The Court of Appeal of England and Wales refused to enforce a foreign judgment on the grounds that it was incompatible with arbitral awards rendered in London concerning the same case, on the basis that such enforcement would be contrary to public policy.
The case related to the oil spill following the sinking of the MT Prestige off the coast of Galicia on November 19, 2002.
The ship belonged to Mare Shipping Inc. (the “Owner”) and was managed by Universe Maritime Limited (the “Manager”). The London Steam-Ship Owners’ Mutual Insurance Association Limited (the “Club”) provided protection and indemnity insurance to the Owner and Manager of the ship, which included an arbitration clause (providing for a seat in London) and a “pay to be paid” clause which stipulated that the Club would only compensate third-party victims if the Owner and the Manager had first paid the sums due as a result of their liability being incurred.
Following the oil spill, multiple proceedings were initiated.
In Spain, the national courts held the ship’s captain, the Owner and the club liable. On 1st March 2019, the club was ordered by a Spanish court to pay Spain and France approximately 855 million euros.
However, this decision was substantively incompatible with several arbitration awards in favor of the club:
– In 2013, an initial series of arbitration awards against Spain and France obliged the two states to respect the arbitration clause as well as the “pay to be paid” clause;
– In 2019, a new series of arbitration awards enjoined Spain and France to resort to arbitration.
Having sought enforcement in England of the Spanish judgment dated 1st March 2019, Spain’s request was dismissed by the Court of Appeal of England and Wales in a judgment dated 12 December 2024.
The judgment is based on Article 34(1) of the Brussels I Regulation as it is contrary to previous arbitral awards. The Court ruled in this regard that “failure to give effect to the authority of res judicata created by a binding arbitral award would be manifestly contrary to English public policy under Article 34(1) [of the Brussels I Regulation]”. More specifically, the failure to recognize the res judicata attached to an arbitral award “would constitute a manifest breach of a rule of law regarded as essential in the legal order of the Member State”.
