Brexit: A costly venture for victims of accidents abroad

Once the UK government triggers article 50 on 29 March 2017, the formal negotiation process in respect of the UK’s departure from the European Union will begin. The government will then have two years to decide which of the EU-derived UK laws to repeal and/or re-draft before all current EU treaties and regulations, which are not otherwise preserved by UK national law, cease to apply.

If the government’s proposed Great Repeal Bill is enacted (the objective of which is to instantly annul the 1972 European Communities Act and transpose EU law into UK law), parliament will have the power to absorb select parts of EU legislation into UK law and discard those elements it does not wish to keep.

However, whether parliament retains all, or only some aspects of EU law, there will still be considerable ramifications and legislative uncertainty, not only for the victims of accidents abroad, but also for insurers, consumers, and the wider travel industry.

Home comforts

Currently, UK residents who are victims of accidents in other EU member states can pursue their claims for damages in the courts of their jurisdiction of domicile directly against the tortfeasor’s EU liability insurer, provided that the law governing the accident or the tortfeasor’s insurance contract allows such a direct action. This right is conferred by Regulation (EU) No 1215/2012, which replaced Regulation (EU) No 44/2001, and is expanded upon in a road traffic accident context in the CJEU case of FBTO Schadeverzekeringen NV v Jack Odenbreit (C-463/06).

In terms of adding a tortfeasor to proceedings brought directly against an insurer, Irwin Mitchell is currently acting for the respondent in the Supreme Court case of Keefe (by his litigation friend Eyton) (Respondent) v Hoteles Pinero Canarias SL (Appellant). The Supreme Court’s judgment will clarify whether the tortfeasor domiciled in another EU member state can be added to an action against the tortfeasor’s liability insurer, pursuant to Article 11(3) of EU Regulation 44/2001, which provides that ‘if the law governing such direct action provides that the…insured may be joined as a party to the action, the same court shall have jurisdiction over them’.

Considering the uncertainty which the UK’s exit from the EU will create in terms of the enforcement of a judgment in any of the UK’s jurisdictions against a foreign insurer and/or tortfeasor, victims of accidents abroad are now placed in the difficult predicament of not knowing whether they can add the tortfeasor to a UK action, or alternatively, whether they should try to speed matters up by concentrating solely on the claim against the insurer. Those victims may therefore be faced with defendant insurers employing delaying tactics to try and move the resolution of any case further into the future and taking advantage of any potential uncertainty that the Brexit vote may have brought.

Both Regulation (EU) No 1215/2012 and its predecessor, Regulation (EU) No 44/2001 (the Brussels Regulations) also oblige courts throughout the EU to register and enforce judgments handed down in the UK against a defendant domiciled in another EU member state. There are currently only limited bases upon which EU member states can refuse to register and/or enforce any such judgment.

With Brexit, however, it cannot be assumed that the Brussels regulations will be retained in exactly their current form, or at all, such that after Brexit, judgments handed down in the UK may no longer be recognised and/or enforced by other EU member states.

The procedure for service of judicial and extra-judicial documents in civil or commercial matters between EU member states is also governed by EU law (in the form of Regulation (EC) 1393/2007 of 13 November). The adoption of these special rules fulfils the objective of ensuring swifter and more secure international service.

Equally as significant, in 2001 the Council of the European Union adopted Regulation (EC) No 1206/2001 on the cooperation between the courts of the member states in the taking of evidence in civil or commercial matters, which lays down procedural rules to make it easier to take evidence in another member state.

The regulation has been applicable throughout the union, except for Denmark, since 1 January 2004, and its primary objective is to ensure that requests for the performance of the taking of evidence are executed expeditiously. To facilitate the taking of evidence, the regulation also provides for the court of a member state to take evidence directly in another member state.

If any or all of these valuable jurisdictional, enforcement and/or procedural mechanisms cease to be available, this will undoubtedly adversely affect the way future claims are pursued and judgments are enforced by UK-domiciled victims of accidents abroad.

All roads lead to Rome

Accidents abroad often involve disputes associated with applicable law arising from two EU regulations that govern this area, namely: Regulation (EC) No 864/2007 of 11 July 2007, which applies to non-contractual obligations (Rome II Regulation); and Regulation (EC) No 593/2008 of 17 June 2008, which applies to contractual obligations (Rome I Regulation). These combined Rome regulations seek to provide a framework to harmonise rules by ensuring that all EU member states apply the same laws to the same disputes. It will be necessary for UK legislators to decide the extent to which the provisions of the Rome regulations will continue to apply once the negotiations between the EU and the UK are concluded.

Although the starting point is that the quantification of any such claim will be determined by the law of the country in which the damage occurs, there are still advantages to an injured party bringing his claim in a UK jurisdiction under the relevant Brussels regulation.

Package holidays

In relation to package holidays, the new Package Travel Directive (2015/2302/EU) only recently entered into force on 31 December 2015, bringing it up to date with the developments in the EU travel market. The EU member states must transpose it into EU law by 1 January 2018 and it will be applicable from 1 July 2018.

The rules are aimed at extending the protection conferred on holidaymakers within the 1990 EU Package Travel Directive beyond traditional package holidays organised by tour operators, with the aim of providing clear protection to 120 million consumers who book other forms of combined travel (e.g. a combination of a flight plus hotel or car rental put together on a website).

One of the main advantages for consumers and market operators consists of the application of the same rules for businesses across the EU selling competing travel products. It is expected that the new harmonised approach will result in easier cross-border transactions, less administrative burden and increased legal certainty.

While it is unlikely that the UK government will retract its commitment to consumers and business as outlined within the new directive, or repeal the 1990 EU Package Travel Directive, it is free to do so following Brexit.

Counting the cost

There can be no doubt that Brexit has the potential to restrict access to justice for all parties involved in cross-border disputes, but no-one will be more effected that victims of foreign accidents.

At present, injured victims often benefit from early rehabilitation under the UK Rehabilitation Code – most foreign jurisdictions do not have an equivalent. This will have life-changing consequences for many, at best, serving to increase their recovery time, and at worst, negating the opportunity to receive treatment that could significantly improve long-term outcomes. This will place a heavy reliance upon state services in the UK, leaving UK taxpayers bearing the lifelong costs of caring for those with seriously disabling injuries.

Seriously injured parties of accidents abroad or bereaved family members may also have great physical and psychological difficulties travelling to the courts of another EU country to pursue their claims. They will face the difficulty of having to find a suitably qualified lawyer to assist them in that jurisdiction.

At a time when seriously injured parties have to deal with perhaps the most difficult period of their lives, they will face the added burden of also having to deal with the legal system and customs of another country with which they are not familiar and in a language which they may not understand.

Furthermore, in the main, only a small fraction of a winning claimant’s legal fees will be recoverable from the losing defendant in most foreign jurisdictions, and so the costs of pursuing claims will eat into claimants’ damages. This, in turn, may also mean that many injured parties will find that their claims are uneconomic to pursue.

In all the circumstances, Brexit has the potential to considerably restrict access to justice for all victims of accidents abroad. Much will depend on the arrangements that are put in place for the UK in the post-Brexit world. What is certain is that Brexit will require more than a simple legislative switch between EU law and its instant effect in the UK under the proposed Great Repeal Act, as an enormous amount of EU law centres around complex union-wide processes, including harmonisation, systems of mutual recognition and transfers of information and shared standards. Such elaborate legal and regulatory networks do not lend themselves to simple re-enactments.

No doubt it will still be some time before we see any clarity on how cross-border legislation will be affected and the legal consequences on the clients we represent in this sector.

Jennifer Lund is a partner in the international personal injury team at Irwin Mitchell