Cross border contention: Fagg v Omniasig Vienna Insurance Group SA

Foreign jurisdiction cases continue to cause headaches for Practitioners both north and south of the border and in this context an English Court decision is worth noting by Scottish Practitioners.

The case of Mark Fagg v Omniasig Vienna Insurance Group SA came before His Honour Judge Simpkiss at Medway County Court on 20 February 2017.

This was an Appeal against the refusal of Deputy District Judge Rahman to allow the Appellant’s Application to strike out the claim on the grounds there was no direct cause of action against the Insurer because of a lack of jurisdiction.

The case related to a road traffic accident which had occurred on 11 February 2014 on the M20 near Maidstone.  As a result credit hire charges had been incurred.  The Respondent, Mr Mark Fagg was domiciled and resident in England and Wales. The other car involved in the accident was driven by Marius Vicot, a Romanian National who it was accepted had been domiciled in Romania at all material times.  The Appellant, Omniasig Vienna were Mr Vicot’s Insurers and was also domiciled in Romania, being a Romanian Company.

Following intimation of the claim the Appellant’s Agent in the UK had been corresponding with the Respondent. Liability for the accident was admitted but the Agent had warned the Respondent that should proceedings be issued they would need to be issued not against the Insurer, but directly against the driver.  Those warnings were ignored and proceedings were issued against the Insurer alone.

The Respondent’s case was that as a matter of law the Appellant as an Insurer of the driver was directly liable for the loss flowing from the accident and as such both parties could be sued in the country where the Respondent resided, namely England and Wales. The Appellant’s position was that in the circumstances of this case, an insurer domiciled in another Member State of the EU could not be sued in England and Wales.

Judge Simpkiss considered in detail the relevant European Regulations in particular EC Regulations numbers 44/2001 (Brussels 1) and numbers 1215/2012 (Brussels 1 Recast).  These Regulations state that where an Insurer is domiciled in a Member State he may be sued in (a) the Courts of the Member State where he is domiciled or (b) in another Member State where the case of action was brought by the Policyholder, the Insured or beneficiary in the Courts of the place where the Plaintiff is domiciled.

In the Fagg case Judge Simpkiss was asked to consider the interplay between these Directives and the European Communities (Rights against Insurers) Regulations 2002 which set out the circumstances when, as a matter of UK law, a person could sue an Insurer of the person causing an injury.  Under these Regulations an entitled party may issue proceedings against an Insurer who issued the Policy of Insurance relating to an insured vehicle and that said Insurer shall be directly liable to the entitled party as to the extent he is liable to the Insured person.

However the definitions applied in this Regulation are critical, in particular the definitions of “entitled party” meaning a resident of a Member State and secondly of “a vehicle” which, for the purposes of the Rights against Insurers Regulations relates only to a vehicle which is “normally based” within the United Kingdom.  By “normally based” is meant the territory of the State for which the vehicle bears a registration plate.  In the Fagg case the vehicle in question bore a Romanian registration plate and there was no dispute that it was not normally based in the UK.

The Respondent’s Solicitors then sought to rely on the Decision of Odenbreit v FBTO Schadeverzekeringen NV (Odenbreit) which considered the Application of the Brussels 1 Regulation before its Recast.  In this case the European Court stated that Articles 91B and 11(2) when read together, widened jurisdiction to include injured parties as persons who can sue an Insurer in their home Courts.  However this is subject to the proviso that a direct action against the Insurer has to be “permitted”.

At first instance, in the Fagg case, District Deputy Judge Rahman had held that this widening was therefore sufficient to give jurisdiction.  However Judge Simpkiss disagreed with this assessment finding that Judge Rahman had misunderstood the provisions.  Judge Simpkiss focused on the crucial aspect of this proposition, being that claims can only be brought by an injured party where direct Actions are “permitted”.

Judge Simpkiss then went on to consider what it meant for an Action to be permitted and in particular which law should be applied.

Reference was made to the case of Keefe v Mapfre Mutualise Cia de Seguros Yu Reaseguros SA which related to an accident involving a claimant in a hotel in Tenerife.  That case was the authority for the proposition that the law which applies to the issue of whether a direct claim is permitted is the law of the lex fori ie, the law of the forum, which in both the Keefe case and the Fagg case was the law of England.

Given the terms of the Rights against Insurers Regulations Judge Simpkiss held that there was no direct action permitted in the law of England and Wales and as such there was no jurisdiction to bring a claim directly against the Appellants in that case.

The Respondents did submit that there was a cause of Action in English law as a result of promulgation of Brussels 1 Recast however Judge Simpkiss was simply not convinced by this argument and as such upheld the Appellant’s Appeal.

Therefore, whilst this case is an English County Court Decision and therefore not necessarily a precedent for how Scottish Courts will deal with these matters, foreign jurisdiction claims are more and more common both north and south of the border and points of contentions continue to arise in this area.  It will be interesting to see how the case law develops both north and south of the border over the coming year and how it is ultimately impacted by changes to the legal landscape post-Brexit.

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