Dec 1;
2022 March 1
Following an incident in which a vessel broke in two off the coast of Spain, causing significant pollution damage, the Kingdom of Spain brought a civil claim in Spain against the vessel owner’s insurer, relying on a Spanish law which provided for the direct civil liability of liability insurers. Spain obtained judgment against the insurer in the Spanish proceedings, which declared that the insurer was liable to the Kingdom of Spain for €855,493,575.65. Spain made an application for the registration of the Spanish judgment as a judgment of the High Court pursuant to article 33 of Regulation (EU) No 44/2001 and subsequently a registration order was made on the papers. The insurer appealed against the registration of the Spanish judgment pursuant to article 43 of Regulation (EU) No 44/2001, contending that the Spanish judgment should not be recognised on the grounds that (i) under article 34(3) of Regulation (EU) No 44/2001, the Spanish judgment was irreconcilable with the prior judgment of the High Court enforcing an arbitration award which declared that the insurer was not liable to Spain; (ii) under article 34(1) of Regulation (EU) No 44/2001, recognition was manifestly contrary to English public policy in respect of (a) the rule of res judicata (applicable by virtue of the arbitration award and/or the judgment enforcing it); or (b) human and fundamental rights, the insurer contending that the proceedings in Spain breached the rights of the master of the vessel to a fair trial, and therefore those of the insurer. On 21 December 2020, shortly before the end of the implementation period of the United Kingdom's exit from the European Union, the judge referred three questions as to the proper interpretation of Regulation (EU) No 44/2001 to the Court of Justice of the European Union, pursuant to article 267 of the FEU Treaty, concerning whether a judgment granted pursuant to section 66 of the Arbitration Act 1996 was capable of constituting a relevant “judgment” of the member state in which recognition was sought for the purposes of article 34(3) of Regulation No 44/2001. The judge did not, at that time, determine a further issue of English public policy in respect of which no reference was made and which, if decided in favour of the insurer, would have determined the appeal in favour of the insurer, regardless of the answers to the questions he referred to the Court of Justice. The insurer appealed the decision to make a reference, on the ground that a ruling on the questions referred to the Court of Justice was not “necessary to enable [the judge] to give judgment” within the meaning of article 267. Although the judge subsequently (on 12 May 2021) determined the further issue against the insurer (so that a decision on the questions referred to the Court of Justice was, in the event, required), the power to make a referral to the Court of Justice would not then have been available, having ended at the end of the implementation period of the United Kingdom’s exit from the European Union. The insurer contended that the judge wrongly advanced the decision to make a referral to the Court of Justice (and the referral itself) in order to avoid that situation. If the insurer’s challenge was well-founded, it would also be necessary to consider the extent of the jurisdiction of the appellate court in respect of an appeal against the decision of a judge to refer questions to the Court of Justice. Whilst it was agreed that the appeal could be entertained, and a reasoned judgment delivered, there was disagreement as to whether the appellate court had jurisdiction to allow the appeal and set aside the referral and/or to direct the judge to withdraw it. Spain contended that it the appellate court could not set aside or vary the order making the reference below.
On the insurer’s appeal—
Held, (1) In considering whether to make a reference to the Court of Justice pursuant to article 267 of the FEU Treaty, the test of necessity had to be applied to the decision the court was being invited to reach, rather than to the outcome of the dispute as a whole. Provided that the condition precedent of necessity was satisfied, the timing of any reference to the Court of Justice was a matter for the national court; the decision had to be dictated by considerations of procedural organisation and efficiency to be weighed by that national court. The ability of national courts to achieve procedural efficiency was not compromised by a strict test of necessity once it was recognised that the test fell to be applied to the outcome of the issue which the court was called on to decide, not the outcome of the dispute between the parties. It was open to a national court, if it considered it appropriate in the interests of procedural efficiency, to isolate for separate determination the question upon which European law was determinative, even if that involved a question which would not necessarily be determinative of the outcome of the dispute between the parties because, for example, that outcome would depend upon subsequent fact-finding, the delay and expense of which would be avoided if (but only if) the issue was resolved in one way. Sometimes a decision on a question of EU law might be necessary to enable a national court to give judgment even though the proceedings would continue however the question of EU law was decided. Providing the European law question was conclusive of the issue which the national court had to decide on a particular occasion in accordance with its national procedure, the necessity test would be fulfilled. By contrast, in the present case, the judge relied (i) on the fact that a decision on the questions referred was necessary for him to give “judgment on the issues before him”, by which he meant his reasons delivered on the issues, being the justification of the order he would ultimately make, and (ii) on the fact that, even if the insurer were to win on the human rights issue, the questions would arise for decision on an appeal, meaning that the points should be regarded as critical to making a proper decision. The term “judgment” in article 267 did not refer to the giving of reasons, but to the order or determination resulting from those reasons. A decision being necessary to give judgment meant that the judge had to have got to the stage where he could enter judgment for one party or the other based on the outcome. The judge fell foul of the correct approach in considering that a decision was “necessary” on a question, even if a decision on the relevant point was ultimately not strictly required, so that his reasoning in that regard would be obiter. Even in cases where a decision on an issue was strictly necessary at an interlocutory stage, the court had exercised its discretion not to refer the question if it might ultimately be academic. Furthermore, taking into account the possibility that a point might need to be decided in a different court was impermissible and could not, on a proper application of the test of necessity, make a decision on a question “critical” when it would not otherwise properly be so regarded. Finally, a decision to make a reference under article 267 was not a purely discretionary matter, there being a legal test of necessity that had to first be satisfied. In the present case, the questions referred could not be said to be conclusive or even substantially determinative of the appeal and it remained entirely possible that the questions referred would, in the end, be academic. Unless and until the judge had decided that the insurer would not succeed on its human rights ground, the time to consider referring the questions of EU law had not arrived. Accordingly, the judge had erred in making the reference to the Court of Justice, since a decision on the question referred was not necessary for the judge to give judgment on the appeal before him (paras 32, 36–37, 39–41, 43, 46–47, 58, 59).
(2) Appeal allowed. Article 267 did not preclude a decision to make a reference for a preliminary ruling from being subject to the remedies available on appeal under national law. It could not be clearer that as a matter of national law a reference could be set aside on appeal. Whilst as a matter of national law and procedure the decision to refer might have been set aside, as a matter of EU law the reference was considered to have been validly made and would have full effect unless and until withdrawn. Accordingly, the judge’s order referring the questions to the Court of Justice would be set aside and the question referred to the judge, pursuant to CPR r 52.20(2)(b), whether, in the light of the appellate court’s judgment, the reference he made to the should be withdrawn by him (paras 51–54, 56, 58, 59).
Christopher Hancock QC, Charlotte Tan and Alexander Thompson (instructed by Ince Gordon Dadds LLP) for the claimant.
Timothy Young QC (instructed by Squire Patton Boggs (UK) LLP) for the Kingdom of Spain.