An investor-State arbitration is currently underway between the Republic of Colombia and a US company over a 300-year-old shipwreck containing treasure estimated at $20 billion - the most valuable sunken treasure in history. The company claims Colombia has unlawfully expropriated its rights to the treasure, in breach of a US-Colombia investment treaty, and seeks nearly $10 billion in damages.

The treasure ship San José and the battle that sank her

On 8 June 1708, a fleet of Spanish treasure ships was sailing along the coast of Colombia. Its flagship was a 64-gun galleon called the Galeón San José (the San José). The San José was loaded with a cargo of immense value - 200 tons of gold, silver and rough emeralds from the New World - to be taken back to Europe to fund Spain and France's military efforts in the War of the Spanish Succession.

But close by, British navy warships were lying in wait to ambush the Spanish fleet, disable and commandeer the San José and seize the treasure. Just before sundown, the British intercepted the galleon and launched their attack.

Unfortunately, the battle did not go to plan when one of the British ships accidentally fired a cannonball right into the San José's gunpowder magazine. The galleon exploded and within minutes the ship and all of its treasure sank to the bottom of the Caribbean Sea. They have remained there ever since.

Discovery and recovery

In the 1980s, an American salvage company (the salvage company) claimed to have found the shipwreck in Colombian waters. In 2015, Colombia confirmed that the San José had been discovered, but claims it was found in a different location to that reported in 1982. The location of the wreck is a tightly guarded Colombian State secret.

Over 300 years after the battle that sank her, and 40 years after being first allegedly discovered, the San José remains on the sea floor. Attempts at recovery have been beset by new battles - legal battles over who owns her USD 20 billion treasure.

Who owns the San José?

A US company called Sea Search-Armada LLC (SSA) claims it is entitled to 50% of the value of the San José's treasure under an agreement in place between Colombia and the salvage company that allegedly made the discovery in 1982.

Colombia denies the salvage company discovered the wreck of the San José. It claims that the San José and its contents belong to Colombia and are assets of national cultural interest, which do not qualify as 'treasure'. In February 2024, Colombia announced plans to investigate and explore the wreck.

According to Spain, neither Colombia nor SSA owns the San José, and the galleon and its treasure remain Spanish public property and are Spain's underwater cultural heritage.

Indigenous peoples of Peru and Bolivia have also voiced objections on the basis that the San José's cargo of gold, silver and emeralds were mined by their ancestors or on their land during colonial times and plundered by Spain. Earlier this year a group of indigenous South American communities sent a petition to Spain and UNESCO that they should share in any proceeds from the San José as their common and shared heritage.

Other groups, including some archaeologists and historians, insist the wreck should be respected as a gravesite and left untouched.

Against this wider international background of disagreement, the focus of this article is the narrower issue of SSA's claims against Colombia and their ongoing arbitral proceedings.

In 1980, the Colombian authorities granted an underwater exploration permit to the salvage company (the permit).

After two years of searching, in 1982 the salvage company sent a report to Colombia that a wreck had been located and provided the wreck's coordinates (the reported coordinates).

Colombia issued a resolution recognising the salvage company as a reporter of treasure in the reported coordinates (the 1982 recognition letter). SSA claims that under Colombian law at that time, the salvage company had rights as the discoverer and reporter of the wreck, to 50% of the value of the treasure.

Following the discovery, relations between Colombia and the salvage company broke down and attempts to agree contract terms to recover the wreck were unsuccessful. SSA claims that Colombia instead began approaching other operators to investigate and recover the wreck using the salvage company's reported coordinates.

The 2015 discovery

Colombia claims that following further investigations in 1994, it turned out that what the salvage company had found at the reported coordinates was not the wreck of the San José.

In 2015, Colombia announced that the San José had been found. Colombia claims the San José wreck had been discovered that year by a Swiss operator, in a different location to the salvage company's reported coordinates.

On that basis, Colombia claims that SSA has no rights to the San José, because the salvage company did not discover it. However, Colombia refuses to disclose the actual coordinates of the San José, and its location is a secret.

The Colombian Supreme Court decision (2007)

The salvage company and its successors have been engaged in litigation against Colombia since 1989, both in Colombia and in the US.

In 2007, the Colombian Supreme Court issued a decision on the salvage company's rights. However, SSA and Colombia disagree over what the Supreme Court determined.

SSA claims the Supreme Court's decision was that the salvage company had rights to 50% of the value of any items qualifying as "treasure" at the reported coordinates and surrounding area. Colombia disagrees with SSA's interpretation of the Court's decision.

In 2008, the salvage company transferred its rights and assets to SSA.

The United States-Colombia Trade Promotion Agreement (2012)

In 2006, the United States and Colombia signed a free trade and investment treaty. The US-Colombia Trade Promotion Agreement () entered into force in 2012. of the TPA protects US companies investing in Colombia against discriminatory or unlawful treatment.

Under Article 10 of the TPA, US companies with a dispute against Colombia that qualifies as an 'investment dispute' can refer their dispute to arbitration.

Colombia passes a new classification law (2020)

In 2020, Colombia passed a new law classifying the San José and its contents as 'assets of national cultural interest'. This means that under current Colombian law, the San José and its contents do not qualify as 'treasure'.

SSA claims that Colombia passed the classification law with the specific purpose of circumventing the result of the Supreme Court's decision and depriving SSA of its right to 50% of the value of the San José's contents.

Arbitration between SSA and Colombia (2022 - 2025)

In December 2022, SSA commenced arbitration against Colombia under the .

SSA claims that Colombia's classification law is arbitrary and unreasonable conduct which expropriates and interferes with SSA's rights to 50% of value of the San José treasure.

Specifically, SSA claims that the classification law breaches Colombia's investment obligations under the TPA regarding:

SSA seeks restitution of its rights, or compensation for damages in the amount of approximately USD 10 billion.

In July 2023, Colombia advanced a number of preliminary objections to the arbitral tribunal's jurisdiction under the TPA to hear the dispute, all of which have recently been dismissed.

Spain and the US apply to intervene in the arbitration (December 2023)

Ahead of the jurisdictional hearing, the US (which is a party to the TPA but not a party to the dispute) made submissions as a 'non-disputing party' on the interpretation of the terms of the TPA.

Spain unsuccessfully sought leave to intervene in the arbitration as an amicus curiae. Spain argued in its application that the San José is in fact Spain's public property and that there is a legal dispute between Spain and Colombia over its ownership (although it gave no details of any proceedings). Spain explained it was intervening in the arbitration in order to defend its interests in the San José.

In December 2023, the tribunal dismissed Spain's application. It held that the issue SSA has referred to arbitration is not whether Spain owns the San José, but whether Colombia has breached its obligations under the US-Colombia TPA investment provisions.

The tribunal acknowledged that Spain may have a significant interest in the arbitration but found that it was unlikely to provide assistance to the tribunal on the interpretation of the TPA and whether SSA has a qualifying 'investment dispute' for the purpose of determining whether the tribunal has jurisdiction to hear the dispute.

However, the tribunal left the door open for Spain to make a further application for leave to intervene at a later, substantive stage of the arbitration.

Colombia's unsuccessful jurisdictional challenge (February 2024)

In February 2024, the tribunal . The tribunal held it was satisfied, on a prima facie basis, that under the TPA:

Evidence Preservation Protocol (June 2024)

On 28 June 2024, the tribunal granted (against Colombia's objections) an application made by SSA for interim measures, ordering Colombia to commit to an Evidence Preservation Protocol.

Colombia must catalogue, preserve and protect evidence (including records, recordings, objects and artifacts) identified, recovered or salvaged from the San José, create and maintain a catalogue of this evidence and report to the tribunal on a bi-monthly basis until the dispute is determined.

However, Colombia is not required to disclose the coordinates of the wreck's location under the Protocol.

Substantive hearing on the merits (to be held in November 2025)

Following Colombia's unsuccessful jurisdictional challenge, SSA filed amended submissions on its substantive claim. In September 2024, the tribunal granted Colombia an extension of time to file its response, which must be received by December 2024.

The substantive hearing is currently timetabled for the end of November 2025, and we look forward to reporting on the tribunal's decision on the merits of SSA's claim in due course.

Picture caption: A US company is claiming damages of $10 billion in an arbitration against Colombia over the discovery of a 300-year-old sunken treasure ship, but Colombia denies that the salvage company made the discovery.