€1.57 Billion to Spain and France in Compensation for Prestige Oil Spill

The 1976 tanker Prestige, which broke up and sank after she was refused entry to a harbour of refuge in November 2002, resulted in one of the worst environmental disasters in European history, polluting nearly 2,000 miles of French, Spanish and Portuguese coastline and wildlife, and adversely affecting the fishing industry.

It’s been a long saga, but today the Spanish Supreme Court upheld a decision handed down by the Provincial Court of A Coruña in November 2017 which requires The London P&I Club and the Prestige‘s Captain Apostolos Ioannis Mangouras to pay nearly €1.6 billion in damages to the Spanish government.

France is also set to receive €65 million and Xunta de Galicia €1.8 million.

Latest instalment of the Prestige saga — over to Madrid

Nearly 14 years ago the tanker Prestige sank, grievously sullying the coasts of France and Spain. The vessel’s P & I club (London SS) was understandably concerned. But it had taken care in granting cover to make sure that the contract was governed by English law; that its exposure was clearly restricted to CLC limits; that any dispute as to cover was to be arbitrated in London; and that there was a “pay to be paid” provision. There were good reasons for this. Many civil law courts take an impatient view of the English attitude that insurers’ liability is an aspect of the contract to indemnify, preferring the view that the liability is a direct one to the victim. The club rightly wanted to avoid the prospect of a court in an affected country giving large judgments against it on the basis of this civil law doctrine (accompanied, no doubt, by a disdain for such niceties as arbitration clauses and the small print in the P & I cover, not to mention in certain cases a large degree of national amour propre). The point was, of course, that if these were EEA courts, then however cavalier or misguided those judgments were, they would be enforceable under Brussels I or Lugano.

The club were right, in spades. Criminal Spanish proceedings, carrying with them under Spanish law the possibility of civil-law-style partie civile liability, were started. To forestall the giving of an enforceable judgment against it, the club demanded arbitration, got an arbitration award saying that the Spanish and French governments could only enforce the cover subject to the terms of the contract — including the arbitration clause, of course — and then successfully got that award translated into an English judgment (see London SS Mutual v Kingdom of Spain, etc [2015] EWCA Civ 333; [2015] 2 Lloyd’s Rep. 33). In fact the original criminal proceedings failed. But a few days ago the Spanish supreme court (Tribunal Supremo) reversed that decision and gave judgment against the master of the Prestige (he got two years in clink) and, more importantly, directly against the club as a matter of civil liability. The news report is here; the judgment text (unfortunately only in Spanish) here.

With conflicting judgments from London and Madrid we now have the irresistible force meeting the immovable object. One suspects we haven’t heard the last of this saga.

AT