Twenty one years on and still fighting over the ‘Prestige’. Registering a foreign judgment in England and the Brussels Regulation.

Butcher J’s judgment of October 6, [2023] EWHC 2473 (Comm), provides us with the latest chapter in the long-running saga between Spain and the London P&I Club regarding the former’s attempts to register its Supreme Court Judgment of 2016 in England. The Club had a declaratory award of non-liability against Spain from Mr Schaff which it successfully converted into a judgment in a decision of Hamblen J, which was upheld by the Court of Appeal (The Prestige (No. 2) [2015] EWCA Civ 333, [2015] 2 Lloyd’s Rep 33). Subsequently, Henshaw J and the Court of Appeal The Prestige (Nos. 3 & 4) [2021] EWCA Civ 1589, [2022] 1 WLR 3434. found that damages would not result from Spain’s failure to comply with an award that was purely declaratory, but the Club obtained permission from the Court to appoint an arbitrator under s.18 of the Arbitration Act 1996 in a second arbitration claiming either damages or equitable compensation.

At the end of 2020 just prior to the ending of the Brexit transition period, Butcher J, who had been hearing the Club’s appeal against Spain’s obtaining a Registration Order for its 2016 Judgment, referred three questions to the CJEU. Shortly after the Court of Appeal found that he was wrong to make the reference but only he could withdraw the reference. Before that could be done, the CJEU gave their judgment, which did not bode well for the Club. In paras 54-73 the CJEU had found that, while a judgment on an arbitration award might fall within Article 34(3), this was only when a judgment on the same terms could have been entered by the enforcing court, and then to provide ‘guidance as to how that test should be applied to the facts presented to the CJEU in this case.’ This ‘guidance’ was that ‘the content of the arbitral award at issue in the main proceedings could not have been the subject of a judicial decision falling within the scope of Regulation No. 44/2001 without infringing two fundamental rules of that regulation concerning, first, the relative effect of an arbitration clause included in an insurance contract and, secondly, lis pendens.’ Further, it was not simply for the court seised with the enforcement application under the Regulation to consider and apply these principles, but the court seised with the application to enter the judgment in the terms of the arbitral award.’

Permission to appeal the Court of Appeal’s Judgment to the Supreme Court had been granted to Spain and a hearing scheduled, which was suspended with the agreement of the parties after the CJEU Judgment appeared. Later in 2022 Spain’s application for permission to appeal to the Supreme Court against the Court of Appeal’s Judgment in the Prestige 3 & 4 was turned down.

Since then, the Club has continued its appeal against Registration of the Spanish Judgment and in January and March 2023 it obtained two partial awards in its favour from Sir Peter Gross, appointed as sole arbitrator for the second arbitration. The awards were to the effect that Sir Peter Gross had jurisdiction as arbitrator, the arbitration exclusion in Brussels I meant that the CJEU erred in its findings at paragraphs of its judgment, equitable compensation could be awarded against Spain, potentially injunctive relief too, although the arbitrator exercised his discretion not to award such relief, and damages could also be awarded in lieu of an injunction.

The Club’s appeal came before Butcher J, along with Spain’s challenges to the awards of Sir Peter Gross under ss 67, 68 and 69 of the Arbitration Act 1966. Butcher J has essentially agreed with the findings of Sir Peter Gross, except as regards the availability of injunctive relief, due to s.13(2) of the Sovereign Immunity Act 1978, and the availability of damages in lieu of an injunction. He deferred a decision on the availability of injunctive relief against a State till after the decision of the Court of Appeal in UK P&I Club N.V. v Republica Bolivariana de Venezuela (The ‘Resolute’) [2022] 1 WLR 4856which is scheduled to be heard this December. On the key question of the effect of the CJEU’s judgment he noted that CJEU had considered questions beyond the three he had referred, and concluded, as had Sir Peter Gross, there was an issue estoppel to the effect that the jurisdiction-allocation provisions of the Regulation, and in particular its lis pendens and insurance provisions, were no good reason for the English s. 66 Judgments not to have been entered because the Regulation is not applicable to arbitration. Specifically, the CJEU did not take into account that, because of the issues which had been raised and decided in the earlier proceedings, there might be res judicatae relevant to the line of reasoning which it adopted. The Court could and should give effect to that issue estoppel, notwithstanding what may have been suggested in paragraphs [54]-[73] of the CJEU Judgment, and  the decision in the relevant part of the CJEU Judgment could not be binding.

Butcher J found that the Club’s Appeal against the Registration Order succeeded because the Spanish Judgment was irreconcilable with the English s. 66 Judgments, and, if that were wrong, recognition of the Spanish Judgment would be contrary to principles of English public policy relating to res judicata by reason of the prior Award of Mr Schaff.

Spain were given permission to appeal under s.69 on all of its four grounds of challenge, save that part of ground 1 which raised the issue of the effect of the CJEU Judgment on the jurisdiction of Sir Peter Gross as arbitrator. The appeal under s. 69 AA 1996 on grounds (1) and (2) (relating to the CJEU Judgment) and (4) (relating to equitable compensation) was dismissed. On ground (3) regarding injunctive relief against Spain and damages in lieu of an injunction, Butcher J concluded that Sire Peter Gross had no jurisdiction to grant either relief, but deferred his decision until after the decision of the Court of Appeal in The Resolute.

On the same day Butcher J gave a similar decision  [2023] EWHC 2474 (Comm) in relation to France’s applications in connection with two partial awards from the Arbitrator appointed by the Club, Dame Elizabeth Gloster, in which it sought declarations that the French State was in breach of its obligations not to pursue the non-CLC claims other than by way of London arbitration, injunctive relief, and an order that the French State pay to the Club such sums as the Club is ordered to pay to the French State in any jurisdiction in which the Spanish Judgment is recognised or enforced, as well as compensation for its costs of defending the non-CLC claims in Spain.

France did not seek to register the Spanish Supreme Court Judgment in England. It sought leave to appeal four questions of law arising out of the Awards, pursuant to s. 69 AA 1996 and an extension of time to appeal the first partial award.

Ground 1: whether the arbitral tribunal had the power to grant an injunction against the French State under s. 48(5) AA 1996;

Ground 2: whether the arbitral tribunal had the power to award equitable compensation for breach of an equitable obligation to arbitrate arising by application of the conditional benefit principle, or whether equitable compensation is otherwise available in these circumstances; Ground 3: whether an anti-enforcement injunction can be granted where its effect is to restrain enforcement of a foreign judgment which is granted recognition under English law; and

Ground 4: whether equitable compensation can be granted where its effect is to neutralise the effect of a foreign judgment which is granted recognition under English law.

Butcher J found that France required an extension of time to bring its s.69 AA 1996 application in respect of matters decided in the First Partial Award and one should be granted on Grounds 1 and 2, but not on Grounds 3 and 4. There should be permission to appeal on Grounds 1 and 2, but there would not have been such permission on Grounds 3 and 4. The appeal on ground 2 was dismissed. In relation to Ground 1 he concluded that the arbitrator had no jurisdiction to grant and injunction against the French state but his decision was deferred until after the Court of Appeal had come to a decision in the ‘Resolute’.