In the context of claims for compensation related to the sinking of the oil tanker Prestige on the Spanish and French coasts in November 2002, an arbitration initiated in the United Kingdom cannot block the recognition of the Spanish judgment ordering the British insurer of the vessel (London P&I Club) to compensate for the damage caused by the oil spill, the Court of Justice of the European Union (CJEU) ruled on Monday 20 June (case C-700/20).
The Spanish State brought a civil action before the national courts and obtained an order against the insurer of the Prestige to pay $1 billion in compensation.
Subsequently, arbitration proceedings in the UK by the London P&I Club resulted in an arbitral award according to which the claims for damages brought by Spain before the Spanish courts should have been made in those arbitration proceedings. Furthermore, the award concludes that, in accordance with a clause in the insurance contract, the insurer could not be liable to Spain in the absence of the prior payment of the damages, by the owners of the vessel, to Spain.
As a result, the insurer obtained a judgment from the High Court of Justice of England and Wales in which the terms of the arbitral award were reproduced, and this judgment was upheld on appeal by Spain. However, it obtained recognition from the High Court of Justice of the Spanish court’s decision ordering the enforcement of the London P&I Club’s court sentence.
The insurer had asked the CJEU to interpret the Brussels I Regulation (44/2001, repealed and replaced by the Brussels Ia Regulation 1215/2012) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Can recognition of the Spanish court's decision be refused on the basis of the existence, in the United Kingdom, of a judgment entered in the terms of an arbitral award and the effects of which are irreconcilable with those of the abovementioned judicial ruling?
In its judgment, the Court ensures that the fundamental provisions and objectives of the Brussels I Regulation cannot be circumvented by means of arbitration proceedings followed by judicial proceedings seeking to have the terms of the arbitral award entered in a judicial decision.
According to the European Court, a jurisdiction clause agreed between an insurer and a policyholder cannot be invoked against a victim of insured damage who wishes to bring an action directly against the insurer in tort before the courts for the place where the harmful event occurred or before the courts for the place where the victim is domiciled (Case C-368/16). And, it adds, to allow a judgment reproducing the terms of an arbitral award to preclude recognition of a decision given in another Member State following a direct action for damages brought by the injured party would be liable to deprive that party of effective compensation for the damage suffered.
As regards lis pendens, the Court notes that the two proceedings under consideration were between the same parties and had the same subject matter and cause of action. The Court concludes that it is incumbent on the court seized to validate an arbitral award to verify compliance with the Brussels I Regulation in order to prevent its circumvention.
See the judgment: https://aeur.eu/f/27e (Original version in French by Mathieu Bion)