Over two years on since the introduction of the “Rome II” Regulation, there remain areas of uncertainty which will be of concern to insurers dealing with personal injury based claims that have a foreign element.

Since 11 January 2009, the Rome II regulation has determined the law applicable to non-contractual obligations throughout EU Member States (apart from Denmark), where a conflict of law situation arises.

The General Rule  

The “General Rule”, as set out in Article 4 of Rome II, is that the applicable law will be that of the country where the damage occurred. This is in contrast with the previous position under the Private International Law (Miscellaneous Provisions) Act 1995, which dictated that the applicable law would be that of the country where the events constituting the tort occurred.  

Rome II makes clear that in cases of personal injury the damage occurred in the country where the injury was sustained. However, it should be noted that there are both general and specific exceptions to the General Rule.  

Temporal scope  

One of the areas of significant uncertainty inherent in Rome II is when it actually came into force. On the one hand, the Regulation states at Article 31 that it “shall apply to events giving rise to damage which occur after its entry into force.” EC Regulations generally enter into force on the twentieth day after their publication in the Official Journal of the EU, which would mean that Rome II entered into force on 20 August 2007.  

However, Article 32 of Rome II goes on to state that the Regulation “shall apply from 11 January 2009.” How Articles 31 and 32 can be reconciled has been the subject of extensive academic debate – and two cases that came before the High Court during the same week in July 2010.  

The first of these cases was Homawoo v GMF Assurance SA, where the claimant had been injured in a road traffic accident in France. The accident occurred on 29 August 2007, and so it fell to be determined whether Rome II applied to the obligations of the defendant insurer arising from the accident. Slade J giving judgment considered that it was necessary to refer the interpretation of Articles 31 and 32 to the ECJ. It is understood that the outcome of this referral is still pending at the time of writing.  

The second of these cases was Bacon v Nacional Suiza Cia Seguros y Reseguros SA, where the claimant had been injured in a road traffic accident in Spain on 7 September 2007. Tomlinson J gave judgment against the claimant on the basis that he was entirely to blame for the accident. However, Tomlinson J went on to pass obiter comment on the applicability of Rome II to the claim. He considered that, as the court had been required to determine what the applicable law was at a hearing taking place after 11 January 2009, he was obliged to apply the provisions of Rome II.  

For insurers dealing with personal injury claims where the injury was sustained after 20 August 2007 but before 11 January 2009, some certainty can be derived from the judgment of Tomlinson J, which is believed to be the first decisive ruling on the temporal scope of Rome II in the whole of the EU community. However, it is also a case of “watch this space” regarding any future guidance from the ECJ.  

Assessment of damages  

The previous position under English law, as set out in the case of Harding v Wealands, was that assessment of damages is a procedural matter to be determined by the law of the forum rather than the applicable law.

The provisions of Rome II change all this, Article 15 stating that the applicable law shall govern “the existence, the nature and the assessment of damage or the remedy claimed.” This provision could not be much clearer in its intent. However, the English courts have so far proved reluctant to follow through with an assessment of damages based on the applicable law of another country.

For example, in the recent case of Jacobs v Motor Insurers’ Bureau (which reached the Court of Appeal in October 2010), the claimant was injured in a motor accident in Spain. The key question on appeal was whether the amount of compensation was to be assessed by reference to Spanish or English law. It was held, somewhat surprisingly, that English law would apply to the assessment of compensation in this instance.

While recognising that Rome II applied to the claim so as to designate Spanish law as the applicable law, the court attached particular significance to the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003, which provided that the defendant was obliged to pay compensation to the claimant assessed in accordance with English law.

Whether the current approach of the English courts is a good thing for insurers depends on a number of issues. On the one hand, the potential need to adduce expert evidence on the assessment of damages in foreign jurisdictions will inevitably complicate litigation and increase costs. On the other hand, and perhaps more importantly, it may often be the case that foreign assessment of damages is not so generous to the claimant as under English rules. In such instances it is clearly in the interests of insurers to argue for a strict application of the assessment of damages provisions within Rome II.

One thing is for sure: Rome II has yet to achieve its objective to “improve the predictability of the outcome of litigation”. We await further developments in this area.