The Spanish Supreme Court judgment on the “Prestige” casualty
By Julio López Quiroga & Hannah de Bustos
Posted: 18th April 2016 09:26
On 14 January 2016, the Criminal Division of the Spanish Supreme Court rendered a judgment in relation to the events that occurred since 13 November 2002, following the oil spill caused by the M/V “Prestige”.
The Supreme Court overturns the judgment issued by the La Coruña Court of Appeal on 13 November 2013 and, based on the facts found in this latter ruling, it convicts the master of the “Prestige” by committing an environment’s crime with recklessness, in its aggravated form of catastrophic environmental damage.
Among other facts, the judgment holds that the master sailed in a risky navigation, transporting a dangerous cargo which exceeded the vessel’s capacity, on board an old vessel on which the autopilot system and coils used to heat the cargo did not work and which had a stern towing system that did not comply with the applicable standards. The judgement also holds that the master, after the vessel listed, decided to load onboard sea water in an unsuccessful attempt to correct the vessel´s list. All of this was compounded by the fact that the master repeatedly rejected the towage requested by the Spanish Maritime Authority (notwithstanding this behaviour, the master was acquitted of the crime of disobeying the authorities, for which he had been convicted in the Court of Appeal judgment in 2013, as this behaviour is now considered to be subsumed under the environmental crime).
The judgment upholds the acquittals of both the chief engineer of the “Prestige” and the Spanish General Director of the Merchant Marine, who was also incriminated with a crime against the environment, based on the decision to tow the “Prestige” far from the coast, refusing it a port of refuge.
Having introduced the criminal consequences of the Supreme Court judgment, we will focus on the aspects of civil liability resulting from it. As a general rule, under Spanish Law, criminal courts that prosecute criminal behaviour are also competent to rule on the civil liability arising from that offence. That being the case, the Spanish Supreme Court judgment rules on the civil liability claims arising from the damage caused by the marine pollution. However, pursuant to Spanish procedural rules, the exact compensation shall be established by La Coruña Court of Appeal within the judgment enforcement proceedings to be brought by the injured parties (in relation to certain claims, the Spanish Supreme Court judgment contains some guidelines that must be followed in such enforcement proceedings).
The Supreme Court judgment states that civil liabilities arising from the casualty must be determined according to the 1992 CLC. However, despite the sole and exclusive liability of the register owner under article III.1 of the CLC, the judgment considers the master primary and unlimited liable pursuant to the exception set forth in article III.4 of the CLC. In short, the Supreme Court considers that, according to the evidences, the master’s actions must be considered to be grossly negligent and that such a concept must be equated to acting “recklessly and with knowledge that such damage would probably result”. Although this approach does not seem to be consistent with the literal interpretation of article III.4 of the CLC, according to the Judgment such construction would find justification in the judgment of the EU Court (Grand Chamber) of 3 June 2008 (C-308/06).
Similarly, the Supreme Court judgment holds the unlimited liability of the register owner (which had not been criminally incriminated in the proceedings) as it is found that it acted with recklessly and with deliberate disregard for the risks derived from its actions (it is declared to be properly proved that the owner was aware of the poor structural conditions of the vessel –which had failed the vetting procedures of two major oil companies– and that, despite this, it undertook an unsafe voyage when it seems that it had already decided to put to an end the operation of the vessel). However, contrary to the provisions of article V.2 of the CLC, register owner liability is declared to be subsidiary to that of the master, as set forth in the Spanish criminal laws that govern the civil liability arising from a crime.
Special attention should be given to the owner’s CLC insurer, the London P&I Club. The insurer (this is expressly reiterated in the judgment) was not party to the criminal proceedings, although it did legally constitute the fund for the amount of the owner’s liability pursuant to article V.3 of the CLC: €22,777,986. However, since according to the terms of the coverage provided by the London P&I Club the total amount insured was US$ 1,000,000,000, the judgment holds a direct liability of the London P&I Club up to the amount insured. This, which is done pursuant to the Spanish criminal laws that govern civil liability rather than pursuant to the CLC, is certainly a questionable decision if we consider that, irrespective of the direct claim that can be brought against the CLC liability insurer for the maximum amount established in article VII.8 of the CLC, any claim in excess of this -if any-, would have to be brought subject to the terms of the insurance coverage. This can be concluded from the Spanish Supreme Court judgment of 3 July 2003, that held that the Spanish courts had no jurisdiction to entertain a direct claim filed against a P&I Club, because, pursuant to the relevant P&I cover, such a claim was subject to arbitration. It is worth mentioning that the Spanish Maritime Navigation Act of 2014 (which is expressly referred to in the 2016 Supreme Court judgment but it has not been applied) seems to admit to the injured third party’s to make a direct claim against the insurance company.
Finally, the Supreme Court judgment holds that the International Oil Pollution Compensation Fund (IOPC Fund) must pay the maximum compensation established in article 4 of the 1992 Fund Convention (i.e., in this particular case, up to SDR 135,000,000, having added up the amounts payable by the owner). The judgment states that compensation payable by the IOPC Fund cannot exclude damages that do not exactly match with those declared as eligible for compensation under the Fund Convention and that the IOPC Fund’s Claims Manual is be used for guidance purposes only.
Since it is clear that neither the master nor the register owner will be able to afford to pay the civil damages, it seems that the injured parties will only be able to obtain their compensation from the amounts that the London P&I Club and the IOPC Fund have been ordered to pay.
In this regard, it should be noted that despite the London P&I Club being ordered to pay up to US$ 1,000,000,000, on 13 February 2013 an arbitration award was issued in London against Spain (another arbitration award was issued against France on 3 July 2013), pursuant to which, it was established: that any claim made against the London P&I Club in excess of €22,777,986 (the limit of the insurer’s liability, according to article VII.8 of the CLC) must be subject to arbitration pursuant to the Rules of the London P&I Club. The award also established that the London P&I Club has the right to apply the “pay to be paid” rule for any amount of compensation that it must pay in excess of the aforementioned amount, from where it follows that in the absence of a prior payment by the member, the London P&I Club would not be liable to pay any amount to Spain. Later, the London P&I Club sought permission to enforce the arbitration award as a judgment, which was granted by the High Court on 22 October 2013.
The Spanish Supreme Court judgment makes no reference whatsoever to the abovementioned award or the subsequent court judgment. However, it certainly seems unlikely that a Spanish judgment that is not compatible with a prior English ruling will be enforced in the United Kingdom (vide. articles 34 and 45 of EU Regulation 44/2001 which is the applicable Regulation rather than EU Regulation 1215/2012, due to the date when the liability actions were initiated in the Spanish proceedings).
Julio López Quiroga and Hannah de Bustos are lawyers in Avante. Avante is a boutique law firm, with offices in Madrid and Vigo, that provides services to the maritime, port, transport, insurance and international trade sectors. Avante provides comprehensive legal advice and strategic input to national and international companies related to these sectors. Avanteadvises in matters of contractual and non-contractual nature and in a wide variety of complex litigation before the courts and before the main national and international arbitration institutions and has also expertise to coordinate international litigation in courts overseas.
Julio can be contacted on (+34) 629 854 964 or by email at firstname.lastname@example.org
Hannah can be contacted on (+34) 680 440 963 or by email at email@example.com