LONDON STEAM SHIP OWNERS' MUTUAL INSURANCE ASSOCIATION LTD V THE KINGDOM OF SPAIN (THE “PRESTIGE”) (NO 3)

[2020] EWHC 1582 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Henshaw, 18 June 2020

Arbitration - Third party claims - Direct action against insurer - Binding effect of arbitration clause - Conditional benefit doctrine - State immunity - Application for appointment of arbitrator - Anti-suit injunctions and damages - Arbitration Act 1996, sections 18, 48 and 66 - State Immunity Act 1978, sections 3 and 9 - Senior Courts Act 1981, sections 37 and 50

The owners of the vessel Prestige were insured by the Club against various forms of liability, including pollution liability. The insurance was subject to arbitration and also to a “pay to be paid” provision. In 2002 the vessel broke in two, causing pollution damage to the Spanish coast. Civil claims were brought in Spain by the Spanish state, and the Club was joined to the proceedings. In March 2019 the Spanish courts awarded €855,493,575.65 against the Club. In the meantime, in January 2012 the Club had commenced arbitration in London and in February 2013 obtained an award which declared that Spain was bound by the arbitration and “pay to be paid” clauses. An application was made to the English court for an enforcement order. This was opposed by Spain but granted in 2015. In March 2019 Spain sought to register the Spanish enforcement order in England. In the present proceedings the Club applied to the court for an order under section 18 of the Arbitration Act 1996 appointing an arbitrator to determine a series of applications including: a declaration that Spain would, by seeking to enforce the Spanish judgment, be in breach of its obligation under the arbitration clause to proceed only by way of arbitration; an anti-suit injunction to prevent further proceedings and enforcement; and compensation in the form of damages for breach of contract, equitable compensation and damages in lieu of an injunction.