State immunity: direct actions against insurers

The rules of P&I Clubs, under which liability insurance is granted to shipowners, provide for arbitration in London. It is often the case that a shipowner incurs liability to a third party and the third party has – under legislation operative in its home country – a right to make a direct claim against the Club. The decided cases in England have concluded that the third party is bound by such clauses. As is seen by London Steam Ship Owners Mutual Insurance Association Ltd v The Kingdom of Spain (The Prestige) (No 2) [2015] EWCA Civ 333, a further set of difficulties arise where the third party claimant is a state.

The Prestige : the facts