February 3, 2009 3:44 PM

Yo Ho! New Shipwreck Find Raises Legal Questions From the Muck

Posted by Brian Baxter

UPDATE: Odyssey general counsel Melinda MacConnel told us that the company has "agreements in writing" with the British government to salvage shipwrecks like the Sussex and hopes to do the same with the Victory. MacConnel said Odyssey has always had a good working relationship with U.K. authorities and wishes the Spanish government shared the same sentiments.

An American salvage company revealed on Monday that it had discovered the remains of a famous British warship at the bottom of the English Channel, more than 50 miles from where it was thought to have foundered during a violent storm in 1744.

The BBC reports that the HMS Victory sank with more than 1,100 seamen aboard, including Admiral Sir John Balchen, just off the Channel Islands. Numerous previous attempts by salvagers to locate the vessel have proven unsuccessful.

The cargo aboard the Victory--thought to include 110 bronze cannons and some 100,000 gold coins--could be worth more than $1 billion.

It's the latest high-profile shipwreck uncovered by Tampa-based Odyssey Marine Exploration, which has made a business of profiting from undersea salvage operations of wrecks loaded with precious cargo.

But the litigation arising from those discoveries has salvagers of sunken artifacts and maritime archeologists trading enough accusations to make Blackbeard blush.

The American Lawyer has previously reported on litigation between Odyssey and the Spanish government over the company's attempts to recover riches from centuries-old Spanish galleons. (Spanish authorities even seized an Odyssey salvage ship operating out of Gibraltar as part of an investigation into whether the company was in violation of Spanish heritage laws.)

Odyssey's general counsel, Melinda MacConnel, did not respond to a phone call or e-mail request for comment on the company's reported negotiations with the British government over the Victory discovery.

The company did issue a 46-page report detailing its Victory salvage operation, but only gave an approximation of the shipwreck's actual location, which Odyssey says is in international waters.

Lawyers such as Covington & Burling's James Goold say that sovereigns must act to secure their interests whenever a shipwreck salvager like Odyssey makes a discovery.

"Odyssey is saying they're in negotiations, but the British government is saying this is a sovereign and immune vessel and that nothing can be done to disturb it without their permission," says Goold, who is representing the Spanish government in several disputes with Odyssey in U.S. district court in Tampa. (Goold says he has not been asked to advise the British government.)

As a military vessel, Goold says, the Victory remains the property of the Royal Navy, calling it a "protected ship." He's filed similar motions in U.S. courts on behalf of the Spanish government, claiming that any treasure taken by Odyssey was wrongful and must be returned to Spain.

"No U.S. court can take any jurisdiction over a Spanish Navy ship or award any interest in it to anybody but Spain," Goold says. "It's all been part of a long briefing process with photos of these ships, their history, and records of the crew and captain. At some point a judge will decide how he wants to proceed, be it through oral arguments or evidentiary hearings."

Goold says it is likely that several British government agencies are involved in negotiations with Odyssey over potential recoveries from the Victory discovery.

And unlike its contentious relationship with Spain, The New York Times reports, Odyssey has a history of collaboration with the U.K.'s Ministry of Defense. For example, the British government approved a deal in 2003 that allowed Odyssey to recover the Sussex, a 17th century Mediterranean shipwreck believed to contain a cargo of gold coins.

Odyssey has relied on admiralty of maritime partner Allen von Spiegelfeld from Florida firm Fowler White Boggs Banker for outside counsel in several U.S. actions against the company, including cases filed by Covington's Goold. But that was before the 550-employee firm broke up last August, like a ship-of-the-line on rocky shoals.

Now part of 70-lawyer breakaway boutique litigation firm Banker Lopez Gassler in Tampa, von Spiegelfeld continues to represent Odyssey. The outside Odyssey lawyer did not respond to a request for comment.

For its part, the Victory was considered a first-rate ship in the Royal Navy before it sank in rough seas more than 250 years ago. The vessel was the fifth British warship to be named Victory, making it a forerunner to the famous flagship of Lord Nelson that can still be toured today as a museum in Portsmouth, England.

The Discovery Channel's Treasure Quest plans to air an upcoming episode on the search for her predecessor by Odyssey.

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