Tag Archives | Colombia

Aargh! We return today to Sea Search Armada v. Republic of Columbia, a case I first covered in October 2011. Here was my description of the facts:

According to the complaint, Sea Search Armada had an agreement with the government of Colombia for salvage of the treasure of the San Jose,a Spanish ship carrying $4 to $17 billion of coins and bullion. In 1708, when Britain really ruled the waves, the British navy sank the San Jose, and the ship came to rest off the coast of what is now Colombia. In 1980, the Colombian government authorized the Glocca Mora Co. to explore the continental shelf for shipwrecks, and the next year GMC discovered the wreck of the San Jose. GMC and Colombia agreed that GMC would be entitled to receive 35% of the treasure recovered. GMC assigned its rights to Sea Search Armada, and in 1984, Colombia agreed that SSA would be entitled to GMC’s 35% share, but it refused to enter a written contract with SSA and refused SSA permission to conduct full salvage operations at the shipwreck site. The Colombia parliament then passed a law giving the state the right to all of the treasure, leaving SSA with a 5% finder’s fee, which was to be taxed at 45% to boot!

SSA sued Colombia in its own courts in 1989. The Colombia Constitutional Court struck down the law at issue as unconstitutional in 1994. Later, the Circuit Court of Baranquilla held that SSA and Colombia each owned 50% of the San Jose treasure, although the source of the 50% figure is mysterious given that the original agreement called for a 65/35 split.

As we saw in the earlier post, SSA sued Colombia for recognition and enforcement of the Colombian judgment in the District of Columbia in 2010. SSA also sought damages in the amount of $17 billion. The judge dismissed the claim for recognition and enforcement on the grounds that the Colombian judgment was not one for damages but was merely declaratory and thus was not entitled to recognition UFMJRA, ¹ which as its name suggests deals only with money judgments. ²

The DC Circuit has now summarily affirmed, just two weeks after oral argument. It adopted the district court’s reasoning in full.

The statute of limitations analysis seems correct. The courts are also correct to conclude that there is no claim here under the UFMJRA, but I still do not understand why there might not be an action for recognition of the Colombian judgment at common law rather than under the statute. Neither the UFMJRA nor the UFCMJRA precludes recognition of judgments not within the scope of the statute. See, e.g., DC Code § 15-371 (” This subchapter does not prevent the recognition under principles of comity or otherwise of a foreign-country judgment not within the scope of this subchapter”). But unfortunately, SSA’s brief does not really make this point, or does not make it clearly, ³ and so it is perhaps not surprising that the court missed it.

The case is not over: SSA has filed a petition against Colombia with the Inter-American Commission on Human Rights, alleging violations of Articles 21 and 25 of the Inter-American Convention on Human Rights.

Photo credit: Yellow Cat

Aargh! The case of the day, Sea Search Armada v. Republic of Colombia (D.D.C. 2011), is, in the words of the judge, “like a marriage between a Patrick O’Brian glorious-age-of-sail novel and a John Buchan potboiler of international intrigue.” According to the complaint, Sea Search Armada had an agreement with the government of Colombia for salvage of the treasure of the San Jose,a Spanish ship carrying $4 to $17 billion of coins and bullion. In 1708, when Britain really ruled the waves, the British navy sank the San Jose, and the ship came to rest off the coast of what is now Colombia. In 1980, the Colombian government authorized the Glocca Mora Co. to explore the continental shelf for shipwrecks, and the next year GMC discovered the wreck of the San Jose. GMC and Colombia agreed that GMC would be entitled to receive 35% of the treasure recovered. GMC assigned its rights to Sea Search Armada, and in 1984, Colombia agreed that SSA would be entitled to GMC’s 35% share, but it refused to enter a written contract with SSA and refused SSA permission to conduct full salvage operations at the shipwreck site. The Colombia parliament then passed a law giving the state the right to all of the treasure, leaving SSA with a 5% finder’s fee, which was to be taxed at 45% to boot!

SSA sued Colombia in its own courts in 1989. The Colombia Constitutional Court struck down the law at issue as unconstitutional in 1994. Later, the Circuit Court of Baranquilla held that SSA and Colombia each owned 50% of the San Jose treasure, although the source of the 50% figure is mysterious given that the original agreement called for a 65/35 split.

In 2010, SSA sued Colombia in the District of Columbia, seeking recognition and enforcement of the judgment and seeking damages in the amount of $17 billion. The District of Columbia has enacted the Uniform Foreign-Money Judgments Recognition Act, which applies, on its face, only to foreign judgments “granting or denying recovery of a sum of money.” The judge granted Colombia’s motion to dismiss. The gist of the decision was that because the Colombian judgment did not award any damages to SSA, it was not within the scope of the UFMJRA. First, the value of the treasure had not been determined, and SSA’s $ $17 billion figure was only its own estimate. Second, the award was, in essence, a declaration of the parties’ rights rather than an award of damages.

I think the judgment is correct as far as it goes—the UFMJRA does not apply to the Colombian declaratory judgment for the reasons the judge identified. But I think the judge was too hasty in dismissing the case with prejudice. It’s true that SSA identified the wrong legal theory, as it had no claim under the Uniform Act, and it may be that the Colombian judgment is not entitled to enforcement in any case. But there is a common law of recognition of foreign judgments that probably survives enactment of the UFMJRA with regard to judgments not within the scope of the statute. According to the Restatement (Second) of Conflict of Laws:

A valid decree rendered in a foreign nation that orders or enjoins the doing of an act will usually be recognized in the United States. That is to say, such a decree will usually be given the same res judicata effect in the United States that it enjoys in the nation of its rendition. So far as enforcement is concerned, it can safely be said that a valid foreign nation decree that orders the payment of money will usually be enforced in the United States. Existing authority does not warrant the making of any definite statement as to the enforcement of decrees that order the doing of other kinds of acts or that enjoin the doing of an act. American courts, however, have usually given the same measure of respect to judgments rendered in foreign nations, which meet the requirements stated in § 98, Comment c, that they give to judgments rendered in sister States. It can therefore be assumed that a decree rendered in a foreign nation which orders or enjoins the doing of an act will be enforced in this country provided that such enforcement is necessary to effectuate the decree and will not impose an undue burden upon the American court and provided further that in the view of the American court the decree is consistent with fundamental principles of justice and of good morals.

I think the judge should at least have considered whether the declaration of rights was res judicata between the parties in the United States.

Photo credit: Yellow Cat (license)