The Luxembourg-based Court of Justice of the European Union (CJEU) has backed Spain’s multi-million euros damage claim against The London Steam-Ship Owners Mutual Insurance Association for the catastrophic oil spill that caused significant damage to the country’s North-Western coast in 2002.

An estimated 63,000 tons of fuel was released when the Greek oil tanker Prestige, which was sailing to Gibraltar, sank along the Galicia coast and forced the closure of Spain’s richest fishing grounds.

What followed was a lengthy dispute that eventually saw the case before the CJEU involving the The London Steam-Ship Owners’ Mutual Insurance Association Limited, the insurer of the vessel, and Spain.

Spain initially took the case to a Spanish court which subsequently ordered the insurer to pay compensation, capped at $1 billon, for the damage. The London Steam-Ship Owners’ Mutual Insurance Association Limited responded by launching arbitration proceedings in London.

Significantly, this action resulted in a ruling that Spain could only seek damages claims through arbitration in London under English law. As a result, Spain asked a UK court to enforce the Spanish ruling and received backing for this stance in 2019. The insurer then appealed, prompting the UK High Court to seek guidance from the CJEU.

The CJEU has now come down in support of Spain’s case with the judges stating in their ruling; “The arbitration proceedings initiated in the United Kingdom cannot block the recognition of the Spanish judgment ordering the insurer to pay compensation for the damage caused by the oil spill.

“To accept that a judgment entered in the terms of an arbitration award by which an arbitral tribunal declared itself to have jurisdiction on the basis of such an arbitration clause may prevent the recognition of a judgment 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.”

W Denis Group arranges international (re)insurance for organisations in a range of sectors and industries. For further information please visit www.wdenis.eu or contact Vida Jarašiūnaitė at vida.jarasiunaite@wdenis.eu or Mark Dutton at mark.dutton@wdenis.com.