A summary of recent developments in insurance, reinsurance and litigation law.
Committeri v Club Mediterranee SA: Court of Appeal characterises nature of a claim under a French Code for the purposes of a choice of law dispute
http://www.bailii.org/ew/cases/EWCA/Civ/2018/1889.html
The claimant brought proceedings against a French holiday company and its insurers when he was injured on holiday in France. The claimant's employer had entered into a contract with the holiday company, and that contract provided for English law and jurisdiction. However, the claimant (who brought proceedings in England) sought to rely on the French Tourism Code, which imposes strict liability for the performance of a contract which falls within the Code. By contrast, if the claim was governed by English law, it would fail because it was not alleged that there had been a breach of a contractual obligation to take reasonable care.
The key issue in this case was whether a claim under the Code was a contractual or non-contractual claim. If it is contractual, Rome I (EU Regulation 593/2008) applies and so English law is the governing law, because of the express choice of law clause in the contract. If it is non-contractual, Rome II ((EU Regulation 864/2007) applies, and so French law is the governing law because that is where the accident occurred.
The Court of Appeal has now held that the strict liability claim was contractual. The relevant article of the French Code which provides for strict liability is "an enhancement of a pre-existing right, which is founded upon the contract. It is not a different right which is unconnected to the contract....Nor does the claim only operate with the contract in the background: on the contrary, the contract is central to the claim".
Reference was made in this case to the CJEU case of Ergo Insurance v IF P&C Insurance (see Weekly Update 4/16), in which it was held that a contribution claim between insurers was determined by the non-paying insurer's contract with its insured (the paying insurer could then be subrogated to the victim's rights against the non-paying insurer) and so was a contractual claim. However, that decision differed from the English case of XL v AXA (see Weekly Update 44/15), in which the judge confirmed that, under English law, a contribution claim is based on equitable principles, and so is non-contractual. The Court of Appeal here said that those cases were different from the situation in this case, though, since there had never been any contract between the insurers themselves.
Accordingly, the claim, which was governed by English law, failed.
Advantage Insurance v Stoodley: Court holds that motor insurer providing cover whilst driving other cars can't rely on the breach of a condition precedent by the insured
http://www.bailii.org/ew/cases/EWHC/QB/2018/2135.html
The first defendant was convicted of causing death by careless driving in an accident in which a passenger died (and another was severely injured). Three motor insurers had a potential liability in respect of claims arising from the accident: (1) an insurer which had issued a policy to the defendant in relation to another vehicle which included an extension covering the driving of other vehicles (this insurer was entitled to avoid its policy – see Weekly Update 16/18); (2) Insurer A, which had similarly issued a policy for another vehicle which included an extension for driving other vehicles; and (3) Insurer B, the insurer of the vehicle involved in the accident. The first defendant was not insured under the policy issued by Insurer B but Insurer B had a contingent liability because, in the absence of a contractual insurer, it would be liable to satisfy a judgment in favour of the injured passenger pursuant to the provisions of section 151 of the Road Traffic Act 1988 ("the RTA 1988").
Insurer A argued that it was not liable to indemnify the first defendant because he had breached various claims conditions precedent. However, section 148 of the RTA 1988 provides that a condition in a motor insurance policy providing that no liability shall arise "in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy....shall be of no effect in connection with such liabilities as are required to be covered by a policy under section 145 of this Act" (emphasis added). Section 145 in turn provides that a policy must insure a person for liability which may be incurred by him arising out of "the use of the vehicle on a road". Insurer A sought to argue that that was a reference to the vehicle insured by it, and not any vehicle which the insured happens to be driving under the driving other cars cover.
That argument was rejected by Master Davison. The policy issued by Insurer A stated that the first defendant could lawfully drive another car and be insured under the policy. Accordingly, once the first defendant started to use the car involved in the accident, that car became the car insured for the purposes of the policy and "the vehicle" under section 145. Otherwise, a driver using another car under a provision entitling it to drive other cars would be committing a criminal offence because he/she would be driving without insurance.
Stati v The Republic of Kazakhstan: Court of Appeal considers test for setting aside a notice of discontinuance
http://www.bailii.org/ew/cases/EWCA/Civ/2018/1896.html
The first instance decision in this case was reported in Weekly Update 17/18. The claimants sought to enforce a NY Convention award in their favour both in the UK and in other jurisdictions. In the proceedings here, the defendant sought to set aside the order granting permission to enforce the award. The court directed that the defendant's claim that the award was obtained by fraud should proceed to trial. In so doing, the court had found that there was prima facie evidence of fraud. The claimants then served a notice of discontinuance and the defendant applied under CPR r38.4 to have the notice of discontinuance set aside.
CPR r.38.4 gives no guidance as to the circumstances when a court will set aside a notice of discontinuance. However, prior caselaw has established that abuse of process is not a necessary or exclusive criterion which has to be satisfied, and the judge in this case re-confirmed that point. He set aside the notice of discontinuance and the Court of Appeal has now allowed the appeal from that decision.
The Court of Appeal agreed with the judge that there was no need to establish abuse of process and that the discretion conferred by CPR r38.4 "is a discretion expressed in general, unqualified terms and there is no ground for limiting it by reference to implied gateways or restrictions". However, it found that the defendant did not have a legitimate interest in continuing the proceedings. The proceedings had been brought in order to enforce the award against the defendant's assets in England – there was no other connection with this jurisdiction. That purpose had now ceased and so "a very strong case" (and possibly exceptional circumstances) are needed to show a continuing interest. No such interest could be demonstrated here (although the Court of Appeal suggested that if it could be shown that a finding here would create an issue estoppel in other countries where enforcement proceedings were pending, that might have satisfied the continuing interest test).
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