Context and the issue already decided
Following the loss of the Prestige, Spain and France brought direct claims against the insurer under Spanish law. The insurance contract contained a London arbitration clause. The States’ obligation to arbitrate when asserting rights derived from that contract had been established earlier. No 2 addressed the nature of that obligation and monetary consequences of breach, rather than deciding their consent for the first time.
Contractual obligation and remedy
The conditional benefit principle prevents a third party from taking the relevant contractual benefit without its associated procedural burden. The Supreme Court held the obligation to arbitrate to be contractual at common law. The appropriate monetary remedy was therefore contractual damages, rather than compensation resting solely in equity. Paragraphs 60–65 explain the distinction.
Disposition and future loss
The insurer’s appeal was allowed; the monetary awards were confirmed subject to the wording variations explained in paragraphs 148–155. Conditional relief for future loss was tied to an already committed breach. The Court did not authorise damages for a future wrong that had not occurred. The breach and the time at which loss arises require separate analysis.
Limits and connection with consent
The judgment does not generally permit injunctions against States: the State Immunity Act section 13(2)(a) obstacle remained in this case. Nor does every beneficiary become bound by every arbitration clause without analysis of its claim. Compare Dallah on consent and the guide to parties to an agreement. The English approach does not replace examination of the law applicable to the particular third party.
General information. The applicable legal framework depends on the particular dispute, seat and enforcement country.