This case arose out of a collision in 2020 between a Venezuelan navy patrol vessel, the BVL Naiguatá GC-23, and the RCGS Resolute, an ice-class cruise liner engaged in tourism to Antarctica, which led to the total loss of the Naiguatá. The Resolute was insured by the first claimant, UK P&I Club NV (a subsidiary of the second claimant, United Kingdom Mutual Steam Ship Assurance Association Ltd; together, the Clubs). Following the loss, Venezuela brought civil claims in 2020 in the Courts of Dutch Curaçao and Caracas, Venezuela. In February 2021 the claimants sought an anti-suit injunction in this Court against Venezuela on the basis that those proceedings were in breach of the London arbitration clause in the contract of insurance with the Resolute's owners. An interim anti-suit injunction was granted against Venezuela.

The main issues are whether Venezuela is bound to arbitrate in London the claims it has advanced in Caracas; and whether it is entitled to immunity under the State Immunity Act 1978 (the Act) from a permanent anti-suit injunction to restrain it from pursuing its foreign proceedings.

The Clubs' applications for anti-suit relief are on the basis that Venezuela’s overseas proceedings are, in substance, claims to enforce the terms of the contract of insurance between the Club as insurer and its members, especially the owners, as assureds: Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Co (The Hari Bhum) (No 1) [2004] 1 Lloyd's Rep 206 (Moore-Bick J); [2005] 1 Lloyd's Rep 67 (CA). Accordingly, the parties are bound by the contract of insurance, including the London arbitration and English law clauses, so that it is contrary to its terms for Venezuela to pursue claims against the Clubs other than in London arbitration. Further, the Clubs contend, the parties are bound by any contractual defences available to the Clubs.

Venezuela contends that in Venezuelan law it has a direct claim against the Clubs, which is born of the law and independent of the contract of insurance. Therefore, the Clubs cannot rely on any arbitration or jurisdiction clause in the contract of insurance as against Venezuela’s claims in Venezuela. There is consequently no basis for an anti-suit injunction.

Held: The claim which Venezuela seeks to advance in the Caracas Court for loss of the Naiguatá is one which must be brought in London arbitration. It is subject to the terms of the contract of insurance which the Clubs entered into with the Resolute's owners. However, in accordance with s 13(2)(a) of the Act, the Clubs are not entitled to a permanent anti-suit injunction against Venezuela in relation to the foreign proceedings which Venezuela is taking against them.

The first issue to be determined is whether Venezuela's claims in the Caracas Court are to be characterised as contractual claims asserted against them as liability insurers, or whether it is exercising an independent right of action born of the law which does not mirror the Clubs' liability under the contract of insurance. Both sides engaged experts to assist the Court. This evidence included an article in 2007 by Jose Alfedo Sabatino Pizzolante in which the author noted that the direct action of a third party victim against an insurer could be seen in international instruments, such as art 7.8 of the CLC. Venezuela has an arguable case that its law recognises that a third party victim may have a right of direct action against an insurer based on an analogy with what exists in the motor vehicle context. Venezuela contends that this right of direct action is born, not of contract, but of the law. Venezuela also submitted that the nature of the direct action of a third party victim against an insurer is comparable to that under the CLC. None of this is persuasive. To say that the claim is born of the law begs the question, as Hamblen J pointed out in The Prestige (No 2) [2013] EWHC 3188 (Comm), [2014] 1 Lloyd's Rep 309 [84]-[87]. The contention that the third party claim is along the lines of tortious liability, or is a form of strict liability, is beside the point when it is the nature of the right which is determinative, not its derivation. The only possible conclusion which can be drawn about Venezuelan law is that if there is a direct action by third parties against liability insurers based on an analogy with that against a motor vehicle insurer, it is subject to the terms of the insurance contract. The position in Venezuelan law is that, with any third party insurance claim in Venezuelan law outside the field of motor vehicle insurance, the insurer cannot raise personal defences it might have against an insured. However, defences in the contract are not precluded since they are not personal as between the insurer and insured, and necessarily precede the third party’s rights. Venezuela’s claims are thus subject to the London arbitration clause in the contract of insurance.

Venezuela has also raised state immunity. Two main issues need to be resolved: first, whether Venezuela has immunity from this Court's adjudicative jurisdiction under s 1 of the Act; and secondly, whether it has immunity from injunctive relief under s 13(2)(a) of the Act. As to adjudicative jurisdiction, Venezuela accepts that the activity which the Court must characterise in this case is its claims against the Clubs in Venezuela which are the basis of the application for relief in this Court. It submits that its claims in the Venezuelan proceedings are sovereign in character, because they relate to military or law enforcement activity by the Venezuelan state. The Naiguatá was patrolling as a coast guard vessel. The claims are for the loss of that vessel, including the military equipment on board, and for the environmental damage to Venezuela’s sovereign territory. However, Venezuela misstates the character of the claims it brings against the Clubs in the Caracas court. Certainly they are claims which arise out of a collision with the Naiguatá, a Venezuelan navy vessel on patrol, and are brought to recover compensation for its loss and associated environmental damage. However, even in their wider context they are ordinary civil claims in private law, brought in the ordinary civil courts, and those which a private individual could bring. They involve nothing more than what a non-sovereign would do in undertaking legal proceedings of this character. The claims seek to enforce an insurance liability for losses which have occurred, albeit that these might relate to military equipment and include environmental damage. That liability is under a commercial contract of insurance by which a P&I club has granted cover to the owners of the Resolute against the consequences of maritime casualties. The activity of Venezuela in seeking compensation in the Caracas court by virtue of this commercial contract is commercial in character: London Steam-Ship Owners' Mutual Insurance Association Limited v Spain, The Prestige (Nos 3 and 4) [2021] EWCA Civ 1589 [36]. Consequently, the commercial exception in s 3(1)(a) of the Act applies and Venezuela’s conduct in launching proceedings against the Clubs in the Caracas Court does not attract adjudicative immunity from this Court's processes provided for in s 1 of the Act.

As to enforcement immunity from injunctive relief, s 13(2)(a) of the Act provides that 'relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property'. Section 13(2)(a) contains a separate and additional immunity (or privilege) as to enforcement measures including injunctions, even if there is adjudicative jurisdiction by way submission to jurisdiction, prior consent, or (as in this case) the operation of one of the exceptions in ss 2-11 of the Act. Section 13(2)(a) is legitimate and proportionate and cannot be interpreted restrictively in the manner sought by the Clubs. The fact that the Clubs will not have an injunction preventing parallel proceedings does not render worthless their right to have Venezuela's claims determined by way of London arbitration. As well as an order to this effect, there may also be supportive remedies available to the Clubs including, at least in a contractual context, the compensation for breach of the arbitration agreement and declaratory relief which the Clubs are seeking in the arbitration, and which could be relied upon to resist enforcement of any judgment which Venezuela obtains in the foreign proceedings.