The Judgments Regulation and jurisdiction in foreign RTAs - An update
In a recent decision concerning which jurisdiction is applicable to foreign RTAs, a French insurer was defeated in its bid to claim jurisdiction in France on the basis of their policyholder's insurance contract.
The first instance decision
The victim in this case was a UK resident who suffered an injury in the course of a road traffic accident with a French vehicle driven by a French resident on September 19 2003 in France.
After the English victim refused an offer made on the basis of assessed French damages, the French insurer sought to bring an action in tort against the victim at the La Rochelle District Court as this was where the harmful event occurred.
In essence, the French insurer sought to forestall court proceedings which would be brought in England and confirm the French medical expert's report assessing the damage arising from the accident, thereby limiting the amount to be paid to the victim to that of the previous offer amount. No doubt the assessment and payment of costs in France, which would be a fraction of those in England, also played a part.
The victim of course argued that the French courts had no jurisdiction and that the action should be brought before the local county court in the UK where he was resident. The La Rochelle District Court approved the victim's argument and ruled in favour of jurisdiction in the UK court.
Technically, the French court had jurisdiction under Council Regulation (EC) No 44/2001 of 22 December 2000 (commonly known as the "Judgments Regulation" and enshrined in English law under the Civil Jurisdiction and Judgments Act 1982).
The basic principle is that jurisdiction is to be exercised by the EU country in which the defendant is resident, regardless of his nationality. The courts’ special jurisdiction includes matters relating to liability for wrongful acts - tort, delict or quasi-delict: these will be decided by the courts for the place where the harmful event occurred or may occur. The French insurer was effectively arguing this was a case brought under tort.
In certain circumstances a defendant may be sued in the courts of another EU country. The regulation lists areas of jurisdiction where this is so: special or exclusive jurisdiction, as well as jurisdiction on matters relating to insurance, consumer contracts and individual contracts of employment.
Article 12(1) of the Judgments Regulation states that "an insurer may bring proceedings only in the courts of the Member State in which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a beneficiary". Essentially, if a case is classed as an insurance matter then the applicable court is the local court where the defendant is resident (in this case, the English court in Guildford).
The Court of Appeal in Poitiers agreed with the first instance decision. It ruled the action was not a direct action in tort pursuant to the case of Odenbreit and brought by the injured party against the insured or the insurer, but an action of the insurer against the victim. Such a situation falls outside of the usual Judgments Regulation and is classed as an action relating to insurance under Article 12(1), which relates to "jurisdiction in matters relating to insurance".
The French insurer and its policyholder appealed to the French Supreme Court. The insurer ran two arguments:
- The insurer sought to argue the case was in fact a case on a tortious basis, as its policyholder had joined the action
- The insurer argued this case could not be classed as an insurance matter, as Article 12(1) refers to "the policyholder, the insured or a beneficiary" of an insurance contract. It argued this wording does not include the victim – who would be a mere beneficiary of damages – but rather the beneficiary of the insurance contract which was concluded on his behalf by a third party. This meant an action against the victim would fall outside the mandatory jurisdiction rules and the usual jurisdiction rules would mean that the French courts could hear the matter.
Supreme Court decision
The Supreme Court ruled in favour of the victim and against the insurer. It rather circumvented the argument relating to the definition of the beneficiary.
The Supreme Court agreed with the previous instances and held that the policyholder joining the action did not affect the jurisdiction issue. Article 11(3), Section 3 was applied, which states that if "the policyholder or the Insured may be joined as a party to the [direct action of the injured party against the Insurance company], the same court shall have jurisdiction over them".
It then simply confirmed that Article 12 applied and ruled against the insurer.
Several commentators have noted that this was a golden opportunity to decide once and for all the juxtaposition of Articles 11 and 12 of the Judgments Regulation and the meaning of "beneficiary" under Article 12.
However, instead of referring the matter to the ECJ, the French Supreme Court decided to make a ruling which we believe to be correct, but which is not well argued and does not cite one of the most important considerations which was mentioned in the Odenbreit decision: that of protecting the perceived weaker party, ie the individual victim.
It is noted that the ECJ ruled in Odenbreit that the decision was "...also based on the purpose of the regulation, which aims to guarantee more favourable protection to the weaker party than the general rules of jurisdiction laid down by Regulation No 44/2001 provide for".
Note: The Regulation being discussed has been reformed by EU Regulation 1215/2012, but none of the provisions relating to insurance was altered in its substance.