The London Steam-Ship Owners’ Mutual Insurance Association Limited v. The Kingdom of Spain / The London Steam-Ship Owners’ Mutual Insurance Association Limited v. The French State

At a glance

Parties

The London Steam-Ship Owners' Mutual Insurance Association Limited (the Club) v. the Kingdom of Spain, and v. the French State

Case no.

Claim Nos. CL-2019-000097, CL-2019-000424, CL-2019-000578, CL-2019-000649; [2020] EWHC 1920 (Comm)

Court

High Court of Justice, Queen's Bench Division, Commercial Court (England and Wales)

Judge

Mr Justice Butcher

Underlying award(s)

Awards of sole arbitrator Alistair Schaff QC dated 13 February 2013 (Spain) and 3 July 2013 (France)

Sector

Marine insurance; oil pollution (MT Prestige)

Outcome

Spain and France are not immune from any of the four actions. The Court has jurisdiction over the Award Claims but has no jurisdiction, or should decline it, over the Judgment Claims.

Amount

The Club claims damages or equitable compensation equal to any sums it must pay under the Spanish judgments, plus agreed costs of £1,650,000. The Spanish execution order allowed Spain to enforce up to €2.355 billion and France up to €117 million, subject to the Club's limit of €855,493,575.65.

The dispute

In 2002 the MT Prestige sank off Cape Finisterre and spilled fuel oil on the coasts of northern Spain and southern France. Spain and France brought direct civil claims against the Club, the shipowners' liability insurer, in criminal proceedings in Spain. The Club obtained London arbitration awards from Alistair Schaff QC. The awards declared that the States were bound to arbitrate in London and that, under the "pay to be paid" clause, the Club was not liable to them; Hamblen J and the Court of Appeal later entered the awards as judgments. The States kept pursuing their claims in Spain. The Spanish Supreme Court held the Club directly liable up to its US$1 billion limit, and Spain applied to register the Spanish execution order in England. The Club then brought four English actions against the States, two for failure to honour the awards and two for failure to abide by the English judgments, seeking damages to set off against the Spanish judgments. The States challenged service, invoked state immunity and contested the Court's jurisdiction.

Key holdings

1. Service on France under the EU Service Regulation (No. 1393/2007) was valid. Where the Regulation applies, it is a mandatory regime and has primacy over s. 12 of the State Immunity Act 1978. Article 12 of the Regulation does not allow national law to restrict service on a Member State to diplomatic channels. ¶¶ 45–46
2. Section 9 of the SIA (arbitration exception) applies to the Award Claims, because they relate to the arbitrations the States were held to have agreed to. It does not matter that the arbitrations are over or that the awards were enforced under s. 66. Section 9 does not apply to the Judgment Claims, which relate to the English court proceedings and judgments. ¶¶ 52–59
3. Section 3(1)(a) of the SIA applies to all four actions. The States' pursuit of civil claims in Spain was an activity of a commercial or similar character, not an exercise of sovereign authority, and the actions relate to it. Svenska and NML Capital are distinguished. The Court did not decide the arguments under s. 3(1)(b), s. 2 or Article 6 ECHR. ¶¶ 61–69
4. The Court has jurisdiction over the Award Claims under the common law rules. The claims fall within the PD6B gateways in para. 3.1(10) or 3.1(6)(c), and England is the appropriate forum. They raise serious issues to be tried: damages for failing to honour declaratory awards, merger in the s. 66 judgments, causation by the Club's alleged submission in Spain, and abuse of process. The Court declined to decide these points of law at the jurisdiction stage. ¶¶ 81–92
5. The Judgment Claims are outside the arbitration exception in Article 1(2)(d) of the Recast Brussels Regulation. They rest on obligations arising from the court judgments and are too far removed from the arbitrations. They are, however, "matters relating to insurance" under Section 3 of the Regulation. ¶¶ 104–109, 123
6. The States are "injured parties", not "beneficiaries", and are entitled to Section 3 protection. Spain's subrogated claims (about 49.5% of its quantified losses) do not change this, because it also suffered losses in its own right. Under Article 14(1) the Club may sue them only in their domicile. The counterclaim exception in Article 14(2) does not cover Spain's enforcement proceedings under Chapter III. The Court therefore has no jurisdiction over the Judgment Claims. ¶¶ 129–140, 144
7. Claiming the agreed costs of £1.65 million in several actions is not an abuse of process. The costs claim can proceed in the Award Claims. ¶¶ 142–143

Procedural history

1. 2002The MT Prestige sinks off Cape Finisterre. Criminal proceedings begin in Spain.
2. 13 February 2013Alistair Schaff QC renders his award against Spain. The award against France follows on 3 July 2013.
3. 22 October 2013Hamblen J enters the awards as judgments under s. 66 of the Arbitration Act 1996 and rejects the States' challenges under ss. 67/72.
4. 1 April 2015The Court of Appeal upholds Hamblen J ([2015] EWCA Civ 333).
5. 1 March 2019The Provincial Court of La Coruña issues an execution order. Spain registers it in England on 28 May 2019.
6. 2019The Club issues the four actions. Permission to serve out of the jurisdiction is granted between 1 April and 18 November 2019.
7. 24 July 2020Butcher J rules that the States are not immune, that the Court has jurisdiction over the Award Claims, and that it has no jurisdiction over the Judgment Claims.

Tribunal, counsel and experts

For the claimant

Ince Gordon Dadds LLP

For the respondent

Squire Patton Boggs · K&L Gates LLP

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Keywords

• Prestige
• state immunity
• State Immunity Act 1978 section 9
• commercial transaction
• pay to be paid clause
• oil pollution
• marine insurance
• P&I club
• EU Service Regulation
• Recast Brussels Regulation
• arbitration exception
• matters relating to insurance
• injured party
• action on the award
• declaratory award
• merger
• service out of the jurisdiction
• subrogation

Summary generated with AI from the published documents — refer to the award for the authoritative text.