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Court of Appeal confirms loss of state immunity when pursuing commercial contractual claims (London Steam-Ship Mutual v France & Spain (MT Prestige))

Published on: 25 November 2021
Published by: LexisPSL
  • Court of Appeal confirms loss of state immunity when pursuing commercial contractual claims (London Steam-Ship Mutual v France & Spain (MT Prestige))
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • Case details

Article summary

Arbitration analysis: The Court of Appeal rejected appeals by France and Spain and confirmed that a claim by a state in a national court seeking monetary compensation for environmental damage pursuant to an insurance contract would be regarded as relating to a ‘commercial transaction’ for the purposes of section 3(3) of the English State Immunity Act 1978 (SIA 1978). Where the insurance contract contained an arbitration clause, a third party (ie the state) claiming a right under the contract took that right subject to the arbitration clause. Consequently, the state could not claim immunity from proceedings against it to enforce an arbitral award (and court judgment in terms of the award) which concerned the same commercial transaction and the obligation of the state to bring any such monetary compensation claims in arbitration. Under SIA 1978, s 9 the state was not immune to court proceedings related to the arbitration. The Court of Appeal also rejected appeals by the insurer and held that a declaratory arbitration award was not capable of creating an obligation, breach of which gave rise to a cause of action for damages. Written by Nicholas Peacock, partner and Prashant Kukadia, associate at Bird & Bird LLP, London. or take a trial to read the full analysis.

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