01/04/2015

London Steam Ship Owners Mutual Insurance Association Ltd v Spain ("The Prestige")

Judgment has been handed down by the Court of Appeal in the matter of The London Steam-Ship Owners' Mutual Insurance Association Ltd v The Kingdom of Spain and the French State (“The Prestige”), dismissing the appeal of Spain and France against the judgment of Hamblen J [2013] EWHC 3188 (Comm).

The case arises out of the sinking of the M/T Prestige in November 2002.  The resulting oil spill was one of the worst ecological disasters in recent years, causing severe pollution of the Spanish and French coasts.  The damage was estimated at over €4.4 billon and clean up operations took years.

The present appeal arose out of disputes between the sovereign states whose costs were affected (Spain and France) and the insurers of the vessel owners (“the Club”).  Spain and France sought pollution compensation from the Club in the Spanish courts.  The Club obtained an arbitration award in London declaring that it was not liable for the Spanish and French claims and then applied under s.66 of the Arbitration Act 1996 for judgment to be entered in terms of the awards.  Spain and France resisted the Club’s application and challenged the Tribunal's jurisdiction under ss.67/72 of the 1996 Act.  At first instance, Hamblen J granted the Club’s s.66 application and dismissed Spain/France’s challenges to the Tribunal’s jurisdiction.

The Court of Appeal dismissed an appeal against the Judge’s order. The Court’s judgment considers the principles applicable to characterisation in accordance with Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Insurance Co (The Hari Bhum) (No 1) [2004] 1 Lloyd's Rep. 206 and [2005] 1 Lloyd's Rep. 67, difficult questions regarding state immunity (in particular under ss.2, 3 and 9 of the State Immunity Act 1978) and issues of arbitrability of claims involving a criminal element.

Christopher Hancock QC and Charlotte Tan acted for the respondent.