locked the vessel`s vaults carrying with them one of the biggest treasures ever known and start preparing for this last departure. Before the mooring rope, a pirate warning was issued. The rumor was that Charles Wagner followed by a British military fleet was sailing around the Cartagena`s Bay. Against all odds and advice, Jose Fernandez de Santillan dismissed the warning and sailed away confident of its military escort. When the armada was leaving Cartagena, the pirate warning became a reality, a military fleet conformed by British vessels was awaiting just outside Cartagena`s Bay and the confrontation was imminent. The Spanish, military vessels including the San Jose immediately formed a defense position while the British military vessels initiated the combat around five in the afternoon (5:00 pm). After two (2) hours of intense combat, the British military vessels managed to strike the San Jose and sunk it into the Colombian`s Seas Jurisdiction arguably turning it into the world`s largest sunken treasure (here and after the Shipwreck ). Since then, the Shipwreck has generated mystery, curiosity and most of all, economic interests among private corporations and National Authorities, who have tried to be a part of it, by means of any type of legal bounding figures. Such is the case of SEA SEARCH ARMADA (here and after SSA ) a foreign private company that entered into negotiations to perform a exploration and salvage agreement with THE REPUBLIC OF COLOMBIA (here and after Colombia ) that finally led to conflict between the Parties and judicial developments in our country, as we will proceed to explain.

2 The Civil and Constitutional Actions that were taken in regard to the salvage agreement and against the regulations adopted by Colombia for the San Jose`s Shipwreck, were one of the most important and significant in our country, not only because the amount that the Plaintiff was claiming was astronomic (between USD 4 billion up to USD 17 billion, estimated amount of the Shipwreck treasure), but also because before it happened there was no judicial record or case precedent of any situation alike. Recently the United States District Court for the District of Columbia, ruled the Civil Action No (JEB) between SSA and Colombia, which was the only action pending to be solved regarding this matter. By means of this article, we will summarize and analyze on a time line basis, the facts and legal foundations of the most important judicial and administrative decisions related to the Shipwreck. It all began in 1980, when the Colombian Seas and Ports General Office issued the Resolution No.0048, authorizing the foreign company, GLOCCA MORRA CO. INC (here and after Glocca Co ) to develop underwater explorations for a period of two (2) years, in a specific area of Colombian`s Seas Jurisdiction, in order to find the exact location of the Shipwreck. Said resolution established mandatory disclosure obligations for Glocca Co. Accordingly if the Shipwreck was located, the exact location shall be disclosed to the National Authorities. Said resolution also ordered that the salvage operation was going to be governed by an exploration and salvage agreement, in which Colombia was entitled to a commission up to the fifty per cent (50%) of the recovered treasure. In compliance with the agreement disclose obligation, in 1982 Glocca Co announced to the Colombian Seas and Ports General Office the discovery of a shipwreck, which presumably was the Shipwreck and requested the recognition as a treasure finder and the rights related over said discovery. The recognition and rights were granted by the Colombian Seas and Ports General Office by means of Resolution No In 1983 Glocca Co assigned to SSA the recognition and related rights over the Shipwreck, assignment that was approved by said Office by means of Resolution No 204. In 1984 the Government of Colombia issued Decree No of 1984, which reorganized the Colombian Seas and Ports General Office and defined the percentage of the commission to the treasure finders. Said Decree established that Colombia was entitled to a ninety five per cent (95%) of the recovered treasure and SSA (as a recognized treasure finder) was entitled to a five per cent

3 (5%) before taxes. SSA filed a constitutional action against said Decree, considering that the President of Colombia exceeded his extraordinary faculties by executing it, given that the regulation of the commission percentage as it was conceived was creating rights in favor to Colombia, clearly breaching or affecting the rights of the treasure finder (SSA), which according to Law 19 of 1983 was not possible. The Colombian Constitutional Court declared unconstitutional the articles of Decree No of 1984 that regulated the percentage of the commission of Colombia and the treasure finders, therefore said articles and dispositions lost their enforceability. Accordingly and for purposes of discussing the terms and conditions of the salvage agreement, the Colombian Seas and Ports General Office sent a draft model to the legal representative of SSA. The discussion over the terms and conditions of the agreement, mainly regarding the commission of each party, was never consent and therefore the agreement was never executed or performed. Five years later (1989), considering that her rights under the assignment agreement executed and performed with Glocca Co were being breached by Colombia, SSA filed a civil action before the Civil Court of Barranquilla requesting his commission over the treasure of the Shipwreck. Colombia opposed SSA request under the motions of lack of legal standing, non-existence of the claimed right, lack of action, lack of jurisdiction, lack of competence and improperly representation of the Plaintiff. In 1994 the Civil Court of Barranquilla ruled in first instance the civil action filed by SSA and ordered that SSA and Colombia owned in joint tenancy the treasures of the Shipwreck located at the coordinates disclosed by Glocca Co, and therefore each of them was entitled to a commission equal to the fifty per cent (50%) of the recovered treasure. This decision was appealed by both Parties. In 1997 the appeal was ruled by the Civil District Tribunal of Barranquilla and basically confirmed the decision of the first instance. Against this decision Colombia filed cassation remedy and in 1999 the Colombian Justice Supreme Court acknowledged and assumed competence over the conflict between the Parties. The analysis performed by the Colombian Justice Supreme Court was focused on two (2) perspectives, i) the amount of the treasure and value of the Plaintiff`s claim, and ii) how to regulate the property over the cultural, historic and artistic goods including those submerged under Colombian waters (seas). In regard to the amount of the treasure of the Shipwreck and the value of the Plaintiff`s claim, the Colombian Justice Supreme Court affirmed that it was not possible to define it exactly, due to the fact that it was not discovered yet. Nevertheless it was considered to be very high and therefore it was subject to the

4 study of the Court. The Court enter into a dissertation of Colombia`s exclusive rights over the cultural, historic and artistic goods located on its territory including sunken treasures. As to the above, the Court ruled that Colombia was the exclusive proprietor of said goods, including those that were at the Shipwreck location. According to the nature of those types of goods, they are not subject to agreements to assign its property, and therefore SSA was not entitled to any right over them. Notwithstanding, the Court granted a title certificate to SSA equal to the fifty per cent (50%) over the goods that were not considered of this nature and were found at the Shipwreck location. The decision adopted by the Colombian Justice Supreme Court was the last instance in our jurisdiction and finally dismissed SSA claims for breach of agreement, indemnification and title certificate over the treasure. However the Court refused to determine in the case of a shipwreck loaded with tons of gold and silver ingots, if the goods are cultural property or just a commodity, so its decision somehow failed to resolve the central issue of how a bounty shall really be divided among the parties. Finally in 2010 SSA desperate to find a negotiated settlement with the Colombian government, filed before the United States District Court for the District of Columbia a civil action or complaint under the basis of three (3) counts, i) breach of contract, ii) conversion and iii) recognition and enforcement of a foreign judgment. Colombia opposed to all the charges based on the motions of, i) lack of subject-matter jurisdiction, ii) lack of personal jurisdiction and iii) failure to state a claim upon which relief may be granted. Now on October 24 of 2011, the Court dismissed the three (3) counts based on the following arguments. As to the breach of contract, the Court mentioned that the statue of limitations of three (3) years had expired. According the analysis of the Court the supposed breach of contract took place in 1987 and the claim was filed in 2010, so the three (3) years expired in In the exact same way the Court ruled the count in regard to the conversion, due to the fact that was subject to the same term of the statue of limitations, and the supposed conversion that Colombia was trying to perform, began in 1984 with the regulations contained in Decree 2324 of the same year. Finally and in regard to the third count, the Court ruled that SSA was unable to state a claim upon which relief may be granted due to the fact that the decision adopted by the Colombian Supreme Court of Justice was not considered as a foreign money judgment that could be enforceable in the United States, it only declare that SSA was the owner of a share of the treasure of the Shipwreck. The decision of this Court, finally put end to the litigation related to the Shipwreck and it was the final stage of the judicial development of this case.

5 Paradoxically the central issue, as to the property of the treasure was never solved. The Supreme Court of Justice ruled that Colombia was the proprietor of the cultural, historic and artistic goods located on its territory, on the other hand, said Court granted a title certificate to SSA over the treasure, as to those goods that were not considered as cultural, historic and artistic goods, over which Colombia was the exclusive proprietor, but never defined if ingots and coins of gold and silver could be considered or included in this category. Therefore the property, the share and the title holder over the goods of the Shipwreck remains in doubt, until any regulation is issued by the Colombian government to define and clarify this matter, which is crucial, since there are other 800 shipwrecks with treasures from the Colonial time, lying on the Colombian sea floor waiting to join the national`s cultural patrimony and their finder`s coffers.