Tort and Issues in Tort

Of central importance in the interpretation of the ’95 Act is an understanding of which incidents and issues it will apply to. The Act provides in s9(1) that the rules in Part III of the Act apply to

38 _{Private International Law (Miscellaneous Provisions) Act 1995 (Commencement Order ) 1996, SI 1996 No 995.This meant}

that there were some claims brought in the early days of the legislation which concerned actions occurring before this date and to which the common law rules still applied. Clearly there can be no doubt that now, in 2013, there can no longer be any claim brought to which the common law rules would apply. Just to be sure of the affect of s14(1), s10 provides for the express abolition of the common law double actionability rules. It states:

The rules of the common law, in so far as they—

(a) require actionability under both the law of the forum and the law of another country for the purpose of determining whether a tort or delict is actionable; or

(b) allow (as an exception from the rules falling within paragraph (a) above) for the law of a single country to be applied for the purpose of determining the issues, or any of the issues, arising in the case in question,

are hereby abolished so far as they apply to any claim in tort or delict

This provision has to be read together with s14(2) which states that: Nothing in this Part affects any rules of law (including rules of private international law) except those abolished by section 10 above.

39 _{This was logical since the rule required English law to apply as the lex fori alongside the lex loci delicti, whatever that might be. If}

23 determine the applicable law to issues relating to tort. Establishing an action as tortious or an issue as one relating to a tortious incident, is a matter of characterisation. In respect of this s9(2) states that characterisation is a matter for the courts of the forum. The Act omits to provide any further guidance on the matter.

In the main, third party claims arising out of traffic accidents will of course be thought of as tortious. What was less clear following the commencement of the Act was how direct actions against an insurer would be characterised.40 _{An answer was not conclusively given until 2009,}

which is ironic, since by then Rome II had already entered into force, arguably changing the position again anyway.

The case of Maher and Maher v. Groupama Grand Est.41 _{concerned an incident which, because of}

when it occurred, was still governed by national choice-of-law rules. The Claimants, an English couple, Mr. and Mrs. Maher, were involved in a collision in France with a van being driven negligently by a French resident, M. Marc Krass. M Krass was sadly killed in the collision. The claim was brought directly against M. Krass’ third party liability insurer. Liability and the application of French law to the substantive issues in the case were not at issue. The issues to be determined by the court were: (1) whether damages should be assessed in accordance with French law or English law and (2) whether pre-judgment interest on damages should be determined in accordance with French law or English law.

40_{Direct actions have been known to English law since the enactment of the Third Parties (Rights Against Insurers) Act 1930,}

which provides for a statutory transfer of rights against an insurer to a third party to whom the insured is liable and where that insured is subject to insolvency proceedings. This is due to be replaced by the Third Parties (Rights Against Insurers) Act 2010. However, a much broader right of direct action against motor insurers was incorporated into English law by the European Communities (Rights Against Insurers) Regulations 2002, in accordance with the requirements of Directive 2000/26/EC, the fourth Motor Insurance Directive.

2. English Choice of Law Rules

24 Under English law the assessment of damages in tort claims falls to be decided as a procedural issue.42 _{The issue in Maher was whether in a direct action against the tortfeasor’s insurer the issue}

was to be characterised as tortious, with damages being dealt with as a procedural issue under the

lex fori or as a claim founded in contract, where assessment of damages is dealt with as a

substantive issue by the applicable (French) law, as stipulated in both the Rome Convention43_and

Rome I.44 _{Despite the defendant’s arguments that the claim only arose because it was}

contractually obliged to indemnify the insured and that, therefore, the claim was contractual in nature, the Court, citing Macmillan Inc v. Bishopgate Investment Trust plc (No. 3)45_{, held that it was not}

the claim that fell to be characterised, but each individual issue.

In the High Court, Blair J held that in a direct action against a third party insurer there may be issues regarding the breach of a duty by the wrongdoer (stage1), which he deemed to sound in tort. Alternatively, if the issue related to whether the insured is entitled to be indemnified by the insurer, then the issue would sound in contract (stage 2).46 _{He stated:}

“At stage (1), the insurer is in reality no more than a surrogate for the tortfeasor, and it would be artificial for such questions as the law governing the tortfeasors liability to turn on the question of the law governing the contract of liability insurance which he took out. The question of the assessment of the damages in respect of which the indemnity is given arises at stage (1), and should be viewed as a matter arising in tort.” 47

Because liability was admitted in the case the only remaining issue was assessment of damages, which related directly to the wrongdoer’s actions, and was consequently characterised as

42 _{See Harding v. Wealands [2007] 2 AC 1.}

43 _{Rome Convention on the law Applicable to Contractual Obligations [1980] OJ L266/1, implemented in English law by}

Contracts (Applicable Law) Act 1990, s.2 and Sch.1, Article .10(1)(c).

44 _{Regulation (EC) No 593/2008 of the European Parliament and of the Council on the law applicable to contractual obligations}

[2008] OJ L177/6, Article 12 (c). This Regulatin is hereinafter referred to as Rome I.

45 _{[1996]1 WLR 387.}

46_{Maher and Maher v Groupama Grand Est [2009] EWHC 38 (QB), [2009] 1 W.L.R. 1752 [19].} 47 _{Ibid [20].}

25 tortious.48 _{Therefore, regardless of the applicable law, under English choice-of-law rules relating}

to tort it was the lex fori which was to determine the assessment of damages. Interestingly, Blair J

made a further statement to the effect that the existence of a right of direct action was to be determined by the law applicable to the insurance contract.49 _{This view was repeated in the Court}

of Appeal, where Moore-Bick L.J. stated:

“If, in July 2005 a Dutch motorist insured by a German insurer had run down a British pedestrian in Strasbourg, resulting in an action in this country by the injured pedestrian against the insurer, one would expect issues relating to the driver's liability to be determined by reference to French law as the law of the place where the tort was committed (see section 11(1) of the Private International Law (Miscellaneous Provisions) Act 1995 ), but issues relating to the insurer's liability under the policy of insurance to be determined by reference to German law as the proper law of the contract. For the same reason German law would also determine whether the injured pedestrian had a direct right of action against the insurer.” 50

This example, illustrates, in fairly clear terms, the position in English law as regards direct actions against insurers, but in general has the potential to make life very complex and difficult for any future claimant trying to rely on English choice-of-law rules. In the example given by the Court of Appeal, the completely innocent victim would have to show that a right of direct action exists and argue about any issue of the insurer’s liability under the law of the contract, which is not even the law of the defendant’s habitual residence, whilst then making out a successful claim under a separate applicable law in relation to the driver’s liability.51 _{Damages will of course fall to}

be decided by English standards. The legal hurdles to be cleared are many and the potential for difficulty on the part of the claimant obvious. The issues relating to insurance are dealt with in

48 _Ibid. 49 _Ibid.

50_{Maher and another v Groupama Grand Est [2009] EWCA Civ 1191; [2010] 1 W.L.R. 1564, [11].}

51 _{The applicable law in relation to the drivers liability is likely to be the law of the place of the accident under the rule in s11. See}

2. English Choice of Law Rules

26 much more depth in Chapter 5, but suffice it to say here that generally it can be said that it is the insurer who is better able to absorb the cost of cross border litigation and who has at his disposal the resources to deal with the application of (even numerous) foreign laws.52 _{The ruling}

of the English court in respect of direct actions tips the scales in favour of the party who already has the upper hand, and to whom any loss equates only to a business expense, rather than potentially a matter of concerning the quality of the victim’s life. As will be seen, the position under Rome II is markedly different, although it remains uncertain whether the level of complexity of such cases has been adequately dealt with.