On 12 December 2024, the Court of Appeal (Vos MR, Andrews and Falk LJJ) handed down judgment in The Prestige litigation (The London Steam-Ship Owners Mutual Insurance Association v. the Kingdom of Spain and the French State). This judgment is the latest of a long series of cases arising out of the clean-up costs of the environmental disaster caused by the total loss of the M/T Prestige in 2002.
The judgment concerned separate awards made in ad hoc arbitrations by Dame Elizabeth Gloster DBE (against the French State) and Sir Peter Gross (against Spain) against which the States had appealed under s. 69 of the Arbitration Act 1996 (“AA”). It also concerned a separate appeal by Spain against a judgment of Butcher J refusing to register a USD 1 billion judgment of the Spanish Supreme Court under the Brussels I Regulation, and the insurance Club’s appeal against a judgment which rejected an argument that registration of that Spanish judgment would violate human rights.
Dame Elizabeth Gloster had granted an anti-enforcement injunction against France to prevent it from enforcing the Spanish judgment outside of Spain, having concluded that s. 48(5) AA gave her the power to do so even in the absence of any institutional rules granting such a power. Sir Peter Gross had determined he had the power to grant injunctive relief, but had declined to do so. The States contended that the arbitrators had no such power on the basis that s. 48(5) granted the tribunals the same powers as a court, and the court had no power to grant an injunction against a State, absent the State’s consent, by reason of s. 13 State Immunity Act 1978. The Court of Appeal accepted this argument. It further agreed with the States that, given the lack of power to award injunctive relief, the arbitrators had no power to grant damages in lieu of an injunction under s. 50 Senior Courts Act 1981 (the successor to Lord Cairns’s Act).
The Court of Appeal also allowed the States’ appeals against awards of equitable compensation by both arbitrators for contravention by the States of an equitable obligation to arbitrate. The awards of equitable compensation had been upheld by Butcher J. The Court found that, although the categories of case in which equitable compensation may be awarded are not closed (and this was a new one), the Arbitrators and Butcher J were wrong to think that it could be awarded as a matter of law in a case such as this. The effect of a grant of equitable compensation would be to neutralise the possibility of the relevant Spanish judgments being recognised or enforced in foreign jurisdictions, which is a matter that should be left to courts in such jurisdictions.
The Court also held that the Spanish Supreme Court’s judgment should not be registered in England because of an issue estoppel arising from previous arbitral proceedings (although not on other grounds advanced by the Club, including concerning a judgment given by the CJEU in London Steam-Ship Owners’ Mutual Association Ltd v Spain (C-700/200)). It dismissed the Club’s appeal concerning human rights.
The judgment makes for important reading in relation to the powers of tribunals and courts to grant injunctive relief against states, the availability of equitable compensation in conditional benefit/‘derived right obligations’ cases (as well as the approach to the grant of equitable compensation in new situations more generally), and the approach of the Courts to decisions of the CJEU post-Brexit.
