John B. v. Royal Merchant, a shipwrecked vessel

Re: Outer Banks (2020)/Abandoned Shipwrecks

What happens when a shipwreck is discovered?  How is ownership of a shipwreck determined?  Who keeps the artifacts found on a shipwreck?

Sources:

United Nations Convention on the Law of the Sea, https://www.un.org/depts/los/convention_agreements/texts/unclos/unclos_e.pdf

Abandoned Shipwreck Act of 1987, 43 U.S.C. 39 §2101.

Salvage of Abandoned Shipwrecks and Other Underwater Archaeological Sites, North Carolina General Statutes, Ch. 121, Art. 3.

Intersal, Inc. v. Hamilton, 834 S.E.2d 404, 373 N.C. 89 (N.C. 2019).

Odyssey Marine Exploration Inc. v. the Unidentified Shipwrecked Vessel, 657 F.3d 1159 (11th Cir. 2011).

Recovery Ltd. v. S.S. Central Am., 2:87cv363 (E.D. Va. 2016); see also CADG I, 742 F. Supp. 1327 (E.D. Va. 1990); CADG II, 974 F.2d 450 (4th Cir. 1992); CADG III, No. 87-363-N (E.D. Va. 1993); CADG IV, 56 F.3d 556 (4th Cir. 1995); and CADG V, 203 F.3d 291 (4th Cir. 2000).

U.S. v. Thompson, 925 F.3d 292 (6th Cir. 2019).

Peter Tyson, “Who Owns Lost Ships?” PBS NOVA, 

https://www.pbs.org/wgbh/nova/lasalle/owners.html (2000).

Kim Alderman, “High Seas Shipwreck Pits Treasure Hunters Against a Sovereign Nation: The Black Swan Case.” American Society of International Law Cultural Heritage and Arts Review (Spring 2010). 

“25 Things Found in the Ocean and Their Worth”  https://www.therichest.com/rich-powerful/25-things-found-in-the-ocean-and-their-worth/ 

Written, Researched, and Recorded by Céleste Young, 2023-2025.
Music: Out On My Skateboard - Mini Vandals

Waitisthatlegal@gmail.com

Transcript

Before I start I want to give a heads up for potential spoilers.  This episode discusses some plot points in the first and second seasons of Outer Banks.  If you haven’t seen the show, but don’t plan to watch it you should still be able to enjoy this episode.

            Its summer, you and your friends are out of school for the next few months and you’ve got nothing to do but hang out and solve the disappearance of your friend’s parent who was on the hunt for the treasure at the center of local legend.  Unbeknownst to you the treasure is real and your friend’s parent made some serious progress in finding it, but was working with some shady partners.  So now your whole summer has turned into fight for you and your friend’s lives and a fight to recover the treasure that could change all of your lives.  

            This is the situation that John B and his friends find themselves in the Netflix show Outer Banks.  The show follows 4 teenagers who live full time on North Carolina’s Outer Banks, a place that during the summers is also filled with rich seasonal residents.  The main character, John B, is still holding out hope that his father, who disappeared at sea several months ago, is still alive.  John B finds evidence that his dad made a big discovery before he disappeared.

            At stake is the location of the legendary shipwreck of the Royal Merchant and the treasure that it was rumored to be transporting.  Of course, John B and his friends manage to find all the above, but end up with none of it by the end of Season 2 (thankfully it appears the show has been renewed for a third season).  So what happens when you find a shipwreck, or come across buried treasure, or find a priceless religious relic?  Who would have the rights to claim any of those things and would the finder of the treasure get to keep it?  If you find treasure but someone else steals it from under you what rights do you have then?  Well let’s find out on today’s episode.  There are a few different types of finds involved in the Outer Banks so I’ve divided it up into 3 exhibits: the Shipwreck, the Gold, and the Cross.  I will discuss the first exhibit in this episode.  Exhibits B and C will be discussed in the next episode.

Exhibit A – The Shipwreck

            According to the show’s local legend, the Royal Merchant was a British ship that was lost at sea off the Outer Banks after successfully raiding a Spanish treasure ship.  John B’s dad has spent his life searching for the fabled shipwreck and correctly figures out that everyone had been looking for it in the wrong direction.  However, he does not have the money needed to test his theory and goes to Ward Cameron for capital.  Ward is a successful businessman with a summer house on the island and is the father of John B’s love interest.

            Interestingly, while the Royal Merchant is entirely fictional there was a British ship called the Merchant Royal that was lost near Land’s End off the coast of England in 1641.  It has also never been found despite treasure hunters and salvage companies searching for the wreck.  The Merchant Royal was transporting about 100,000 pounds of gold, 400 bars of silver, and 500,000 coins (mostly British currency); it’s estimated worth in today’s money is just over $1.5 billion.  If found it would be one of the most valuable wrecks ever discovered.  So in giving the fictional wreck in the show a very similar name, the show writers obviously wanted to convey some of the mystery and grandeur of the real Merchant Royal.

            Finding an abandoned shipwreck filled with treasure has featured heavily in a lot of fiction and incredibly the non-fiction accounts of treasure hunters can sometimes be just as fanciful.  However, most of the modern day drama of treasure hunting plays out in court battles as multimillion dollar salvage firms apply for permits to search wrecks and fight off claims made by potential owners and others with claims to the contents of the wreck.  It is because of the high stakes nature of the marine salvage industry and the potential historical significance of some of these shipwrecks that there are many laws, treaties, and international agreements in place.

            So as it turns out, the shipwreck is actually the easiest legal question to answer.  The setting of the show and the real Outer Banks are in North Carolina and the shipwreck is supposedly within U.S. territorial waters.  Both the United States and North Carolina have laws governing the discovery and salvaging of shipwrecks off its coasts.  The Abandoned Shipwreck Act passed in 1987 gives the U.S. government ownership title to all abandoned shipwrecks within 3 nautical miles of U.S. coastlines and in any internal waterways.  The Federal government maintains title to shipwrecks in solely Federal waters, but title to shipwrecks on submerged land belonging to States or Indian Tribes is transferred to the appropriate government entity.  Before the 1988 enactment of the Abandoned Shipwreck Act and for shipwrecks that lie outside U.S. waters, admiralty law generally applies.  The U.S. also maintains title and exclusive jurisdiction over all U.S. naval vessels wherever they sink which is consistent with international and federal law.  International law generally recognizes wrecked military vessels as the exclusive property of their country of origin regardless of the waters they sink in.  The U.S. also has multiple treaties with individual countries recognizing the sovereign immunity of naval shipwrecks and their contents.

            It might be worth taking a little bit of a detour here to discuss some of the maritime terms I have been using.  First let’s talk about how national boundaries within the ocean are established and defined.  Historically, a country’s territorial waters were all of their internal waters and the coastal waters that they were able to defend from the coast; this is where the 3 nautical miles comes from in the Act because 3 nmi was how far a cannon could typically be shot.  A nautical mile is equal to 1.15 miles or 1,852 meters; the nautical mile is also equal to one minute of Earth’s latitude.  

            In modern international law territorial waters are all the waters controlled by a sovereign state.  They include internal waters and coastal waters.  Internal waters, like rivers and lakes and the water between islands in countries like the Philippines, are under the complete jurisdiction of the country they are contained within.  Coastal waters are determined by the distance between the baseline, which is the low water mark on the coast, out to sea.  The United Nations Convention on the Law of the Sea defines a country’s territorial seas as the area from the baseline out 12 nautical miles (approx. 14 mi).  The territorial seas are controlled by the country they belong to and are considered sovereign territory, but the innocent passage of vessels through these waters must be allowed.  From the baseline to 24 nmi is a country’s contiguous zone.  This area is a bit more flexible because it might overlap with countries that are closer together.  In this zone, travel is not restricted but the country it belongs to can police the waters for various reasons, like immigration, environmental regulation, and economic regulations.  The area from the baseline to a maximum of 200 nmi is considered a country’s exclusive economic zone.  The country that owns the economic zone has exclusive rights to fishing, drilling, mining, and other economic uses.  The ocean that extends beyond the claimed economic zone is international waters or the high seas.

            The recovery of property from the ocean under admiralty law is divided into two categories: the law of finds and the law of salvage.  The Law of Finds supports the rights of finders of abandoned shipwrecks.  The Law of Salvage applies to ships that are still owned, but are wrecked or in distress.  People who come across a ship in distress and offer aid are entitled to compensation; this rule was designed to encourage ships to come to the aid of other ships in distress on the open oceans.  Someone who salvages an owned shipwreck is usually entitled to either compensation for their services or a percentage of the salvaged goods.  The U.S. Supreme Court has a three part requirement to determine if a salvage reward is owed: whether the ship and its artifacts are in marine peril (the fact that any shipwreck is underwater and subject to corrosion and currents seems to be enough), that the salvor’s services are voluntary (ie. they weren’t under contract from the owners or the insurance company), and that the salvage yielded results.  If a salvage operation meets those requirements then the 7-factor Blackwall/Columbus-America test is used to determine the amount of the reward.

            To break this all down, let’s look at some examples of shipwrecks where admiralty law was applied by U.S. courts.  The easiest of these is an Italian ship salvaged by an American man in 1993.  The ship, Andrea Doria, sank in 1956 and was in a known location and easily accessible, but the ship’s owners never made any attempt to salvage it.  The Andrea Doria is a very straightforward case because it was privately owned and sank in U.S. waters near Nantucket Island.  Almost immediately after the ship sank divers began exploring the wreck and taking souvenirs.  The insurance company that took ownership of Andrea Doria never filed to stop people from accessing the wreck and never attempted to salvage the wreck themselves.  As a result, when an American, John Moyer, applied for salvage rights with the Federal admiralty court in 1993, the court determined that the ship had been abandoned by its owners, so the Law of Finds applied and he was awarded ownership of the expensive Italian mosaics on the wreck.

            Another example is La Belle, one of several ships used by the French explorer Robert Cavelier La Salle in order to establish a French colony at the mouth of the Mississippi River.  The ship sank within Texas State waters and was claimed, along with its artifacts, by Texas. The State of Texas argued the ship was abandoned because La Belle was given to La Salle as a gift by King Louis the fourteenth making La Salle’s heirs the true owners and they had not asserted a claim to the wreck.  France argued the ship was not abandoned because they were the true owners of La Belle.  French records show that the ship was loaned to La Salle by Louis the fourteenth making it the property of the French government.  International admiralty law supports France’s claim to the ship so it could not be considered abandoned.  Despite La Belle being found in U.S. waters it was not abandoned which means the Abandoned Shipwreck Act does not apply.  France could have claimed Law of Salvage in an admiralty court, but in the end the dispute was handled diplomatically.  The U.S. government negotiated a deal between France and Texas that gave legal title of La Belle and her artifacts to the French government and allowed the Texas State Historical Commission to have day to day control for 99 years.  The ship is currently on display at the Bullock Museum in Austin, TX.

            Admiralty law becomes increasingly hard to apply the more parties there are claiming both ownership and rewards.  One muddied example is the extensive litigation surrounding the aptly nicknamed “Ship of Gold.”  The SS Central America was a steam ship carrying passengers and gold on route from the California Gold Rush; it serviced the second part of the journey sailing from Panama to New York City.  It sank during a Hurricane off the coast of the Carolinas in 1857.  At the time it was estimated that $1.2 million in gold was on board the Central America.  The wreck was discovered in 1989 by Thomas G. Thompson and Columbus-America Discovery Group (CADG).  CADG obtained the salvage rights and brought up approximately $400 million of gold.  Several insurance companies claimed they had ownership in the Central America, CADG claimed they had sole ownership of the salvage.  A decade and 5 cases later, the parties finally sorted out a settlement.  One of the main issues brought up in the cases was whether the law of finds or the law of salvage should be used to determine the ownership of the Central America.  Initially, the trial court used the law of finds which gave CADG complete ownership of the wreck.  The 4th Circuit Court disagreed with the lower court’s argument that the insurance companies abandoned their claims to the Central America because all the original documentation was destroyed.  There was no evidence that the documents had been intentionally destroyed, the companies just couldn’t find a lot of them which is to be expected after over a century has passed.  The 4th Circuit further explained that the law of salvage should be the default for maritime discoveries because salvage law allows for more openness and cooperation than the law of finds, which favours an all or nothing approach.  Using the law of salvage, CADG was eventually awarded 90% of the recovered gold with the remaining 10% going to the insurers.  In 2016, the court appointed successors in interest to CADG’s salvage rights to the Central America, Recovery Limited Partnership (RLP) was awarded 100% of the further $48.2 million in gold and artifacts brought up from the wreck.

            While the admiralty case over ownership continued, Thompson was sued in 2005 by the salvage crew and his investors because they had never received their share of the gold.  Thompson disappeared with the gold and had to be tracked down by the U.S. Marshals who had a warrant for his arrest.  Thompson was found to be in criminal and civil contempt of court for failing to cooperate when asked where the gold was.  His civil contempt penalty is to remain in jail with a $1000/day fine until he gives up the whereabouts of the gold owed to his crew and investors.  Currently, Thompson has served almost 7 years and owes over $2.5 million in fines.  Also as part of a civil judgment against Thompson and CADG, RLP was given the salvage rights to the Central America.  Seriously, this case is wild and shows just how badly things can go with millions of dollars of gold on the line.

            In contrast, there are stories of how things can go right, take the Nuestra Señora de Atocha for example.  In 1622, a Spanish Treasure fleet was sunk in a hurricane off the Florida Keys.  Some of the ships survived the storm and a couple were even salvaged by Spain in the years after the disaster, but the galleon carrying the majority of the fleet’s gold and emeralds, the Atocha, was lost.  In 1971, Mel Fisher and Treasure Salvors Inc. found the wreck which was estimated to be carrying $250 million to half a billion dollars worth of gold, silver, and emeralds.  Initially, the State of Florida claimed ownership of the wreck and awarded Treasure Salvors a 75% salvage reward, but after the case reached the Supreme Court it was determined the wreck was not located in Florida’s territorial waters and that the Law of Finds should apply.  Fisher and his partners ended up with the entire amount salvaged and anything that might remain in the wreck.  The Atocha is a lot older than the Central America so Fisher did not have to contend with insurance companies making claims of ownership, the age of the wreck also lends weight to the argument it is abandoned.  This case was also decided prior to the passing of the Abandoned Shipwreck Act, which might have made a difference, but probably not because the Atocha was determined to be in International waters putting outside the United States’ jurisdiction.

            When it comes to salvaging shipwrecks the major difference between the U.S. Federal law and admiralty law is only really concerned with the commercial value of lost cargo.   The Abandoned Shipwreck Act removes shipwrecks from the jurisdiction of Admiralty courts which allows them to be classified as more than just commercial property.  This is especially important when the historical significance of the wreck is larger than any material wealth that it may contain.  So because of the Act, the U.S. government can ensure that shipwrecks with historical value are preserved either by a Federal agency or by the State or Tribal authority with jurisdiction over the location of the wreck.

            According to North Carolina law, any shipwrecks which are unclaimed for more than 10 years and lie within the State’s navigable waters are subject to the exclusive control and dominion of the State of North Carolina.  North Carolina’s navigable waters are defined as being within one marine league from the extreme low watermark of the Atlantic seashore out seaward.   A marine league is equal to 3 nautical miles or approx. 3.5 miles.  The State designates its Department of Natural and Cultural Resources as the custodian of all shipwrecks the State has title to and it is the Department that makes the rules regarding the preservation, protection, recovery, or salvaging of the ships themselves and any property contained within.  The State also requires that any exploration, recovery, or salvage operations be done by a qualified entity who must apply for a permit from the Department.

            In the show the coordinates on the map John B and his friends find in his dad’s office puts the Royal Merchant at 34 degrees 57 minutes 30 seconds North and 75 degrees 55 minutes 42 seconds West, which when put into Google Maps is about 8 to 8.5 miles off of Ocracoke Island, North Carolina and would put it well outside of North Carolina territorial waters. However, I’m not sure what the extreme low water mark of Ocracoke Island is and the territorial maps I found through NOAA (the National Oceanic and Atmospheric Administration) were clearly not meant for my level of maritime map expertise, which is zero.  This doesn’t matter though, in a real world scenario you would hire an expert or rely on the State to determine where exactly the ship was and in whose jurisdiction.  The Royal Merchant is a fictional shipwreck and I think the show was implying that it was close enough to the Outer Banks to be considered within North Carolina waters.

            In order to secure any claim to the shipwreck and to stay out of legal trouble, John B and his friends should have applied for a permit from the North Carolina Department of Natural and Cultural Resources.  The Department would then be able to determine whether the Royal Merchant was in State waters or not and what the next steps would be.  John B and his friends are also all under the age of 18 so it would be likely that they would need an adult to represent them.  Actually, throughout this whole show John B would have greatly benefitted from having a lawyer or just telling Sherriff Peterkin the whole situation he was in from the beginning.  There were a few adults in the show that probably would have been able to help John B and his friends.  The museum would have been a good place to start, or the teacher that helps John B translate Tanny’s letter and later gives Pope Tanny’s journal.  Even Pope’s dad or Kiara’s parents would have been able to advocate for the teens and had the resources and community standing to possibly go up against Ward Cameron’s claims.

            Regardless, applying for a permit to search for the shipwreck and confirming the find with the North Carolina DNCR is not a total relinquishment of any rights or potential monetary gain.  In 1998, a marine exploration and recovery corporation, Intersal Inc. entered into an agreement with the NC DNCR after they discovered the wreck of the Queen Anne’s Revenge, the famous pirate Blackbeard’s flag ship.  The agreement secured the corporation’s involvement in all aspects of the Department’s activities involving the Queen Anne’s Revenge and gave them exclusive marketing, media, replication, and merchandizing rights over the ship and any artifacts discovered by the State.  In exchange for those rights, Intersal relinquished the salvage rights and possession of the physical contents of the ship.  The State did claw back some of the media rights in a later Supreme Court case, but the example of the Queen Anne’s Revenge shows that the discoverers of important shipwrecks do have some leverage to make a deal with the government.  It also shows that it is possible to both reap the glory and wealth of discovering a significant treasure, but also allow it to be studied and preserved for the good of everyone.

            While there is considerable value in the physical artifacts of a ship and the replicas and images that can be made from them, the biggest boon for the discoverer of a well-known ship is in the publication rights.  An example is the discovery of the Civil War-era Confederate submarine the CSS H. L. Hunley, which is considered the first successful combat submarine in history.  On February 17, 1864, in a Confederate effort to break the Union naval blockade of Charleston Harbor (South Carolina), the Hunley successfully sank the USS Housatonic and then disappeared.  It was finally found in 1995 by author Clive Cussler’s NUMA organization (which is named for the fictional government agency at the center of his many novels).  The location and historical importance of the Hunley meant that the U.S. government took ownership of the wreck before transferring it to a commission formed by the South Carolina government, Friends of the Hunley.  In 2000, the submarine was raised and is now on display at the Friends of the Hunley Museum in Charleston, SC.

            NUMA spent 15 years searching for the Hunley and could not (and likely did not expect to) recoup those costs through salvaging, but Cussler was credited with the find.  Cussler wrote a non-fiction book, The Sea Hunters: True Adventures with Famous Shipwrecks, which has a part dedicated to the Hunley.  There is also a documentary show based on the book and several television specials about the Hunley that mention Cussler.  It also seems that the museum’s gift shop sells Clive Cussler novels.  The bragging rights of being the one to find the Hunley was apparently valuable enough that there was a long court battle between Cussler and a man who claimed to have discovered the Hunley in 1970, but the case was eventually dropped.  The National Park Service, the U.S. Navy, and the Friends of the Hunley all credit Cussler and NUMA with finding the submarine.

            The fact that a bunch of teenagers were able to find a legendary shipwreck and the story behind that find make this a compelling fictional story; even the slightly less exciting (in terms of treasure on board) finds of the Hunley and the Titanic spawned profitable books and documentaries. Registering the find in order to profit from the story later is a good move and will secure any bragging rights for the find in the future.

            The fact that the gold had been removed already from the Royal Merchant was actually a blessing in disguise for John B and his friends.  The Abandoned Shipwreck Act makes the Royal Merchant government property, so any cargo found in or around the wreck would also be the property of the U.S. government (potentially transferred to North Carolina).  Taking the gold from the ship would be stealing government property, which in the worst case scenario is a serious crime, and in the best case scenario would just result in forfeiture of the gold.  It could also land them in some serious financial trouble as the owners of Odyssey Marine Exploration Inc. discovered when they salvaged millions of dollars’ worth of coins and other artifacts from a wreck found off the Iberian Coast.

            In 2006, Odyssey was surveying the sea floor near the coast of Gibraltar when they found the remains of a wrecked ship.  Odyssey’s Black Swan Project was initially believed to be looking for the aforementioned Merchant Royal, but the ship they found near the Iberian Peninsula was the Nuestra Señora de las Mercedes.  The Mercedes was a Spanish Navy ship sunk off the Iberian Coast by the British Navy in 1804.  At the time it sunk it was carrying gold, silver, and various spices to Spain from Uruguay.  Odyssey filed their claim to the Mercedes in U.S. Federal Court in Florida based on the law of finds and the location of the ship in international waters.  

            It is notable that Odyssey filed the claim after they had already recovered $600 million worth of coins and other artifacts from the wreck which they had shipped and stored in Florida.  Spain and Peru also asserted claims to the shipwreck and the cargo.  Spain argued that the ship was a Spanish Naval ship and was subject to sovereign immunity.  Peru claimed that the cargo aboard the Mercedes originated in Peru or was produced by the people of Peru; specifically the coins were minted in Peru from Peruvian silver. Peru’s claim was not entertained by the Court because the Court determined they did not have jurisdiction to hear the case.  The Court ordered Odyssey to return everything that they had taken from the ship to the Spanish government.  The Court also ordered Odyssey to pay $1 million to Spain for legal costs because they had acted unfairly and in bad faith, mostly because they kept the identity of the ship secret and salvaged and shipped the artifacts before filing a claim to the treasure.  So not only did Odyssey lose out on $600 million in treasure, they still paid the costs of salvaging the Mercedes and shipping the coins back to the U.S.  Then they had to pay their own legal costs, $1 million of Spain’s legal costs, and the cost of shipping all the treasure back to Spain.  For John B, the stakes would never have been this high, he is not at the head of a multi-million dollar corporate salvage company and as such has neither the capital involved, nor the expertise that the Court cites as being why they penalized Odyssey.

            Based on the cases I just laid out its clear the best move would have been for John B to register that they found the Royal Merchant with some government authority.  First of all, it’s the right thing to do because of the historical importance of the shipwreck.  From the show we know that people have been searching for the ship and finding it would be a big deal for the community.  Secondly, registering the find does secure some of John B’s rights and would secure his father’s legacy as being the one credited with the find.  If there was anything of value found on the ship and John B had registered the find first, he would have rights and the ability to negotiate with the State, and more importantly, Ward Cameron would be entitled to nothing.  John B would also have the publishing rights to his story and the ability to credit his father with the discovery.  Finally, if the gold had been on the ship when it was found John B would have been in a lot of trouble if he hadn’t registered the wreck with the authorities. 

            The position that John B and his friends found themselves in by the end of the first season of the show was arguably one of the worst-case scenarios.  They had discovered one of the most significant finds within the show’s given shipwreck lore, but no one in the Outer Banks knows that they found it.  The teens also know the story behind the wreck, Denmark Tanny, and where Tanny stored the gold on the island. This is all information they could have used to put themselves in a better position to bargain with the North Carolina DNCR and would have made their claim to the discovery of the Royal Merchant and the gold more credible than Ward Cameron’s.  Instead, they ended up with nothing and are considered juvenile delinquents by most of the Outer Banks.  It’s not too late for them to register the find of the Royal Merchant because no one has actually found it yet and Ward Cameron has fled the country.  At the very least they should register the find with the State of North Carolina.

            That concludes part one of my exploration of the legal issues in the show Outer Banks.  I’ll be back next time with discussions about the terrestrial finds by John B and the gang.