The French State v The London Steam-Ship Mutual Insurance Association Limited
[2023] EWHC 3263 (Comm)
The French State v The London Steam-Ship Owners’ Mutual Insurance Association Limited
6 October 2023
[2023] EWHC 2474 (Comm)
High Court
France sued an insurance company, and a judge said the insurance company could make France pay them money. A higher court mostly agreed, but said that part of the ruling should be thrown out because the original judge didn't have the right to make that decision about France. The higher court also agreed France could pay the insurance company money for breaking their agreement to handle this dispute in a specific way.
Key Facts
- •The French State (Claimant) appeals two partial awards made by Dame Elizabeth Gloster in an arbitration against The London Steam-Ship Owners' Mutual Insurance Association Limited (Defendant).
- •The First Partial Award (8 February 2023) included declarations of breach of equitable obligations, an injunction against enforcement of Spanish judgments globally (except Spain), and an order for equitable compensation.
- •The Second Partial Award (2 May 2023) clarified the terms of the relief, specifying the conditions under which equitable compensation would be due and clarifying the injunction’s application to Spain.
- •The French State sought an extension of time to appeal the First Partial Award, arguing it was not a final award, and leave to appeal both awards on four grounds: 1) The arbitrator's power to grant an injunction against the French State; 2) The power to award equitable compensation; 3) The possibility of anti-enforcement injunctions against recognized foreign judgments; and 4) The permissibility of equitable compensation neutralizing recognized foreign judgments.
- •The French State's application for an extension of time was based on the argument that they were acting prudently to avoid potential issues concerning state immunity in light of a forthcoming enforcement application by the Club.
- •The French State later argued they did not need an extension because the First Partial Award was not a complete award requiring immediate appeal.
Legal Principles
An appeal under s. 69 Arbitration Act 1996 can only be made in respect of 'an award'.
Arbitration Act 1996
An award must be certain and final; the tribunal is functus officio after issuing a valid award.
Emirates Trading Agency LLC v Sociedade De Fomento Industrial Private Ltd [2015] EWHC 1452 (Comm)
Factors to consider in determining if a decision is an award include: finality, substance over form, nature of issues, tribunal's description, reasonable recipient's view, compliance with formal requirements, and tribunal's intent.
ZCCM Investments Holdings plc v Kasashi Holdings plc [2019] EWHC 1285 (Comm)
Principles regarding extensions of time to challenge an arbitration award include considering the length of delay, reasonableness of the party's actions, contribution by the respondent or arbitrator, irremediable prejudice, impact on arbitration progress and costs, strength of the application, and overall fairness.
AOOT Kalmneft v Glencore International AG [2002] 1 Lloyd’s Rep 128; Terna Bahrain Holding Company WLL v Al Shamshi [2012] EWHC 3283 (Comm)
State Immunity Act 1978, section 13(2) governs the exercise, not the existence, of the court's power to grant injunctions against a State. Arbitral tribunals may have different powers from courts.
State Immunity Act 1978, section 13(2), The Prestige (No. 3)
Equitable compensation is available for breach of an equitable obligation to arbitrate.
The Prestige (No. 2)
Recognition of a foreign judgment does not negate the possibility of remedies for breach of contract or equitable obligations leading to that judgment.
The ‘Alexandros T’ [2013] UKSC 70; Briggs: Civil Jurisdiction and Judgments
Outcomes
The First Partial Award was deemed a final award.
It met the formal requirements of an award, dealt with substantive issues, and concluded the arbitrator's authority on the decided points.
Extension of time granted for Grounds 1 and 2, but refused for Grounds 3 and 4.
The delay was significant, but the court considered the French State's reasons, lack of prejudice to the Club, and the overall justice of allowing the appeal on Grounds 1 & 2. Grounds 3 & 4 were deemed weak.
Permission to appeal granted for Grounds 1 and 2, refused for Grounds 3 and 4.
Grounds 1 and 2 raise points of general public importance where the arbitrator's decision is open to serious doubt. Grounds 3 and 4 were not deemed open to serious doubt.
Appeal on Ground 1 (power to grant injunction) succeeds (subject to the outcome of *The Resolute* appeal).
The arbitrator lacked jurisdiction to grant the injunction against the French State under the State Immunity Act 1978 and the Arbitration Act 1996, unless the State Immunity Act is read down as argued by the Club.
Appeal on Ground 2 (equitable compensation) dismissed.
The court upheld the arbitrator's finding that equitable compensation is available for breach of an equitable obligation to arbitrate.