The law of unintended consequences (or determining applicable law in cross-border cases)

05 Jun 2017


The recent decision in Marshall v MIB (1) Pickard (2) Generali (3) 2017 provides a useful example of how the rules governing which laws apply in cross border personal injury cases can potentially give rise to unintended consequences.

The facts of the case were a little convoluted. An uninsured Peugeot car driver (B) had hit British Nationals (M and P) as they were standing behind a Ford Fiesta car and trailer whilst the trailer was being attended to by a recovery truck on the side of the motorway.  P had been driving the Fiesta and M was his passenger.  After hitting M and P, the Peugeot collided with the trailer, shunting it into the Fiesta which, in turn, was shunted into the recovery truck.  P was thrown forward by the impact with the Peugeot and landed clear of the vehicles.  He suffered serious injuries.  M was thrown off the front of the Peugeot and the trailer fell on his leg.  He died at the scene.  The Fiesta was registered in the UK and insured by RSA; the recovery truck was registered in France and insured by Generali.

From a UK perspective at least most people would perhaps think there would be no liability attaching to the recovery truck driver.  In fact the recovery truck driver and his insurers faced the very real prospect of being held wholly responsible for the claims of both M and P.  However, because of the cross border nature of the case the Court first had to determine which laws would apply to the case.

For all accidents occurring after 11 January 2009, applicable law is governed by Regulation (EC) 864/2007, known as Rome II.  Article 4 deals with choice of law and sets out a general principle at Article 4 (1), an exception at Article 4 (2) and an escape clause at Article 4 (3).  The general principle is that the applicable law will be the law of the country in which the damage occurs.  The general principle is displaced where the person sustaining damage and the person claimed to be liable share a common habitual residence at the time when the damage occurs.  If the tort or wrongdoing is manifestly more closely connected with a country other than that indicated by Article 4(1) or (2), the law of that country will apply.

The risk to the recovery truck driver in this case was that the Court would apply French law pursuant to the general principle outlined above. This would mean that liability might well attach as French law has a no fault system in motor cases called “Loi Badinter”.  Loi Badinter requires a party to establish that a road traffic accident occurred; a Claimant has suffered an injury and an insured motor vehicle was involved in the accident. The conduct of the driver is not relevant.  In this case both RSA and Generali it was argued were involved as insurers of the Fiesta and recovery truck respectively. However it was further argued by RSA that Article 4 (2) should apply to any claim as between M and P as both shared a common habitual residence (the UK).  If the Court accepted that argument then RSA would have had no liability as the UK’s fault based system would have applied to the claim by M against P.  That in turn would have meant that the claim of M and possibly P as well would have attached to the recovery truck and its insurers in full.

At first instance Dingemans J decided that the applicable law was to be determined by reference to Article 4 of Rome II.  He decided that under Article 4(3) a governing law mandated by Article 4(1) but excluded by Article 4(2), might by required by Article 4(3).  In this case, it was clear that the tort was manifestly more closely connected with France rather than England and thus French Law applied to the issue of liability for the claims before the Court.

RSA, as insurers for P, applied to the Court of Appeal for permission to challenge this decision.  Mr Justice Cranston refused permission in a Judgment dated 19 January 2017. He noted that the judge at 1st instance took into account that M and P were hit by a French vehicle, driven by a French national on a French motorway; that the collision by B with M and P was as a matter of fact the cause of the accident, the injuries and the subsequent collisions and that any claims that M and P had against Generali were governed by the laws of France.

This case is thought to be the first reported case in which Article 4 (3) has pointed back to the same law as Article 4 (1).  Perhaps even more important is the clarification that in looking at Article 4 (3) in a multi tort case (such as a motor vehicle pile up), for the purposes of determining the applicable law, it is relevant to look at all of the claims against the other parties as well as simply the specific claim advanced against the Defendant in question.

Kelvin Farmaner is a member of the Forum of Insurance Lawyers (FOIL) European Issues Sector Focus team and a Partner with Trethowans LLP.  He represented Generali in Marshall v MIB (1) Pickard (2) Generali (3) together with Paul Lavelle, Claims Manager of Van Ameyde UK and Charles  Dougherty QC of 2TG.