MAKING WAVES: HOW MANDATED ARBITRATION COULD BETTER ADDRESS CULTURAL HERITAGE AND BRING TREASURE SALVAGE LAW INTO THE TWENTY-FIRST CENTURY.
|Bodenhamer, Megan C.
TABLE OF CONTENTS INTRODUCTION 1834 I. BACKGROUND OF THE LAW OF SALVAGE 1835 A. The S.S. Central America 1836 B. The Existing Statutory Landscape 1839 C. The Common Law: Law of Finds Versus Law of Salvage 1841 II. THE INADEQUACY OF SALVAGE LAW IN ADDRESSING CULTURAL HERITAGE 1845 A. Cultural Heritage Defined 1846 B. Maritime Peril and Preservation 1846 C. Detrimental Impacts of Commercial Treasure Salvage Operations 1849 III. THE SOLUTION: IMPLEMENTING ALTERNATIVE DISPUTE RESOLUTION 1851 A. Defining Alternative Dispute Resolution and Arbitration 1851 B. Proposing an Alternative 1852 C. How Arbitration Resolves the Shortcomings of Treasure Salvage Law 1854 D. Implementing the Solution 1859 CONCLUSION 1860 INTRODUCTION
The lore of pirate ships, mermaids, and the Bermuda Triangle have long captivated the public and garnered the attention of imaginative storytellers spinning tales of shipwrecks fathoms below the ocean's surface untouched for centuries. (1) But what if these mysterious wrecks and valuable trunks full of gold are no longer fantasy, but rather realities of the contemporary world? Developments in modern technology have brought these mysterious wrecks out of their watery graves and within the realm of scientific discovery. (2) This new reality has motivated private treasure hunters, resulting in complex litigation surrounding their quests for gold and glory. (3) Unfortunately, these modern technological advancements have not been matched by developments in the law of treasure salvage. Rather, treasure salvage law is based on dated legal principles governed by the familiar phrase "finders, keepers" and an archaic understanding of modern technology. (4)
The discovery of the S.S. Central America shipwreck was a direct result of this type of modern technological innovation. (5) The litigation surrounding this monumental shipwreck's discovery is demonstrative of the flaws of treasure salvage law and the inability of courts to properly address cultural heritage in modern salvage operations. (6) While the case of the S.S. Central America has been litigated and title to the treasure awarded, (7) the fight over real-life treasure lost to the sea is still unsettled and is indicative of how the current state of treasure salvage law does not utilize an adequate forum to satisfactorily resolve these disputes.
This Note argues that American treasure salvage law should implement the modern legal techniques of Alternative Dispute Resolution--specifically arbitration--to address the modern problems surrounding treasure salvage law. Part I of this Note provides an overview of the law governing treasure salvage law. This includes common law principles called the law of finds and the law of salvage as well as the governing United States law and international treaties. Part II will outline the problems with the current standing of treasure salvage law, particularly how it fails to address modern cultural heritage considerations such as scientific advancement and the proliferation of commercial salvors. Part III outlines a proposal suggesting that the United States adopt a policy of mandatory prelitigation arbitration among all interested parties for each salvaged shipwreck. This Note argues that mandated arbitration will resolve issues with cultural heritage, commercial salvage, and the rights of all key stakeholders in a more efficient manner than litigation.
BACKGROUND OF THE LAW OF SALVAGE
While most people have only heard of shipwrecks in stories, in reality there are historically rooted legal principles that govern ownership of these real-world discoveries. (8) Treasure salvage law, which governs these shipwrecks, is a niche area of admiralty law. (9) Despite the rarity of significant shipwrecks, shipwreck salvage is a developed area of law with ancient origins. (10) However, modern cases of salvage litigation do exist, most notably the S.S. Central America litigation. (11)
The S.S. Central America
Colloquially known as the "Ship of Gold," the S.S. Central America has a rich history stemming from its wreck and the resulting loss of vast sums of gold aboard the ship. (12) In the nineteenth century, the California Gold Rush promised fortunes of gold to those brave enough to make the pilgrimage to the West Coast. (13) Many of the S.S. Central America's passengers made this pilgrimage successfully, earning opulent wealth for themselves. (14) On September 3, 1857, several hundred passengers and their newly found wealth boarded the S.S. Central America, which headed first to Havana, then, less than a week later, began its final journey to New York. (15) Only two days into this journey, clear skies gave way to a violent hurricane, and the ship began to sink. (16) After fighting to remain afloat for four days, the S.S. Central America rapidly sank to the bottom of the Atlantic Ocean on September 12, 1857. (17) While many passengers met their demise, all the women and children, as well as around fifty men, were miraculously saved by passing ships. (18)
In addition to the harrowing loss of human life, there were also great economic ramifications of the shipwreck. Alongside hundreds of passengers and crew, some estimates suggest that the S.S. Central America carried over fifteen tons of gold aboard. (19) An unknown but large sum of this gold was the cargo of passengers who boarded the ship. (20) In addition, historians are certain that bankers shipped more than $1 million in commercial gold on the S.S. Central America. (21) Some believe that the ship also bore a secret fifteen-ton shipment of gold for the federal government. (22) While there are conflicting tales about exactly how much gold sank that night, the gold aboard the ship was estimated at $2 million in 1857, which today would be valued at approximately $300 million. (23) The overnight loss of gold resulting from the catastrophe was disastrous to the U.S. economy and helped ignite the Panic of 1857. (24) While government officials rushed to tame public alarm, the news of the economic loss spread rapidly, and the nation's banks began to collapse from an influx of withdrawals. (25) The economic impacts from this event lasted over a year, with the United States only recovering at the onset of the Civil War. (26)
The vast sum of gold lost to the sea and the glory of making such a historically rooted discovery has undoubtedly lured many treasure hunters who hoped to discover the S.S. Central America. However, it was not until the 1970s that technological advancements allowed for pragmatic discussions of how to successfully recover the ship. (27) However, modern salvors still faced the dilemma of determining the precise location of the vessel, as no one knew where it sunk over one hundred years earlier. (28)
A private salvage company called Santa Fe Communications, owned by Harry G. John and Jack R. Grimm, contacted Columbia University offering to pay the university $300,000 to use sonar technology to search a 400-square-mile area of the Atlantic Ocean. (29) This technology eventually uncovered one prospective target along the bottom of the ocean floor. (30) Santa Fe Communications did not further explore this target due to harsh surrounding conditions, but today it is known to be the final resting place of the S.S. Central America. (31)
Shortly after the sonar survey, Columbus-America President Thomas "Tommy" Thompson contacted Columbia University, hoping to learn the results. (32) Columbia, which was legally bound to not publish the results, gave Thompson the data under the condition that he would not share it with others. (33) Despite agreeing to these terms, Thompson shared the files with Columbus-America, and in 1987, they believed they finally discovered the remains of the S.S. Central America. (34) On May 27, 1987, in accordance with admiralty law principles, Columbus-America filed an in rem action against the wreck to be declared its rightful salvor and requested an injunction to prevent other salvors from investigating the area. (35) The United States District Court for the Eastern District of Virginia granted the injunction. (36) In reality, this area was not actually the location of the S.S. Central America, which was approximately thirty miles from the actual wreck. (37)
Eventually, Columbus-America determined that the exact location of the S.S. Central America was approximately 160 miles off the coast of South Carolina. (38) In 1989, the recovered gold was brought to court, where it was placed in a vault during litigation. (39) The United States Court of Appeals for the Fourth Circuit weighed the claims of Columbus-America, Jack F. Grimm and Harry G. John, Columbia University, and British and American insurers (and their successors in interest) who had paid out claims on the gold at the time of the wreck. (40) After years of extensive litigation, the Fourth Circuit held that Columbus-America was entitled to a salvage award of 90 percent of the gold, with the other 10 percent to be divided among the underwriters as proportionate to their claims. (41) Clearly unsatisfied with the judgment, Tommy Thompson, the President of Columbus-America, has been imprisoned since 2015 for refusing to share the location of some 500 coins missing from the S.S. Central America's recovered gold. (42) While the tragedy of the S.S. Central America is fascinating as a story, it is also an example of how U.S. courts litigate shipwreck salvages such as the S.S. Central America.
The Existing Statutory Landscape
In reality, only certain salvaged shipwrecks are within the jurisdiction of U.S. courts. The Abandoned Shipwreck Act of 1987 limits the rights of treasure salvors in litigating title to their discoveries. (43) This law grants the United States title to three different categories of shipwreck discoveries, effectively precluding salvors from claiming title to such wrecks. (44) These categories include (1) abandoned shipwrecks embedded in any state's submerged...
To continue readingRequest your trial
COPYRIGHT GALE, Cengage Learning. All rights reserved.