Jurisdiction in European claims: latest CJEU decision on ‘weaker party’ suing in home state

The recent decision in of the Court of Justice of the European Union (CJEU) in CNP v Gefion C-913/19 examines questions of jurisdiction under the Brussels 1 (Recast) Regulation following an assignment of the underlying claim, which arose from a motor accident, to a commercial entity. The case also touches on the provisions of the Regulation dealing with a defendant company having a branch in another Member State.

Despite Brexit, the approach adopted in this case will remain binding in relation to cross border cases connected to the UK in which proceedings were issued before the end of the transition period, i.e. by 31 December 2020.

Factual background and competing arguments

The essence of the case is very close to what would be regarded in the UK as a credit hire claim. CNP, a claims company based in Poland, had purchased an assignment of the right to recover hire costs arising from an accident in Poland caused by a driver insured with Gefion, which was based in Denmark. CNP presented its claim to Polins, Gefion’s agent in Poland. Crawford Polska acted as claims adjuster and paid in part. CNP then issued, in Poland, against Gefion for the balance. [By coincidence and completely unconnected with this case, the FSCS declared on 7 June 2021 that Gefion had entered into insolvency: https://www.fscs.org.uk/failed-firms/gefion/].

The Polish court ordered payment of the balance to CNP (possibly via a form of summary or default judgment). At this stage Gefion disputed jurisdiction arguing that because CNP purchased the claim it did not come within the rules under the heading Jurisdiction in matters relating to insurance found at Section 3 of Chapter II of the Brussels I Recast Regulation. Specifically, CNP as claimant was not “the policyholder, the insured or a beneficiary” – often referred in the short hand of Recital 18 as ‘the weaker party’ – and therefore unable to sue an insurer “in the courts for the place where the claimant is domiciled”, per Article 13(1). It submitted that the CJEU decision in Hofsoe, C-106/17 (an earlier decision on commercial assignment of a motor claim and jurisdiction) tended to support this argument.

CNP, and the referring court, raised the prospect of jurisdiction in Poland under different rules at Section 2 of Chapter II of the Regulation and headed Special jurisdiction. Possible bases of jurisdiction (other than in the defendant’s home state) offered by Article 7 within Section 2 include:

“(2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur

(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated.“

What the Court decided

In its decision, the CJEU appears to have been able to balance both these arguments.

First, it accepted that the case-law culminating in Hofsoe meant that Section 3 of Chapter II did not provide a commercial undertaking acting on assigned motor claims with the necessary status to sue in its home jurisdiction: “That fact, which it is for the referring court to verify, precludes that undertaking from being regarded as a party in a weaker position than the other party, within the meaning of the case-law … so that it cannot benefit from the special rules on jurisdiction laid down in [Section 3 of Chapter II of the Regulation.]”

Second, the Court found that where Section 3 of Chapter II (ie Jurisdiction in matters relating to insurance) did not apply, the claim could fall within Section 2 of the same Chapter, and in particular Article 7 at (2) and (5), set out above, “even in the case of a dispute concerning insurance, provided that the conditions laid down in those provisions [i.e. the quoted subsections of article 7] are satisfied.”

With regard to this second finding, it should be noted that Article 10 of the Regulation is the demarcation between Jurisdiction in matters relating to insurance and other bases of jurisdiction within the Regulation. It stipulates that “In matters relating to insurance, jurisdiction shall be determined by this Section, without prejudice to … point 5 of Article 7.”

The effect of Article 10 is that in circumstances in which the rules on Jurisdiction in matters relating to insurance are satisfied they are mandatory, but 7(5) may apply in any event. On this analysis, the court decided that despite jurisdiction in Poland not being made out under the insurance rules in Chapter 3, it could be established separately under Article 7(5) if Polins / Crawford Polska could be regarded as “a branch, agency or other establishment” of Gefion.

Although it is not the CJEU’s role to make a determination on the facts – although reading between the lines would suggest that the court leaned to the view the representatives ought to be so regarded – it set the general test here as being that an organisation “which adjusts losses in the context of motor liability insurance in one Member State pursuant to a contract concluded with an insurance undertaking established in another Member State, in the name and on behalf of that undertaking, must be regarded as being a branch, agency or other establishment, within the meaning of that provision, where that undertaking:

  • has the appearance of permanency, such as an extension of the insurance undertaking; and
  • has a management and is materially equipped to negotiate business with third parties, so that they do not have to deal directly with the insurance undertaking.

This case comes after Brexit – so what?

The answer to the “We’ve left: so what?” point is that CNP serves as a timely reminder that the CJEU case law on all aspects of the Brussels I Regulation will, as provided for at Article 67 of the UK / EU Withdrawal Agreement, continue to be binding UK courts in cross border claims in which proceedings were issued before the end of the transition period ie 31 December 2020.

Although few (if any) of those are likely to be factually similar to CNP, it is worth recalling that there was something of a rush by claimants to issue in cross border cases in England before the deadline precisely to secure the ongoing application of the Regulation, on a quasi ‘run-off’ basis, meaning that cross border claims practitioners will need to continue to pay careful attention to CJEU decisions for quite some time yet.

Alistair Kinley at BLM
Alistair Kinley, Director of Policy and Government Affairs at BLM

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