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  • Odyssey Marine: Spain Would Give Spain Nothing in the Black Swan Case 5 comments
    Jul 14, 2011 10:32 PM | about stocks: OMEX

    With a decision pending in the Black Swan case, Odyssey Marine (NASDAQ:OMEX) is about to be in focus yet again. In reviewing legal filings, the conclusion of Odyssey's response sticks out:

    Under Spanish law, when a vessel and/or property “ceases to exist,” by sinking or other loss, the rights to that vessel and property also cease to exist. (Doc.138-89 ¶10, at 10-11.) In the interest of comity, this Court is certainly free to consider the law of the country seeking relief. (See Stuart v. United States, 813 F.2d 243, 251 (9th Cir. 1987), rev’d on other grounds, 489 U.S. 353 (1989); Fed. Rule Civ. P. 44.1.) Under Spanish law, Spain would be entitled to nothing in this case. Link

     

    Is US law going to give Spain the rights to property which they neither found nor recovered? Its hard to tell, but doesn't seem possible... intuitively. With the Aqua Log case in mind, handicapping the likelihood of a 757 full of coins going back to Spain seems pretty easy. No chance.

    On a side note, with the Yuzhmorgeologiya (Russian ship) on its way to find the Gairsoppa... a significant find could be on the horizon.  If estimates are correct, OMEX's take of the $260M of silver on board would roughly be equivalent to their current market cap. 
     

    Legal Filings:

    August 9, 2010
    Claimants Santiago de Alvear, et al. Reply to Spain's Response

    August 19, 2010
    Odyssey's Appellate Reply to Spain's Response

    Keith Bray seems to think things look good
    Odyssey Marine Exploration, Inc., Keith Bray vs The - Eleventh Circuit
     

    For more info on the Black Swan recovery, its well checking out the DVD set of The Discovery Channel's Treasure Quest.  



    Disclosure: I am long OMEX.
    Themes: Long OMEX Stocks: OMEX
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  • silence_twain
    , contributor
    Comments (330) | Send Message
     
    You seem to confuse retail value and the value OMEX ultimately receives. In the case of the Gairsoppa my guess is you came to your number by taking the 7 million ounces of silver and multiplying it by the current value of silver. Of course that 7 million is on the high end since the estimate is 4-7 million ounces. Two points here. You are forgetting that under the deal with the UK, OMEX only gets 80% value and secondly that 260 million is retail value. If I were you, I would take 260 million and multiply by 80% and then divide by 50% which yields a value to OMEX of a little over 100 million. Of course, there is the major point of them still needing to find the wreck and the silver.

     

    In the case of the Black Swan, the value of those coins continually gets quoted at 500 million. If you talk with OMEX, they will tell you that the 500 million quoted is retail value and they generally recognize 33-50% of retail value. This would mean that OMEX would hope to realize around $250 million from the coins it holds from the Black Swan. You of course have to discount what OMEX collects due to time value of money, but that is a conversation for a different day.

     

    By the way, in the case of the Black Swan don't forget even if they win the appeal, the case just goes back to the lower courts, it does not give them the right to sell the coins.
    22 Jul 2011, 06:14 PM Reply Like
  • silence_twain
    , contributor
    Comments (330) | Send Message
     
    Also you do realize that if the Mercedes is deemed to be a warship, which I believe it to be, then this is all a moot point because the coins will revert back to Spain.
    22 Jul 2011, 06:14 PM Reply Like
  • TEDGE
    , contributor
    Comment (1) | Send Message
     
    It's only a warship when the ship was on a strictly 'non-commercial mission.’ The decks were re-configured to accommodate paying customers, merchant gold, and good being shipped for a 'cost.'

     

    Besides....NO SHIP....just coins. The 'THEORY' that Spain puts is the it IS the Mercedes. Not identified beyond a reasonable doubt.
    22 Jul 2011, 09:00 PM Reply Like
  • silence_twain
    , contributor
    Comments (330) | Send Message
     
    So your view is that it was on a non-commercial mission and therefore was not a warship. I understand that is the position that OMEX takes. I am left to wonder then why the British sunk the ship that day when they had let other clearly commercial ships pass before engaging and sinking the Mercedes. Also note that the Mercedes was on the official Navy registry up until the year it exploded.

     

    You note that there was no ship and only coins, but the Spanish brief clearly states: Odyssey’s brief states that there are no “coherent remains of a vessel at the site.” (Odyssey Br. 6.) In the district court, one of Odyssey’s experts reported that the wooden hull remains at the site are in the “largely decomposed” condition to be expected after two centuries. (Doc. 138-27:20.) Odyssey’s expert also acknowledged that at the site is “a vessel that has broken up at the surface, descended through the water column and spilled out the cargo and various components onto the seabed.” (Doc. 138-27:11.) Shipwreck features readily identifiable in the photographs include remains of the wooden hull, remains of the rudder, the ship’s pump, and other structural elements, including gun-deck reinforcements showing blast damage. Scattered across the site is the copper sheathing that encased the Mercedes’s hull, torn and crumpled by the explosion.

     

    Other interesting points in the Spanish brief include: Appellants provide not a single example of a case recognizing a right for a would-be salvor to strip a sunken vessel of valuables over the vessel owner’s objection, much less to do so to a sovereign’s warship. The Nereide (Odyssey Br. 45; Whitlock Br. 6, 14, 20) held that property of neutrals on board a British ship captured by an American privateer during the War of 1812 was not subject to seizure as a prize of war. 13 US (9 Cranch.) 388, 426-27 (1816). Columbus Am. Discovery Gp. v. Atl. Mut. Ins. Co. (Odyssey Br. 45) concerned a dispute between a salvor and insurers over the division of their shares of gold taken from a private merchant vessel that had been abandoned and there was no objection by any party to the salvage. 927 F.2d 450 (4th Cir. 1992). After Columbus America, moreover, the Fourth Circuit pointed out in Sea Hunt that “[i]t is the right of the owner of any vessel to refuse unwanted salvage,” and recognized the immunity of the Spanish Navy Frigates Juno and La Galga.

     

    Indeed, it is no small irony that Odyssey and the individual claimants seek to label the Mercedes a “commercial transport vessel” (Odyssey Br. 8; Aliaga Br. 6) when she was attacked by the British Navy precisely because she was recognized to be a “ship of war” and not a merchant vessel. See pp. 22-24, supra. Even if the Mercedes were viewed, contrary to historical fact, as a commercial vessel, no exception to sovereign immunity would apply in any event...Section 1610 of the FSIA could not be more explicit that the “commercial activity” exception applies only to property “used for a commercial activity in the United States,” 28 U.S.C. §§ 1610(a)-(b), (d), and then only if the property “is or was used for the commercial activity upon which the claim is based.”

     

    This Court’s decision in Aqua Log marked no change in Eleventh
    Amendment law and certainly did not extend it to foreign nations’ sovereign immunity. Aqua Log did not address the FSIA, or U.S. and international law on naval vessels, in any way.

     

    Moreover, just like Odyssey and the individual claimants have done in this case, it was argued to no avail in Sea Hunt that the Juno and La Galga were in commercial service. (See Doc. 163-15:7 (¶ IV) (claim by treasure hunter that LA GALGA carried nonmilitary property and “was not engaged in a military mission”); Doc. 163-15:23-24 (claiming that there were fare-paying passengers and “a substantial amount of privately-consigned gold or silver on board the JUNO”)
    23 Jul 2011, 02:41 AM Reply Like
  • j g
    , contributor
    Comment (1) | Send Message
     
    is the stock worth holding
    27 Jul 2011, 07:53 PM Reply Like
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