Insurer must pay Spanish claim in case of oil spill in Galicia, EU


Spain won the backing of Europe’s highest court on Monday in its multimillion-euro claim against the London Steam-Ship Owners Mutual Insurance Association over a massive oil spill on its northwest coast two decades ago.

The 2002 sinking of the Greek tanker Prestige, which was sailing to Gibraltar, dumped around 63,000 tonnes of foul-smelling black fuel along the coast of Galicia and forced the closure of Spain’s richest fishing grounds.

This led to a long dispute between London Steam-Ship Owners’ Mutual Insurance Association Limited, the ship’s insurer, and Spain.

The latter took the case to a Spanish court which subsequently condemned the insurer to pay compensation capped at 1 billion dollars for damages.

The London Steam-Ship Owners’ Mutual Insurance Association Limited in turn initiated arbitration proceedings in London, which resulted in a ruling that Spain could only seek damages by arbitration in London under the English law.

Spain then asked a UK court to enforce the Spanish ruling and won its support in 2019. The insurer appealed, prompting the UK High Court to seek advice from the UK Court of Justice. European Union (CJEU) based in Luxembourg.

The CJEU sided with Madrid.

“The arbitration proceedings initiated in the United Kingdom cannot prevent the recognition of the Spanish judgment ordering the insurer to pay compensation for the damage caused by the oil spill,” the judges said.

“To accept that a decision rendered under the terms of an arbitration award by which an arbitral tribunal has declared itself competent on the basis of such an arbitration clause may prevent the recognition of a decision rendered in another Member State following of a direct action for liability brought by the injured party would be likely to deprive the latter of effective compensation for the damage suffered”, they declared.

The case is C-700/20 London Steam-Ship Owners’ Mutual Insurance Association.

(Reuters – Reporting by Foo Yun Chee; Editing by Alison Williams)

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