Tuesday, December 31, 2013

RMS Titanic v The Wrecked and Abandoned Vessel case brief

RMS Titanic v The Wrecked and Abandoned Vessel case brief summary
US Court of Appeals, 2002

Facts and Procedural Posture
  • The concept of the exhibitions wasn’t bringing enough money. The question was how to turn this into a money making operation. This was a profit foundation.
  • As decided by the court, RMS is the salvor-in-possession of the Titanic and the true, sole and exclusive owner of any items salvaged from the wreck. So, RMS obtained an inchoate lien.
  • 2000 Order: The court discovered that RMS was going to sell some of the artifacts. Therefore, the court issued a sua sponte order in 2000, prohibiting RMS to sell the artifacts.
  • 2001 Order: RMS submitted to the court a supplemental report in 2001, describing the formation of a foundation that would purchase the artifacts from RMS. The district court issued again a sua sponte order until a hearing was held. At the hearing the court noted that the people from the Foundation and RMS were the same and that would create irreconcilable conflicts of interest with respect to the principal’s duties to the public corporation and the non-profit organization.
  • However, the court also stated that if an agreement between RMS and another potential buyer was entered into, it should be brought to the court for approval.
  • Court order of September 26: Following the hearing, the court entered another order dated September 26, 2001 stating that the previous orders designed to prevent sales of the artifacts were proper and were necessary when entered.
  • RMS appealed the order.

  • Whether RMS can appeal the order of September 26, 2001.
  • Whether RMS as a salvor has the right to sell the saved artifacts.

  • RMS can appeal the order because a change had occurred.
  • RMS cannot sell the artifacts because under the law of salvage, RMS doesn’t become the owner of the items but the salvor-in-possession and it’s only the owner of the lien, not the artifacts. RMS only has the exclusive possession of the artifacts to earn money for further salvage efforts. Although, the June 1994 is ambiguous, the court was clearly applying the law of salvage.

  • Although, the trial court stated that no appeal could be made against an interim order for which no factual or legal change had occurred plus RMS had not appealed the previous orders. The circuit court decided the following:
  • Appeal on the order: The court of appeals decided that the new developments that preceded the September 26 order were sufficiently material to justify RMS appeal. While the court may not have explicitly expanded its earlier injunctions, it acknowledged that the earlier injunctions were designed to prevent sales of individual artifacts and that the new order prevented sales of the artifacts together as a group.
  • Salvage Law: By saving property at sea salvors do not become the property owner; rather, they save it for the owners and become entitled to a reward from the owner or from his property. The salvor receives a lien in the property, not title to the property.
  • Enforcing salvor’s award: the principal method of enforcing a salvor’s award is through the recognition of a salvor’s lien. This lien arises from the moment salvage service is performed and it secures the payment of the as-yet-to-be-determined salvage award. If the owner appears and pays the salvage reward determined by the court, the lien is discharged and the owner takes the property. If the owner does not appear then the case continues as an in rem action and the court determines the award, sells the property and from the proceeds pays the salvor.
  • Requirement for salvage award:
  1. Existence of a marine peril.
  2. Voluntary action by the salvor.
  3. Successful salvage.
  • Factors for determining the salvage award / The Blackwall Factors:
  1. Labor by salvors
  2. Promptitude, skill and energy displayed in rendering the service.
  3. The value of the property employed by the salvors in rendering the service and the danger to which the property was exposed.
  4. The risk incurred by the salvors.
  5. The value of the property saved.
  6. The degree of danger from which the property was rescued.
  7. The degree to which the salvors have worked to protect the historical and archeological value of the wreck and the items salved (This is NOT a Blackwall Factor, but a factor for Columbus-America case).
    • Maximum sum:
      • An award cannot exceed the value of the property itself. The salvage award is therefore limited by the value of the property saved after all of the appropriate factors are taken into account.
      • If the proceeds are inadequate, then the court might award the salvor title to the property.
  • Only after the reward is determined can it seek to enforce the lien.
  • The salvor doesn’t have a direct right to the title in the property.
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