Court of Appeal allows British Holidaymaker to sue Spanish Hotel and its Liability Insurers in the English Courts

A British holidaymaker who suffered severe injuries whilst staying at a hotel in Spain has been given confirmation by the Court of Appeal that he is entitled to sue the Spanish hotel owners and its Spanish liability insurers in England.

In the case of Hoteles Pinero Canarias SL v Godfrey Keefe [2015] EWCA Civ 598 the Court found that the general position that a defendant should be sued in the courts of the Member State in which it is domiciled could be departed from due to an exception for matters relating to insurance under Article 11 of the EU Regulation 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters ("the Judgments Regulation").

It was found that the exception for matters relating to insurance was not limited to policy disputes (such as disputes as to the meaning or effect of a policy) but extended to direct actions against liability insurers and the insured/alleged tortfeasor.

Background

The claimant sustained very severe facial and brain injuries when an unsecured parasol made contact with his face when he was sitting by the pool at a hotel in Tenerife whilst on holiday with his family. The claimant alleged that the accident was caused by the negligence of the hotel owners and damages were said to be valued in excess of £5 million.

As the incident occurred in Spain, it was subject to Spanish law which permitted the claimant to bring a claim directly against the hotel’s liability insurers. The claimant brought proceedings directly against the insurers in England. The main reason for proceedings being brought in England instead of in Spain was that the claimant’s representatives were of the view that the claimant would recover a significantly higher sum of damages if quantum was decided according to English principles and procedure.

The claimant relied on Article 9 and 11 of the Judgments Regulation which provides that, where direct actions are permitted, an insurer domiciled in a Member State may be sued in the courts where the injured party is domiciled.

The insurer accepted liability and the jurisdiction of the English Court but stated that its cover under the policy was limited to €600,000.

The claimant therefore sought to join the owner of the hotel to the proceedings in order to recover the uninsured proportion of the claim. He sought to do this under Article 11(3) of the Judgments Regulation which provides that in "matters relating to insurance" the insured may be joined as a party to direct actions against its insurers brought outside its home court.

The Spanish hotel owner argued that the English court had no jurisdiction to hear the claim against it and that it should be sued in its place of domicile. It argued that the claimant’s claim could not be characterised as "relating to insurance" as required by the Judgments Regulation. It stated that the claim was a claim in tort for the uninsured excess and that it did not concern insurance.

The hotel owner submitted that, in the absence of a policy dispute, it was not possible to join it as a party to the English proceedings under Article 11(3).

The High Court refused the hotel owner’s application for an order that the English Court had no jurisdiction to try the claim. The hotel owner then brought the matter before the Court of Appeal.

Ruling of the Court of Appeal

The Court of Appeal held that the hotel owner’s construction of Article 11(3) was "too narrow" and dismissed the appeal.

It stated that the whole point of Article 11 was to enable direct actions against liability insurers to be brought in the courts of the injured party’s domicile, irrespective of whether there is any dispute in relation to the policy. There was no logical reason for restricting the addition of the insured under Article 11(3) to situations where there was a policy dispute.

It expressed two main considerations that influenced its conclusion. Firstly, the Court had regard to the fact that one of the main aims of the Judgments Regulation was to guarantee more favourable protection to the weaker party in insurance, consumer and employment matters. Therefore, greater weight needed to be given to the claimant’s interests.

Secondly, the Court was conscious that it had a duty to have regard to the interests of the harmonious administration and the need to minimise the possibility of concurrent separate proceedings in two different Member States.

The Court found that it would not be within the spirit of the Regulation for it not to allow the claimant to join the insured to the proceedings. Furthermore, there would be a risk of irreconcilable judgments if separate proceedings were heard in Spain.

Comments

This case confirms that, where the law of a Member State allows direct actions against liability insurers, a foreign claimant may bring an action against both the insurer and its insured (if there is any uninsured excess) in its own State.

The judgment highlights the Court’s eagerness to avoid separate proceedings in two different Member States and willingness to read the Judgments Regulation with the injured party’s interests primarily in mind.

The claimant in this case was set on having his case heard in England as his damages were likely to be considerably higher than if they were awarded in Spain. Although Spanish law was to apply to the substantive issues, the assessment of damages would be undertaken according to English law as quantification of loss is traditionally regarded as a procedural issue.

Following the claimant’s accident which occurred in 2006, the Parliament and Council Regulation (EC) No 864/2007 ("Rome II") came into force. It applies to accidents occurring abroad on or after 11 January 2009 and provides that the applicable law should extend to the assessments of damages as well as to substantive issues.

Therefore, going forward claimants are unlikely to benefit financially in terms of their award of damages from choosing to bring their claims in their home court.