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clarification on whether damages should be assessed in accordance with the claimant's home jurisdiction or those of the place where the accident happened

an update the European Court of Justice decision in Homawoo v GMF Assurances SA  

Insurers, lawyers, claimants and defendants can now proceed with certainty following the decision of the European Court of Justice in Homawoo v GMF Assurances SA (Case C-412/10). (2010/C 301/12).  If the accident happened after the 11 January 2009 then the law of the country where the event occurred will apply in assessing the claimant's entitlement to damages.  Before that date, for a claimant resident in England, English law will apply when assessing the amount of damages to be awarded.

We have been at the forefront of this very important argument for insurers and claimants in the UK and throughout Europe, which has affected the amount of damages payable where an accident happens outside of the claimant's home jurisdiction.  The ECJ has now followed the Advocate General's Opinion and offered useful clarification as to how Regulation (EC) No 864/2007 (namely Rome II) should be interpreted and applied.  The decision is significant because the amount of damages payable can vary substantially following an accident – the same claim if assessed in England could be worth £4 million, and in Spain €750,000. 

One of the intentions of Rome II is to clarify the damages payable to a claimant following an accident in a foreign jurisdiction.  The Regulation also attempts to harmonise the position across the EU.  For English insurers this is important because, if a Spaniard (for example) were injured in England, should they be compensated the higher English or lower Spanish damages?  The answer according to Rome II is that only Spanish damages are payable for accidents before Rome II and English damages after Rome II.  Conversely, an English person injured in Spain would be able to recover English damages before the application of Rome II and Spanish damages after.

Homawoo follows an accident in France on 29 August 2007.  Simply - if damages are assessed in accordance with French law the insurers pay out less to the claimant than if the claim was decided in accordance with English law.

The opposing arguments were that Rome II only applies to accidents after 20 August 2007, or only to accidents that happen after 11 January 2009.  The High Court in England has been asked to decide on the point on a couple of occasions including Bacon v Nacional Suiza, and Homawoo.  Both claims involved accidents that happened in between these two dates.

The arguments come about due to the wording within Rome II.  Should it be 20 days from the date of publication of Rome II in accordance with Article 254 (1) EC, ie 20 August 2007?  Alternatively it should be 11 January 2009 in accordance with Article 31 of Rome II.  The difference in opinion comes from a lack of clarity within Rome II as different wording is used.  At Article 31 it is 'entry into force' and at Article 32 it is 'date of application'.

Lord Justice Tomlinson gave a clear opinion in Bacon that Rome II applied to accidents that happened after 27 August 2007.  That judgement was appealed.  The parties were able to reach terms of settlement during the course of the appeal.  Consequently the legal and insurance community has been awaiting the outcome of Homawoo to clarify the accidents to which Rome II applies.  Rather than give an opinion on the point, Mrs Justice Slade in Homawoo referred the argument to Europe and the ECJ has now cleared up the long-standing confusion.

The point is of such importance that the Greek Government, the UK Government and the Commission all expressed their views on the proceedings.  The Greek Government submitted its view that Rome II applies for all accidents after 20 August 2007.  This was favoured by the insurers in the claim.  The alternative view espoused by the claimant, the UK Government and the Commission, was that Rome II only applied to accidents that happened on or after 11 January 2009.

The ECJ has now given a very clear and conclusive decision that Rome II only applies to accidents on or after 11 January 2009.  This means the claimants in Bacon and Homawoo were both correct in their interpretation.  There are exceptions where Rome II does not apply and an expert should always be consulted wherever an accident happens in a jurisdiction foreign to the insurer or claimant.

This may leave some insurers in difficulty where they may not have underwritten claims properly and have to pay out higher damages in their own jurisdiction for accidents up to 11 January 2009.  However the same insurers have the protection of having damages assessed in accordance with the location of the accident in the majority of cases where the accident happened after 11 January 2009.  The decision brings good news for English claimants and insurers where an accident has occurred before 11 January 2009.  After this date Rome II favours insurers in many jurisdictions.  Rome II does not favour insurers in jurisdictions such as England (following the injury of an EU citizen from elsewhere in the EU) where damages are higher or English claimants who can only recover lower damages where they have been injured elsewhere in the EU.

This is a simplification of the law and, should you be faced with an issue following an accident out of your home jurisdiction, always make sure you have good advice from someone experienced in this area of law.

For further information, please contact Daniel Scognamiglio in the Travel team in Southampton at daniel.scognamiglio@bllaw.co.uk or call him on 023 8085 7339.

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