In an otherwise rather boring solicitors’ negligence case, the CA have included a useful nugget. All three of their Lordships accepted that where a person such as a professional can be liable either in contract or in tort — in other words, where there is concurrent liability — the relevant test for remoteness of damage is that in contract, namely the rule in Hadley v Baxendale. And quite right too.
See Wellesley Partners LLP v Withers LLP  EWCA Civ 1146, November 11, 2015.
Article 4(1) of Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II) provides the law applicable to a non-contractual obligation arising out of a tort is “the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur”. On 10 December 2015 in Florin Lazar, (C-350/14), the ECJ has clarified the meaning of this provision as it operated in the context of a road accident with transnational effects.
A traffic accident in Italy resulted in the death of a woman whose close relatives made claims for the loss of a loved person and the loss of a source of maintenance. The claimants were all Romanian. Some were habitually resident in Italy, others in Romania. Under Italian law, the damage resulting from the death of a family member is treated as having been suffered directly by the family member and, in particular, is deemed to amount to an infringement of his personal rights.
The ECJ ruled that their claims could not be characterised as “damage” and constituted an “indirect consequence” of the accident, and that the applicable law was that of Italy where the accident occurred. In reaching this conclusion, the ECJ referred to art. 2 which provides that ‘damage shall cover any consequence arising out of tort/delict’ and to Recital 17 which states that “in cases of personal injury or damage to property, the country in which the damage occurs should be the country where the injury was sustained or the property was damaged respectively”.
A decision last Friday from a deputy High Court judge which may raise the odd Euro-eyebrow: see XL Insurance Company SE v AXA Corporate Solutions Assurance  EWHC 3431 (Comm) (available on BAILII).
Put simply, in 2008 there was a nasty railroad smash in California involving Connex. Connex’s insurer XL paid up to the victims. They then alleged that AXA, a French insurer, had insured the same risk and claimed contribution from it in London on the basis of double insurance. AXA applied to strike on the basis that, being French-based, it had the right to be sued in France under Brussels I Recast, Art.4. XL countered on the basis that this was a claim “relating to a contract” under Art.7(1), or one “relating to tort, delict or quasi-delict” under Art.7(2); in which case AXA could be sued in the place of performance or the place where the harmful act occurred as the case might be.
HHJ Waksman QC obliged by striking out.
This was not a claim relating to a contract, since although there were a couple of insurance contracts in the background, a claim relating to a contract involved a contractual duty of some sort obliging the defendant to render performance to the claimant: this wasn’t the case here. If anything, one insurer’s liability to contribute to the other’s payment is a claim in unjust enrichment. True, an EU Advocate-General had said exactly the opposite a couple of months earlier in Ergo Insurance v P & C Insurance Cases C-359 and 475/14 (see http://curia.europa.eu/juris/document/document.jsf?text=&docid=168543&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=281090), opining that this was a contract claim, with the place of performance being that of the underlying insurance policies. But the judge did not mince his words: he said that Adv-G Sharpston (incidentally an English ex-academic long since inveigled away by the good life in Brussels) did not understand the matter and was simply wrong.
Nor was this anything “relating to tort, delict or quasi-delict”. Taking the narrow view of this as requiring at least some degree of liability for wrongs (see Reichert v Dresdner Bank  I.LPr. 404), it didn’t embrace contribution: no wrong was committed by one insurer not paying while another insurer did.
This all matters, if only because contribution claims can’t normally be subjected to a jurisdiction agreement. Put shortly it seriously raises the bar for those seeking contribution if their lawyers may potentially have to jurisdiction-hop anywhere in the EU to obtain their money. But the betting is strong that this isn’t the last word. Watch this space.