February 14, 2020

High Court provides guidance on jurisdiction rights under Recast

The High Court has ruled on the jurisdictional issues which arise in claims where a claimant has a direct right of action against the insurers of the tortfeasor in the country where the injury was sustained.

Mrs Justice Andrews held that the English Court was able to take jurisdiction in respect of the contractual claim made by the injured party, but stayed further claims in tort and breach of statutory duty as there is already an outstanding reference to the Court of Justice of the European Union. 

Background

In June 2016, the Claimant was on holiday in Ibiza, and attended club premises owned by a Spanish company, Ice Mountain. At some point during the evening of 3 June 2016, the Claimant was found floating in the club's swimming pool by other guests. It was unclear whether he had dived or fallen into the pool and hit his head; CCTV footage of the pool area was not retained. The Claimant is now tetraplegic having suffered life-changing injuries.

The Claimant had purchased a ticket for entry, and therefore, he was a consumer within the meaning of Articles 17 and 18 of Regulation (EU) 1215/2012 ("Recast").

The Claimant issued claims in England in contract, in tort and for breach of statutory duty against Ice Mountain and their Spanish insurers, Mapfre. It was accepted by the Claimant that under Spanish law, there is "no material difference between the claim for breach [of contract], and… the alternative causes of action."

Article 76 of the Spanish Insurance Contracts Act 50/1980 permits an injured party to bring a claim governed by Spanish law against the liability insurer of the party who is primarily liable (as well as the liable party if necessary).

Article 13(2) of Recast provides that the right of an insured to pursue an insurer in the Member State of his own domicile is extended to cover a direct claim that the injured party has against the insurer, if that direct claim is allowed under the national law applying to the insurance contract.

Both Ice Mountain and Mapfre contested jurisdiction of the claim in England.

Ice Mountain argued that that the Claimant did not enter the consumer contract as a result of him reading promotional materials in the UK; rather those he had seen in Ibiza. Therefore, Article 17(1) should not be interpreted to apply to the consumer contract entered into by the Claimant outside of the Member State which was domicile. In addition, Ice Mountain argued that the Claimant had approached the pool from the VIP area; an area which he was not contractually entitled to use.

Mapfre argued that its policy would not cover any liability of Ice Mountain to the Claimant under a judgment given in an English court, whilst accepting it would cover liability arising from a judgment given in a Spanish court. Mapfre relied under a 'territorial scope' provision within the insurance policy. Ice Mountain supported this submission, essentially arguing it should be viewed as uninsured for claims pursued outside of Spain.

Outcome

In respect of the contractual claim against Ice Mountain, the High Court was held to have jurisdiction. The Court dismissed the argument that the Court did not have jurisdiction due to the location of the concluded contract, stating Ice Mountain could not escape the consequences of Recast "by relying on the fortuity" of the Claimant buying the ticket outside of the UK.

Regarding the argument that the Claimant approached the swimming pool from the VIP area, Mrs Justice Andrews stated that the argument advanced by Ice Mountain was "hopeless" and "it was irrelevant whether [the Claimant] was in the VIP area before he had his accident".

Mrs Justice Andrews also found jurisdiction over Mapfre in respect of the contractual claim.

Considering Mapfre's argument, the Court held if that submission were correct, "it would be difficult to imagine a great disincentive for a consumer… to exercise the special right conferred upon him" to sue in his own domicile.

The Court found it was obliged to interpret the relevant provisions of Recast in order to protect the weaker party. Mapfre’s interpretation of its policy terms would "drive a coach and horses" through the jurisdictional protections offered by Recast.

Agreeing with Mapfre's interpretation would grant insurers "the simplest means of depriving the injured party of the choice of additional jurisdictions conferred upon him by Articles 11 to 13 of Recast Brussels 1. It would be the easiest thing in the world for an insurer, as the economically strongest party, to include a standard term in the policy that he is only liable for claims that have been brought against the policyholder in the courts of the policyholder's and/or the insurer's own domicile."

Mrs Justice Andrews additional stayed those claims in tort and for breach of statutory duty against Ice Mountain pending the determination by the Court of Justice of a preliminary reference made in the matter of Cole v IVI Madrid SL concerning the interpretation and scope of Article 13(3) of Recast.

What can we learn?

  • This decision demonstrates that the English courts will interpret Recast in a manner that aims to protecting the weaker party. Mapfre had attempted to prevent the Claimant from utilising his jurisdictional rights under Recast by enforcing their 'territorial scope' clause in a manner which would have required the Claimant to issue the claim in Spain.

  • In addition, Ice Mountain argued – "belatedly" in the words of the judgment – that the Court of Ibiza had already been seised of the claim, and therefore, the English claim must be stayed under Articles 29 or 30 of Recast, pending jurisdictional arguments before the Spanish courts. It was submitted that a doctor at the hospital treating the Claimant filed a report, whilst he was unconscious, which prompted a criminal investigation. Mrs Justice Andrews rejected this argument, finding the Claimant was "free to choose to start separate civil proceedings at the time when he did".

  • Jurisdictional challenges when used appropriately can save international defendants considerable sums if they can escape English courts and avoid the punitive costs that English procedure allow. However a thorough understanding of the merits of such an action is needed as a jurisdictional challenge amounts to a mini trial of its own and can ultimately increase costs and delay work towards the main action. The court has narrowed the possible scope that international insurers may use with this decision to avoid our Jurisdiction and appropriate expert advice on the merits of a jurisdictional challenge should always be sought and considered at the onset.

This article was authored by Craig Evans, Senior Associate.