Although Letters of Marque and Reprisal were sometimes issued before a formal declaration of war, as happened during the American Revolution when the rebelling colonies of Massachusetts, Maryland, Virginia, and Pennsylvania all granted Letters of Marque months before the Continental Congress's official Declaration of Independence of July 1776, by the turn of the 19th century it was generally accepted that a sovereign government first had to declare war. The "existence of war between nations terminates all legal commercial intercourse between their citizens or subjects," wrote Francis Upton in Maritime Warfare and Prize, since "[t]rade and commerce presuppose the existence of civil contracts … and recourse to judicial tribunals; and this is necessarily incompatible with a state of war." Indeed, each citizen of a nation "is at war with every citizen of the enemy," which imposes a "duty, on every citizen, to attack the enemy and seize his property, though by established custom, this right is restricted to such only, as are the commissioned instruments of the government."
The formal commission bestowed upon a naval vessel, and the Letter of Marque and Reprisal granted to private merchant vessels converting them into naval auxiliaries, qualified them to take enemy property as the armed hands of their sovereign, and to share in the proceeds.
When a privateer or naval vessel spotted a tempting vessel—whatever flag she flew or often enough flying none at all—they gave chase. Sailing under false colors was a common ruse, both for predator and prey. The convention was a vessel must hoist her true colors before firing the first shot. Firing under a false flag could cost dearly in prize court proceedings, even result in restitution to the captured vessel's owner.
Often a single cannon shot across the bow was enough to persuade the prey to heave-to, but sometimes brutal hours and even days of cannonading ensued, along with boarding and hand-to-hand fighting with cutlasses, pistols, and boarding pikes. No matter how furious and bloody the battle, once it was over the victors had to collect themselves, put aside anger and exercise forbearance, treating captives with courtesy and civility to the degree prudence allowed. Officers restrained the crew to prevent pillaging defeated adversaries, or pilfering the cargo known as breaking bulk. Francis Upton's treatise on Maritime Warfare cautioned:
Embezzlements of the cargo seized, or acts personally violent, or injuries perpetrated upon the captured crew, or improperly separating them from the prize-vessel, or not producing them for examination before the prize-court, or other torts injurious to the rights and health of the prisoners, may render the arrest of the vessel or cargo, as prize, defeasible, and also subject the tort feasor for damages therefore.
Taking the prize before a prize court might be impractical for any number of reasons like bad weather, shortage of prize crew, dwindling water and provisions, or the proximity of an overpowering enemy force — in which case a vessel might be ransomed. That is, instead of destroying her on the spot as was their prerogative, the privateer or naval officer would accept a scrip in form of an IOU for an agreed sum as ransom from the ship's master. On land this would be extortion and the promise to pay unenforceable in court, but at sea it was accepted practice and the IOUs negotiable instruments.
On occasion a seized vessel would be released to ferry home prisoners, a practice which Lord Stowell said "in the consideration of humanity and policy" Admiralty Courts must protect with the utmost attention. While on her mission as a cartel ship she was immune to recapture so long as she proceeded directly on her errand, promptly returned, and did not engage in trading in the meantime.
Usually, however, the captor put aboard a prize crew to sail a captured vessel to the nearest port of their own or an allied country, where a prize court could adjudicate the prize. If while sailing en route a friendly vessel re-captured the prize, called a rescue, the right of postliminium declared title to the rescued prize restored to its prior owners. That is, the ship did not become a prize of the recapturing vessel. However, the rescuers were entitled to compensation for salvage, just as if they had rescued a crippled vessel from sinking at sea.
The prize that made it back to the capturing vessel's country or that of an ally which had authorized prize proceedings would be sued in Admiralty Court in rem meaning "against the thing", against the vessel itself. For this reason decisions in prize cases bear the name of the vessel, such as The Rapid (a U.S. Supreme Court case holding goods bought before hostilities commenced nonetheless become contraband after war is declared) or The Elsebe (Lord Stowell holding that Prize Courts enforce rights under the Law of Nations rather than merely the law of their home country). A proper prize court condemnation was absolutely requisite to convey clear title to a vessel and its cargo to the new owners and settle the matter. According to Upton's treatise, "Even after four years' possession, and the performance of several voyages, the title to the property is not changed without sentence of condemnation".
The agent of the privateer or naval officer brought a libel, accusing the captured vessel of belonging to the enemy, or carrying enemy cargo, or running a blockade. Prize commissioners took custody of the vessel and its cargo, and gathered the ship's papers, charts, and other documents. They had a special duty to notify the prize court of perishable property, to be sold promptly to prevent spoilage and the proceeds held for whoever prevailed in the prize proceeding.
The commissioners took testimony from witnesses on standard form written interrogatories. Admiralty Courts rarely heard live testimony. The commissioners' interrogatories sought to establish the relative size, speed, and force of the vessels, what signals were exchanged and what fighting ensued, the location of the capture, the state of the weather and "the degree of light or darkness," and what other vessels were in sight. That was because naval prize law gave assisting vessels, defined as those that were "in signal distance" at the time, a share of the proceeds. The written interrogatories and ship's papers established the nationality of the prize and her crew, and the origin and destination of the cargo: the vessel was said to be "confiscated out of her own mouth."
One considerable difference between prize law and ordinary Anglo-American criminal law is the reversal of the normal onus probandi or burden of proof. While in criminal courts a defendant is innocent until proven guilty, in prize court a vessel is guilty unless proven innocent. Prize captors need show only "reasonable suspicion" that the property is subject to condemnation; the owner bears the burden of proving the contrary.
If all was in order, the prize court ordered the vessel and its cargo condemned and sold at auction. But the court's decision became vastly more complicated in the case of neutral vessels, or a neutral nation's cargo carried on an enemy vessel. Different countries treated these situations differently. By the close of the 18th century, Russia, Scandinavia, France, and the United States had taken the position that "free ships make free goods": that is, cargo on a neutral ship could not be condemned as a prize. But Britain asserted the opposite, that an enemy's goods on a neutral vessel, or neutral goods on an enemy vessel, may be taken, a position which prevailed in 19th century practice. The ingenuity of belligerents in evading the law through pretended neutrality, false papers, quick title transfers, and a myriad of other devices, make up the principal business of the prize courts during the last century of fighting sail.
Neutral vessels could be subject to capture if they ran a blockade. The blockade had to be effective to be cognizable in a prize court, that is, not merely declared but actually enforced. Neutrals had to be warned of it. If so then any ships running the blockade of whatever flag were subject to capture and condemnation. However passengers and crew aboard the blockade runners were not to be treated as prisoners of war, as Upton's Maritime Warfare and Prize enjoins: "the penalty, and the sole penalty ... is the forfeiture of the property employed in [blockade running]." Persons aboard blockade runners could only be temporarily detained as witnesses, and after testifying, immediately released.
The legitimacy of an adjudication depended on regular and just proceedings, and departures from internationally accepted standards of fairness risked ongoing litigation by disgruntled shipowners and their insurers, often protracted for decades. For example, during America's Quasi-War with France in the 1790s, corrupt French Caribbean prize courts (often sharing in the proceeds) resorted to pretexts and subterfuges to justify condemning neutral American vessels. They condemned one for carrying alleged English contraband because the compass in the binnacle showed an English brand; another because the pots and pans in the galley were of English manufacture. Outraged U.S. shipowners and their descendants continually challenged these French colonial kangaroo court decisions of the 1790s, litigation called the French Spoliation Cases which lasted well over a century, until 1915. Together with Indian tribal claims for 18th century treaty breaches, the French Spoliation Cases enjoy the dubious distinction of figuring among the longest-litigated claims in U.S. history.
End of privateering and the decline of naval prizes
Most privateering came to an end in the mid-19th century, when signatories to the Paris Declaration Respecting Maritime Law of 1856 at the conclusion of the Crimean War renounced granting letters of marque.
The United States however, was not a signatory. During the American Civil War, Confederate privateers cruised against Union merchant shipping. Likewise the Union (though refusing to recognize the legitimacy of Confederate letters of marque) allowed its navy to take Confederate vessels as prizes. Under US Constitution Article 1 Section 8, it is still theoretically possible for Congress to authorize letters of marque, but in the last 150 years it has not done so.
Commerce raiding by private vessels ended with the American Civil War, but Navy officers remained eligible for prize money a little while longer. The United States continued paying prizes to naval officers in the Spanish–American War, and only abjured the practice by statute during World War I. The U.S. prize courts adjudicated no cases resulting from its own takings in either World War I or World War II (although the Supreme Court did rule on a German prize—Appam—that was brought to and held at Hampton Roads). Likewise Russia, Portugal, Germany, Japan, China, Romania, and France followed the United States in World War I, declaring they would no longer pay prize money to naval officers. On November 9, 1914, the British and French governments signed an agreement establishing government jurisdiction over prizes captured by either of them. The Russian government acceded to this agreement on March 5, 1915, and the Italian government followed suit on January 15, 1917.
Shortly before World War II France passed a law which allowed for taking prizes, as did the Netherlands and Norway, though the German invasion and subsequent capitulation of all three of those countries quickly put this to an end. Britain formally ended the eligibility of naval officers to share in prize money in 1948.
Under contemporary international law and treaties, nations may still bring enemy vessels before their prize courts, to be condemned and sold. But no nation now offers a share to the officers or crew who risked their lives in the capture:
Self-interest was the driving force that compelled men of the sea to accept the international law of prize ... [including merchants] because it brought a valuable element of certainty to their dealings. If the rules were clear and universal, they could ship their goods abroad in wartime, after first buying insurance against known risks. ... On the other side of the table, those purchasing vessels and cargoes from prize courts had the comfort of knowing that what they bought was really theirs. The doctrine and practice of maritime prize was widely adhered to for four centuries, among a multitude of sovereign nations, because adhering to it was in the material interest of their navies, their privateersmen, their merchants and bankers, and their sovereigns. Diplomats and international lawyers who struggle in this world to achieve a universal rule of law may well ponder on this lesson.