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FOR THE ELEVENTH CIRCUIT Odyssey Marine Exploration Inc

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									                  UNITED STATES COURT OF APPEALS
                    FOR THE ELEVENTH CIRCUIT
                             Docket No. lO-10269J*


                       Odyssey Marine Exploration, Inc.
                                Plaintiff-Appellant

                                         v.

                             The Kingdom of Spain
                                Claimant-Appellee.


               ON APPEAL FROM THE U.S. DISTRICT COURT
                FOR THE MIDDLE DISTRICT OF FLORIDA
                   The Hon. Steven D. Merryday, Presiding


                      APPELLANT'S OPENING BRIEF


           David J. Bederman, Esq.     Melinda J. MacConne1, Esq.
           1301 Clifton Road           ODYSSEY MARINE
           Atlanta, Georgia 30322-2770 EXPLORATION, INC.
           Phone (404) 727-6822        5215 West Laurel Street
           Counsel of Record           Tampa, Florida 33607
                                              Counsel of Record
                         CarL. R. Nelson, Esq.
                         FOWLER WHITE BOGGS, P.A.
                         P.O. Box 1438
                         Tampa, Florida 33601
                          Counsel of Record

             Counsel for Appellant, Odyssey Marine Exploration, Inc.

*Related cases: This appeal is the lead case and is related to the following
docketed appeals: 10-10317,10-10318,10-10319,10-10320, 10-10374, 10-10375.
                                                                                                              lO-10269-J
                                                                                        Odyssey Marine Exploration, Inc. v.
                                                                                                        Kingdom of Spain



                          IN THE UNITED STATES COURT OF APPEALS
                                           FOR THE ELEVENTH CIRCUIT


                                                              No.lO-10269-J


                                   D.C. Docket No. 8:07-cv-00614-SDM-MAP


ODYSSEY MARINE EXPLORATION,
INC.,

                       Plaintiff-Appellant,

v.

KINGDOM OF SPAIN,

                        Claimant-Appellee. /
                APPELLANT ODYSSEY MARINE EXPLORATION, INC.'s
                   CERTIFICATE OF INTERESTED PERSONS AND
                     CORPORATE DISCLOSURE STATEMENT

           Pursuant to Fed. R. App. P. 26.1 and 11th Cir. R. 26.1-1 through 26.1-3, the

undersigned counsel for Plaintiff/Appellant Odyssey Marine Exploration, Inc.,

certifies that the following is a complete list of the trial judge, magistrate judge, all




                                                                 Page C-1 of6
                                                                      lO-10269-J
                                                Odyssey Marine Exploration, Inc. v.
                                                                Kingdom of Spain


attorneys, persons, associations of persons, firms, partnerships, or corporations that

have an interest in the outcome of the above case:

      Aliaga, Agustin de

      Aliaga, Gonza10 de

      Alvear, Emilio de

      Alvear, Santiago de

      Anderson, Jeffrey Carter - Attorney

      Armijo, Enrique - Attorney


      Arvelo, Jose E. - Attorney

      Banker, David Christopher - Attorney


      Barthe, Alejandro Julian Pera

      Bederman, David J. - Attorney

      Burnette, Guy Ellington. Jr. - Attorney

      Casa Davila, Marques of

      Colmenares, Ignacio de

      Colmenares, Leonor Perales Calderon de



                                   Page C-2 of6
                                                              lO-10269-J
                                        Odyssey Marine Exploration, Inc. v.
                                                        Kingdom of Spain


Del Fuente, Marques de Zelada

Del Villar, Gonzalo Alvarez

Duthurburu, Enriqueta Pita

Eurasquin, Julio Vega

Goold, James - Attorney


Goyeneche, Javier de

Goyeneche y Si1ve1a, Mariano de

Guaqui, Count of

Horan, David Paul - Attorney


Izcue Bazo, Adela Armida de

Kimball, John D. - Attorney


Kingdom of Spain

Kinsky, Carola Daireaux

Kinsky, Eleonora Daireaux

Kinsky, Matilde Daireaux

LaMotte, K. Russell - Attorney




                              Page C-3 of6
                                                             lO-10269-J
                                       Odyssey Marine Exploration, Inc. v.
                                                       Kingdom of Spain


Lurigancho, Count of San Juan de

MacConnel, Melinda Joy - Attorney

McLaughlin, John J. - Attorney

Maney, Mark - Attorney

Merryday, Steven D. - Trial Judge

Morello, Gianluca - Attorney


Nelson;Carl R. - Attorney

O'Malley, Barbara B. - Attorney


Odyssey Marine Entertainment, Inc.

Odyssey Marine Exploration, Inc. - Stock Symbol OMEX

Odyssey Marine, Inc.

Odyssey Retriever, Inc.

Odyssey Marine Services, Inc.

Osorio, Inez Marque

OVH, Inc.

Palacios, Dr. Jaime Durand



                             Page C-4 of6
                                                               lO-10269-J
                                         Odyssey Marine Exploration, Inc. v.
                                                         Kingdom of Spain


Pizzo, Mark A. - Magistrate Judge

Polentinos, 11th Count of

Republic of   Peru




Rodriguez-Menendez, Jose Antonio - Appearing pro se

Shipwreck Heritage Press LLC

Shusta, Timothy Peter - Attorney

Skorewicz, Keith Dennis - Attorney


Solveyra, Agustina

Solveyra, Ignacio

Solveyra, Maria Eugenia

Stull, R. Jeffrey - Attorney

Thiel, Eric C. - Attorney

Thiessen, Alberto Emilio

VanDercreek, William - Attorney


Villafuente, Marques de

Von Spiege1feld, Allen K. - Attorney



                               Page C-5 of6
                                                         lO-10269-J
                                   Odyssey Marine Exploration, Inc. v.
                                                   Kingdom of Spain


Voyest, Felipe


White, Marlow V. - Attorney

Whitlock, Elsa Dorea




                 f




                         Page C-6 of6
                                       REQUEST FOR ORAL ARGUMENT

           Appellant, Odyssey Marine Exploration, Inc., believes that oral argument

would benefit the Court. This case involves significant issues of first impression

and addresses complicated and long-standing admiralty jurisdiction prineiples.

While the facts are unique and specific, the outcome is expected to have a

significant impact on shipwreck recoveries and claims generally. The admiralty

expertise of the attorneys involved will assist the court on all of the issues,

including the specific issue regarding the scope of foreign sovereign immunity in

an in rem admiralty proceeding involving claims by various parties to reeovered

cargo. Therefore, Odyssey respectfully requests oral argument.




                                                                 i
                                         TABLE OF CONTENTS

CERTIFICATE OF INTERESTED PERSONS AND
    CORPORATE DISCLOSURE STATEMENT........................................ C-1

REQUEST FOR ORAL ARGUMENT .................................................................... i

TABLE OF CONTENTS ............. .......................................................... ................... ii

TABLE OF AUTHORITIES................................................................................... vi

STATEMENT OF JURISDICTION .................................................................... xiv

        A. Admiralty Jurisdiction Generally........................................................ xiv

        B. District Court Jurisdiction................................................................... xiv

        C. Court of Appeals Jurisdiction .............................................. ................ xiv

        D. Date of Rulings from which Appeal is Sought and the
                    Filing of    the Notice of Appeal.............................................................. xiv

        E. Final Judgment .................................................................................... xiv

STATEMENT OF ISSUES PRESENTED FOR REVIEW.................................. 1

STATEMENT OF THE CASE ................................................................................2

I. COURSE OF PROCEEDINGS AND DISPOSITION BELOW................ 2
II. STATEMENT OF FACTS.............................................................................5
        A. Odyssey's Discovery of the Salvage Site. ............................................... 5

         B. The Last Voyage of                  The MERCEDES.....................................................8

         C. The District Court's Ruling. ................................................................. 10

III. STANDARD OF REVIEW..........................................................................13

                                                           11
SUMMARY OF THE ARGUMENT ..................................................................... 16

ARGUMENT ........................................................................................................... 19

I. SPAIN'S CLAIM OF SOVEREIGN IMMUNITY MUST FAIL
    BECAUSE SPAIN WAS NOT IN POSSESSION OF THE RES............. 19

II. THE DISTRICT COURT ERRED IN DISMISSING AN IN REM
         ADMIRALTY PROCEEDING UNDER THE FOREIGN SOVEREIGN
         IMMUNITIES ACT, ON WRITTEN PLEADINGS ONLY, WHERE


         SPAIN'S CLAIM OF OWNERSHIP WAS BASED ON ITS
         ASSERTION THAT THE SALVAGED CARGO ORIGINATED
         FROM A SPANISH NAVAL VESSEL NOT PRESENT AT THE SITE
         AND PROVEN TO HAVE BEEN ENGAGED IN COMMERCIAL
         ACTIVITy..................................................................................................... 23

         A. The District Court's Ruling Denied Odyssey Due Process and
                     Resulted in Erroneous Factual Findings. .............................................23

                     1. Where the Facts Necessary to Decide Jurisdiction are
                                 Intertwined with the Merits of the Claim, the Jurisdictional
                                 Challenge must be Resolved under the Rule 56 Summary


                                 Judgment Standard, and Dismissal of the Case on Written
                                 Pleadings Only was Erroneous. ................................................. 23

                     2. The District Court Erred Not Only in Resolving Disputed
                                 Factual Issues without a Hearing, but also in the Factual
                                 Findings Themselves. .. ........ ....................................................... 26

         B. Since The Mercedes was Not on a Solely Military, Non-Commercial
                      Voyage at the Time of                    its Sinking, it is Not Immunized under the
                     FSIA or SMCA. .....................................................................................29

                      1. The Commercial Activity of The MERCEDES was
                                  Undisputed. ........................................................................ ..... .... 29

                     2. Under The FSIA and SMCA, Commercial Activities
                                 Defeat Immunity. ........................................................................ 32

                                                                         111
                      (a) The FSIA expressly declines to extendforeign
                                sovereign immunities to a foreign government's
                                commercial activities. ...................................................... 32

                      (b) Denying Spain immunity with regards to the
                                commercial activity ofThe MERCEDES would be
                                completely consistent with international law................... 34

                      (c) The SMCA likewise denies Spain immunity. ....................38
III. THE DISTRICT COURT ERRED IN DISMISSING TillS IN REM
    ADMIRALTY PROCEEDING FOR LACK OF SUBJECT MATTER
    JURISDICTION WHERE THE MAJORITY OF THE RES WAS
    PRIVATELY OWNED CARGO AND WHERE SPAIN DID NOT
    PROVE OWNERSHIP OF ANY OF IT..................................................... 40

    A. Spain Cannot Bootstrap its Ownership of The Mercedes in
           Order to Assert that Private Cargo is also its Property. ...................... 40 .

           1. The Majority of                      The MERCEDES Cargo was Private
                      Property. ..................................................................................... 40

           2. Vessel and Cargo Interests have been Consistently
                      Distinguished in the FSIA, SMCA, and General
                      Maritime Law. ............................................................................43

    B. Adjudicating the Interests of Owners of Private Cargo on
           The MERCEDES does not affect Spain's Legitimate Sovereign
           Interests. ................... ............................................................................. 46

    C. Even if Part of the Res is Determined to be Spanish State
           Property, the Case Can Proceed under FSIA Section 1605(b). ...........49

IV. THE DISTRICT COURT ERRED IN HOLDING THAT IT LACKED
    SUBJECT MATTER JURISDICTION OVER SALVAGED
    PROPERTY, AND AT THE SAME TIME, ORDERING TRANSFER
    OF THAT PROPERTY TO A FOREIGN SOVEREIGN THAT WAS


                                                         iv
        NOT IN POSSESSION OF IT AT THE TIME OF SALVAGE AND
        ARREST.........................................................................................................54

        A. The District Court's Order is Manifestly Contradictory.. ............... ..... 54

        B. The Proper Disposition of                         Subject Matter
                                                        the Case, if


                   Jurisdiction is Absent, is to Return the Parties Status
                   Quo Ante the Admiralty Arrest. ............................................................56
        c. Fairness and Equity Should Prevail. ....................................................57

V. CONCLUSION..............................................................................................59

CERTIFICATE OF COMPLIANCE....................................................................61

CERTIFICATE OF SERVICE..............................................................................62

BRIEF SERVICE LIST .......................................................................................... 63

Photomosaic of Site (Doc.138-5:2) ..........................................................Appendix A




                                                          v
                                   TABLE OF AUTHORITIES

Cases
* Alfred Dunhill of London, Inc. v. Republic of Cuba,
        425 U.S. 682 (l976) ..........................................................................33,34,40

Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne
    de Navigation,
     605 F.2d 648 (2d Cir. 1 979)..........................................................................34

* Aqua Log, Inc. vs. State of Georgia,
      594 F.3d 1330 (lIth Cir. 2010)............................................. 16, 19,20,21,23

Astoria Fed. Sav. & Loan Ass'n v. Solimino,
        501 U.S. 104 (1991)......................................................................................22

Beg v. Islamic Republic of Pakistan,
        353 F.3d 1323 (lIth Cir. 2003).....................................................................13

Bemis v. RMS LUSITANIA,
         88 F. Supp. 2d 1042 (B.D. Va. 1995) ...........................................................45

Borgships Inc. v. M/V MACARENA,
         1993 WL 408342 (E.D. La. Oct. 4, 1993) ....................................................44

*California v. Deep Sea Research, Inc.,
         523 U.S. 491 (1998)................................................................................20,23

Chalwest (Holdings) Ltd. v. Ellis,
     924 F.2d 1011 (lIth Cir. 1991).....................................................................26

China National Chemical Import & Export Corp. v.
        M/V LAGO HUALAIHUE,
      504 F. Supp. 684 (D. Md 1981) ....................................................................54

Columbus-America Discovery Group v. Atlantic Mut. Ins. Co.,
     56 F.3d 556 (4th Cir. 1995)...........................................................................48


                                                    VI
Columbus-America Discovery Group v. Atlantic Mut. Ins. Co.,
     974 F.2d 450 (4th Cir. 1992).........................................................................45

*Compania Espanola de Navegacion Maritima,
           S.A. v. THE NA VEMAR,
           303 U.S. 68 (1938)............................................................................20,21,27

Entron Ltd. v. Crane Vessel TITAN,
      1996 A.M.C. 1463 (W.D. La. 1995), aftd,
           70 F.3d 1269 (5th Cir. 1 995).........................................................................52

Ex parte McCardle,
           74 U.S. (7 Wall.) 506 (l868) ........................................................................55

Fleischman v. Potts,
      2006 WL 1737181, *1 (N.D. Fla. June 23,2006) ........................................25

Garcia v. Copenhaver, Bell &                  Assoc., MD. 's, P.A.,
            104 F .3d 1256 (lIth Cir. 1997)................................................ ....... ........ 14, 24

Guevara v. Republic of Peru,
           468 F.3d 1289 (lIth Cir. 2006).....................................................................33

Hannes v. Kingdom of Roumania Monopolies Institute,
            20 N.Y.S.2d 825 (lst App. Div. 1940) ......................................................... 27

Hartford Accident & Indemnity Co. of Hartford v.
            Southern Pacific Co.,
            273 U.S. 207 (1 927) ......................................................................................57

Honduras Aircraft Registry, Ltd. v. Government of Honduras,
     129 F.3d 543 (lIth Cir. 1997).......................................................................26

Houseman v. Schooner NORTH CAROLINA,
     40 U.S. (14 Pet.) 40 (1841) ..........................................................................xiv




                                                        Vll
* International Aircraft Recovery, L.L. C. v. Unidentified,
              Wrecked and Abandoned Aircraft,
              218 F.3d 1255 (llthCir. 2000).....................................................................46

International Insurance Co. v. Caja Nacional de Ahorro y Seguro,
              293 F.3d 392 (7th Cir. 2002)......................................................................... 26

Isbrandtsen Co. v. Johnson,
      343 U.S. 779 (1 952) ......................................................................................22

Lawrence v. Dunbar,
              919 F.2d 1525 (lIth Cir. 1990)............................................................... 13, 24

Long v. The Tampico,
      16 F. 491 (S.D.N.Y. 1883)............................................................................21

Marx v. Government of Guam,
      866 F.2d 294 (9th Cir. 1989).........................................................................21

Mason v. The BLAlREA U,
     6 U.S. (2 Cranch) 240 (l804)...........................................................xiv, 43,52

Ministry of        Defense and Supportfor Armed Forces of
              Islamic Republic of Iran v. Cubic Defense Systems, Inc.,
              236 F.Supp. 2d 1140 (S.D. CaL. 2002)..........................................................26

Ministry of        Supply, Cairo v. Universe Tankships, Inc.,
              708 F.2d 80 (2d Cir. 1 983)............................................................................ 34

Morales v. TWA,
              504 U.S. 374, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (l992)............................ 53

Morrison v. Amway Corp.,
      323 F.3d 920 (lIth Cir. 2003)................................................................. 14, 24

Pa. Bureau ofCorr. v. Us. Marshals Serv.,
      474 U.S. 34, 106 S. Ct. 355, 88 L. Ed. 2d 189 (1985)..................................53


                                                         Vl11
Permanent Mission of               India to the United Nations v. City of                New York,
            551 U.S. 193 (2007)......................................................................................22

R.MS. Titanic, Inc. v. Haver,
            171 F.3d 943 (4th Cir. 1999)...................................................................45, 49

R.M.S. Titanic, Inc. v. Unidentified, Wrecked Vessel,
      531 F. Supp. 2d 691 (E.D. Va. 2007) ...........................................................45

Reiss v. Societe Centrale du Groupe des Assurances Nationales,
      246 F. Supp. 2d 273 (S.D.N.Y. 2003)...........................................................25

Republic of Argentina v. Weltover, Inc.,
     504 U.S. 607 (1 992) ......................................................................................33

Republic of Austria v. Altmann,
            541 U.S. 677 (2004)......................................................................................40

Republic of Mexico v. Hoffman,
            324 U.S. 30 (1945)........................................................................................20

* Republic of Philippines v. Pimentel,
             128 S. Ct. 2180 (2008)..........................................................22, 46, 47, 48, 49

Saudi Arabia v. Nelson,
      507 U.S. 349 (1 993) ...................................................................................... 15

Schoenberg v. Exportadora de Sal, S.A. de C. V.,
             930 F .2d 777 (9th Cir. 1991)....... ......................................................... ......... 34

Steel Co. v. Citizens for a Better Environment,
             523 U.S. 83 (1 998) ........................................................................................55

 The ATTUALITA,
             238 F. 909 (4th Cir. 1916).............................................................................21

 The CARLO POMA,
      259 F. 369 (2d Cir. 1919) (rev'd on other grounds 255 U.S. 219) ............... 21

                                                                ix
The CRISTINA,
         1938 App. Cas. 485 (Eng.)............................................................................34

The   DAVIS,
       77 U.S. (1869) .........................................................................................20,23

The Johnson Lighterage Co. No. 24,
      231 F. 36$ (D.N.J. 1916) ..............................................................................21

The NEREIDE,
     13 U.S. 388 (1815)........................................................................................45

The SANTISSIMA TRINIDAD,
      20 U.S. (7 Wheat.) 283 (l822)......................................................................44

The SCHOONER EXCHANGE v. McFaddon,
     11 U.S. (7 Cranch) 116 (1 8 12)......................................................................20

The ST. PAUL,
      86 F. 340 (2d Cir. 1 898)................................................................................45

Transamerican S.S. Corp. v. Somali Democratic Republic,
         767 F.2d 998 (D.C. Cir. 1 985) ...................................................................... 34

Treasure Salvors, Inc. v. Unidentified Wrecked & Abandoned Vessel,
      640 F.2d 560 (5th Cir. 1981).........................................................................49

Turcios v. Delicias Hispanas Corp.,
         275 Fed. App'x 879 (lIth Cir. 2008) ...........................................................24

 United States v. Alcon Laboratories,
       636 F.2d 876 (lst Cir. 1981).........................................................................57

 United States v. Crape,
       2010 U.S. App. LEXIS 8212, No. 09-12470
       (lIth Cir. Fla. Apr. 21, 2010) .......................................................................53



                                                     x
United States v. Jardine,
         81 F.2d 745 (5th Cir. 1 935)...........................................................................21

University of South Alabama v. American Tobacco Co.,
         168 F .3d 405 (lIth Cir. 1999)....................................................................... 56

Velidor v. LIPIG BENGHAZI,
      653 F.2d 812 (3d Cir. 1981).......................................................................... 52

Statutes
28 U.S.C. § 1291 ....................................................................................................xiv

28 U.S.C. § 1331 ....................................................................................................xiv

28 U.S.C. § 1 333 .................................................................................................... xiv

28 U.S.C. § 1391 (£)(2)............................................................................................. 43

28 U.S.C. § 1 602 .............................................................................................. passim

28 U.S.C. § 1603(d)...........................................................................................32,33

28 U.S.C. § 1604 ...............................................................................................35,39

28 U.S.C. § 1 605 .....................................................................................................55

28 U.S.C. § 1605(a).................................................................................................53

*28 U.S.C. § 1 605(b )........................................................................................ passim

*28 U.S.C. § 1605(b)(1)..........................................................................................22

*28 U.S.C. § 1605(b )(2) ..........................................................................................43

*28 U.S.C. § 1609 ............................................................................................passim

28 U.S.C. § 1610(a)...........................................................................................12,53


                                                        xi
Pub.L. 100-640, § 1, 102 Stat. 3333 (l988) ............................................................51

Public Vessels Act (PVA), 46 U.S.C. § 31101 et seq. ...................................... 36,53

Sunken Military Craft Act (SMCA), 10 U.S.C. § 113 note........................ 11,38,43

Other Authorities
Admiralty Suits Against Foreign States, H.R. Rep. 100-823,
     100th Cong., 2d Sess., at 2 (l988), reprinted at 1988
     U.S.C.C.A.N. 451 1,.......................................................................................52

Black's Law Dictionary 270 (6th ed. 1990)............................................................33

Brussels Convention for the Unification of        Certain Rules
            relating to the Immunity of State-Owned Vessels,
            Apr. 10, 1926, 196 L.N.T.S. 199..................................................................35

Foreign Sovereign Immunities, H.R. No. 94- 1 487, 94th Cong.,
      2d Sess. (l976), reprinted in 1976 U.S.C.C.A.N. 6604..............34,36,50,55

Geneva Convention on the High Seas, Apr. 29, 1958,
     13 U.S.T. 2312,450 U.N.T.S. 82.................................................................. 35

Immunity of Uruguayan Oil Tanker Presidente Rivera,
            DIGEST OF U.S. PRACTICE IN INTERNATIONAL LAW (1989-90), at 3,
            available at
            http://www.state.gov/documents/organization/ 28486.pdf(July 13, 1989....37

Letter to the Attorney General from Jack B. Tate,
            Aeting Legal Adviser, Dept. of              State, May 19,1952.................34,39,43,52

Martin J. Norris, The Law of                 Salvage,
            3A BENEDICT ON ADMIRALTY §27 (2009).....................................................45




                                                        XlI
Ronald W Reagan National Defense Authorization Act for
     Fiscal Year 2005, H.R. Rep. 108-491,2004 U.S.C.C.A.N.
            at 359; H.R. Conf. Rep. 108-767,2004 U.S.C.C.A.N. at 2139.................... 38

Treaty of       Friendship and General Relations, U.S.-Sp., July 3, 1902,
            art. X, 33 Stat. 2105 ......................................................................................36

U.S. Dep't of         Navy, OPNAV Instruction 3128.10G (2008)...................................37




                                                         Xl11
                                        STATEMENT OF JURISDICTION

           A. Admiralty Jurisdiction Generally. U.S. federal courts sitting in
admiralty have long exercised in rem jurisdiction over shipwrecks located in

international waters, adjudicating both salvage claims and assertions of ownership.

See, e.g., Mason v. The BLAlREAU, 6 U.S. (2 Cranch) 240, 240 (l804) (salvage);

Houseman v. Schooner NORTH CAROLINA, 40 U.S. (l4 Pet.) 40, 48 (1841);

R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943,961 (4th Cir. 1999).

           B. District Court Jurisdiction. Pursuant to 28 U.S.C. §§ 1331 & 1333;


28 U.S.C. § 1602 et seq.

           C. Court of Appeals Jurisdiction. Pursuant to 28 U.S.C. § 1291.


           D. Date of Rulings from which Appeal is Sought and the Filing of the

Notice of Appeal. Appeal is taken from the U.S. district court's final order of

dismissal of December 22, 2009, Doc.270, and final judgment of December 28,

2009, Doc.271. The notice of                        appeal was filed on January 15,2010, Doc.272:2.1

            E. Final Judgment. Pursuant to 28 U.S.C. § 1291, the distriet court's

final order of dismissal of December 22, 2009, Doc.270, and civil judgment of

December 28, 2009, Doc.27 1, are final judgments.



            In this brief record references will be cited as "Doc. t a J : tb J," where field
t a J is the district court docket ( or sub-docket) number, and field tb J is the relevant
page, based on the district court's pagination of                   the document.




                                                           xiv
                       STATEMENT OF ISSUES PRESENTED FOR REVIEW

            1. Whether Spain's claim of sovereign immunity fails because Spain was

not in possession of                 the res at the time of salvage and arrest.




            2. Whether the district court erred in dismissing an in rem admiralty

proceeding under the Foreign Sovereign Immunities Act, on written pleadings

only, where Spain's claim of ownership was based on its assertion that the

salvaged cargo originated from a Spanish naval vessel not present at the site and

proven to have been engaged in commercial activity.

            3. Whether the district court erred in dismissing an in rem admiralty

proceeding for lack of subject matter jurisdiction where the majority of the res was

privately owned cargo and where Spain did not prove ownership of any of it.




            4. Whether the district court erred in holding that it lacked subject matter

jurisdiction over salvaged property, and at the same time, ordering transfer of that

property to a foreign sovereign that was not in possession of it at the time of


salvage and arrest.




                                                                       1
                                              STATEMENT OF THE CASE

I. COURSE OF PROCEEDINGS AND DISPOSITION BELOW.

           On April 9, 2007, Odyssey Marine Exploration, Inc. filed an admiralty arrest

in rem against cargo it found at the bottom of the Atlantic Ocean. Doc.1: 1. The

verified complaint was subsequently amended to reflect that no vessel had been

located at the site (case caption was amended to "the unidentified vessel, if any . . .

") and for other purposes not material to this appeal, at Doc.252. Odyssey
recovered the cargo, brought it within the jurisdiction of the Middle District of

Florida, and presented to the U.S. Marshal a small bronze block as an artifact for

the symbolic arrest. Doc.1 :4(ir9). A warrant of arrest was issued by the district

court, Doc.5, and Odyssey's motion to serve as substitute custodian of                    the res was

granted.3 Doc.8.

            Because the res was derelict, with no party in possession, and the origin of

the res was unidentified, Odyssey pled in its verified complaint two substantive


2 In its amended complaint, Odyssey raised certain in personam claims against

Spain arising from Spain's retaliatory conduct after the original arrest was filed.
Doc.25:11-12,13-15 (amended counts III, V & VI). Spain moved to dismiss these
new counts, Doc.37, and that motion was granted. Doc.91. These in personam
counts are not before this Court on appeaL.

3 Since April 2007, Odyssey has served as substitute custodian of
                                                                                          the res, and
has borne all costs for the care, conservation and curation of coins and other
artifacts recovered from the site. For images of some of the coins and artifacts, as
well as a narrative of                  the conservation process, see Doc.13 1-7:23-28.

                                                                         2
counts seeking a determination that it was either the owner of the res (or portions

thereof), Doc.1:8 (prayer (c)), or that it was entitled to a salvage award. Doc.1:8-9

(prayers (d) & (e)).

           Odyssey published timely notice of its arrest. Doc.9&10. The Kingdom of

Spain ("Spain") filed a claim to that portion of the res which belonged to Spain on

May 31,2007. Doc.13.

           The Republic of Peru filed a conditional claim to unspecified property at

issue in this case on August 19, 2008, and conceded the jurisdiction of the court.

Doc.120.

           Spain filed a motion to dismiss or for summary judgment on September 22,

2008, Doc.131, based on Fed. R. Civ. P. ("FRCP"J 12(b)(l), arguing that the res at

issue in the case was Nuestra Señora de las Mercedes ("The MERCEDES") and

was entitled to foreign sovereign immunity under the Foreign Sovereign

Immunities Act (FSIA), 28 U.S.C. § 1602 et seq. Doc.131:16,18. In the

alternative, Spain sought summary judgment under FRCP 56. Doc.131:16(n.8).

Concurrently, Spain sought to vacate the arrest, terminate Odyssey's appointment

as substitute custodian of the res, and "direct release to the custody of Spain of all




artifacts taken from" the defendant site. Doc.132:5.




                                                                      3
           In January and February 2009, a number of other claims were filed by

parties alleging to be descendants of individuals who had paid to ship cargo on The

MERCEDES.4 See Doc.164 (Alvear deseendants); 168 (Whitlock); 169 (group of

16 descendants); 175 (claim of Menendez as "non-possessory lien-holder"); 176

(Palacios). These descendant claims did not dispute Odyssey's rights as a salvor.




See, e.g., 168:2(irir4&5); 169:4(ir6); 176:3(ir5). The descendant claims also

conceded jurisdiction of the court and speeifically objected to Spain's purported

assertion of ownership over privately-shipped cargo aboard The MERCEDES at

the time of its sinking. See, e.g., 164:2(ir6); 168:3(irir7&8); 169:6-7(irir20&21);


176:3-4(ir8).

            Odyssey filed its opposition to Spain's motion to dismiss on November 17,

2008. Doc.138. Peru and the descendant claimants also filed their oppositions.

Doc.141; 177; 178.

            The district eourt referred Spain's motions to the magistrate judge for the

preparation of a report and recommendation. Doc.20, 134. Without the benefit of

an evidentiary hearing and despite conflicting evidence submitted, the magistrate

judge issued his report and recommendation ("R&R") on June 3, 2009. Doc.209.




 4
             These will be collectively referred to here as the "descendant claims."

                                                                       4
           Odyssey objected to the R&R, as did Peru and the descendant claimants.

See Doc.227; 228; 229; 230, 231; 234.

           In a December 22, 2009, order the district court adopted the R&R, and the

R&R was incorporated into the district court's opinion. Doe.270:4. The district

court then, consistent with the R&R, dismissed Odyssey's admiralty complaint for

lack of subject matter jurisdiction and vacated the in rem arrest. Doc.270:4-5. The

district court also ordered "the substitute custodian, Odyssey, . . . to return the res

to Spain. . .." Doc.270:5. The order to return the res, however, was stayed


pending this appeaL. Id. The district court rendered a judgment to that effect.




Doc.271.

            Odyssey brought this timely appeaL. Doc.272.

II. STATEMENT OF FACTS.

A. Odyssey's Discovery of the Salvage Site.


            Odyssey Marine Exploration, Inc. ("Odyssey") is engaged in the business of

deep-ocean exploration and the archaeological recovery of shipwrecks and cargo

around the world. Doc.1: 1 (ir1); Doc.25 :2. In March 2007, after the investment of

a great deal of time, money, technology and effort, Odyssey discovered an


underwater site using sophisticated sonar and magnetometer equipment.




                                                                        5
Doc.l:5(ir13)5. The site is located at a depth of 1 100 meters (nearly two-thirds ofa

mile under the ocean surface), at a place approximately 100 miles west of the

Straits of Gibraltar, outside the territorial waters or contiguous zone of any nation.

Doc1 :2&3(irir2&5); Doc.25:2. Upon discovery, Odyssey immediately initiated an

archaeological non-invasive survey, employing advanced remotely operated

vehicles ("ROV s") and prepared a photomosaic of the site. Doc.1 :3(ir5). The

photomosaic revealed no evidence of the coherent remains of a vessel at the site,

Doc.25:5(ir16), as can be readily determined from the image itself. Doc.138-5:2;

attached as Appendix A to this brief. (See also Spain's concession that there is no

"coherent vessel" at the site. Doc. 163: 1 1 - 1 2.)

       Closer examination by Odyssey of the site revealed clumps or concretions of

silver and gold coins, as well as other objects, scattered over an area measuring

368 meters long and 110 meters wide. Doc.l38-3:9. Odyssey painstakingly

followed best archaeological methods and protocol in the course of recovering

these objects, consisting of approximately 594,000 coins and a small number of

other artifacts. Doc 138-3:9-10. This is the res at issue in this case.

       At the time Odyssey recovered the res, no other party was in actual or

constructive possession of the site or property or even aware of its location or

5 Odyssey has also spent significant resources in storing and properly
conserving the coins and artifacts recovered. See Doc.25:7(ir20).

                                           6
existenee. Doc 1:2-4, 6-7(irir2,6,8,17,21). In its verified claim, Doc.13, Spain

nowhere asserted that it was in actual possession of the site or of the cargo that is

the res in the proceeding. Rather, Spain asserted that it had "not abandoned its


ownership and other rights . . . in cargo or other property of the Kingdom of Spain

on or in its sunken vessels." Doc.13:1. Spain also purported to refuse salvage of

the res. Doc.13:2. Spain reserved the "sovereign immunity of . . . its property."

Id.

           Since no vessel exists at the site, the identity of the res and its source was

much disputed in proceedings below. In its motion to dismiss, Spain asserted that

the res was The MERCEDES, a "public armed ship," Doc.131:20, and was thus

entitled to foreign sovereign immunity. Doc.131:21-25. Spain also argued that it

could refuse Odyssey's salvage services even ifit was not in possession of
                                                                                 the res,

and claim the res without satisfying any maritime lien that Odyssey might have on

the property. Doc. 13 1 :28-34.


            Spain's motion to dismiss, Doc.131, and motion to vacate the arrest,

Doc.132, appeared to attack the district court's subject matter jurisdiction over

Odyssey's in rem arrest, yet made a substantive plea on the merits that all the res

was Spanish public property and should be returned forthwith to Spain.




                                                                       7
B. The Last Voyage of                            The MERCEDES.

            In October of 1804, Spain was at peace and The MERCEDES was serving

as a commercial transport vessel for the Spanish Correos Maritimos (Maritime

Cargo Service). The ship was carrying goods for freight charges, and between 24

and 40 passengers for fares. Doc.138-31:9, 18-23(irir6,12&13); 138-64:7; 138-68;


179-2:5-6,8. The gun-decks of The MERCEDES had been reeonfigured for her

final voyage to accommodate paying passengers and cargo, and many of       the ship's


guns were actually dismantled or removed to make room for passenger cabins and

storage of passenger personal effects and cargo, further underscoring the peaceful

cargo-carrying voyage. In fact, the fighting ability of The MERCEDES was

hindered by the extensive cargo aboard. Doc.138-3 1 :20; 138-64: 12-13; 163-9:37.

            The vast majority of the cargo aboard The MERCEDES, at the time of its

sinking, was privately owned and commercially shipped. Doc. 1 38- 31: 19. By the

 Spanish government's own, contemporaneous estimate (in diplomatic

 correspondence with the British government), over 75% of the cargo on The

 MERCEDES was privately owned. Doc.138-31:19; 138-46:4-7. The cargo

 manifest for The MERCEDES, as well as 173 separate receipts showing freight

 charges paid and issued by a civilian silver master under the auspices of the

 Customs authority (indicating their commereial nature), clearly indicate that at


                                                                       8
least 75% of              the cargo (measured by value) was privately owned. Doc.138-31:26-

28; 138-64: 12-13; 138-62; 232-3 (customs receipts showing private freight charges

paid); 232-4 (original & translation of bills); 232-5 (contemporary manifest).


Private merchants, having placed cargo on The MERCEDES in Spanish American

ports, were charged freight at the rate of 1 % of the declared value of their

consignments payable to the Correos Maritimos. Doc.138-31:19-20; 138-62:10.


For a spreadsheet showing private commercial versus official consignments on The

MERCEDES at the time of                             her sinking, see Doc.232-2.

               In the aftermath of the sinking of The MERCEDES, Spain went on

 diplomatic record to protest to the British government that The Mercedes was

 carrying private cargo and passengers and, therefore, the British attack was an

 unwarranted provocation. Doc.l38-46:6-7; 138:64:17,18. In its subsequent


 Declaration of War with Britain, Spain expressed outrage at the attaek on The

 MERCEDES because it was being used to transport passengers and cargo, not as a

 warship. Doc. 1 3 1 -6:48. The Spanish government at the time took the position that

 the private parties who lost property shipped aboard The MERCEDES and other

  ships in the small fleet that accompanied her in 1804 were to be treated as private

  claimants, and their only recourse was to seek relief from the British government.




                                                                        9
Doc.138-31:26-27; 179-2:15; 232-8.6 Even the Spanish government, as recently as

2006 (before it brought its claim in these proceedings), acknowledged that the


majority of The MERCEDES' cargo was "treasures and goods of private

interests." Doc.232-6:10&15-16.

C. The District Court's Ruling.

      The R&R issued on June 3, 2009, did not directly address the status of

private property shipped on The MERCEDES (much less acknowledge the claims

filed by the descendants of the owners of the res). Instead, it implied that The

MERCEDES was actually on an official wartime voyage at the time of its sinking

because "Spain needed all its resources for these tumultuous times; accordingly, it

dispatehed frigates to collect 'specie and precious produee' from its American

Viceroyalties." Doc.209:6 (quoting Doc.131, Ex.A, irir15-16). The R&R expressly

found that "the Mercedes is the property of Spain," Doc.209: 17, and went on to




6
      Crucial material was provided by Odyssey to the district court in the
declarations of (1) Dr. Rodney Carlisle, professor emeritus of history from Rutgers
University and noted authority on naval affairs and Latin American history, who
was retained by Odyssey as an independent expert witness, Doe.138-31:5(irir1,2);
138-32 (Carlisle CV); and (2) Dr. William Henry Flayhart, III, professor emeritus
of history at Delaware State University, one of the world's leading authorities on
maritime history, who was also retained as an independent expert. Doc. 1 38-64:5-
6; 138-65 (Flayhart CV). Both the Carlisle and Flayhart declarations assembled a
substantial amount of archival doeumentation and scholarly literature to refute
Spain's assertions as to ownership of the res and the nature of The MERCEDES'
final voyage.

                                      10
conclude that all the cargo aboard The MERCEDES should be assimilated as

Spanish public property for purposes of Spain's motion to dismiss. Doc.209:21-

26. Contrary to undisputed evidence showing otherwise, the R&R found that "the

Mercedes clearly was not engaged in any commercial activity at the time of its

demise. . . ." Doc.209:27.

           Regarding the applicability of the Foreign Sovereign Immunities Act (FSIA)

to Spain's motion to dismiss, the magistrate judge indicated, see Doc.209: 17, that

the analysis must proceed under FSIA section 1609, which provides that "property

in the United States of a foreign sovereign shall be immune from attachment arrest

and execution. . .." 28 U.S.C. § 1609. The magistrate judge disclaimed the


relevance of FSIA section 1 605(b), Doc.209:26-28, which specifically regulates

admiralty arrests against foreign sovereign vessels or eargo for purposes of

enforcing a maritime lien (as in salvage eases). See 28 U.S.C. § 1605(b). The

magistrate judge also indicated that the fact that Spain was not in actual possession

of the res at the time of its arrest by Odyssey was irrelevant under the FSIA.

Doc.209: 1 9-21. The magistrate judge acknowledged that the immunities of both


U.S. and foreign warships were currently regulated by the Sunken Military Craft




Act (SMCA), 10 U.S.C. § 113 note, and that inasmuch as under the SMCA, "(tJhe




                                                                       11
United States protects its sunken warships," Doc.209:25, the same treatment

should be accorded to The MERCEDES in this case. Doc.209:24-26.

           The United States submitted a Statement of Interest in the case on

September 9, 2009, largely aligning its position with that of Spain. Doe.247.

However, the district court refused to accept or consider a statement by the primary




drafter of the SMCA indicating that only vessels on strictly noncommercial

missions were intended to enjoy immunity, Doc.252, as well as a statement by a

U.S. congressional delegation in support of                                       Odyssey's position, Doc.258.

            In its order adopting and incorporating the R&R, the district court wrote

separately to indicate that it "emphatically agree(dJ," Doc.270:4, with the


magistrate's conclusions as to (l) the application of the FRCP 12(b)(l) "standard

for reviewing facts to a determination of subject matter jurisdiction," id.; (2) the

factual determination that the res originated from The MERCEDES, id.; and (3)

that there was no indication in this case, under FSIA section 1610(a), that there

 was any nexus between a commercial activity involving The MERCEDES and the

 United States, in order to justify an assertion of the district court's jurisdiction

 here. Doc.270:3.




                                                                        12
                                                                                ...




           The district court concluded by noting that "the Mercedes is a naval vessel

of Spain and that the wreck of this vessel, the vessel's cargo, and any human

remains are the natural and legal patrimony of Spain. . . ." Doc.270:47.

III. STANDARD OF REVIEW.

           The district court's factual findings and legal rulings as to foreign sovereign

immunity are subject to de novo review by this Court. Beg v. Islamic Republic of

Pakistan, 353 F.3d 1323, 1324 (lIth Cir. 2003). There is no case on point


involving cargo salvaged from a site where no vessel exists and where a foreign

sovereign lacking possession or ownership of
                                                                    the res denies jurisdiction of          the U.S.



..
federal court in an in rem admiralty proceeding. Thus, this is a case of first

impression.

            Insofar as the district court made findings of fact as to the ownership and

character of the res at issue in this case and as to the nature of The MERCEDES'

final voyage, such findings are not entitled to deference by the court of appeals. In

deciding an FRCP 12(b)(l) dismissal for lack of subject matter jurisdiction, the

district court is "free to weigh the evidence and satisfy itself as to the existence of

its power to hear the case." Lawrence v. Dunbar, 919 F.2d 1525, 1529 (lIth Cir.

 1990), but, as this Court has consistently held, this "free                                    ( dom J" comes with a



 7
             No vessel or human remains were found at the site.

                                                               13
substantial restriction: "the district court should only rely on Rule 12(b)(1) '(iJfthe

facts necessary to sustain jurisdiction do not implicate the merits of plaintifts

cause of action'." Morrison v. Amway Corp., 323 F.3d 920, 925 (lIth Cir. 2003)

(quoting Garcia v. Copenhaver, Bell & Assoc., MD. 's, P.A., 104 F.3d 1256, 1261

(11th Cir. 1997). This Court has instructed that "(iJf a jurisdictional challenge does

implicate the merits of the underlying claim then:

      (TJhe proper course of action for the district court . . . is to find that
      jurisdiction exists and deal with the objection as a direet attack on the
      merits of the plaintift s case . . . . Judicial economy is best promoted
      when the existence of a federal right is directly reached and, where no
       claim is found to exist, the case is dismissed on the merits. This
       refusal to treat indirect attacks on the merits as Rule 1 2(b)( 1) motions
       provides, moreover, a greater level of protection for the plaintiff who
       in truth is facing a challenge to the validity of his claim: the defendant
       is forced to proceed under Rule 12(b)(6) . . . or Rule 56 . . . both of
       which place great restrictions on the district court's discretion. . . ."

Id.

       Here, the district court's findings as to the ownership of
                                                                         the res went directly

to the ultimate question for determination of Odyssey's complaint: whether


Odyssey owned the recovered cargo or was entitled to a salvage award. Because

the district court's findings of fact resulted in eomp1ete dismissal of the case thus

resolving the claims of Odyssey, Peru, and all claims by descendants, this was


 effectively a ruling on the merits, not a mere jurisdictional holding.



                                                                    14
      For purposes of this appeal, therefore, the Court should not grant deference

to the district court's factual findings and should accept as true the well-pleaded

facts in Odyssey's amended complaint. See Saudi Arabia v. Nelson, 507 U.S. 349,

351 (l993) ("Because this case comes to us on a motion to dismiss the complaint,

we assume that we have truthful factual allegations before us . . . .").




                                        15
                                      SUMMARY OF THE ARGUMENT

      The district court's dismissal of this case under the Foreign Sovereign

Immunities Act (FSIA) was clearly erroneous. In dismissing Odyssey's complaint,

the district court made four fundamental errors.

      First, without the benefit of          this Court's ruling in Aqua Log, Inc. vs. State of

Georgia, 594 F.3d 1330 (lith Cir. 2010), the district court erred in adopting the

magistrate judge's finding that possession of the res in an in rem proeeeding was

not required for Spain to prevail on its claim of sovereign immunity. This ruling

was wrong and has since been shown as such by this Court's ruling in Aqua Log.

There is no question that Spain did not have possession of the res in this case.

Like the logs at issue in Aqua Log that rested at the bottom of a river, the cargo that

is the Defendant res in this case rested at the bottom of the Atlantic Ocean. In

Aqua Log this Court held, a month after the district court's dismissal of this case,

that a sovereign's possession is indeed required in order for it to claim immunity in

an in rem admiralty action.

       Second, despite undisputed evidence to the contrary and without an


 evidentiary hearing, the district court made a clearly erroneous factual finding that

 The MERCEDES, the vessel alleged by Spain to have been earrying the subject

 cargo, was not engaged in commercial activity, and a related erroneous legal


                                                 16
finding (perhaps in tacit response to the clear evidence proving the commercial

activity), that a vessel owned by a foreign country is immune from the jurisdiction

of the U.S. courts regardless of the nature of its voyage. The MERCEDES was

carrying passengers for fares and privately owned cargo for freight charges.

Moreover, contemporaneous evidence proved that Spain knew The MERCEDES

was on a commercial voyage. Despite this evidence, however, the court below

failed to recognize the longstanding law, as codified in the FSIA and the Sunken

Military Craft Act (SMCA), that only vessels on exclusively noncommercial


missions are entitled to sovereign immunity. Any logical reading of SMCA and

background principles of international law incorporated by the FSIA compel the

same result: a vessel is not entitled to foreign sovereign immunity if it was engaged

in commercial acts.

      The district court's third error was its failure to recognize that under well-

established admiralty law, cargo may be separated from a vessel, and the cargo

may also be separated among itself, to determine competing claims of ownership

and salvage. This error was especially glaring given that no vessel was found at the

subject site and was compounded by the district court's failure to acknowledge the

legitimate ownership claims of the descendant claimants whose ancestors may

have actually owned the cargo and placed it aboard The MERCEDES for


                                       17
commercial transport. Completely missing the descendants' relationship to the

property at issue, the district court erroneously identified these claimants as


"descendants of those aboard The MERCEDES." Doe.270:33. Although faced

with a motion to dismiss, the district court effectively ruled on the merits - albeit

erroneously - that Spain was the only party in this case whose claim of ownership

should be considered. The MERCEDES is not the res in this case, but even if

Spain could prove that The MERCEDES once carried this cargo, such would not

warrant dismissal of this case because where the res is private, commercial


property or even where disputed evidence exists as to the ownership, the in rem

action cannot be dismissed under the FSIA. Seetion 1609 does not apply because

the res is not the property of Spain, and even if it were, Section 1 605(b) does apply

specifically to exclude immunity in an admiralty case where a salvage lien is

asserted.

            Fourth, and finally, finding that it had no jurisdiction over the res, the

district court nevertheless awarded the res to Spain, something it would be

powerless to do absent jurisdiction. If the distriet court was truly without

jurisdiction, the proper disposition was to have returned the parties to the status

 quo prior to Spain's intervention, where Odyssey, not Spain, had possession of
                                                                                   the

 res.


                                                                        18
                                                 ARGUMENT

I. SPAIN'S CLAIM OF SOVEREIGN IMMUNITY MUST FAIL
           BECAUSE SPAIN WAS NOT IN POSSESSION OF THE RES.

           Without the benefit of           this Court's clear guidanee in Aqua Log, Inc. VS. State


of    Georgia, 594 F.3d 1330 (11th Cir. 2010), the district court erroneously held that

the fact that Spain was not in possession of the res at the time of its arrest by

Odyssey was irrelevant. Doc.270:24-26. The district court declared, "no section

of the FSIA imposes the possessory requirement Odyssey advances, and I refuse to

read one into the statute." Doc.209 at 20. This ruling was wrong and has since

been shown as such by this Court's holding in Aqua Log. In Aqua Log (which the

Eleventh Circuit decided a month after the district court's erroneous dismissal of

 the subject case), this Court held that even absent specific statutory language,


 possession is indeed required in order for a sovereign to claim immunity in an in

 rem admiralty action where its purported property is the res at issue.

            Although in Aqua Log this Court eonsidered the possession requirement for

 the applicability of               the sovereign immunity of a state (Georgia) under the Eleventh

 Amendment rather than a foreign country under the Foreign Sovereign Immunities

     Act, the Court's well-reasoned analysis was based in part upon case law which

     addressed the sovereign immunity of foreign sovereigns generally, including

     Spain. In fact, this Court relied upon many of the same cases which Odyssey cited

                                                      19
in its pleadings below, but which were dismissed by the district eourt as being

irrelevant. 8 Although the cases discussed predated the FSIA, this Court held that

the actual possession doctrine for sovereign immunity in in rem admiralty cases is

pervasive. Moreover, the FSIA must be considered against the backdrop of

general sovereign immunity principles, and there is certainly no indication that

Congress intended the FSIA to provide greater protection to a foreign sovereign

lacking possession than the Constitution or U.S. law affords to a domestic


sovereign lacking possession. In each situation, the absence of actual possession -

and therefore the absence of any corresponding dispossession - significantly

diminishes any likelihood that a sovereign's interests would be offended by the

mere exercise of the Court's jurisdiction when the res is brought before the court




for appropriate disposition.

            In Aqua Log, this Court considered Georgia's claim of immunity in an

admiralty case where logs owned by the sovereign were the subject of an in rem

admiralty proceeding like this one. This Court discussed the relevance of foreign

sovereign immunity in admiralty cases and quoted The NAVEMAR, 303 U.S. 68,

8 These cases include California v. Deep Sea Research, Inc., 523 Us. 491

(1998); The DAVIS, 77 Us. 15 (1869); The SCHOONER EXCHANGE v.
McFaddon, 11 Us. (7 Cranch) 116 (1812); Compania Espanola de Navegacion
Maritima, S.A. v. THE NAVEMAR, 303 Us. 68 (1938); and Republic of
                                                                                     Mexico v.
 Hoffman, 324 Us. 30, 65 S. Ct. 530, 89 L. Ed. 729 (1945).


                                                                       20
75-76 (l938), which involved a vessel claimed by the Spanish government. The

Supreme Court in The NAVEMAR denied Spain's assertion of foreign sovereign

immunity holding that "actual possession by some act of physical dominion or

control in behalf of the Spanish government was needful . . . or at least some

recognition on the part of the ship's officers that they were controlling the vessel

and crew in behalf of their government. Both were lacking . . . ." (citations

omitted).9

           This Court in Aqua Log observed:

           Federal district and circuit courts have likewise held a foreign
           government cannot claim sovereign immunity with respect to a vessel
           not in its possession. See United States v. Jardine, 81 F.2d 745 (5th
           Cir. 1935); THE CARLO POMA, 259 F. 369 (2d Cir. 1919) (rev'd on
           other grounds 255 U.S. 219)); The ATTUALITA, 238 F. 909 (4th Cir.


           1916); The Johnson Lighterage Co. No. 24,231 F. 365 (D.N.J. 1916);
           Long v. The Tampico, 16 F. 491 (S.D.N.Y. 1883).

594 F.3d at 1335 n.8. The Aqua Log decision thus settles the matter here: Spain

must have had actual possession of the res before it could demand foreign

sovereign immunity and displace what would otherwise be the legitimate

jurisdiction of federal admiralty courts to adjudicate maritime claims in rem.

9
            NA VEMAR was distinguished in Marx v. Government of Guam, 866 F.2d
 294 (9th Cir. 1989), but this Court declined to address Marx in its Aqua Log
 opinion, and Marx is distinguishable from this case as it did not involve an FSIA
 analysis. Moreover, in Marx sunken vessels actually existed; there was no dispute
 that Guam owned the vessels; and the vessels were located within the territorial
 waters of Guam and were thus under its control.




                                                                      21
      The district court's faulty legal reasoning also ignored that the FSIA most

certainly does contain a requirement of possession. Under section 1605(b) (the

provision relevant to admiralty actions to enforce maritime liens) an in personam

mechanism is only triggered when "notice of the suit is given. . . to the person, or

his agent, having possession of the vessel or cargo against which the maritime lien

is asserted." 28 U.S.C. § 1605(b)(l) (emphasis added). Ifno person representing


a foreign sovereign (or its agent) is "in possession of the vessel or cargo," then

there is no party to serve notice of the suit, and, thus an in rem proceeding may be

instituted. That is precisely what occurred here.

      Even if Congress had not thoughtfully included the possession language into

1 605(b)(l), the Supreme Court has repeatedly held that Congress is assumed to

have legislated the FSIA, as with other statutes, against the backdrop of common

law sovereign immunity principles. See Astoria Fed. Sav. & Loan Ass'n v.

Solimino, 501 U.S. 104, 108 (l991); Isbrandtsen Co. v. Johnson, 343 U.S. 779,

783 (l952). Specifically, the Court has held that pre-FSIA common law rules of

sovereign immunity survived the enactment of the FSIA and are enforceable today.

See Republic of Philippines v. Pimentel, 128 S. Ct. 2180, 2190 (2008); Permanent

Mission of India to the United Nations v. City of New York, 551 U.S. 193, 201

(2007) (examining "pre-FSIA international practice"). As this Court has noted,


                                       22
citing the United States Supreme Court in Deep Sea Research, actual possession

for assertions of sovereign immunity is a common law requirement and was

actually first enunciated by the Supreme Court regarding claims made to vessels

and cargo. Aqua Log, 594 F.3d at 1334-1336. See Deep Sea Research, 523 U.S. at

507-08 (discussing The DAVIS, 77 U.S. (l0 WalL.) 15,20 (l869).


           However the matter is viewed, the distriet court in stark contrast to this

Court's later holding in Aqua Log, erred in its legal conclusion that Spain's lack of

possession of the res was irrelevant. This conclusion distorted the district court's

sovereign immunity analysis and led to an improper and clearly erroneous

dismissal of the case. Thus, Odyssey requests this Court to reverse the district

court's order dismissing the ease and remand the case for proper adjudication of all




claims.

II. THE DISTRICT COURT ERRED IN DISMISSING AN IN REM
    ADMIRALTY PROCEEDING UNDER THE FOREIGN SOVEREIGN
            IMMUNITIES ACT, ON WRITTEN PLEADINGS ONLY, WHERE


            SPAIN'S CLAIM OF OWNERSHIP WAS BASED ON ITS
            ASSERTION THAT THE SALVAGED CARGO ORIGINATED
            FROM A SPANISH NAVAL VESSEL NOT PRESENT AT THE SITE
            AND PROVEN TO HAVE BEEN ENGAGED IN COMMERCIAL
            ACTIVITY.

A. The District Court's Ruling Denied Odyssey Due Process and Resulted in
            Erroneous Factual Findings.

             1. Where the Facts Necessary to Decide Jurisdiction are Intertwined
                  with the Merits of the Claim, the Jurisdictional Challenge must be

                                                                       23
                      Resolved under the Rule 56 Summary Judgment Standard, and
                      Dismissal of             the Case on Written Pleadings Only was Erroneous.

          In resolving Spain's Motion, the district court applied the wrong standard of

review and impermissibly resolved faetua1 disputes, most significantly those

concerning the issue of ownership. While district courts in this Circuit may

"independently weigh facts" when resolving a factual attack on subject matter

jurisdiction under Rule 12(b)(l) of the Federal Rules of Civil Procedure (see

Morrison v. Amway Corp., 323 F.3d 920, 925 (1 Ith Cir. 2003)), there is an

important exception: if the facts neeessary to decide jurisdiction are intertwined

with the merits of the p1aintift s claim, the jurisdictional challenge must be


resolved under the Rule 56 summary judgment standard. See Lawrence v. Dunbar,

919 F.2d 1525, 1529 (lIth Cir. 1990); Turcios v. Delicias Hispanas Corp., 275


Fed. App'x 879 (11th Cir. 2008); Garcia v. Copenhaver, Bell & Assoc., MD. 's,

P.A., 104 F.3d 1256, 1258 (lIth Cir. 1997); see also Morrison, 323 F.3d at 930


(reversing district court's Rule 12(b )(1) dismissal because it resolved disputed
issues of fact and thus "erroneously invaded the province of the jury").

            Furthermore, in ruling only on written pleadings, the district court denied

 Odyssey its Constitutional right to due process. Odyssey pled to the district court




 that the court should at least afford the parties opportunity to participate in an

 evidentiary hearing. Doc. 138:9-10. Without an evidentiary hearing, however, the

                                                                       24
district court dismissed the possession issue, as noted, completely denying

Odyssey the opportunity to litigate that issue. Odyssey was also denied the

opportunity to cross examine and properly discredit Spain's witnesses as to all




other relevant issues. Although the written evidence presented by Odyssey did

reveal the inaccuracies of Spain's contentions as to the certain identity of The

MERCEDES and the nature of its voyage, the district court erred in failing to

properly consider that evidence and then in dismissing the entire case without so

much as a hearing.

            The court could not possibly have properly weighed the facts under any

standard of review absent an evidentiary hearing on Spain's motion. See

Fleischman v. Potts, 2006 WL 1737181, *1 (N.D. Fla. June 23, 2006) ("A district

 court may address its lack of subject matter jurisdiction in two ways: the court may

 find insufficient allegations in the pleading, viewing the alleged facts in the light

 most favorable to Plaintiff, similar to an evaluation pursuant to Rule 1 2(b)( 6), or,

 after an evidentiary hearing, the court may weigh the evidence in determining

 whether the facts support the jurisdictional allegations. (emphasis added)); Reiss v.

 Societe Centrale du Groupe des Assurances Nationales, 246 F. Supp. 2d 273, 277

 (S.D.N.Y. 2003) (evidentiary hearing is required when resolution of whether
 commercial-activity exception to FSIA immunity applies involves factual dispute);


                                                                        25
see also Chalwest (Holdings) Ltd. v. Ellis, 924 F.2d 1011, 1014 (lIth Cir. 1991)

("If the issue is contested and there is conflicting evidence, the court must either

deny the motion and postpone any further jurisdictional challenge until trial, or

hold a preliminary evidentiary hearing.").

      2. The District Court Erred Not Only in Resolving Disputed Factual
           Issues without a Hearing, but also in the Factual Findings
                 Themselves.

      It must be noted that Spain bears the burden of proving that the res at issue

here is its property. In this case, regardless of the possession issue, Spain did not

prove ownership of the res. Under FSIA section 1609, it is incumbent upon a

foreign sovereign to prove that it is, indeed, its property which is the subject of

"attachment arrest and execution" in "the United States." 28 U.S.C. § 1609. See

Honduras Aircraft Registry, Ltd. v. Government of Honduras, 129 F.3d 543, 550

(lIth Cir.1997); International Insurance Co. v. Caja Nacional de Ahorro y Seguro,

293 F.3d 392, 397 (7th Cir. 2002); Ministry of Defense and Support for Armed

Forces of Islamic Republic of Iran v. Cubic Defense Systems, Inc., 236 F.Supp. 2d

 1140, 1143 (S.D. CaL. 2002).

       Furthermore, it is not enough for a foreign sovereign to merely assert




 ownership.1O If the burden of proof were allocated otherwise, foreign sovereigns


 10
       See Hannes v. Kingdom of Roumania Monopolies Institute, 20 N.Y.S.2d

                                                                 26
would have an incentive to make spurious claims to property in order to seek the

FSIA's jurisdictional immunities.

          The district court below did not hold Spain to its burden but instead


erroneously accepted Spain's assertions as true and held, despite all evidence to the

contrary that, "the res is the Mercedes." Doc.209:12. The court's finding ignored

that no vessel was found at the site, and more importantly elided an important legal

distinction between the status of the vessel and the status of the cargo on that

vesseL. The district court may have held, at best for Spain, that the res (the coins)

came from The MERCEDES. Even that factual finding, however, was made by

the court based only on written pleadings and on presumptions which were simply

wrong. For example, the district court based its finding that the res came from The

MERCEDES substantially in part on one eannon found at the site. Spain's

"expert" opined, and the district court agreed, that a cannon with unique dolphin

handles, "makes identification certain." Doc.209: 10. This finding was clearly

erroneous. Odyssey produced evidence that a cannon almost identical, with the




 825, 836 (lst App. Div. 1940) ("While the declaration of
                                                                 the Minister of   Roumania
 that the property attached is held by the defendant for governmental use is
 undoubtedly entitled to great weight as a statement of the contentions made, we do
 not consider that such declaration is controlling or prevents this court from
 weighing the facts. . . .") (citing The NAVEMAR, 303 U.S. 68 (l938)).

                                                            27
same dolphin motif, was found on a British shipwreck in the English ChanneL.




Doc.l79:8; 179-3:1.




            The district court erroneously dismissed as "metaphysical" or "not
persuasive" the fact that only 17 or 18 cannon were found at the site, while The

MERCEDES was carrying between 33 and 50 cannon. Additionally, The

MERCEDES carried almost twice the cargo found at the subject site. Doc. 138-

31:26-28; 138-64:12-13; 138-62; 232-3; 232-6:15-16. The district court does not

undertake to explain where the other 15 - 33 cannon or 15 tons of coins may have

gone. The district court further erred in dismissing accounts of survivors of The

MERCEDES' demise which explained in detail land masses that were visible from

the location. It was undisputed that no land could be seen from the subject site.

            In fact, one of the district court's most significant errors was the failure to

meaningfully acknowledge any content from Odyssey's historical and

archaeological experts' declarations. An evidentiary hearing would have afforded

 Odyssey the opportunity to bring those to light, and at the very least, proved that

 the jurisdictional facts were so intertwined with the merits so as to warrant

jurisdiction and a trial of all claims. Odyssey, thus, respectfully requests this Court




 to remand the case for such a triaL.




                                                                       28
B. Since The Mercedes was Not on a Solely Military, Non-Commercial Voyage
           at the Time of its Sinking, it is Not Immunized under the FSIA or SMCA.

            1. The Commercial Activity of                            The MERCEDES was Undisputed.

            Spain's argument that the res belongs to Spain and is thus immune under the

FSIA is based entirely on the presumption that the recovered cargo originated from

The MERCEDES and that The MERCEDES was a sovereign immune vesseL.




Even if Spain could prove that the eargo originated from The MERCEDES,

however, The MERCEDES was absolutely not a sovereign immune vessel because

it was engaged in commercial activity. The distriet court's finding that "the

Mercedes clearly was not engaged in any commercial activity at the time of its

demise. . .." Doc.270:32 is perhaps its most clearly erroneous conclusion. This


finding was contradicted by undisputed evidence.

            At the time of its sinking, The MERCEDES was serving as a commercial

transport vessel for the Spanish Correos Maritimos (Maritime Cargo Service), and

was carrying goods for freight, and between 24 and 40 passengers for fares.

 Doc.l38-31:9,18-23(irir6,12&13); 138-64:7; 138-68; 179-2:5-6,8.                                See also

 Doc.l38-31:22-23; 138-53:2-3 (showing that The MERCEDES was carrying

 32,000 pesos on the account of the Correos Maritimos); 138-64:8,10-12; 138-68.


 Indeed, the gun-decks had been reconfigured to accommodate the paying

 passengers and commercial cargo. Doc. 138-31:20; 138-64:12-13; 163-9:37.


                                                                    29
      The cargo manifest for The MERCEDES, whieh was produced by Odyssey

but completely ignored by Spain and by the district court, as well as 173 extant

receipts showing freight charges paid (issued by a civilian silver master under the

auspices of the Customs authority), clearly indicate that at least 75% of the cargo

(measured by value) was privately owned and commercially shipped. Doc.138-

31:26-28; 138-64:12-13; 138-62; 232-3 (customs receipts showing freight charges

paid); 232-4 (original & translation of bills); 232-5 (contemporary manifest). In

both of her South American ports of call local officials advertised the sailing of the

vessels in order to solicit commercial cargoes. Doc. 179- 1: 1 3 (n.36). Furthermore,

private merchants, having placed cargo on The MERCEDES in Spanish American

ports, were charged freight at the rate of 1 % of the declared value of their

consignments. Doc.138-31:19-20; 138-62:10.


       Indeed, in the aftermath of the sinking of The MERCEDES, the Kingdom of

Spain went on diplomatic record to protest to the British government that The

MERCEDES was carrying private cargo and passengers, and, therefore, its

destruction was an unwarranted provocation. Doc.138-31:18; 138-46:6-7. In its

Declaration of War with Britain, Spain expressed outrage at the attack on The

MERCEDES as it was being used not as a warship, but to transport private cargo.

 Doc.l31-6:48. This contemporaneous declaration by Spain should have been



                                       30
given more credibility by the district court than its self-serving statement in this

case, over 200 years later, that The MERCEDES was a "warship."ll Moreover,

even Spain, in 1 802, realized that its naval ships sailing for the Correos Maritimos

were not entitled to the protections of                                sovereign immunity. Doc.138-31:21.




            The district court ignored all evidence of the commercial activity of The

MERCEDES, choosing instead to identify it as a Spanish "warship." The district

court erred in finding, however, that "It (The MERCEDESJ remains on the Royal

Navy's official registry of ships." Doc.209: 17. As Odyssey revealed to the court




below, this is simply false. The MERCEDES does not appear on official Spanish

naval registers published after i 804. The document earelessly purported by

 Spain's witness to represent the current "official register" is, in fact, nothing more




than an unattributed list of ships titled "Master List of Vessels, Working
 Document No.1 . . ." authored by some unknown party with no official

 designation, no reference to naval vessels, and no attribution whatsoever.




 Doc.13 1-3:37.




 11 Fed. R. Evid. 803(l) recognizes that a "statement describing or explaining
 an event or condition made while the declarant was perceiving the event or
 condition, or immediately thereafter" is admissible as an exeeption to the heresay
 rule; and 803(l6) provides that statements in ancient documents are likewise
  admissible, subject to authenticity. The Federal Rules of Evidence thus clearly
 recognize the inherent credibility of contemporaneous statements as evidence.

                                                                        31
      Spain was not at war when The MERCEDES sank. In fact, Odyssey

presented evidence showing that Spain went to great lengths to assure its neutrality

would be respected before allowing The MERCEDES to saiL. See Doc. 138-31:10-

12; 138-64: 15-1 7; 179-2:7-12. Regardless of whether Spain had a governmental

interest in the movement of specie from Peru to Spain, the key fact is that The

MERCEDES was very clearly and undisputed1y engaged in eommercial activity at

the time of its sinking. It was operating as a commercial transport vessel, not as a

warship. The district court's finding otherwise is erroneous.

      2. Under The FSIA and SMCA, Commercial Activities Defeat Immunity.


             (a) The FSIA expressly declines to extend foreign sovereign
                   immunities to a foreign government's commercial activities.

       "Under international law, states are not immune from the jurisdiction of

foreign courts insofar as their commercial activities are concerned. . . ." 28 U.S.C.

§ 1602. The FSIA defines "commercial activity" as "either a regular course of

commercial conduct or a particular commercial transaction or act. The commercial

character of an activity shall be determined by reference to the nature of the course

of conduct or particular transaction or act, rather than by reference to its purpose."

Id. § 1603(d).


       The Supreme Court has held that a state engages in commercial activity

 where it exercises "those 'powers that can also be exercised by private citizens',"

                                       32
as distinct from those "'powers peculiar to sovereigns'." Thus, a foreign state

engages in commercial activity under the FSIA where it acts "in the manner of a

private player within" the market. Republic of Argentina v. Weltover, Inc., 504


U.S. 607, 614 (l992) (quoting Alfred Dunhill of London, Inc. v. Republic of Cuba,


425 U.S. 682, 698 (l976). In Weltover, the Supreme Court concluded that

Argentina's conduct in the international bond market qualified as a "commercial

activity," and so Argentina was not entitled to foreign sovereign immunity under

the FSIA. See id. at 617. In so concluding, the Court noted that:




            (BJecause the Act provides that the commercial character of an act is
            to be determined by reference to its "nature" rather than its "purpose,"
            the question is not whether the foreign government is acting with a
            profit motive or instead with the aim of fulfilling uniquely sovereign
            objectives. Rather, the issue is whether the particular actions that the
            foreign state performs (whatever the motive behind them) are the type
            of actions by which a private party engages in "trade and traffic or
            commerce."

Id. at 614 (quoting FSIA section 1603(d), and BLACK'S LAW DICTIONARY 270 (6th

ed. 1990)) (original emphasis).

            The district court acknowledged that a foreign state is commercially engaged

 if it acts like an ordinary private person and not like a sovereign, Doc.209:28,

 citing Guevara v. Republic of Peru, 468 F.3d 1289, 1298 (lith Cir. 2006), but

 failed to acknowledge that the carriage of passengers and cargo by sea for fares

 and freight charges was the exact commercial activity being condueted by private

                                                                    33
vessels at the time. Doc.232-5. Such activity has been consistently characterized

as a commercial activity under the FSIA.12 Indeed, the advent in the early 1900's

of "State-owned commercial ships" was a major impetus for the United States to

adopt a "restrictive theory" of sovereign immunity in the 1952 Tate Letter, which

was codified in the FSIA. See Dunhill, 425 U.S. at 700 nA (quoting The

CRISTINA, 1938 App. Cas. 485, 521-522 (Eng.)), 711-13 (Appendix 2 to the

opinion of the Court reprinting Letter to the Attorney General from Jack B. Tate,

Acting Legal Adviser, Dept. of State, May 19, 1952).

           The FSIA's legislative history manifests this policy. See 1976 U.S.C.C.A.N.

at 6626 (the United States "reeognize(sJ the liability to execution under appropriate

circumstances of state-owned vessels used in commercial service."). Under FSIA

section 1 605(b), The MERCEDES' commercial activity defeats a claim for

sovereign immunity, and the district court's finding to the contrary was clearly

 erroneous.

                        (b) Denying Spain immunity with regards to the commercial
                                    activity of The MERCEDES would be completely consistent
                                    with international   law.



 12 See, e.g., Schoenberg v. Exportadora de Sal, S.A. de C. v., 930 F.2d 777, 780
 (9th Cir. 1991); Transamerican s.s. Corp. v. Somali Democratic Republic, 767
 F.2d 998, 1002 (D.C. Cir. 1985); Ministry of
                                                                Supply, Cairo v. Universe Tankships,
 Inc., 708 F.2d 80 (2d Cir. 1983); Amoco Overseas Oil Co. v. Compagnie Nationale
 Algerienne de Navigation, 605 F.2d 648, 654 (2d Cir. 1979).

                                                         34
             The FSIA expressly incorporates international law rules into its
determination of foreign sovereign immunities. See 28 U.S.C. §§ 1602 (" Under

international law, states are not immune from the jurisdietion of foreign courts

insofar as their commercial activities are concerned"); 1604 ("Subject to existing

international agreements to which the United States is a party at the time of


enactment of this Act a foreign state shall be immune from the jurisdiction of the

courts of       the United States. . . ."); (emphasis added); 1609.

             In the FSIA's legislative history, Congress made clear that two international

agreements were relevant to the immunities of foreign state-owned vessels: the

Brussels Convention for the Unification of Certain Rules relating to the Immunity

of State-Owned Vessels, Apr. 10, 1926, 196 L.N.T.S. 199; and the Geneva

Convention on the High Seas, Apr. 29, 1958, 13 U.S.T. 2312,450 U.N.T.S. 82.

See 1976 U.S.C.C.A.N. at 6626. The provisions of
                                                            both treaties provide that state-

owned vessels (including those nominally characterized as warships) are not

entitled to sovereign immunity if they are engaged in commercial activities,13 and


 l3 See Geneva Convention, supra, art. 9 ("Ships owned or operated by a State
 and used only on government non-commercial service shall, on the high seas, have
 complete immunity from the jurisdiction of any State other than the flag State.")
 (emphasis added); Brussels Convention, supra, art. 3(l) (no immunity unless
 "ships of        war (orJ vessels owned or operated by a State (areJ employed exclusively
 at the time when the cause of action arises on Government and non-commercial
 service") (emphasis added).

                                                   35
that private cargoes carried aboard those vessels are subject to maritime liens

(including for salvage ).14


            The MERCEDES, as a Spanish state-owned vessel, should be accorded the

same treatment as a similarly situated United States vessel - no more, no less.lS

The FSIA's legislative history makes clear that the immunities afforded to foreign

sovereigns under the Act should be consistent with those granted to the United

States. See 1976 U.S.C.C.A.N. at 6611-12,6619-20,6625. More specifieally, the

FSIA legislative history noted that "the United States follows a policy of not

claiming immunity for its publicly-owned merchant vessels, both domestically. . .

and abroad." Id. at 6626 (citing 46 U.S.C. §§ 742, 747, 781, former codifications

of the Public Vessels Act). Under the Publie Vessels Act (PV A), 46 U.S.C. §


31101 et seq., a U.S. vessel similarly situated to The MERCEDES would not be

immune from a salvage proceeding such as this.

14 See Brussels Convention, supra, art. 1 ("Sea-going ships owned or operated
by States, cargoes owned by them, and cargoes and passengers carried on State-
owned ships, as well as the States which own or operate such ships and own such
cargoes shall be subject, . . . to the same rules of liability and the same obligations
as those applicable in the case of privately owned ships, cargoes and equipment.");
art.   3.
 15 That is precisely the command of Article X of the 1902 Friendship Treaty
between Spain and the United States, relied upon by the district court. Doc.270:29
(citing Treaty of Friendship and General Relations, U.S.-Sp., July 3, 1902, art. X,
33 Stat. 2105 ("In cases of shipwreck. . . each party shall afford to these vessels of
 the other . . . the same immunities which have been granted to its own vessels in
 similar cases.").

                                         36
           Indeed, the stated position of the United States - at least prior to this

litigation - was that foreign state-owned vessels (even those characterized by a

foreign sovereign as "warships") were not to be afforded sovereign immunity if

they were engaged in commercial activities. See Immunity of Uruguayan Oil




Tanker Presidente Rivera, DIGEST OF U.S. PRACTICE IN INTERNATIONAL LAW


(1989-90), at 3, available at http://www.state.gov/documents/organization/




28486.pdf(July 13,1989) (Uruguayan naval vessel engaged in transport of
                                                                               fuel oil

for freight, thus "The Presidente Rivera is properly characterized, at the time of its

grounding, as a government ship operated for commercial purposes and engaged in

commercial activity, and not as a warship . . .. Only warships and other

government ships operated for non-commercial purposes not engaged in

 commercial activity are entitled to sovereign immunity.").

             Odyssey's submission here - that a "warship" is not entitled to sovereign

 immunity if it is engaged in commercial activities - is the offieial position of the

 U.S. Navy. See U.S. Dep't of Navy, OPNAV Instruction 3128.10G (2008)

 ("foreign naval vessel" means "(a Jny ship belonging to the armed forces of a

 foreign state, bearing the external marks distinguishing warships of its nationality,

 under the command of an officer duly commissioned by the government of the

  State and whose name appears in the appropriate service list or its equivalent, and


                                                                          37
manned by a crew which is under regular armed forces discipline, and engaged

solely in government service, not carrying commercial cargo or passengers for

hire.") (emphasis added).

      It would thus be no violation of international law, or existing U.S. policy, to

deny Spain immunity with regards to The MERCEDES' commercial activities.

             ( c) The SMCA likewise denies Spain immunity.
      If there were any doubt that under the FSIA or international law Spain is not

entitled to immunity here, such is laid to rest by the clear provisions of the Sunken

Military Craft Act, legislated by Congress in 2004. SMCA section 1408(3)(A)

defines a "sunken military craft," subject to the protections of the Act as "any

sunken warship, naval auxiliary, or other vessel that was owned or operated by a

government on military noncommercial service when it sank." 10 U.S.C. § 113


note (emphasis added).16 The logic and grammar of SMCA section 1408(3),

clearly indicate that the qualifying phrase "owned or operated by a government on

military noncommercial service when it sank," was meant to qualify the status of

"warships," "naval auxiliaries" and "other vessels."


16 The manifest congressional intent of the SMCA was "to protect sunken
United States military vessels, aircraft and spacecraft." Ronald W Reagan
National Defense Authorization Act for Fiscal Year 2005, H.R. Rep. 108-491,
2004 U.S.C.C.A.N. at 359; H.R. Conf. Rep. 108-767,2004 U.S.C.C.A.N. at 2139.


                                       38
              The SMCA's provisions are thus consistent with the FSIA and background

rules of international law (expressly incorporated by FSIA sections 1602, 1604 and

1609): in order for a foreign warship to be accorded immunities in U.S. courts it

must not have been engaged in commercial activities. The vast weight of the

record evidence before the district court, see supra § ILB, indicated that The

MERCEDES was engaged in the commercial carriage of goods and passengers at

the time of       its sinking. The district court's statement that The MERCEDES was on

an official mission at the time of its sinking because "Spain needed all its resources

for these tumultuous times; accordingly, it dispatched frigates to collect 'specie

and precious produce' from its American Viceroyalties," Doc.209:6, cannot be

considered a judicial ground for holding that its mission was anything other than

commerciaL. It also erroneously relies upon an interpretation of the "purpose" of

the voyage rather than on the undisputed commercial nature of the voyage. This

position would cloak with immunity commereial transport of private property and

the promotion of trade, so long as such had an incidental benefit for a national

 economy. Such a "mercantilist" justification for foreign sovereign immunity was

 specifically rejected when the United States adopted the restrictive theory of

 foreign sovereign immunity with the 1952 Tate Letter. See 28 U.S.C. § 1603(d)

 ("nature," not "purpose," of commercial act is decisive); Dunhill, 425 U.S. at 711-


                                           39
13 ("the immunity of the sovereign is recognized with regard to sovereign or

public acts (jure imperii) of a state, but not with respect to private acts (jure


gestionis)"); Republic of Austria v. Altmann, 541 U.S. 677, 689-90 (2004). Under

the SMCA, it was manifestly erroneous for the district court to ignore the

commercial activity of The MERCEDES and declare it to be sovereign immune.

Thus, Odyssey respectfully requests this Court to reverse the district court's order

dismissing the case and remand the case with an instruction that foreign vessels

engaged in commercial activity are not immune from the jurisdiction of the U.S.

courts.

III. THE DISTRICT COURT ERRED IN DISMISSING THIS IN REM
           ADMIRALTY PROCEEDING FOR LACK OF SUBJECT MATTER
           JURISDICTION WHERE THE MAJORITY OF THE RES WAS
           PRIVATELY OWNED CARGO AND WHERE SPAIN DID NOT
           PROVE OWNERSHIP OF ANY OF IT.

A. Spain Cannot Bootstrap its Ownership of The Mercedes in Order to Assert
           that Private Cargo is also its Property.

            1. The Majority of                        The MERCEDES Cargo was Private Property.

           Finding, erroneously, that The MERCEDES was not involved in commercial

activity, the district court found that the "vessel's cargo. . . (is theJ natural and

legal patrimony of Spain." Doc.270:4. Irrespective of the standard of appellate

review applied here, this finding was factually and legally erroneous and very




clearly in contradiction of the weight of the record evidence.

                                                                      40
           It is by no means clear that Spain, in its verified claim filed before the

district court, ever asserted ownership over the private cargo aboard The

MERCEDES. See Doc.13:1 (claiming "cargo or other property of         the Kingdom of

Spain on or in sunken vessels"). Nowhere in its filings did Spain produce any

evidence whatsoever showing that it had become the owner (whether by

subrogation, espousal, or otherwise) of what was once private cargo aboard The

MERCEDES. The district court specifically declined to make such a finding,

Doc.270:26, preferring, instead, to automatically assimilate all private cargo on

The MERCEDES as Spanish "natural and legal patrimony." Doc.270:4.

            The record evidence provided by Odyssey, as well as by over twenty


descendant claimants, Doc.164, 168, 169 & 176, proved that the vast majority of

the cargo carried aboard The MERCEDES, when it sank in 1804, was privately

owned. See Doc.1 38- 31 : 19. This evidence is derived from uncontradicted

material from Spain's own archives and official documents. By the Spanish

government's own contemporaneous estimate (in diplomatic correspondence with

the British government in 1804 and 1805), over 75% of the cargo on The

MERCEDES was privately held. Doc.138-31:19; 138-46:4-7. As noted, the cargo

 manifest for The MERCEDES lists 173 receipts identifying the owners of the

 cargo and showing the freight charges paid. These receipts clearly indicate that at


                                                               41
least 75% of        the cargo (measured by value) was privately owned and commercially

shipped. Doc.138-31 :26-28; 138-64: 12-13; 138-62; 232-5. Failing to address the

manifest, and completely missing the descendants relationship to the property at

issue, the district court erroneously identified the descendants claiming ownership

here as "descendants of those aboard The MERCEDES." Doc.270:8. The district

court's failure to acknowledge the manifest and the property interests of
descendant claimants was clearly erroneous.

               If evidence contemporaneous with The MERCEDES' loss was not enough

to persuade, Spanish official documents prepared just before it instituted its claim

in this litigation reveal that the vast majority of the cargo carried in the fleet of The

MERCEDES was not for the account of the Spanish government. See Doc.232-

6:10&16 (2006 document prepared by the Spanish Guardia Civil showing that

over 70% of The MERCEDES' cargo was "treasures and goods of private

 interests.").

               Spain did not prove below that it owned the cargo which is the res in this

 case. Instead, it made a general reference to its "natural and legal patrimony" and

 "patrimonial interests," Doc.270:4,19, however those are defined. Legally,

 however, Spain's interest in The MERCEDES is analytieally distinguished from




                                             42
the private cargo which was placed aboard that vessel, and the distriet court's

failure to make that distinction was clearly erroneous.

      2. Vessel and Cargo Interests have been Consistently Distinguished in
             the FSIA, SMCA, and General Maritime Law.

      The FSIA itself draws a distinction between vessel and cargo interests, albeit

in a provision that the district court declined to regard as relevant. FSIA section

1 605(b) provides that: "A foreign state shall not be immune from the jurisdiction

of the courts of the United States in any case in which a suit in admiralty is brought

to enforce a maritime lien against a vessel or cargo of the foreign state. . .." 28


U.S.C. § 1605(b) (emphasis added).17 Obviously, if Congress had believed, in

drafting the FSIA, that all cargo aboard a state-owned vessel would be considered

state property, there would have been no need to distinguish the two interests. See

id. § 1605(b)(2) (determining "the existence of the foreign state's interest" in

"vessel or cargo").

       Likewise, the Sunken Military Craft Act, Pub.L. 108-375, Div. A, Title xiv,


§§ 1401-1408, 118 Stat. 2094 (2004), codified at 10 U.S.C. § 113 note, draws a

distinction between vessel and cargo interests. Under the SMCA, "associated

17 See also the balance of 28 U.S.C. § 1605(b), which draws a distinction
between vessel and cargo interests, no less than four times. See also 28 U.S.C. §
 1391(f)(2) ("A civil action against a foreign state. . . may be brought. . . (2) in any
judicial district in which the vessel or cargo of a foreign state is situated, if the
claim is asserted under section 1 605(b) of this title") (emphasis added).

                                        43
contents" of a shipwreck (including cargo) are only included within the ambit of

"sunken military craft," "if title thereto has not been abandoned or transferred by

the government concerned." Id. § 1408(3)(C) (emphasis added). Congress's

conditionality (the word "if') is significant here, and indicates that title of cargo

aboard a state-owned ship must rest with the state to be assimilated to the vesseL.




Private property situated aboard a military craft does not, under the SMCA,

become state property when that ship sinks.

            The FSIA and SMCA provisions are consistent with general maritime law's

long-standing distinction between vessel and cargo interests, as recognized by the

Supreme Court and this Court in related sovereign immunity contexts. As early as

1822, the Supreme Court held that a foreign sovereign's assertion of immunity of a

public vessel does not extend to private cargo, such as to oust the jurisdiction of

U.S. courts sitting in admiralty. The SANTISSIMA TRINIDAD, 20 U.S. (7 Wheat.)

283, 254 (l822) ("whatever may be the exemption of the public ship herself, and.

of her armament and munitions of war, the prize property which she brings into our

ports is liable to the jurisdiction of our Courts"). See also Borgships Inc. v. MIV

MACARENA, 1993 WL 408342, at *3 (E.D. La. Oct. 4, 1993) ("(FSIAJ Section

 1 609 affords immunity from prejudgment attachment only to the property of a

 foreign state and claimants have failed to provide any authority for the proposition


                                                                       44
that property not belonging to a foreign state but carried aboard a vessel belonging

to a foreign state is immune from seizure.").

           In the specific context of salvage, U.S. admiralty courts have consistently


held that a salvor's interests in recovered cargo are analytically distinct from

salvage services offered to the vesseL. See The ST. PAUL, 86 F. 340, 341 (2d Cir.




1898) (separate salvage awards for cargo and hull); Martin J. Norris, The Law of

Salvage, 3A BENEDICT ON ADMIRALTY §27 (2009). This rule has been applied as

well to salvage of sunken shipwrecks. See, e.g., R.M.S. Titanic, Inc. v. Haver, 171

F.3d 943, 964 (4th Cir. 1999) ("to exercise in rem jurisdiction over a ship or its

cargo, the ship or cargo must be within the district in which the in rem complaint is

filed."); R.MS. Titanic, Inc. v. Unidentified, Wrecked Vessel, 531 F. Supp. 2d 691,

692-93 (E.D. Va. 2007) (separating cargo interests); Columbus-America Discovery




Group v. Atlantic Mut. Ins. Co., 974 F.2d 450, 467-68 (4th Cir. 1992) (salvage

award calculated for various parcels of eargo); Bemis v. RMS LUSITANIA, 88 F.

Supp. 2d 1042, 1047-48, 1053-54 (E.D. Va. 1995) (right to salvage hull did not

include cargo). As Chief Justice Marshall ruled in The NEREIDE, 13 U.S. 388,

431 (l815), "(tJhe characters of                             the vessel and cargo remain as distinct in this as in

 any other case."




                                                                       45
      Indeed, this Court recently acknowledged that a sovereign could refuse

salvage services only for its own property aboard a sunken craft. International

Aircraft Recovery, L.L.c. v. Unidentified, Wrecked and Abandoned Aircraft, 218

F.3d 1255, 1262 (lIth Cir. 2000) ("the owner of a vessel in marine peril (mayJ


decline the assistance of others so long as only the owner's property interests are

at stake.") (emphasis added). Apparent in this statement is the judicial recognition

that a sunken craft might represent a multitude of interests (the hull and various

consignments of cargo), and that a sovereign owner of the craft (the United States

in that case) cannot purport also to assert ownership over private cargo carried

aboard, thus refusing salvage for that private cargo. Likewise, ownership by the

foreign sovereign of a sunken craft does not cloak the private cargo aboard with

immunity from the jurisdiction of U.S. admiralty courts to adjudicate maritime

claims and liens to that private property.

B. Adjudicating the Interests of Owners of Private Cargo on The MERCEDES
      does not affect Spain's Legitimate Sovereign Interests.

      The district court, relying on Republic of Philippines v. Pimentel, 128 S. Ct.




2180 (2008), held that adjudication of the rights of private claimants would


"necessarily implicate Spain's rights to the property" and "would frustrate the

FSIA's goals and impermissibly prejudice Spain." Doc.270:27. The district

court's legal analysis is profoundly flawed.

                                                                46
          Importantly, and às already briefed, see supra § II.A.2, it is Spain that bears

the burden of proving that the property at issue here is its property. It should also

be recalled it was Spain that filed a verified claim in this proceeding. Doc.13.

Spain is hardly an "absent sovereign" in these proceedings, whose interests might

be "injur( edJ" or "substantially prejudice( dJ," as the Supreme Court was concerned

with in Pimentel. See 128 S. Ct. at 2184, 2189, 2191-92.18 According to

Supplemental Admiralty Rule C, "a person who asserts a right of possession or any

ownership interest in the property that is the subject of the action must file a

verified statement of right or interest" and that "statement of right or interest must

describe the interest in the property that supports the person's demand for its

restitution or right to defend the action." FRCP Supp. Adm. R. C(6)(a)(i) & (ii).

Nowhere in Spain's verified claim did it purport to assert ownership over cargo

that was privately shipped or consigned on The MERCEDES. Doc.13:1 (Spain

asserting rights "in eargo or other property of The Kingdom of Spain on or in its

sunken vessels") (emphasis added). It can hardly be deemed prejudicial to Spain

to hold it to the proofs of its own claim.



18 Pimentel concerned an FRCP 19 joinder in an interpleader proceeding
concerning in personam creditor claims to funds situated in a U.S. bank. See 128
S. Ct. at 1284. The Philippines had been originally sued as a defendant, but that
was properly dismissed because of foreign sovereign immunity. Id. at 1286.

                                           47
           The logical consequence of                           the district court's ruling would be that a foreign

sovereign could insert itself into any in rem, collective proceeding in a U.S. federal

court (whether in admiralty, forfeiture or bankruptcy), file a claim, and then assert




that any adjudication would prejudice its interests and that, therefore, the

proceeding should be terminated for lack of subject-matter jurisdietion. The

Supreme Court certainly did not countenance such a result in its Pimentel opinion.

The Court was careful, for example, to indicate that a foreign sovereign's assertion

ofa claim cannot be "frivolous." 128 S. Ct. at 1291. Spain will obviously assert in

this appeal that its claim of current ownership over private cargo that was shipped

on The MERCEDES is not "frivolous." But nowhere in its filings, and more

importantly, nowhere in the district court's ruling is there a finding of
                                                                                                       how exactly

Spain came to acquire title to this private cargo, other than through a blanket

assertion that it is Spain's "natural and legal patrimony." Doc.207:4.19

            Even more fundamentally, principles of international "comity" - which

significantly motivated the Supreme Court in Pimintel, see 128 S. Ct. at 2190 -

 19 The only possible ground that Spain could assert is that it aequired rights to
private cargo shipped on The MERCEDES via subrogation when it allegedly
 "offered to compensate those who suffered losses." Doc.270:26. But the district
 eourt did not embrace that theory, id., and for good reason: there was no evidence
 presented that Spain ever actually paid such an indemnity, which is the requisite
 for a subrogation right. See Doc.1 79-2: 14- 1 6. See also Columbus-America
 Discovery Group v. Atlantic Mut. Ins. Co., 56 F.3d at 575-76 (4th Cir. 1995)
 (requiring strong evidence for a subrogation claim).
                                                                       48
would not be offended here in adjudicating the interests in private cargo aboard

The MERCEDES. This is not an instance, as in Pimentel, where there are parallel

proceedings in a foreign court to settle the same matters at issue, and so there is no

risk of "piecemeal litigation and inconsistent, conflicting judgments." 128 S. Ct. at

2193. As already observed, see supra Statement of Jurisdiction at A., United

States courts have routinely adjudieated the rights and interests of the world in in

rem proceedings concerning high seas salvage, consistent with comity and

international law. See Treasure Salvors, Inc. v. The Unidentified Wrecked &

Abandoned Sailing Vessel, 640 F.2d 560, 567 (5th Cir. 1981) and R.M.S. Titanic,

171 F.3d at 966-67.

       In short, nothing prevents a federal admiralty court from adjudicating


maritime claims involving private cargo even if it had been carried on a state-

owned vesseL. Segregation of eargo and hull interests, as well as sovereign and

private consignments, is recognized under the FSIA, SMCA, and general

international maritime law. Given Spain's posture in this case as a claimant in an

in rem proceeding, no "impermissibl( e J prejudice" should accrue to Spain.

C. Even if Part of the Res is Determined to be Spanish State Property, the Case
       Can Proceed under FSIA Section 1605(b).

       Odyssey acknowledges that while the overwhelming bulk of the res at issue

in this case is private property, there is evidence which suggests that a portion of

                                       49
the recovered cargo may have been Spanish state-owned property at the time of the

sinking. Odyssey's position (assuming the site could be identified as being related

to The MERCEDES, see Doc.64, 65), was that Spain may be entitled to possession

of the ratable share of any cargo it could prove to the Court's satisfaction was


state-owned property in 1804, free-and-clear of any maritime lien by Odyssey, and

that the title to cargo has continued to rest with Spain. Doc. 1 87.

       Because the site was unidentified and there was no "person, or his agent,

having possession of the vessel or cargo against which the maritime lien is

asserted," (28 U.S.C. § 1605(b)(l)), at the time Odyssey discovered the site and the

res, Odyssey was precluded from initiating the in personam meehanism under

FSIA section 1605(b). Fortunately, in legislating that section (and through

subsequent amendments to that provision), Congress contemplated the situation in

which an in rem arrest was brought against a vessel or cargo, not within the actual

possession of a foreign sovereign (or its agent), but for which a claim may later be

filed.20



20 See Foreign Sovereign Immunities, H.R. No. 94-1487, 94th Cong., 2d Sess.,

at 22 (l976), reprinted in 1976 U.S.C.C.A.N. 6604, 6620 ("in the case where the
plaintiff was unaware that the vessel or cargo of a foreign state was involved. This
would be . . . rare . . . because the flag of the vessel, the circumstances giving rise
to the maritime lien, or the information contained in ship registries kept in ports
throughout the United States should make known the ownership of the vessel in
question, if not the eargo.").

                                        50
           FSIA section 1 605(b) provides:

           if the vessel or cargo is arrested pursuant to process obtained on
           behalf of the party bringing the suit, the service of process of arrest
           shall be deemed to constitute valid delivery of such notice, but the
           party bringing the suit shall be liable for any damages sustained by the
           foreign state as a result of the arrest if the party bringing the suit had
           actual or constructive knowledge that the vessel or cargo of a foreign
            state was involved.

28 U.S.C. § 1 605(b )(2).i1 In legislating this provision, Congress made clear that a

plaintiff seeking to enforce a maritime lien by bringing an in rem arrest against

property that was later found to be owned by a foreign state, could proceed under

FSIA section 1 605(b). In explaining this provision, the legislative history




indicates:

            If the vessel of a foreign state is wrongly detained under the
            traditional in rem procedure (which remains the legal procedure
            except when the ship is owned by a foreign state), (former J section
            1 605(b) provides that the arresting party loses the entire claim against
            the foreign state under the F.S.I.A. in personam procedure.

            H.R. 1 149 would substitute the award of damages for losses resulting
            from the wrongful arrest of a vessel owned by a foreign state, instead
            of barring the entire claim, and would allow the claim to proceed
            under in personam jurisdiction pursuant to the F.S.I.A. H.R. 1149
            makes it clear that a case brought under section 1 605(b) to enforce a
            maritime lien will proceed under the established maritime law
            principles of in rem suits, even though it is a suit in personam.

21 The district court, in discussing the 1976 legislative history of section
1 605(b), see Doc.270:27,3 1 -32, apparently did not realize that the language of
 1605(b) was amended by Congress in 1988. See Pub.L. 100-640, § 1, 102 Stat.


3333 (l988).

                                                                       51
Admiralty Suits Against Foreign States, H.R. Rep. 100-823, 100th Cong., 2d Sess.,

at 2 (l988), reprinted at 1988 U.S.C.C.A.N. 4511,4512.

          The district court's analysis of 1605(b) was flawed. Erroneously, the court




referred to the 1976 legislative history of FSIA § 1605(b), Doc.270:27, 31-32, in

observing that that section allows only in personam suits in admiralty. The district

court failed to recognize that the section was amended in 1988 removing the

reference to in personam action in 1 605(b).

           The only remaining reference to "in personam" in FSIA § 1 605(b )&( c), is

"Nothing shall preclude the plaintiff in any proper case from seeking relief in

personam in the same action brought to enforce a maritime lien as provided in this

section." FSIA § 1605(c). This clearly implies that a proper case under FSIA §

1 605(b) is not necessarily an in personam action. In fact, many courts have

accepted subject matter jurisdiction in an in rem admiralty procedure where a

sovereign appears following the arrest. See, e.g., Velidor v. LIPIG BENGHAZI,

653 F.2d 812, 815 (3d Cir. 1981) (proceeded in personam); Entron Ltd. v. Crane

Vessel TITAN, 1996 A.M.C. 1463 (W.D. La. 1995), aftd, 70 F.3d 1269 (5th Cir.




1995) (proceeded in rem).

           Section 1605(b) of                  the FSIA speeifically applies "in any case in which a suit

in admiralty is brought to enforce a maritime lien against a vessel or cargo of the

                                                                      52
foreign state, which maritime lien is based upon a commercial activity of the

foreign state." As this Court noted in United States v. Crape, 2010 U.S. App.

LEXIS 8212, No. 09-12470 (lIth Cir. Fla. Apr. 21, 2010), "'Where a statute

specifically addresses the particular issue at hand, it is that authority, . . ., that is

controlling.' Pa. Bureau of Corr. v. U.S. Marshals Serv., 474 U.S. 34, 43, 106 S.

Ct. 355, 88 L. Ed. 2d 189 (l985); see also Morales v. TWA, 504 U.S. 374, 384,

112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992) ('(IJt is a commonplace of statutory




construction that the specific governs the general. . . . ')."

           Odyssey's salvage claim falls squarely within the 1605(b) criterion. A lien

for salvage is a preferred maritime lien under 46 U.S.C. § 31301(5)(F), and the

district court correctly acknowledged that "salvage gives rise to a lien."

Doc.270:31-32(n.22). Odyssey's lien, moreover, flows directly from the

commercial activity of the salvaged vessel (arising from that vessel's carriage of

valuable commercial cargo for freight charges). In eontrast to FSIA sections

1605(a) and 1610(a) (erroneously cited by the district court), section 1605(b) does

not require that the foreign state's eommercial activity take plaee in the United

States, and there need be no commercial relationship between the salvor and the

owner of the salvaged vesseL. Instead, consistent with longstanding prineiples of

sovereign immunity law, section 1605(b) only requires that the underlying lien


                                                                       53
anses from a commercial, as compared to a non-commercial and therefore

immune, activity of a foreign state. See China National Chemical Import & Export

Corp. v. MIV LA       GO HUALAlHUE, 504 F. Supp. 684 (D. Md 1981) (agreeing that

"Congress did not intend to limit § 1 605(b) to eases where there is a commereial

relationship between the injured party and the foreign state; rather, . . . Congress

intended to allow plaintiffs . . . to bring an action under § 1 605(b) where the

alleged maritime tort lien arises out of a commercial activity of a foreign state; . .

."). Thus, even assuming the recovered cargo is that of a foreign state, section
1 605(b) clearly applies, and there is no immunity here from the jurisdiction of the

courts of the United States. Odyssey, therefore, requests this Court to reverse the

district court's order dismissing the case and remand the case for proper

adjudication of all claims.

iv. THE DISTRICT COURT ERRED IN HOLDING THAT IT LACKED
            SUBJECT MATTER JURISDICTION OVER SALVAGED
            PROPERTY, AND AT THE SAME TIME, ORDERING TRANSFER
            OF THAT PROPERTY TO A FOREIGN SOVEREIGN THAT WAS
            NOT IN POSSESSION OF IT AT THE TIME OF SALVAGE AND
            ARREST.

A. The District Court's Order is Manifestly Contradictory.

            The district court ruled that it lacked subject matter jurisdiction and that the

warrant of arrest be vacated, yet ordered "the substitute custodian, Odyssey, . . . to

return the res to Spain. . . ." Doc.270:5. It is uncontradicted that the res was not



                                            54
in the possession of Spain (or its agents) at the time of Odyssey's discovery of the

site and the recovery operations. Doc.1:2-4,6-7(irir2,6,8,17,21). It was Odyssey

that brought the res within the jurisdiction of the district court from the floor of the

Atlantic Ocean. Doc.1 :2(ir4); Doc.5 (order for issuance of arrest warrant); Doc.8

(order appointing Odyssey substitute custodian of
                                                                                     the res).

           The district court cannot both hold that it lacks jurisdiction over the res

(granting a dismissal under FRCP 1 2(b)(l)), and then order the "return" of the res

to Spain when Spain was not in possession of the res at the time of its arrest. It




would be one thing, of course, if Spain's (or its agent's) possession of the res had

been ousted by Odyssey's filing of an arrest/2 but that was manifestly not the case

here. The district court's order to "return the res to Spain," Doc.270:5, acted as a

substantive ruling on the merits, resolving all parties' interests in the cargo, which

is something the district court cannot purport to do if it lacked subject matter

jurisdiction. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94

(1998); Ex parte McCardle, 74 U.S. (7 WalL.) 506, 514 (l868) ("Without

jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to

declare the law, and when it ceases to exist, the only function remaining to the

22 Indeed, it is precisely such a scenario - where the possession of property by
a foreign sovereign (or its agent) is disrupted by an attaehment or arrest - that
motivated Congress in legislating FSIA sections 1605 and 1609. See 1976
U.S.C.C.A.N. at 6619,6626.

                                                                       55
court is that of announcing the fact and dismissing the cause."); University of South

Alabama v. American Tobacco Co., 168 F.3d 405, 410 (1 Ith Cir. 1999) ("Simply

put, once a federal court determines that it is without subject matter jurisdiction,

the court is powerless to continue.") (citing Steel Co. and McCardle).

B. The Proper Disposition of the Case, if Subject Matter Jurisdiction is Absent,
            is to Return the Parties Status Quo Ante the Admiralty Arrest.

            If the district court truly believed that it lacked subject matter jurisdiction

over Odyssey's in rem admiralty complaint, and the admiralty arrest was to be

vacated, then the proper course would have been to return the parties to their

position just prior to the arrest being instituted. That would mean that the res

would be returned to the party that had possession of tt and had brought it into the

jurisdiction of            the court. That party was Odyssey, not Spain.23


            This is the only possible result countenanced by the FRCP's Supplemental

Admiralty Rules. See FRCP Supp. Adm. R. E(5)(e) (res is "released" "upon the

dismissal or discontinuance of the aetion"); see also M.D. Fla. Local Adm. R.

7.05(i)(3) (where action is "dismiss(edJ or discontinu(edJ"). Nothing in the

Federal Rules grants a district court, in cases where there is no subject matter

jurisdiction, the power to transfer possession of a res to any party other than the

23 Spain would hardly be without a remedy in such a situation. It could
institute a replevin action as a plaintiff, and in such a proceeding its rights, as well


as the interests of the descendant claimants and Odyssey, could be adjudicated.

                                                                      56
one that had actual possession of it at the moment of arrest. See United States v.

Alcon Laboratories, 636 F.2d 876, 883 (lst Cir. 1981). To grant such authority

would permit federal courts to substantively exercise jurisdiction, where none

ostensibly exists. Here, it would mean that under the guise of denying jurisdiction,

Spain has been awarded valuable property which was not its own without

satisfying the interests of the descendant claimants or Odyssey's maritime salvage

lien.

C. Fairness and Equity Should Prevail.


           It bears reminding that admiralty courts administer equity. See Hartford

Accident & Indemnity Co. of Hartford v. Southern Pacific Co., 273 U.S. 207, 214

(l927). For the district court to order the surrender of
                                                                            the res to Spain when Spain

never owned the vast majority of it, and possessed none of it at the time of arrest -

especially when it was Odyssey which expended the resources and in good faith

followed all applicable laws in submitting the res to the jurisdiction of                   U.S. courts


- would be fundamentally unfair.

            If the district court's ruling stands, admiralty jurisdiction of the U.S. courts

over shipwreck disputes, which has been a consistent feature of admiralty

jurisprudence, will be irredeemably subverted. No salvor will avail itself of the

process for fear of losing all rights after only a perfunctory "jurisdictional" ruling


                                                                      57
by a district court. From an archaeological and historical standpoint, shipwrecks


will no longer be properly documented, recovered and conserved. Potential

owners will neither receive notice nor an opportunity to have their claims


adjudicated, and there will be no forum in which merits rulings on the status and

disposition of property lost at sea can be obtained. At stake in this appeal is

nothing less than preserving the integrity of a forum for resolution of shipwreck

disputes; otherwise, this historic resource may be forever lost.




                                                                   58
v. CONCLUSION.

              Odyssey respectfully requests this Court to:

              (1) reverse the order dismissing the case; and


              (2) remand the case to the district court for a trial on the merits and proper

                    adjudication of all claims to the Defendant res.

              Odyssey further respectfully requests instruction upon remand to the district

court that:




              (1) foreign owned vessels engaged in commercial activity are not immune

                    from the jurisdiction of   the U.S. federal courts; and

              (2) under U.S. admiralty law a vessel can be separated from cargo, and


                    the cargo separated among itself for adjudication of ownership and

                    salvage claims.

              If this Court upholds dismissal of the case based on a lack of jurisdiction

over the res, Odyssey respectfully requests this Court to:

              (1) reverse the district court's order for Odyssey to transfer the recovered


                    cargo to Spain; and

              (2) order release of the res to Odyssey which originally found it and


                    brought it into the jurisdiction of the court.




                                                59
                         Respeetfully submitted,




                     l
                         Melinda J. MaeConne1, Esq.
                         ODYSSEY MARINE EXPLORATION, INC.
                         5215 West Laurel Street
                         Tampa, Florida 33607

                         CarL. R. Nelson, Esq.
                         FOWLER WHITE BOGGS, P.A.
                         P.O. Box 1438
                         Tampa, Florida 33601

                         Counsel for Appellant,
                         Odyssey Marine Exploration, Inc.

Submitted: May 10,2010




                               60
             FRAP 32(A)(7) CERTIFICATE OF COMPLIANCE


      The applieable portions of this brief are proportionately spaced, has a
typeface of 14 points or more, and eontains 13,822 words, and were otherwise
prepared in complianee with 11th Cir. R. 32-4.




                                             Counsel of Record for Appellant

May 10,2010




                                      61
                                              CERTIFICATE OF SERVICE

           I HEREBY CERTIFY that on May 10,2010, a true and correct copy of         this

document has been served by U.S. Mail to those on the attached Service List.




                                                           ~~N~~




                                                                               62
                                 lO-10269-J
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                                   63

								
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