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Dramatic High Seas Collision Triggers State Immunity Test Case

A dramatic collision between an Antarctic cruise liner and a Venezuelan navy patrol vessel – which led to the sinking of the latter – provided the context for an important High Court ruling on the vexed subject of state immunity.

The collision followed an altercation at sea, the circumstances of which were hotly disputed. The liner was subsequently arrested in Dutch Curacao and the Republic of Venezuela launched civil proceedings, both there and in Caracas, against, amongst others, the cruise ship’s insurers.

The insurers’ response was to argue that, under the terms of the liner’s contract of insurance, Venezuela was bound to arbitrate the dispute in London. They obtained an interim anti-suit injunction which required Venezuela to desist from the foreign proceedings, and later applied to make the injunction permanent. In resisting the application, Venezuela cited provisions of the State Immunity Act 1978.

Ruling on the matter, the Court noted that, if a permanent anti-suit injunction were granted, it would represent the first time that an English court had issued such an order directly against a sovereign state without that state’s agreement.

The Court was satisfied that Venezuela was subject to the arbitration clause in the insurance contract and was thus obliged to pursue its claim in respect of the loss of the patrol vessel before a panel in London, under English law. Although a military vessel was involved in the collision, the foreign proceedings were ordinarily civil claims and Venezuela’s engagement in them did not amount to a sovereign act.

Nevertheless, the Court ruled that the insurers were precluded from obtaining the permanent order sought by virtue of Section 13(2)(a) of the Act, which prohibits the grant of an injunction, or an order for specific performance, against a sovereign state without first obtaining that state’s written consent.

The insurers argued that, in shielding a state’s non-sovereign activity from injunctive relief, the provision conflicted with its right of access to the court, enshrined in Article 6 of the European Convention on Human Rights. It could not be right to permit Venezuela to pursue the foreign proceedings in breach of contract.

The Court acknowledged that the insurers’ Article 6 rights were engaged. However, it found that interference with those rights was justified by both customary international law and domestic policy. It was also not possible to read down or otherwise interpret the provision in a manner that would entitle the insurers to the relief sought.

In dismissing the insurers’ application, the Court noted that they would still be able to pursue a London arbitration in parallel with the foreign proceedings. They might be entitled to compensation for breach of the arbitration agreement and success in the arbitration might also assist them in resisting enforcement of any judgment which Venezuela obtained in the foreign proceedings.

18 October 2022
Last Updated
9 November 2022