Goliath v Goliath – who chooses the battleground?

CJEU Court of Justice of the EU
The Court of Justice of the European Union (CJEU) has recently given guidance on the EU special jurisdiction regime for insurance claims. Under the 2001 Brussels Regulation, in matters relating to insurance, an insurer may be sued in the court where the claimant (as the weaker party) is domiciled. These special jurisdiction rules also apply to third parties proceeding directly against a liability insurer, where such direct actions are permitted in the member state where the third party is domiciled.

In Llandeskrankenanstalten-Betriebsgesellschaft – KABEG v Mutuelles du Mans assurances – MMA IARD SA, an Austrian company brought a subrogated claim in Austria, against a French insurance company, for recovery of the salary of one of its employees, paid when the employee was unable to work following a road traffic accident involving a motor vehicle covered by the insurer.

The CJEU gave a preliminary ruling, following a request from the Austrian Court, that an employer pursuing a subrogated claim against a defendant insurer domiciled in another member state is also entitled, in principle, to rely on the special jurisdiction provisions and sue the insurer in the country of the employer’s domicile. The employer, being subrogated to the rights of its employee against the wrongdoer and his insurer, will be considered an “injured party” and the “weaker party” in relation to the insurer. The CJEU clarified that the notion of the “weaker party” in insurance-related matters is broader than in consumer or employment matters, as the claimant could be the policyholder, insured, beneficiary or an injured party, who may not in fact be economically the weaker party. In addition, Article 11(2) refers to an injured party being allowed to claim directly against an insurer in the injured party’s country of domicile, without limiting who the injured party may be.

This in effect limits the application of an earlier CJEU decision that the special jurisdiction rules do not apply unless there is a genuinely weaker party. It may also apply to the equivalent special jurisdiction provisions in the Recast Brussels Regulation (which applies to claims brought on or after 10 January 2015). Therefore, EU insurers may find themselves defending proceedings in another member state in circumstances where the claimant is not the victim of wrongdoing, but a party who has been subrogated to the rights of the victim against the insurer, even if that claimant is a corporate entity and an economically strong party. The relevance of this decision in the post-Brexit landscape (when the CJEU will no longer have any UK jurisdiction) remains to be seen, but the government has indicated that it will seek to reach an agreement on judicial co-operation that reflects current principles under EU law. In that case, the Supreme Court may continue to have regard to (though it will not be bound by) decisions of the CJEU made whilst the UK was a member of the EU, in interpreting the post-Brexit UK legislation.

Katy Carr