When in Rome
21 April 2010
New Europe-wide regulations to harmonise non-contractual obligation laws have had the opposite affect, says Paula Jefferson and Sarah Wright
Rome II, the regulation governing the law applicable to non-contractual obligations, came into force on 11 January 2009. Its aim was to standardise rules across Europe as to which country’s law will apply in claims with a cross-border component.
Practically, this could be summarised as “the law which will apply to the claim is that where the accident occurred”.
There were fears of lower damages being awarded to claimants injured overseas who could no longer rely on the decision in Harding v Wealands (2006) that English assessment of damages should apply.
Although intended to simplify litigation, so far there has been little harmonisation and the practical effect has been greater uncertainty and inevitably further litigation.
The first uncertainty is around timing. Most commentators in England considered Rome II would apply to accidents after 20 August 2007, where proceedings were issued after 11 January 2009.
This appeared straightforward and resulted in a rush to issue claims to beat the deadline. Since then three approaches have been taken:
- The German Federal Court has concluded that Rome II should only apply to events giving rise to damage after 11 January 2009.
- Some legal advisers are now saying that Rome II only applies where proceedings are issued, so if there is a long limitation period (for example 10 years in France) then there is no rush to issue and, in effect, Rome II can be ignored.
- In the unreported case of Bonsall v Cattolica Assicurazioni (2010)the judge held that Rome II should apply to all claims where the accident occurred after 20 August 2007 but where the assessment of damages takes place after 11 January 2009. If correct, this means the rush to issue pre 11 January 2009 was pointless.
If agreement cannot even be reached about issues of timing, there would seem little hope of Rome II creating any harmony.
The second uncertainty relates to the change of wording from ‘substantially’ to ‘manifestly’ and the impact, if any, that will have. The general principle of Rome II is that the applicable law will be the law of the county in which “the damage occurs”, usually where the accident took place.
If the claimant and defendant share a common habitual residence at the time the damage occurs, such as family members on holiday abroad where the claimant passenger is injured by the defendant driver, then the general rule is displaced and the applicable law is that of the country of residence. It is a rigid rule, not a flexible exception, with little room for interpretation.
Many claimants wish any litigation to proceed in their home court. If there is no common habitual residence, then a claimant can argue that the tort is ‘manifestly’ more closely connected with their home.
Previously the hurdle they had to overcome was to argue that the test was one of a substantial connection. To date no court has determined whether manifest and substantial are the same or whether there is now a higher hurdle to surpass.
Long term impact
In seeking to create harmony Rome II sought to ignore the fact that the long term consequences of the accident were often not experienced in the country where the accident occurred.
However, particularly in cases involving more serious injuries, requests are likely to be made for the court to consider Paragraph 33 of the preamble of Rome II, which provides that the court assessing damages can take into account all the victim’s circumstances, including “the actual losses and cost of after-care and medical attention”.
Thus, an English claimant injured in Spain may ask an English court to make an award for gratuitous care , even though Spanish law does not recognise such a head of loss. Thus the preamble runs contrary to the regulation itself.
Consequences of uncertainty
All this uncertainty means that there have been very few judgments on Rome II to date. In the recent case of Jacobs v MIB the English courts applied Rome II purposively. The judge held that there was a clear inconsistency between Rome II and English national law and, as European law must take precedence over national law, Rome II applied and the applicable law was Spanish.
In practice the application of foreign laws is at present considered on a case by case basis. It may be that smaller claims can be resolved by negotiation with English medical evidence and advice from foreign lawyers, but for more complex claims it is likely that foreign medical experts will have to examine the claimant.
A judge will then face potentially conflicting reports on heads of loss and the law of quantification from lawyers, before damages can be assessed. More claims may require a formal assessment than under the previous rules. This all means an increase in costs and delay in resolution.
When Rome II came into force, it was hoped that claims involving accidents abroad would become more straightforward, with lower costs. With no evidence of this yet, the only certainty is that, pending guidance from the higher courts, it remains impossible for either claimant or defendant lawyers to offer clients any certainty, let alone harmony.
Paula Jefferson is a partner and Sarah Wright a solicitor at Beachcroft