In 1942, the government of the Union of South Africa purchased a consignment of 2,391 silver bars shipped free on board the SS Tilawa at Bombay for use in coinage. A Japanese submarine sank the vessel with considerable loss of life. In 2017, the claimant salvage company Argentum retrieved 2,364 bars of silver from the wreck. The claimant landed the bars at Southampton, declared them to the Receiver of Wreck and subsequently claimed salvage. The government of the Republic of South Africa (“RSA”) asserted its interest in the bars.2 The RSA applied to have the proceedings struck out, set aside or stayed on the ground of state immunity under the State Immunity Act 1978 (“SIA”). SIA, s.10(4) provides that there is no state immunity in an action in rem against cargo, or in an action in personam for enforcing a claim in connection with a cargo, if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes.

At first instance, Teare J dismissed the RSA’s application, holding that the cargo had been shipped on board a merchant ship on commercial terms, that both the Vessel and cargo were in use for commercial purposes in 1942 and that both remained as such thereafter. On appeal by the RSA, the Court of Appeal, by a majority, held that it was necessary to examine the use and intended use of the cargo at the time when the vessel sank. Since the vessel was being carried on commercial terms under a contract of carriage, it was in use for commercial purposes. The RSA appealed to the Supreme Court.