The Kingdom of Spain v The London Steam-Ship Owners' Mutual Insurance Association Ltd

Hearing dates: 29 October to 1 November 2024, 4 to 6 November 2024

Approved Judgment

This judgment was handed down remotely at 10:00am on Thursday 12 December 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Sir Geoffrey Vos, MASTER OF THE ROLLS:

Section A: Introduction

On 19 November 2002, the M/T Prestige (the vessel) broke in two and sank off the coast of Spain in the course of a voyage from St. Petersburg to the Far East. The vessel was carrying 70,000 metric tonnes of fuel oil. The resulting oil spillage caused significant pollution damage to the Spanish and French coastlines. The vessel was owned by Mare Shipping Inc (the owners) and managed by Universe Maritime Limited (the managers). The Club provided Protection and Indemnity (P&I) and Freight, Demurrage and Defence (FD&D) insurance to the owners and managers in respect of the vessel. The terms of that insurance included two critical clauses. The first required London arbitration (the arbitration clause). The second was a “pay to be paid” clause that provided for the Club only to be liable if the owners and managers had first actually paid the full amount of their liability out of their own monies (the pay to be paid clause).

There are five appeals before this Court from orders made following three separate judgments of Mr Justice Butcher (the judge). The first concerned human rights and was delivered on 12 May 2021 ( [2021] EWHC 1247 (Comm) – the first judgment). The second judgment delivered on 6 October 2023 is the most substantial one, and concerned many issues relating to Spain's, France's and the Club's claims ( [2023] EWHC 2473 (Comm) – the second judgment). The third judgment was also delivered on 6 October 2023 and concerned France's claims against the Club ( [2023] EWHC 2474 (Comm) – the third judgment). The five appeals fall into three categories.

The first appeal (CA-2024-000178) concerns the question of whether a judgment for some €855,493,575.65, which was obtained by Spain and other claimants against the Club in the Spanish Courts on 1 March 2019 (the Spanish judgment), should have been registered in England pursuant to Chapter III of Regulation (EC) No. 44/2001 (the Brussels I Regulation). The events took place before Brexit. Spain says in support of its appeal that the Spanish judgment should be enforced in England and Wales, relying on a decision of the Court of Justice of the European Union (the CJEU) ( The Prestige [2023] 1 WLR 1) delivered on 20 June 2022 (the CJEU's decision), after the judge had referred certain questions to it on 21 December 2020. The judge decided that the CJEU's decision did not bind him to register the Spanish judgment, because (a) the CJEU had exceeded its jurisdiction, and (b) Hamblen J in The Prestige (No 2) [2013] EWHC 3188 (Comm), [2014] 1 Lloyd's Rep 309 (Hamblen J's judgment) and the Court of Appeal in The Prestige (No 2) [2015] EWCA Civ 333, [2015] 2 Lloyd's Rep 33 (the CA's section 66 judgment) had decided under section 66 (section 66) of the Arbitration Act 1996 (the 1996 Act) that an order should be made in the terms of an arbitration award delivered on 13 February 2013 (Mr Schaff's award) by Mr Alastair Schaff KC (Mr Schaff). Mr Schaff's award had declared that Spain was bound to arbitrate its claims against the Club. Hamblen J's judgment and the CA's section 66 judgment are together referred to as the “section 66 judgments”. Accordingly, since the judge held that he was not bound by what the CJEU had decided, he decided that the section 66 judgments created issue estoppels that were irreconcilable judgments preventing the registration of the Spanish judgment in England & Wales under article 34(3) of the Brussels I Regulation (article 34(3)).

In addition, the judge held that there was an issue estoppel created in favour of the Club as against Spain by Mr Schaff's award, which would anyway have prevented the registration of the Spanish judgment as a matter of English public policy under article 34(1) of the Brussels I Regulation (article 34(1)).

The judge, therefore, set aside the registration ordered originally by Master Cook. The issues raised by the first appeal have been designated by the parties as the “Brussels Appeal”. It may be noted at this stage that, whilst Mr Schaff also made a similar award against France in separate arbitration proceedings, France has never sought to register the Spanish judgment in its favour against the Club in England & Wales. Mr Schaff's awards against each of Spain and France are referred to together as “Mr Schaff's awards”.

The second set of three appeals are Spain's appeal numbered CA-2024-000180, France's appeal numbered CA-2024-000182, and the Club's cross appeal concerning France numbered CA-2024-000597. The issues raised by the second set of appeals have been designated by the parties as the “Arbitration Appeals”. The Arbitration Appeals all concern the question of whether separate arbitration awards made by Sir Peter Gross against Spain and by Dame Elizabeth Gloster (together the Arbitrators) against France should be upheld. The Arbitrators and the judge held that the Club was entitled to equitable compensation from Spain and France in respect of their breach of an equitable obligation to arbitrate their claims against the Club. The essential question in the Arbitration Appeals is whether they were right as a matter of law. The Club says they were, and Spain and France say that no such equitable compensation is available in law. There are two important connected, but subsidiary, questions raised by these appeals. The first is whether an injunction restraining the Spanish proceedings could or should have been granted against either Spain or France, and the second is whether the Club was, either in addition to equitable compensation or instead of it, entitled to equitable damages in lieu of or in addition to such an injunction against Spain and France. Equitable damages, as opposed to equitable compensation, are claimed under section 50 of the Senior Courts Act 1981 (section 50), which was the statutory successor to section 2 of the Chancery Amendment Act 1858 (known as Lord Cairns's Act). Spain and France...