ROME II – What is it all about again and where are we 2 years on?
It is now over 2 years since the implementation of European Regulation 864/2007, better known as “Rome II”. Reviewing the legislation, Kelvin Farmaner, Partner and Head of Insurance Litigation at Trethowans LLP in conjunction with the Van Ameyde Group asks whether everyone is now clear on its scope and application.
Generally, and in order of importance under Article 4, the applicable law is firstly the law of the country where the damage occurs; secondly the law of the country where both parties were habitually resident and thirdly the law of the country with which the case is manifestly more closely connected than the other countries. The Regulations also allow, under Article 14, parties to choose, by mutual agreement, the law that will apply to their obligation. Under Article 15 the scope of the law applicable includes the basis and extent of liability as well as the existence, the nature and the assessment of damage or the remedy claimed. The last point represents a major change in the law. It effectively reverses the House of Lords decision in Harding v Wealands where the court decided the assessment of damages was for the law of the forum. Article 18 provides that the “victim” of a tort may bring his or her claim directly against the insurer of the person liable if permitted by the law applicable to the tort or the law applicable to the insurance contract. The decision of the ECJ in FBTO v Odenbreit allows the victim to sue in their home country. In practice this is restricted to road traffic cases.
Unfortunately, despite the legislators laudable attempts to achieve harmonisation and clarity, a number of areas of dispute have arisen. Perhaps the most fundamental of these has been the question of the effective commencement date of Rome II. Article 31 states that “This regulation shall apply to events giving rise to damage which occur after its entry into force”. Article 32 states that “This regulation shall apply from 11 January 2009”. The apparent contradiction left legal practitioners and insurance professionals unclear as to whether Rome II applied to accidents from 20 August 2007 or 11 January 2009. The reason for this is that in E.U. legislation the words “application” and “entry into force” do not have the same meaning. In general regulations enter into force on the date specified in them or, in the absence thereof, on the 20th day following that of their publication in the Official Journal. No date is specified in the regulation for its entry into force. Publication was on 31 July 2007, so the default provisions would make 20 August 2007 the date of coming into force. However, if that is right, what was the significance of the 2009 date mentioned in Article 32?
In the case of Homawoo v GMF the High Court noted that there was no judicial authority on the temporal scope of the regulation and it chose to make a reference to the ECJ.
The first judicial decision on the temporal scope of Rome II came in the High Court case of Bacon v Nacional Suiza. The Defence in that case was orchestrated by Van Ameyde UK (part of the Europe-wide Van Ameyde Group). The Court decided that the regulation is applicable to claims arising from events occurring from 20 August 2007, as long as the issue of which law is applicable comes before the Court from 11 January 2009.
The application of Rome II is of course inevitable across the E.U and E.E.A. in the future. This Judgment is ultimately to the advantage of all non-UK insurers and they will gain a considerable advantage in liability claims involving UK citizens.
The reasoning of the court in the Bacon case is robust and it seems likely to prevail if the matter is left to the English Courts. As things stand the combined effect of these regulations and decisions is that there should be less so-called “Forum-Shopping” and more certainty in the sometimes opaque world of conflict of laws. If this proves to be the case it will be welcome.
This article was written jointly by Kelvin Farmaner, Partner and Head of Insurance Litigation with Trethowans LLP and Paul Lavelle Claims manager with Van Ameyde UK Ltd. For more information contact firstname.lastname@example.org and P.Lavelle@vanameyde.com.
This article was published in The Post Magazine and Post Online on 27 May 2011.