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Direct claims against insurers
Not infrequently, a situation will arise in personal injury litigation arising in the context of road accidents which happened overseas as to whether a claimant wishing to bring his claim in the courts of England and Wales can name a foreign-domiciled insurer as defendant.
Cause of action
At common law in this country the victim of a tort has no direct claim against the liability insurer of the tortfeasor. Many foreign systems of law have long provided a direct claim against insurers for victims of road traffic accidents. Now, following the implementation of legislation required by the Fourth Motor Insurance Directive (the Fourth Directive of the European Parliament and Council of 16 May 2000 (2000/26/EC)), direct actions by road traffic victims exist in all member states of the EU. The circumstances in which a direct claim is possible vary from one member state to another, and it will be necessary in every case in which a direct claim against an foreign insurer is contemplated, to obtain advice from a lawyer in that member state (and of course if an accident occurs in a non-member state) as to whether a direct action lies.
Jurisdiction
The existence of a direct action does not necessarily mean that the English Court will have jurisdiction over the liability insurer in question. In most cases involving accidents abroad one will be dealing with an insurer domiciled outside the jurisdiction. This will normally require proceedings to be served outside England and Wales. The circumstances in which the English court will have jurisdiction over a foreign insurer differ according to whether it is domiciled, on the one hand, in one of the countries covered by Council Regulation (EC) No. 44/2001, ‘the Judgments Regulation’; countries which are party to either the Brussels Convention (now just Denmark); or the Lugano Convention (Iceland, Norway and Switzerland); or, on the other hand, in any other country. The remainder of this article deals with the issue of establishing jurisdiction over insurers domiciled in other Judgment Regulation countries only.
The general rule is that persons may only be sued in the courts of the state in which they are domiciled, and therefore jurisdiction can only be exercised in one of the exceptional cases specifically provided by the Judgments Regulation.
It is, as ever, possible for a foreign-domiciled insurer to submit to the jurisdiction by entering an appearance but otherwise, different considerations apply to insurers as compared with other defendants.
The Judgments Regulation (like the Brussels/Lugano Conventions) contains special jurisdictional regimes applicable to claims involving insurers, see Section 3 of Chapter II. The normal exceptions provided by Section 2 of Chapter II do not apply in the cases of claims against insurers. The most significant exception which is excluded is the one under Article 6(1) giving the court jurisdiction to entertain a claim if there is at least one other defendant (such as the driver of one of the vehicles involved in a road traffic accident) who is domiciled within England and Wales.
Moreover, it is important not to be misled by Article 11(1), which at first sight might appear to be a provision allowing an insurer to be made an additional defendant to a claim brought by an injured party against the insured. The Jenard report ([1979] OJ C59 at p.32), to which the court is bound to give consideration when construing the text of the Brussels Convention, indicates that this provision was intended to allow an insured to join his insurer as a third party and was not meant to allow an injured party to sue the liability insurer as an additional defendant. This interpretation of Article 10(1) of the Brussels Convention was accepted by Morland J. in the unreported case of Patterson v. Carden (QBD 14 September 2000). Since Article 11(1) of the Judgments Regulation mirrors Article 10(1) of the Brussels Convention, there is no reason to consider that it would be differently construed.
Article 9(1)(b) of the Judgments Regulation provides that:
‘An insurer domiciled in a Regulation State may be sued: … (b) in another Member State, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts for the place where the plaintiff is domiciled.’
This means that an insurer domiciled in another Regulation State can be sued in an English court ONLY by:
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Its policyholder
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Its insured or
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A beneficiary.
Some commentators (and judges) believed that the Fourth Motor Insurance Directive gave not only a direct cause of action to a victim of a road accident against the defendant’s insurer, but also altered the rules of jurisdiction in order to allow such a claim to be brought in the victim’s country of domicile despite the general rule pursuant to Article 2 of the Judgments Regulation. Certainly there was nothing in the European Communities (Rights Against Insurers) Regulations 2002 which gave support to that school of thought. The argument was based on Articles 11(2) and 9(1)(b) of the Judgments Regulation, which permit the ‘beneficiary’ of an insurance policy (the term ‘beneficiary’ is nowhere defined in the Judgments Regulation) to bring a claim in his own domicile against an insurer domiciled in a different state.
It was often considered (and held, although no reported case deals with the matter) that ‘beneficiary’ would not include an injured party. The term ‘injured party’ is used in Article 11. The argument ran, if the intention had been to include injured parties within the class of persons who could bring an action in the courts of their own state against a foreign-domiciled insurer, it would have been perfectly easy to specify them as a further category.
However, this particular problem appears shortly to be resolved in favour of claimants. The Fifth Motor Insurance Directive 2005/14/EC, which must be brought into force by no later than 11 June 2007, provides at Article 5(1) that the recital to the Fourth Motor Insurance Directive be amended at 16a to read that, ‘injured parties may bring legal proceedings against the civil liability insurance provider in the Member State in which they are domiciled.’ Although hopelessly ambiguous in its drafting, this recital is surely intended to permit claims against foreign insurers in England.
However, the issue will probably not end there, not least because it must be open to doubt as to the extent to which a new recital to a Directive inserted in this fashion some time after the adoption of the Judgments Regulation can be seen as a legitimate tool for its interpretation.
Furthermore, one obvious question which appears nowhere to be answered is whether a local equivalent to the Motor Insurers’ Bureau counts as an ‘insurer’ for the purposes of the Judgments Regulation. Clear guidance is eagerly awaited.
KATHERINE DEAL
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