European justice endorses the ruling of the Provincial Court of A Coruña that required the disbursement of 855 million euros for the oil slick
The Court of Justice of the European Union (CJEU) ruled this Monday that the Spanish judgment prevails over the British arbitration in the case that confronts Spain with the Prestige insurer, London P&l Club, and, therefore, it would be obliged to pay compensation for oil slick damage.
In its opinion, the high court considers that the arbitration award issued in 2013 in the United Kingdom cannot prevent the recognition of the sentence issued in Spain by the Provincial Court of A Coruña, which forced the insurer to disburse 855 million euros.
The European court underlines in the preliminary ruling that the agreement between the insurer and the insured cannot oblige the injured party to go to the court of the place of domicile of the insurer instead of the one that caused the incident for which compensation is claimed, and thus rejects the insurer’s request to declare that Spain was obliged to file its appeal under English law. The CJEU explains that recognizing the British arbitration award against the judgment of the Spanish court and preventing the recognition of a resolution of another Member State on the liability of the insurance contract, “would deprive” the injured party of “effective compensation for the damage suffered”, and therefore to Spain of the compensation.
The court based in Luxembourg confirms that an arbitration award can only “prevent” the recognition of judicial decisions of other Member States, if the content of that award “is followed by a judicial procedure” that transcribes the conclusions of that arbitration in a resolution court, as established by Regulation No. 44/2001. A judicial resolution that has not been produced in this case.
As a preliminary, the CJEU points out that the Community Regulation excludes arbitration from its scope of application and a judgment issued in the terms of an arbitration award “cannot enjoy mutual recognition between the Member States”. In addition, the high court indicates that the British arbitration award was issued in conditions in which it would not have been possible to issue a judicial resolution and thus contradicts the recommendation of the Advocate General last May, which concluded that the arbitration award should be considered a “relevant ruling”, so the British law would prevail over the Spanish ruling, which would exempt the insurer from paying compensation to Spain.
In a further step, the high court observes that “the procedure related to the civil action in Spain and the arbitration procedure in London”, not only confronted the same parties, but also had the same object and the same cause: the responsibility of London P&I Club against the Spanish State in accordance with the insurance contract between the insurer and the owners of the Prestige, for the damage caused by the shipwreck. The European court emphasizes that the British court responsible for issuing the arbitration must verify that the Community Regulation is complied with to prevent circumvention, such as carrying out an arbitration procedure in contravention of the arbitration clause of the insurance contract.
Origin of the procedure
On January 16, 2012, the London P&I Club initiated a procedure in which it requested that it be declared that Spain was obliged to present its appeal under English law, since the claim was contractual and responded to the English rules of conflict of laws, Therefore, English law should be applied to the contract.
The case stems from the sinking of the Prestige oil tanker, in November 2022, off the Galician coast when it was transporting 70,000 tons of fuel oil, which spilled and caused significant damage on the northern coast of Spain and the western coast of France. In this context, a legal dispute arose between the ship’s insurer, London P&I Club, and Spain, raised in two different proceedings in two Member States. These processes gave rise to two judicial resolutions: one issued by the Provincial Court of A Coruña and the other by the High Court of Justice of England and Wales.
Spain requested recognition of the resolution of the Provincial Court of A Coruña by the jurisdictional bodies of England and Wales, to which the High Court of Justice of the United Kingdom agreed in May 2019 and to which London P&I Club filed an appeal , for which the question is now being referred to the European Court for a preliminary ruling.
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