A five million pound question: whether to claim in English or Spanish courts?

Godfrey Keefe was on holiday in Tenerife in October 2006. He was sitting by a hotel swimming pool when the pointed end of an unsecured parasol, lifted by a gust of wind, penetrated his right eye socket and caused him serious brain injury. Subject to liability, his claim would be worth around £5 million pounds if quantified under English law. It would, however, be worth around a tenth of that amount (between €600,000 and €800,000) if quantified under Spanish law.

The Court of Appeal partly resolved Mr Keefe’s claim on 17 June 2015 and in so doing provided a third level of judicial analysis – after that of the master and the judge in this case – of what might initially appear to be a narrow question: whether the Spanish hotel could be joined in the claim, pursued in the English Courts, brought directly against Mapfre, the hotel’s public liability insurer?

In fact, the question of joining the hotel was absolutely critical. In its defence to the direct claim, Mapfre had disclosed that the hotel’s public liability policy was subject to a costs-inclusive limit of €600,000. The hotel itself would therefore need to be sued, either in England or Spain, if (subject to liability) the claimant was to recover anything above that amount.

Could the hotel be properly joined to the proceedings already commenced in England against its insurer? The Court of Appeal held that it could, reaching the same conclusion as both the master and the judge had come to at earlier stages in this case.

The conclusion resulted from a purposive interpretation and application of the law as set out in the Brussels convention on jurisdiction and in the Odenbreit decision of the European Court of Justice in 2007. Odenbreit interpreted the convention so as to permit injured parties to bring a direct action, in their home courts, against a defendant’s liability insurer. It did not, however, deal with joining the insured to that direct action against the insurer. In the present case, Gloster LJ refused to take a narrow view of Odenbreit and therefore allowed the insured – the hotel – to be joined in the direct claim in England against its insurer, Mapfre. In addition to reaching this conclusion by interpreting the convention and Odenbreit, she also found that there “would be no logical reason for imposing such a restriction … when the injured party sought to add the insured to the action already started against the insurer”.

The accident took place before the Rome II regulation an applicable law came into effect, meaning that the assessment of damages* would be carried out according to the law of the court seised of the action (as held by the-then House of Lords in the pre-Rome II case of Harding v Wealands). Given that the Court of Appeal found that English courts had jurisdiction, it followed that (subject to liability) damages would be assessed on an English basis. All three members of the Court agreed on this, although Moore-Bick LJ expressly recognised that it was:

“…hard on the hotel to find that because its insurer has been sued in this country it faces a liability for damages considerably greater than would have been the case if it had been sued in Spain, but that is primarily a consequence of the differences between English and Spanish law in relation to the assessment of damages.

The decision is likely to be important only for those claims ‘in the pipeline’ before Rome II applied, ie claims arising from accidents occurring before 11 January 2009. Because of limitation, there may not be many such cases left unresolved in 2015. However, any which are still outstanding are likely to involve very serious injuries and may well be ones in which limitation does not run, i.e. claims involving children or protected parties, such as Mr Keefe.

 

* Footnote:

A great deal of the Court of Appeal’s 40 page judgment examined the key issue in this case as a matter of jurisdiction under the Brussels convention, rather than one of applicable law. This approach was strictly necessary because of the rules which applied at the time, given the date of the accident.

The commentary above does not, however, go into the fine detail of the Court’s analysis of jurisdiction. This was done deliberately, to avoid confusion. The principles of jurisdiction and applicable law involved pointed to the same outcome, but for different very reasons. While the correct law applying to the tort was Spanish law, jurisdiction lay in England, even for the application to join the hotel to the English proceedings brought against the insurer. However, the English pre-Rome II rules direct that the law of the court seised (ie the law of the national court before which the case is brought) governs questions of evidence and procedure. Before Rome II, the quantification of damages was regarded in English law as a matter of procedure. In this way, the effect of the pre-Rome II rules, relevant to this claim, would be that if there was jurisdiction in England – which the court found to be so – it would inevitably follow that damages would assessed on an English basis, despite the fact that the applicable law governing the tort would be Spanish law.

The potential for confusion and the intricate cross-referral of national laws involved in this sort of claim is clear in this passage from Gloster LJ’s judgment (emphasis added): “… English law would regard the question as to whether the claimant had a direct cause of action against the insurer as one to be determined by reference to Spanish law pursuant to English law‘s private international law rules in operation before Rome II.”


About the Author

akAlistair Kinley is BLM’s Director of Policy & Government Affairs.

Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.

He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).

 

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