Pursuing a claim for a road traffic accident abroad has just been made easier, as Marcel Lipelt explains


Each year, millions of UK nationals go on their summer holidays to the sunnier parts of Europe. Some will be unfortunate enough to be involved in a road traffic accident (RTA) through no fault of their own and, once home, they might seek advice from a solicitor as to whether they can claim damages. Fortunately for them, important changes in EU law have just made it easier to pursue a claim.



By 11 June 2007, the fifth Motor Insurance Directive (Directive 2005/14/EC) had to be transposed into the national laws of all member states. It strengthens claimants' rights introduced by the fourth directive (2000/26/EC). Essentially, the fourth directive created the right of any UK victim of an RTA which occurred in another EU member state to pursue a claim for personal injury and/or property damage against the foreign third-party insurer through an appointed claims representative based in the UK.



The fifth directive has not changed this procedure. The letter of claim is still to be sent to the claims representative whose details can be obtained from the Motor Insurers Information Centre. The representative acts on behalf of the foreign third-party insurer and a reasoned response to the letter of claim is to be provided within three months of its receipt. If the representative fails to reply, the claimant may submit a claim to the Motor Insurers Bureau.



However, significant limitations of the fourth directive made foreign accident claims less attractive for solicitors. Once the claim was being dealt with by the representative, damages were assessed in accordance with the law of the country in which the accident occurred. For English claimants, this often meant they received less in damages than if the accident had occurred here. In addition, it must have been disappointing news for every solicitor to learn that his costs were not recoverable pursuant to the Civil Procedure Rules (CPR), but rather to the law of the other country.



The most significant limitation of the fourth directive though, was the fact that court proceedings could not be issued in England if an agreement as to damages and costs was out of reach. Save for the most exceptional case, the English courts did not have jurisdiction. This has now been changed by article 5 of the fifth directive, whereby a new recital (reasoning) No16a is to be added to the fourth directive to say that under article 11(2), read in conjunction with article 9(1)(b) of Council Regulation (EC) No. 44/2001of 22 December 2000, 'injured parties may bring legal proceedings against the civil liability insurance provider in the member state in which they are domiciled'. Though Council Regulations are self-executing, the said regulation has been implemented in UK law by virtue of the Civil Jurisdiction and Judgment Order 2001 (SI 2001 No3929) as amended by the Civil Jurisdiction and Judgments Regulation 2007 (SI 2007 No1655).



Therefore, a claimant resident in England who has been injured in an RTA which occurred in another member state may issue court proceedings against the foreign third-party insurer in an English county court or the High Court.



The right to commence court proceedings in England does not depend on a claimant's nationality, as the wording of the fifth directive merely refers to his or her 'domicile'. Claimants have the choice of issuing court proceedings in their home court or, alternatively, in the country in which the accident occurred.



Nevertheless, the claims representative should be asked to nominate solicitors authorised to accept service on behalf of the insurer in order to avoid having to serve the claim form pursuant to rule 6.19 of the CPR.



So far so good, but which laws will the English courts apply? This question will arise as soon as the claimant claims damages in respect of a loss that is not recognised in the foreign country, or if damages awards in the other country are lower than in England. Unfortunately, the fifth directive is silent on that issue as far as court proceedings are concerned.



In the absence of express regulation, the answer lies with what is generally known as the discipline of conflict of laws. Pursuant to section 11 of the Private International Law (Miscellaneous Provisions) Act 1995, 'the general rule is that the applicable law is the law of the country in which the events constituting the tort... in question occur'. This means that liability and the heads of any claim are to be determined in accordance with the law of the country in which the accident occurred.



If liability rests with the foreign third party, the claimant has to show that the foreign law recognises each head of his or her claim. An award may not be made in respect of any head of claim that is not recognised in the foreign law, even though the claimant would have been able to successfully claim had the accident occurred in England.



However, what if the head of claim is recognised in the foreign law? Will the actual amount of damages payable to the claimant be assessed by English standards or by the standards of the country of the accident?



One might say that it is only a logical consequence of section 11 that the law of the country of the accident determines the amount of damages to be paid. This was the majority opinion of the Court of Appeal in Harding v Wealands [2004] EWCA Civ 1735. That case concerned a couple who were both resident in England, but during their holiday in Australia the claimant was injured in an RTA due to the negligence of his partner, the defendant. While Australian law recognises personal injuries as a recoverable head of claim, it limits damages to a maximum amount of A$309,000. In accordance with English law, the claimant would have been able to recover substantially more.



The Court of Appeal, in keeping with its majority opinion as to the applicable law, awarded damages capped at the Australian maximum compensation amount. On appeal to the House of Lords ([2006] UKHL 32), their Lordships took a different view and held that the quantification of damages under any head of claim is governed by the lex fori. Hence the amount of damages is to be assessed in accordance with English law.



The distinction drawn by their Lordships was between substantive law and procedure. It held that the question of the availability of a particular head of claim is a matter of substantive law, whereas the quantification of damages is a matter of procedure. Having identified the quantification of damages as procedure, the lex fori (in this case, English law) applies to it pursuant to section 14(3)(b) of the 1995 Act.



As costs are a matter of procedure, claimants will now be able to recover their reasonable legal costs in full pursuant to the Civil Procedure Rules in all issued fifth directive cases. If the case settles prior to the issue of court proceedings, solicitors should ensure that any settlement agreement clearly stipulates that costs are payable pursuant to English costs rules. However, it should be borne in mind that the predictive costs scheme does not apply to RTAs which occurred abroad.



The fifth directive is excellent news for claimants and solicitors alike. Claimants will benefit from higher damages payments and solicitors should be able to recover their costs in full without having to look to their clients for payment of any shortfall out of their damages.



As a final note, the route used by EU lawmakers to implement the right to issue court proceedings in the claimant's home court is questionable and has been referred to the European Court of Justice.



Marcel Lipelt is a registered European lawyer and German rechtsanwalt at Manchester law firm JS Miller