This was an appeal by the London Steam-Ship Owners' Mutual Insurance Association Ltd (the Club) against an ex parte registration order of Master Cook dated 28 May 2019, made pursuant to art 43 of Regulation (EC) No 44/2001 (the Regulation), of an order of the Provincial Court of La Coruña, Spain, dated 1 March 2019. The Spanish judgment was made following criminal and civil proceedings in which the Spanish courts found the Club liable up to a USD 1 billion global policy limit for damages arising out of pollution following the total loss of the M/T Prestige off the coast of Spain in November 2002. The Club acted, among other things, as the Prestige owner's insurer in respect of the owner's liabilities under the International Convention on Civil Liability for Oil Pollution Damage 1969 (as amended by the 1992 Protocol) (the CLC 1992).

On 14 January 2016, the Spanish Supreme Court handed down judgment in these proceedings (see CMI1141). In relation to criminal liability, the Supreme Court reversed the Provincial Court's judgment (see CMI1140) and convicted the master of the offence of serious negligence against the environment. The offence was classified as aggravated on the ground that the master had generated a risk of pollution which exceeded the merely serious level required by the basic offence. The master was acquitted of the offence of disobedience. In relation to civil liability, the Spanish Supreme Court imposed liability for the total loss on the master, the owner (vicariously), and the Club subject to the USD 1 billion limit in its contract of insurance. In the meantime, following the Spanish Supreme Court's judgment on the cassation appeal, the civil claims returned to the Provincial Court for a determination of quantum in respect of the liability of the master, the shipowner and the Club.

The Club’s case on this appeal was that recognition and enforcement of the Spanish judgment should be refused and that the registration order should be set aside for one or both of two main reasons, namely that: (1) the Spanish judgment is irreconcilable with an English judgment, ie the order of Hamblen J dated 23 October 2013 as upheld on appeal, and that accordingly the exception in art 34.3 of the Regulation is applicable; (2) recognition of the Spanish judgment would entail a manifest breach of English public policy in respect of (a) the rule of res judicata and/or (b) human and fundamental rights, and that accordingly the exception in art 34.1 of the Regulation is applicable.

The Club’s case is that when the Spanish Supreme Court proceeded, having found the master criminally guilty of serious negligence, to make findings of civil liability, it made arbitrary or irrational findings as to the application of the CLC 1992. The Club argues as follows:

1. The exemption or restriction of liability contained in arts 3.4 and 5.2 of the CLC 1992 may be set aside only in exceptional circumstances. The strictness of the test (personal acts or omissions committed 'with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result') is clear from a number of English or Privy Council authorities, including The MSC Rosa M [2000] 2 Lloyd's Rep 399 [12]-[14]; The Leerort [2001] 2 Lloyd's Rep 291 [9]-[11], [13], [19]; The Cape Bari [2016] 2 Lloyd's Rep 469 [14] (CMI114); The Ocean Victory [2017] 1 WLR 1793 [69], [76] (CMI16). These cases recognised that there was 'an almost indisputable', or 'virtually automatic' right to limit, which would only not apply in 'quite exceptional circumstances'.
2. The CLC 1992 is an international treaty which has been ratified by Spain and is directly incorporated into the Spanish legal order. Within that legal order, according to the evidence of Mr Ureña, the test in the CLC 1992 was the practical equivalent of dolo eventual, a form of indirect intent and fundamentally different from negligence (including negligence where there is knowledge that damage might result (or culpa consciente)). That, the Club submitted, was in accordance with decisions of Spanish courts in relation to the Warsaw Convention and Article 4.5.e of the Hague-Visby Rules, and a body of academic opinion.
3. The Provincial Court had found not only that the master was not aware, but also that he could not have been aware of the maintenance deficiencies of the vessel, and that his acts or omissions had not caused the failure of the vessel, and had made no material findings about the owner, either as to its knowledge or as to whether it had caused or contributed to the loss.
4. The Supreme Court, having found the master guilty of serious negligence at the stage of deciding on criminal responsibility, accepted that the CLC 1992 applied in principle to claims against the master (Legal Ground 63). It then referred to the exception in art 3.4, and found that the test was to be applied consistently with the 'system of which it forms part', which included the imposition of criminal sanctions for serious negligence (Legal Ground 64). As the Court had found the master guilty of serious negligence, the test in art 3.4 was found to have been met.
5. This was, the Club contends, wholly unjustified and perverse. It says: (i) that there was no basis to equate the art 3.4 test with culpa consciente; (ii) even if the standard were culpa consciente, the Spanish Supreme Court did not apply that test; and (iii) the Spanish Supreme Court then made findings that the master had caused the loss by his personal act or omission, which the Provincial Court had not made, and for which there was no basis.
6. In relation to the owner, the Spanish Supreme Court recognised that its liability had to be considered on the basis of the application of the CLC 1992 (Legal Ground 67). It then found that the owner must have had knowledge of the structural condition of the vessel and its state of repair, which was not a finding the Provincial Court had made, and which the Spanish Supreme Court was not in a position to make. It also failed to apply a standard of dolo eventual which it should have applied, even on its own reasoning, in a civil context. And it proceeded to impose liability without making a finding of causation by the personal act or omission of the owner.

Held: Article 34.1 of the Regulation is not applicable on the basis of breaches of fundamental rights. Argument will be heard on the appropriate order which should be made to reflect this conclusion, and the fact that a determination on the other points argued must await a determination of the outcome of the Club’s appeal against the order for a reference to the CJEU, and the reference (if it continues after that appeal).

Article 34.1 does not apply and enforcement is not to be refused by reason of the Spanish Supreme Court’s decision being manifestly unreasonable or arbitrary. This is for three reasons. First, the Club’s complaints in this area are an attempt to invite the Court to review the substance of the decision of the Spanish Court, which is impermissible under art 36 and art 45.2 of the Regulation. Secondly, the Club has not overcome the strong presumption that the courts of the originating Member State, through 'the system of legal remedies' of that State, will have provided a procedure which is compliant: Maronier v Larmer [2003] QB 620 [23]-[26]. The Club has not shown what arguments or authorities were put before the Spanish Supreme Court. The Court is accordingly not in a position to be able to make any informed assessment of how the Spanish Supreme Court’s conclusions related to the submissions which were made to it. Thirdly, the Club has not attempted to avail itself of any remedies in the Spanish courts to put right what it contends to have been the arbitrary nature of the liability decision. It is not a sufficient answer for the Club to say that a nullity appeal to the Spanish Supreme Court would have been pointless because, as the Club contends, it 'would never have changed its mind'.