Following the sinking of the Prestige off the coast of Galicia in 2002, Spain and France invoked article 117 of the Spanish Penal Code 1995 to sue the vessel’s P&I Club directly, as victims of the extensive pollution. In civil proceedings the Spanish courts declared Spain entitled to recover up to €2.355bn and France €117m, subject to the $1bn limit of cover. The Club contended that by taking the benefit of the insurance contract the States also took its burden, including the London arbitration clause. The Supreme Court held that the States’ obligation to arbitrate arose as a contractual obligation at common law, not an equitable one, so their breach of contract attracted common law damages, and confirmed the arbitrators’ awards of monetary relief to the Club.
Read the full judgment here