A Tortuous Journey from Brussels to Rome via Luxembourg - European Court of Justice Rules on Effective Start Date of Rome II Regulation
On the 17 November the European Court of Justice handed down a landmark decision in the case of Homawoo v GMF (C-412/10), clarifying the effective start date of the application of the Rome II (EC No 864/2007 of 11th July 2007). BY MICHAEL ZURBRUGG
On the 17 November the European Court of Justice handed down a landmark decision in the case of Homawoo v GMF (C-412/10), clarifying the effective start date of the application of the Rome II (EC No 864/2007 of 11th July 2007) which introduced a new EU wide (i) set of rules governing choice of law in a wide range of cross border civil disputes.
The stated intention of Rome II, which had a long period of gestation, was to “improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movements of Judgments” and “for the conflict of law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought”.
Publication of the definitive text took place in the Official Journal on the 31st July 2007 after much wrangling between the European Parliament and the Commission, and with compromises being introduced at the last minute. Despite the stated intention of introducing “certainty” difficulties have accompanied its very introduction and what has come to be known as its “temporal application”.
This has resulted from problems associated with the interpretation of Articles 31 and 32. Article 31 specifies that “This regulation shall apply to events giving rise to damage which occur after its entering into force”, which is generally understood to be the twentieth day after publication in the Official Journal, and hence 20th August 2007. Article 32 provides “This regulation shall apply from the 11th January 2009…“.
Which of these two dates was to be applied in relation to a road traffic accident in France in which Mr Homawoo, a London based pedestrian, sustained serious injuries on the 29th August 2007, and why is the outcome important?
In order to provide an answer to these questions it is important to bear in mind that the law of England and Wales has long established its own rules for deciding the law applicable to torts committed abroad. Relatively recently this was codified in Part III of the Private International Law (Miscellaneous Provisions) Act 1995 which, by Section 11(1) provides a general rule that the law applicable shall be the law of the country “ in which the events constituting the tort or delict in question occur”. Section 11 (2) specifies that in relation to personal injury or death resulting from personal injury this is to be the law of the country where the individual was when he sustained the injury. Section 12 (1) provides that the general rule may be displaced in circumstances where it is considered “substantially more appropriate” for the applicable law to be that of another country. In Mr Homawoo’s case, involving as it did an accident in France with a French defendant, the general understanding is that the law applicable to his claim would be that of France under Section 11.
A series of subsequent cases have led to consideration by the Court as to when it might be appropriate to displace the general rule. In Edmunds v Simmonds, the first reported case following the introduction of the 1995 Act Garland J held that it was appropriate to displace Section 11 in circumstances where two English friends had travelled to Spain and the claimant had sustained devastating injuries whilst travelling as a passenger in a Spanish hire car driven by her friend. He ruled that the factors connecting the dispute with England overwhelmingly outweighed factors which linked the dispute with Spain. These included the fact that both parties were resident in England, had only been in Spain for a short holiday and that the majority of the losses flowing from the injuries were sustained in this country.
Subsequent cases have suggested that English Courts may be more hesitant in displacing the general rule provided in Section 11 and in the leading case of Harding v Wealands the focus of attention before the House of Lords moved away from which was the applicable law to consider the extent and scope of the applicable law. Harding v Wealands concerned a road traffic accident in New South Wales as a result of which the claimant suffered catastrophic injuries whilst travelling as a passenger in a car driven by his Australian girlfriend. Both parties were living in this country but the Court of Appeal held that this was not sufficient to displace the general rule under Section 11 of the 1995 Act.
Following an appeal to the House of Lords it was held that notwithstanding the applicability of the law of New South Wales there remained a distinction between matters of substantive law (including such issues as liability and heads of loss) to be governed by the lex loci, and matters of procedural law (including notably the quantification of damages) which were to remain questions for the law of the forum. As a consequence the claimant was entitled in this country to have his damages assessed in accordance with normal English principles, to the exclusion of caps on certain heads of loss and other restrictions which would have been applicable under the law of New South Wales.
The regime introduced by the Rome II regulation significantly changes the legal landscape. As with Section 11 of the 1995 Act there is a general rule giving primacy to the lex loci delict (Article 4.1). This is to apply unless both parties to the litigation have their habitual residence in the same country at the time when the damage occurred, in which event it is the law of that country which will be applicable (Article 4.2). There is an exceptional provision allowing the application of the law of another country where the circumstances of the tort are considered “manifestly more closely connected with a country” other than that indicated in Articles 4.1 and 4.2.
In this context it is particularly significant that by Article 15 the scope of the law applicable under Rome II is to govern “the existence, the nature and the assessment of damage or the remedy claimed”.
It follows that if the circumstances surrounding the claim of Mr Homawoo are to be considered in accordance with the provisions of the 1995 Act damages will essentially be considered under English law as the law of the forum. Conversely if Rome II had been held applicable Article 15 of that Regulation would lead to damages being assessed in accordance with the then applicable law, namely that of France.
That Mr Homawoo was able to bring a claim in this jurisdiction at all results from another ground-breaking decision by the European Court of Justice of 13 December 2007 in the case of Jack Odenbreit v FBTO Schadeverzekeringen NV (Case No C- 463/06) which determined that Regulation 44/ 2001 (dealing with questions of jurisdiction and the enforcement of civil judgments in cross border cases) was to be understood as enabling an injured party to bring a direct claim against a civil liability insurer domiciled in a Member State before the courts of his own domicile, providing that such a direct right of action was recognized.
It was by virtue of the ‘Odenbreit’ decision that proceedings were issued before the High Court in this country on behalf of Mr Homawoo. Such a right of action was not disputed. Liability was also conceded with the result that judgment was entered on the claimant’s behalf. Predictably the parties were unable to agree as to the law applicable to the assessment of damages and the case was fixed for a trial of this question as a preliminary issue, it being contended by the defendant that Rome II was applicable at the time of Mr Homawoo’s accident and on behalf of Mr Homawoo that the effective date of application of Rome II was only in relation to events taking place on or after the 9th January 2009.
The point was argued in London before Mrs Justice Slade on 25th May 2010 . She handed down a reserved judgment on the 27th July 2010 indicating that the proper interpretation of Articles 31 and 32 of Rome II was unclear, that the Court of Justice had not considered the question and that with a divergence of opinion between academics and practitioners both in this country and in other Member States the High Court considered the Court of Justice to be in the best position to resolve the issue. Accordingly the matter was referred to the European Court of Justice.
Written submissions were filed on behalf of the parties, the European Commission and the British and Greek Governments (with the latter supporting the defendant’s stance and the Commission and British Government supporting the claimant’s position). A hearing took place in Luxembourg before a five Judge Court on the 14th July 2011 attended by Counsel for the parties and for the Commission. The Advocate General, Paolo Mengozzi, was asked to provide an Opinion to the Court by the 6th September 2011.
In a robustly expressed opinion the Advocate General put forward a clear view that the ECJ should respond to the question submitted by concluding that Rome II applies only to causes of action taking place on or after 11th January 2009. It is this view which the ECJ has now endorsed in its judgment.
For Mr Homawoo and others whose causes of action arose between 21st August 2007 and 10th January 2009 the position is at last clarified and the parties can now hopefully make progress towards a resolution of his claim in the knowledge of the law to be applied. For those English domiciled litigants whose cause of action arose prior to 11th January 2009 the 1995 Act will continue to apply. Only for those whose events giving rise to claims occurred on or after 11th January 2009 will the Rome II Regulation be applied.
That much is clear although it is unlikely to be the last reference to the ECJ in relation to Rome II.
The application in one country of the law of another is inherently fraught with difficulties. Particularly in the field of personal injury compensation the weight attached to evidence relied upon and how that evidence is secured vary considerably. In many Member States’ legal systems, and by contrast with the practice in this jurisdiction, expert evidence is often obtained at the instigation of the Court itself leaving little or no opportunity for such evidence to be challenged or its author open to oral cross examination. Many countries use tables and scales allotting percentage points to very particular types of disability. How is this to work in practice when it is clearly specified in Article 1.3 of Rome II that “this Regulation shall not apply to evidence and procedure”?
Awards of compensation in personal injury cases across Europe are frequently directly related to the availability and extent of benefits (monetary or otherwise) available under the Social Security regime applicable in that country. Different rules apply as to the priority rights afforded to Social Security organisations over compensation awards to individual claimants. More generally the cost of living varies significantly between Member States.
Such differences are recognized to some extent in Recital 33 to Rome II which specifies “According to the current national rules on compensation awarded to victims of road traffic accidents, when quantifying damages for personal injury in cases in which the accident takes place in a State other than that of the habitual residence of the victim, the court seized should take into account all the relevant actual circumstances of the specific victim, including in particular the actual losses and costs of after-care and medical attention”. Why such special treatment should apply only in road traffic cases is not clear (is for example the victim of a skiing accident to be treated less favorably) and what weight is to be attached to this Recital? It does not form part of the Regulation itself. How will judges across Europe give effect to this Recital, if at all?
Still further confusion arises by reason of the fact that by Article 28.1 the Rome II Regulation “shall not prejudice the application of international conventions to which one or more Member States are parties at the time when this Regulation is adopted which lay down conflict of law rules relating to non- contractual obligations. This applies chiefly to the Hague Convention of 4th May 1971 with the result that uncertainty will now arise as to how courts in the different Member States will apply Rome II depending upon whether they were, or were not , signatories to the Hague Convention (ii). Also relevant is the fact that the Hague Convention contains no equivalent provision to that contained in Recital 33. Very probably this will lead to a variable two tier approach with differing and inconsistent outcomes depending upon the Member States involved.
What does seem evident is that with the replacement of the 1995 Act by Rome II many English victims of accidents abroad will now face a position where damages are to be decided by reference to levels of compensation associated with the country where the accident took place. In many instances this is likely to result in significantly less favorable treatment than has applied until now. An illustration of this is to be found in a case recently handled by the author where another victim of a road traffic accident in France who sustained catastrophic spinal injuries secured damages in this country at approximately double the level previously being offered in France at a stage when it was not possible to invoke the jurisdiction of the English court.
In this country questions of foreign law are deemed to be matters of fact to be decided by the court. But how in practice will this take place? Will an English Judge be entirely dependant on the views of overseas lawyers and ‘foreign law experts’? And how is a Judge to approach and resolve differing views? In many European countries regional differences can exist and the advice provided by a lawyer from Naples may well be different from that of a colleague in Milan. A court in Paris may be more generous than one in Poitiers. Inconsistencies between awards in Madrid and in Mallorca can frequently arise. Can there truly be said to be a unified and consistent Italian , French or Spanish approach to levels of compensation in a particular case and will the courts in Member States allow appeals against rulings made by first instance courts based upon challenges as to the understanding of or application of overseas law? Preliminary enquiry suggests that the position varies across Member States.
These and other concerns were recently voiced at the annual conference of the Institute of European Traffic Law held in Luxembourg resulting in a call by some for a review of the Rome II Regulation, particularly insofar as it relates to the treatment of personal injury claims in countries other than those where the accident occurred. One suggestion was that such cases be treated as a distinct body of litigation where, contrary to the general rule currently contained in Article 4.1 of Rome II, the ‘lex loci delicti’ should be abandoned in favour of the’ lex fori’, thereby allowing the courts concerned in the victim’s home country to award damages by reference to the law of the forum.
Whether the European legislators will heed such calls remains to be seen. If not the courts in this country and those in other Member States face a challenging time. Practitioners will equally face a difficult task advising clients how best to proceed - far removed from the “certainty “ and “predictability” which the Rome II Regulation was intended to introduce.
About the Author
Michael Zurbrugg is Partner and serious injury abroad expert in the International Travel Litigation team at Irwin Mitchell.