International organisation immune from jurisdiction

17/10/14

Mr Justice Hamblen handed down judgment this morning in Assuranceforeningen Gard Gjensidig v The International Oil Pollution Compensation Fund [2014] EWHC 3369 (Comm), upholding the immunity of the Fund from the jurisdiction of the English courts.

The International Oil Pollution Compensation Fund is an international organisation headquartered in London under the terms of a Headquarters Agreement with the UK Government, the terms of which are incorporated into English law by an Order in Council made under the International Organisations Act 1968. Pursuant to that Order, the Fund was granted, inter alia, immunity from suit and legal process except, inter alia, in relation to a “loan” or “other transaction for the provision of finance”.

The Fund forms part of an international regime set up to compensate victims of oil pollution damage. Under this regime, the shipowner/insurer is obliged to pay claims up to a certain limit of liability. The Fund is then obliged to compensate claimants who have not been able to obtain full compensation from the shipowner/insurer.

In 1997 the Nissos Amorgos, entered with Gard (a P&I Club), grounded in the Maracaibo Channel, Venezuela, as the result of which approximately 3,600 mt of crude oil escaped from the vessel. In February 2010 the Venezuelan courts held that the shipowner and Gard were liable to pay some US$60 million to the Republic of Venezuela in relation to damage suffered as a result of the incident, which far exceeded the shipowner’s/insurer’s limit under the international regime.

Gard sought to recover this money from the Fund. It alleged that it had entered into a funding agreement with the Fund in 1997, whereby it agreed to pay off claims up to its limit, and the Fund agreed to take over claims thereafter (including the claim of the Republic). In May 2014, Hamblen J held that Gard had a “good arguable case” that this agreement existed, and granted a freezing order against the Fund in support of Gard’s claim.

However in his judgment following evidence and full argument on the immunity issues, Hamblen J decisively rejected the existence of any agreement on the facts. He also held that, even if there was an agreement as alleged, it was not a “loan” or “other transaction for the provision of finance” for the purposes of the exception to the Fund’s immunity in the Order, with the result that the Fund was immune from the Court’s jurisdiction. That finding will also have important consequences for the equivalent sovereign immunity in s. 3 of the State Immunity Act 1978.

The judgment is here.