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Clarity for insurers in foreign subrogated claims? Hill v Generali Biztositó ZRT [2021]

24 June 2022

This recent High Court decision considered whether an insurer's subrogated outlays were recovered by the insured following an accident which occurred outside the UK, but where proceedings had been issued in the Courts of England and Wales.

General rule – pre-Brexit

Where a Claimant who is resident in the jurisdiction of England and Wales is involved in an accident in another jurisdiction involving a resident in Europe, the general rule pre-Brexit was that proceedings could be issued either in the jurisdiction where the accident occurred or in the Defendant's home court under the Brussels Recast Regulation (EU) 1215/2012. 

The seminal decision in FBTO Schadeverzekeringen NV v Jack Odenbreit (2007) (case C-463/06) established that an individual who was involved in an accident in the EU could issue proceedings in their home Courts of England and Wales for any personal injury and/or losses suffered,  even where no injury had been sustained,  provided they were considered to be a 'weaker party' (usually in this context an insured or policyholder) as defined by EU law; a 'weaker party' however does not include an insurance company or any other type of company. 

Article 14 (1) of the Brussels Recast Regulation (EU) 1215/2012 provides that an insurer may bring proceedings only in the Member State where the Defendant is domiciled.  Under this Article, the insurer could not therefore join an action brought by its insured in the jurisdiction where the insured as Claimant was domiciled. However the question of whether a subrogated claim, brought by the insurer in the name of the insured, should be treated as a claim brought by the insured notwithstanding that the insurer's outlay was not that of a weaker party, has now been resolved in the insurer's favour following the recent Queen's Bench Division appeal decision in Hill v Generali Biztositó ZRT

Facts of the case 

In Hill v Generali Biztositó ZRT an English motorist's vehicle was damaged by a vehicle insured by a Hungarian insurer following an accident in Germany. The insured, Mr Hill, sued for both his uninsured loss (being the excess payable under his insurance policy) and his insured loss (being the repair costs which his insurers had paid). The subsequent claim was therefore brought for the insured's own benefit and also to pursue his insurer's subrogated claim. 

Because the accident had taken place prior to Brexit, the issue of jurisdiction was to be determined by reference to the Brussels Recast Regulation. The Lower Court held that it did not have jurisdiction to deal with the repair costs. Mr Hill appealed against this decision and the issue to be decided on appeal was whether Mr Hill's insurers' subrogated claim was a claim brought by the insured within Article 11 (1) of the Brussels Recast Regulation (EU) 1215/2012, which deals with jurisdiction and recognition and enforcement of judgments in civil and commercial matters. 

The result

The High Court allowed Mr Hill's appeal and held that the damage to the vehicle was the owner's loss.  

Under English law, a claim for both insured and uninsured losses are brought in a single action and under the doctrine of subrogation the vehicle owner has to account to his or her insurer for any sums recovered on behalf of the insurer.  The purpose of the Brussels Regulation 1215/2012 was to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments were not handed down by different courts.  The court noted that the Regulation should therefore permit a Claimant to include both insured and uninsured losses within their claim before the UK Court. The alternative would have been that the policyholder as a weaker party could issue proceedings for their uninsured losses within the jurisdiction but their insurer would then have to issue separate proceedings in their own name in the jurisdiction where the accident occurred, even though both sets of proceedings arose out of the same accident.  Multiple actions could lead to different Courts arriving at conflicting decisions in relation to the same accident thereby negating the purpose of the EU legislation to avoid irreconcilable judgments

The position post-Brexit

Following the UK's departure from the European Union on 31 December 2020, the Brussels regime fell away rendering it more difficult for a Claimant and an insurer to seek redress through the UK Courts following an accident abroad. However, where an opponent agrees to proceedings being issued in the UK or where jurisdiction can be secured by the Common Law route under CPR Practice Direction 6B, if there is a good arguable case that permits a party to proceed through the jurisdictional tort gateway and/or by reference to the Supreme Court judgment in the case of FS Cairo (Nile Plaza) LLC v Brownlie[2021] UK SC45 then an insurer should still be able to pursue its subrogated claim with the assistance of an individual insured through the Courts of England and Wales. 

Conclusion

At the present time, it is likely that only accidents resulting in significant damage will lead to subrogated foreign recoveries of this nature proceeding through the tort gateway with the assistance of the Supreme Court decision in Brownlie and therefore the appeal judgment in Hill v Generali Biztositó ZRT, whilst being a positive and welcome result for insurers, is likely to be of limited application post-Brexit.  However, where the jurisdictional tort gateway can be passed through or if at some point in the near future the UK is permitted to accede to the Lugano Convention, which permits similar rights of action as the former recast Brussels Regulation, then the case of Hill v Generali Biztositó ZRT will be of vital importance in cases where an insurer is unable to secure its outlay from an opponent based in the EU and where proceedings in the Courts of England and Wales are necessary.

Further Reading