A Post-Brexit World: Unanswered Questions and Opportunities for Challenges in Cross-Border Claims

This article explores a legal dispute arising from an accident involving a Scottish man on a tour bus in Malta. Despite initial dismissal on jurisdictional grounds, two defendants, Mapfre Middlesea Insurance Plc and City Sightseeing Malta Ltd, remained. The central question revolved around the applicability of Regulation (EU) No 1215/2012, "Recast Brussels I," post-Brexit.

Background

A Scottish man was injured when he was traveling as a passenger on a tour bus in Malta.  The accident occurred on 9 April 2018 in Malta.  

Part of the pursuer’s claim had already been dismissed.  In the decision dated 16 December 2021 Lord Richardson upheld a plea of no jurisdiction by the then Third Party, Transport for Malta.  This was on the basis of section 14 of the State Immunity Act 1978.  This was Appealed to the First Division of the Inner House and Lord Richardson’s decision was upheld.  

Two defenders remained in the action, Mapfre Middlesea Insurance Plc and City Sightseeing Malta Ltd.  The first defender was sued initially as insurer of the operator of the tour bus (City Sightseeing) but later the pursuer amended his pleadings to direct a case against the tour bus company introducing City Sightseeing Malta to the action. 

Issues in Dispute 

The pursuer’s position is his claim directed against the second defender was based on Article 13(3) of Regulation (EU) No 1215/2012 or “Recast Brussels I”.  It was disputed by the second defender that the Court of Session had jurisdiction and sought dismissal of the action against them.

A preliminary proof was heard on the issue.  There was no attendance or representation from the first defender having been excused by the court. 

It was agreed that the resolution of jurisdiction point turned on two issues:

1. Whether, following the withdrawal of the United Kingdom from the European Union, Recast Brussels I applied to the second defender in the present case; and
2. If Recast Brussels I did apply then whether the court had jurisdiction to hear the claims against the second defender in terms of Article 13(3).

The Second Defender’s Argument

On the first issue, the second defender argued that following Brexit the ongoing applicability of Recast Brussels 1 was to be governed by Article 67(1) of the Withdrawal Agreement.   Article 67(1) applied to legal proceedings which had been initiated before the end of the transition period.  In this case the second defender highlighted they had been brought into the action after the transition period had ended and therefore the pursuer could not rely on Recast Brussels I.  

On the second issue, the second defender argued that if Recast Brussels I was to apply to the issue of jurisdiction then the general principle would be for a defender to be sued in the member state which they are domiciled (under Article 4).  In support of their argument, they referred to the case of BT v Seguros Catalana Occidente & Anr (“Seguros”).  The second defender argued Seguros supported their position that Article 13(3) could not be used to assume jurisdiction over an insured where an action has been brought against an insurer. 

The Pursuer’s Argument

The pursuer’s position was quite straightforward.  The phrase “legal proceedings” in Article 67(1) of the Withdrawal Agreement referred to the case as a whole.  There was no dispute that the case had been brought against the first defender prior to the end of the transition period and Recast Brussels I should therefore apply when determining jurisdiction of the case.  The pursuer cited a number of authorities to support their position. The pursuer sought to distinguish his case from Seguros on the basis there were policy issues between the first and second defender.  

Decision

Resolution of the first issue turned on the construction of Article 67, in particular, the meaning of the phrase “legal proceedings”.  The pursuer submitted that this applied to the whole case whereas the second defender argued it should be construed more narrowly to mean the proceedings brought against them.  

Lord Richardson took the view that “legal proceedings” did apply to the entire case.  He drew the distinction with Article 8(2) of the Recast Brussels I which referred to “original proceedings”.  The language of Article 67(1) supported a broader construction as argued by the pursuer. 

On the second issue Lord Richardson noted the critical question being whether the pursuer, as an injured party, was entitled to rely upon Article 13(3) of Recast Brussels I when he convened the second defender (the insured) to the action against the first defender (the insurer).

In Seguros the CJEU issued helpful guidance on the interpretation of Article 13(3).  When applying that guidance to this case the court could not assume jurisdiction over the second defender.  The pursuer would therefore need to distinguish the facts of the present case from those in Seguros. 

The pursuer had relied on two factors.  The pursuer highlighted that there was a dispute between the insurer and insured in respect of policy coverage and the limits to indemnity.  The pursuer also highlighted the potential impact of these issues in respect of the policy on its claim against the second defender. 

Lord Richardson was not convinced by either of these factors.  The issue under consideration was the pursuer’s claim against the second defender.  The question then had to be whether or not the claim raised a matter “relating to insurance”.  Lord Richardson highlighted that the claim against the second defender was based on delict, a breach of statutory obligation and a breach of contract.  

Lord Richardson did not consider the existence of a dispute between the first and second defenders as to the insurance policy was relevant when considering the characterisation of the pursuer’s claim against the second defender.  

Lord Richardson took the view the consequences to the pursuer of the policy issues had no relevance to the nature of the pursuer’s claim against the second defender.  The court in Seguros was clear in that any issues between an insurer and injured party as to the validity and effect of the policy were not sufficient to render a claim against an insured a matter “relating to insurance.”  

The facts of this present case were not distinguishable from the facts in Seguros and the second defender succeeded in persuading the court that it did not have jurisdiction over them.

Summary and Final Thoughts… 

Lord Richardson's decision to dismiss the action against the second defender highlights the uncertainties stemming from Brexit in the legal landscape. The aftermath of Brexit has introduced challenges and opportunities for both pursuers and defendants involved in cross-border disputes. As these challenges persist, it's likely that similar claims and legal battles will emerge, necessitating a thorough examination of existing laws and past rulings. Lord Richardson's decision, alongside others, will shape the course of future disputes, emphasising the need for careful consideration of specific circumstances in legal proceedings.

Craig Evans, Partner and Amy Riley, Associate are members of Clyde & Co’s Cross-Border Subject Matter Group. To read more insights from this group please click here.

Greg MacDougall is a member of Clyde & Co’s Scotland Subject Matter Group. To read more insights from this group please click here.