Mapfre Mutualidad Compania De Seguros Y Reaseguros SA & Anorv Keefe [2015] EWCA Civ 598

[2015] EWCA Civ 598Case No B3/2013/3098
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE QUEEN’S BENCH DIVISION
HIS HONOUR JUDGE HIGGINS
HQ11X04049
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 17/06/2015
Before
LORD JUSTICE MOORE-BICKVICE PRESIDENT OF THE COURT OF APPEALLADY JUSTICE BLACKLADY JUSTICE GLOSTER
Between
GODFREY KEEFEClaimant /Respondent
Mr Philip Mead (instructed by Mackrell Turner Garrett) for Second DefendantMs Katherine Deal (instructed by Irwin Mitchell) for Claimant/RespondentHearing Hearing dates : Thursday 12 th February 2015
Judgment
[1]This is an appeal by the second defendant, Hoteles Piñero Canarias SL (“the Second Defendant”), against an order of His Honour Judge Higgins (sitting as a Judge of the High Court) dated 9 October 2013, whereby he dismissed the Second Defendant’s appeal against the order of Master Cook dated 17 May 2013, which had dismissed the Second Defendant’s application dated 11 November 2012 challenging the jurisdiction of the English court.[2]The claimant, Godfrey Keefe (“the Claimant”), who sues by his litigation friend, Nik Eyton, suffered very severe injuries in an accident which occurred on 26 October 2006 at the Bahia Principe Costa Adeje Hotel owned by the Second Defendant in Tenerife (“the hotel”) where he and his family were staying at the time. The Second Defendant is a company domiciled in, and incorporated under, the laws of the Kingdom of Spain. The Claimant alleges that the Second Defendant is liable in tort for damages in respect of the injuries which he suffered.[3]The issue raised on the appeal concerns the Claimant’s entitlement to rely on Article 11(3) of Council Regulation (EC) No. 44/2001 of 22 December 2001 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters (OJ 2001 L12/1) (“the Judgments Regulation”) to sue an alleged foreign-domiciled tortfeasor in the same proceedings as a direct claim brought against such tortfeasor’s foreign-domiciled liability insurer in the English Court.

Factual and procedural background

[4]On 26 October 2006 at about 4 pm the Claimant was sitting by a swimming pool at the hotel. He alleges that an unsecured parasol was lifted by a gust of wind and blown into contact with his face. The spike of the parasol penetrated the Claimant's right eye socket and into his brain, causing him very serious injuries, loss and damage. As at the date of the appeal, the Claimant’s damages were said to be valued in an amount in excess of £5 million.[5]The Claimant alleges that the accident was caused by the fault, negligence and breach of duty of the Second Defendant, its management, servants and agents contrary to Spanish law and that it is liable under Spanish law for the injuries, loss and damage which he has suffered.[6]The claim was initially pursued in Spain. However, following a ruling in December 2007 by the Court of Justice of the European Union (“the CJEU”) in Odenbreit v FBTO Schadeverzekeringen NV (Case C-463/06) [2008] 2 All ER (Comm) 733; [2007] ECR I-11321, CJEU (“Odenbreit”), the decision was taken to bring the Claimant’s claim in England directly against the Second Defendant’s liability insurers.[7]The court was informed that the principal reason for doing so was because of the Claimant’s advisers’ understanding that the value of his claim, if determined in England, under English law principles as to the quantification of loss, would exceed by a significant amount the value of his claim assessed under Spanish law principles. That was because, as was common ground So far as the Second defendant is concerned this concession was made solely for the purposes of the application and the appeal. , although, if the action were to proceed in England, Spanish law (as the law of the place of the accident) would be the applicable law, pursuant to section 11 of the Private International Law (Miscellaneous Provisions) Act 1995 (“PILA”), for determining substantive issues in the claim (such as liability and the availability of heads of loss), nonetheless the assessment of the amount of such heads of loss as were recoverable would take place in accordance with English law principles, since quantification of loss was traditionally regarded under English law as procedural, and procedural issues were governed by English law as the law of the forum: see Harding v Wealands [2007] 1 AC 1. If the quantum of the claim fell to be assessed in accordance with principles of Spanish law, the Second Defendant’s position was that the value of the claim was likely to be in the region of €600,000 - €800,000.[8]In this context it was common ground that Parliament and Council Regulation (EC) No 864/2007 (“Rome II”) did not apply to determine the applicable law for the purposes of the assessment of damages, or otherwise, as Rome II only applied to accidents occurring abroad on or after 11 January 2009.[9]Accordingly, on 28 October 2011 the Claimant issued a claim form in England against the first defendant, Mapfre Mutualidad Compania De Seguros Y Reaseguros SA, the Second Defendant’s liability insurer (“the Insurer”). The Insurer is also a company domiciled in, and incorporated under the laws of, the Kingdom of Spain. It was common ground that, as a matter of Spanish law, the Claimant has a direct right of action against the Insurer pursuant to the provisions of article 76 of the Spanish Insurance Contract Act 50/1980 of 8 October by virtue of the fact that it was the Second Defendant’s liability insurer.[10]Prior to service of the Particulars of Claim, the Insurer had indicated in correspondence that it had “assumed responsibility for the claim”. The claim form and the original Particulars of Claim (dated 2 March 2012) were served on the Insurer on 29 March 2012 in Spain. At that stage the Second Defendant was not a party to the proceedings. The Insurer did not challenge jurisdiction and filed an acknowledgment of service in the usual way. The Insurer served its defence on 29 May 2012. In the defence, the Insurer stated:
“1. Without making admission of specific acts of negligence or breach of regulation, the Defendant admits liability to compensate the Claimant for such loss, damage and injury as he may prove were caused by the accident pleaded. 2. The Defendant is not liable to admit or deny the nature, extent or causation of any personal injury, loss or damage suffered by the Claimant, whether as set out in the Particulars of Injury or at all, and puts the Claimant to strict proof thereof. 3. The Defendant is at present unable to admit or deny the losses set out in the preliminary schedule served with the Particulars of Claim. The Defendant will only be able to respond usefully to the heads of claim once there has been exchange of evidence… 5. The Statement of Value is noted but not admitted. 6. The Defendant agrees that the applicable law for substantive matters is Spanish law. 7. Without prejudice to the foregoing, the Defendant admits it is the Public Liability Insurer of the owners and/or operators of the Bahia Principle Costa Adeje Hotel in Tenerife as pleaded in paragraph 2 of the Particulars of Claim. That policy of insurance is subject to a financial limit of €601.012.10 (six hundred and one thousand and twelve Euros, ten cents) including legal costs.”
[11]On 30 May 2012, Master Cook, having read the defence and “acting on [the court’s] own initiative”, at a time when only the Insurer was a defendant to the proceedings, made an order that there should be judgment for the Claimant against the Insurer for damages to be assessed. He allocated the assessment to the Multi-Track and gave further directions for the hearing of the assessment, including the service of a reply. It would appear from the defence, which I have quoted above, that issues of causation as well as quantum were still in issue for the purposes of the assessment of damages.[12]Apparently, the first mention that had been made by the Insurer of any potential cap on the Insurer’s liability to compensate the Claimant was in the defence itself. Previous requests by the Claimant’s solicitors for sight of the relevant insurance policy had been disregarded. The information subsequently provided to the Claimant’s solicitors by the Insurer in July 2012 suggested that the insured amount for the relevant policy in force as at the date of the accident was limited to €601,012.10 per claim, although even to date the Claimant’s solicitors have not been provided with sight of the actual policy in force at that time.[13]It was in those circumstances, viz. where the Claimant’s advisers recognised that any shortfall in recovery against the Insurer would have to be recovered as against the Second Defendant, that the Claimant issued an application on 6 July 2012(i) to join the Second Defendant as a defendant pursuant to CPR Part 19.2 and 19.4 on the grounds that the Second Defendant “had an interest in the matter and their addition to the claim is needed in order for the Court to resolve the matters in dispute in these proceedings”;(ii) for permission to file and serve an amended claim form and amended particulars of claim; and(iii) a direction for the Second Defendant to serve a defence. An order was made in those terms by Master Cook on 13 July 2012 at a hearing at which representatives of the Claimant and the Insurer were present.[14]The Second Defendant was subsequently served with the amended claim form and particulars of claim on [10 October 2012]. Paragraph 11 of the amended particulars of claim stated that:
“The Claimant is entitled to bring this action against the Defendants in England and Wales pursuant to Articles 9(1)(b) and 11(2) of ..... the Judgments Regulation” as against the First Defendant and pursuant to Article 11(3) as against the Second Defendant.”
[15]On 11 November 2012, having filed the requisite Acknowledgement of Service, the Second Defendant issued an application for an order that the English court had no jurisdiction to try the claim against it.[16]The application was heard before Master Cook on 30 January 2013. He delivered a reserved judgment on 17 May 2013 and made an order on the same date dismissing the application and declaring that the English court had jurisdiction under Articles 9 and 11 of the Judgments Regulation to hear the Claimant's claim against the Second Defendant. Permission to appeal that order was granted by Burton J on 16 July 2013.[17]The appeal was heard before His Honour Judge Higgins on 7 October 2013. On 9 October 2013 he dismissed the appeal [2013] EWHC 4279 (QB). holding (in summary) that the English court had jurisdiction to determine the claim against the Second Defendant under Article 11 of the Judgments Regulation, because it concerned a matter relating to insurance, and that as a matter of discretion it was appropriate to join the Second Defendant to the action. In doing so he rejected the Second Defendant’s arguments as summarised below.[18]Permission to appeal was refused by the judge but granted by Tomlinson LJ on 21 February 2014.

The relevant provisions of the Judgments Regulation

[19]For present purposes the relevant provisions of the Judgments Regulation The provisions of Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (“Rome II”) (in particular Articles 4, 15 and 18) are not relevant to the present case as Rome II came into effect after the date of the accident and only apply to events giving rise to damage on or after 11 January 2009. , as set out in the recitals and the Articles, are the following: “Whereas ...... (11) The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction isgenerally based on the defendant's domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction. (12) In addition to the defendant's domicile, there should be alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice. (13) In relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules provide for. (14) The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation. (15) In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States. There must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending. For the purposes of this Regulation that time should be defined autonomously. ...... (19) Continuity between the Brussels Convention and this Regulation should be ensured, and transitional provisions should be laid down to that end. The same need for continuity applies as regards the interpretation of the Brussels Convention by the Court of Justice of the European Communities and the 1971 Protocol should remain applicable also to cases already pending when this Regulation enters into force ...... Section 1 General provisions Article 2 1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. 2. Persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State. Article 3 1. Persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter. 2. In particular the rules of national jurisdiction set out in Annex I shall not be applicable as against them. ....... Section 2 Special jurisdiction Article 5 A person domiciled in a Member State may, in another Member State, be sued: 1.(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question; ..... 3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur; ...... Article 6 A person domiciled in a Member State may also be sued: 1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; 2. as a third party in an action on a warranty or guarantee or in any other third party proceedings, in the court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case; .... Section 3 Jurisdiction in matters relating to insurance Article 8 In matters relating to insurance, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5. Article 9 1. An insurer domiciled in a Member State may be sued: (a) in the courts of the Member State where he is domiciled, or(b) in another Member State, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts for the place where the plaintiff is domiciled,(c) if he is a co-insurer, in the courts of a Member State in which proceedings are brought against the leading insurer. 2. An insurer who is not domiciled in a Member State but has a branch, agency or other establishment in one of the Member States shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State. Article 10 In respect of liability insurance or insurance of immovable property, the insurer may in addition be sued in the courts for the place where the harmful event occurred. The same applies if movable and immovable property are covered by the same insurance policy and both are adversely affected by the same contingency. Article 11 1. In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured. 2. Articles 8, 9 and 10 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. 3. If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them. Article 12 1. Without prejudice to Article 11(3), an insurer may bring proceedings only in the courts of the Member State in which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a beneficiary. 2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending." Section 1 General provisions Article 2 Article 3 Section 2 Special jurisdiction Article 5 A person domiciled in a Member State may, in another Member State, be sued: Article 6 A person domiciled in a Member State may also be sued: Section 3 Jurisdiction in matters relating to insurance Article 8 Article 9 (a) in the courts of the Member State where he is domiciled, or (b) in another Member State, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts for the place where the plaintiff is domiciled, (c) if he is a co-insurer, in the courts of a Member State in which proceedings are brought against the leading insurer. Article 10 Article 11 Article 12

The Second Defendant’s grounds of appeal

[20]The Second Defendant’s grounds of appeal were that the judge “erred and was wrong in law”, in that: i) he wrongly held that the claim against the Second Defendant concerned a matter relating to insurance and thereby fell within the ambit of Article 11(3) of the Judgments Regulation; ii) he wrongly found that there was a risk of irreconcilable judgments; iii) he wrongly failed to consider whether the divergence of outcome leading to the risk of irreconcilable judgments arose as a result of a same situation of fact and law; iv) he wrongly found that the case law of the CJEU on irreconcilable judgments under Article 6(1) of the Judgments Regulation had no application by analogy under Article 11(3); v) he wrongly failed to find that the effect of the Claimant’s application was to oust the jurisdiction of the Spanish courts.

The Claimant’s respondent’s notice

[21]In a respondent's notice, the Claimant sought to have the judge’s order upheld on the additional ground that, although the judge had correctly held, contrary to the Second Defendant’s case, that there was indeed a policy dispute on the facts, the judge wrongly suggested that Article 11(3) of the Judgments Regulation permits an injured party to join the insured to a claim against the insurer (in a claim where the Courts of the place of domicile of the injured party have jurisdiction over the insurer pursuant to Articles 9(1)(b) and 11(2) of the Judgments Regulation) only in circumstances where there is a policy dispute.

The Second Defendant's submissions

[22]Mr Philip Mead, counsel for the Second Defendant, submitted that the English court had no jurisdiction to hear the claim against the Second Defendant, on the basis that the joinder would in law be contrary to Article 11(3) of the Judgments Regulation. In summary, his arguments were as follows: i) Article 11(3) refers to matters relating to insurance. The claim against the Second Defendant for the uninsured excess was not a claim “relating to insurance”. As the CJEU remarked in Odenbreit, supra, at paragraph 30, the rules relating to insurance are distinct and separate from those regulating tort or delict. The claim against the Second Defendant did not concern a policy dispute, or any other insurance dispute, such as would justify joinder under Article 11(3). The claim fell outside the scope of Article 11(3). ii) The liability of the Insurer under the policy was admitted. The Claimant’s claim against the Second Defendant was simply a claim in tort which fell to be determined in accordance with Articles 8-14 inclusive of Section 3 of the Judgments Regulation. Article 11(3) was a procedural device to permit joinder; not a device to enable other tort claims to be included in the proceedings. Assistance could be obtained from the CJEU case of Brogsitter v Fabrications de Montres Normandes EURL (Case C-548/12) [2014] QB 753, which was not before the judge, which explained the difference between “matters relating to a contract” within the meaning of Article 5(1)(a) and “matters relating to tort, delict or quasi delict” within the meaning of Article 5(3). iii) The circumstances in which Article 11(3) permitted or envisaged joinder were not present in the instant case. In Maher and another v Groupama Grand Est [2010] 1 WLR 1564 Moore-Bick LJ (albeit obiter) had discussed the possibility of joining other parties in relation to an anchor claim brought against an insurer in the courts of the place of domicile of the claimant. At paragraph 17 of his judgment, Moore-Bick LJ made clear that the circumstances where joinder was considered appropriate concerned cases where there were concurrent causes of action involving issues both as to the liability of the insured for the accident and as to the insurer’s obligation to indemnify under the policy. At paragraphs 18 -21, Moore-Bick LJ set out the relevant test for joinder, reflecting the commentary of Mr P. Jenard The rapporteur for the working party on the Brussels Convention. in his report [1979] O.J. C59. (“the Jenard Report”) on the predecessor to the Judgments Regulation, namely the 1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (“the Brussels Convention”), and emphasising that the purpose of such joinder was to avoid the risk of irreconcilable judgments. But Moore-Bick LJ did not suggest that joinder would be appropriate in every case where there was a parallel claim against an insurer and an insured. iv) In the present case the claim against the Second Defendant did not give rise to a risk of irreconcilable judgments; it was a tort claim. The claim against the Insurer, on the other hand, was not a tort claim but referable to what was insured. Moreover, liability to indemnify the claimant had been admitted. So any issue of irreconcilability arose in the context of two different claims. For there to be a finding of a risk of irreconcilable judgments, a mere difference in outcome was insufficient; it was necessary to determine that there was a risk of an irreconcilable outcome in a case involving the same situation of fact and law. An analogy could be drawn with the principles and guidance recently summarised by the CJEU in Painer v Standard Verlags GmbH (Case C-145/10, [2011] ECR I 12594 at paragraphs 73-82 in relation to the parallel provision of Article 6(1), as to when it is appropriate for there to be joinder of co-defendants, so as to avoid irreconcilable judgments. v) The test in Article 11(3) was an exception to the general rules on jurisdiction, and therefore should be narrowly construed, by reference to the situations expressly envisaged by Mr. Jenard (and Moore-Bick LJ in Maher). A claim to recover the uninsured excess would be to stretch the purpose of Article 11(3) so as to bring about the result that insured tortfeasors could always be sued in the courts of the place of the domicile of the claimant, contrary to the purpose of Article 11(3). Spain was the place, in accordance with the principles of certainty and foreseeability (which underpinned the regime of the Judgments Regulation), by reference to whose system of laws the Second Defendant knew it would be answerable for its tortious conduct: see for example the recent judgment of the CJEU in Folien Fischer AG and another v Ritrama SpA (Case C-133/11)[2013] QB 523, at paragraph 45. The Second Defendant could not reasonably have expected, in accordance with the principle of predictability and certainty, to be sued in the courts of the place of domicile of each of the foreign tourists staying at the Second Defendant’s hotel. vi) The result of the Master’s and the judge’s decision had been wrongly to oust the jurisdiction of the Spanish court. The effect of the Claimant’s application to join the Second Defendant was forum shopping: namely to obtain a benefit because of the peculiar rule of English law of procedure by which the assessment of damages was considered at the date of the accident to be a matter for the law of procedure and not a matter for the proper law of the tort.

The Claimant's submissions

[23]Ms Katherine Deal, counsel for the Claimant, submitted that the judge and Master Cook were both correct when they accepted the Claimant’s argument that the English court has jurisdiction over the Second Defendant by virtue of its having jurisdiction over the First Defendant insurer. In summary her arguments were: i) If the Second Defendant were correct and the claim against it could not be pursued in England under Article 11(3), it would significantly limit the scope of Article 11(3) where there were policy limits in place which might impact on the adequacy of a direct action brought by an injured party against an insurer to satisfy the injured party’s claim. It was in precisely such circumstances that it was likely to be necessary or desirable to join the tortfeasor as well. ii) The selection of the Court in which to bring a claim was a matter for a claimant. If the Judgments Regulation conferred jurisdiction, it was a matter of no relevance that a defendant might have preferred another jurisdiction, or even might have expected another jurisdiction. iii) For the purposes of Article 11(2) and Article 11(3), the relevant “governing” or “applicable” law by reference to which one had to answer the question whether “a direct action” was “permitted" was Spanish law, as the substantive law of the cause of action against the Insurer (lex causae), rather than English law, as the procedural law governing the action by the Claimant against the Insurer (lex fori) : see Jones v Assurances Generales de France (AGF) SA [2010] I.L.Pr.4 and Thwaites v Aviva Assurances [2010] I.L.Pr.47. She also relied upon statements by Moore-Bick LJ in Maher to support her argument that Spanish law was the governing, or applicable, law to determine the question whether a a direct claim against an insurer was permitted. iv) The claim against the Second Defendant was a ‘matter relating to insurance’ and so fell within the scope of Article 11(3) because, jurisdictionally, it was the insurer that acted as the anchor defendant. v) The Second Defendant’s reference to the claim against it as a claim merely for the uninsured excess, or for sums not insured under the policy, was a mischaracterisation. vi) There was no justification for the introduction of a threshold requirement that a Spanish insured could only be sued as co-defendant in an English court alongside its Spanish insurer pursuant to Article 11(3), where there were issues both as to the liability of the insured for the accident, and as to the insurer’s obligation to indemnify under the policy. The wording of Article 11(3) contained no such restriction. The existence or otherwise of a policy dispute could not properly determine jurisdiction, which had to be predictable and ascertainable by a claimant at a time before proceedings were issued and jurisdiction established: see Canada Trust Co v Stolzenburg (No. 2) [2002] 1 AC 1. vii) Even if the Second Defendant were correct that there needed to be issues both as to the liability of the insured for the accident and the insurer’s obligation to indemnify under the policy, such threshold requirement was satisfied on the facts of this case. There were numerous issues regarding the Insurer’s obligation to indemnify. The existence of the limit was not conceded by the Claimant and there was an issue as to whether the policy limit (if there was one) included legal costs. viii) There was no anomaly between the judge’s conclusion and the provisions of Article 6(1). The decision in Painer, in which the application of Article 6(1) was considered in the context of copyright infringement, did not change the law or offer a different test for determining irreconcilability. There was no inconsistency between the test applied, and previous decisions of the CJEU using a broad interpretation of ‘contradictory decisions’ (Roche Nederland BV v Primus & Goldberg (C-539/03) or ‘conflicting decisions’ (The Tatry C-406/92 [1999] QB 515), or indeed the ‘broad common sense approach’ emphasised by the Court of Appeal in Casio Computer Co Ltd v Sayo (No. 3) [2001] I L Pr 43. ix) There was necessarily a close connection where a claimant sought the same remedy from jointly and severally liable defendants arising out of the same accident such that it was expedient to hear and determine them together so as to avoid the risk of irreconcilable judgments resulting from separate proceedings. x) In the present case there would necessarily be a risk of irreconcilable judgments if the claim were to go ahead against the Insurer in the English court and against the Second Defendant in a Spanish court. xi) The judge’s approach to the question of ouster had been correct. It was no part of the regime set out in the Judgments Regulation for the court to scrutinise whether the effect was to oust jurisdiction of an alternative forum: if there was jurisdiction, there was no improper ouster. xii) As to the point made in the Claimant’s respondent’s notice, although he did not decide either way, the judge did express the view that there was ‘some force’ in the Second Defendant’s submission that Article 11(3) could only be invoked by an injured party where there was a ‘policy dispute’: see paragraph 27 of the judgment. That was wrong. There was no threshold requirement for a claimant seeking to invoke Article 11(3) that there should be a policy dispute. Analysis and determination Article 11 and Odenbreit

Analysis and determination

[24]The starting point of the analysis as to whether Article 11(3) is engaged to confer jurisdiction on the English court to join the Second Defendant to the existing proceedings against the Insurer, is the juridical basis for the direct action brought by the Claimant against the Insurer.[25]The effect of Article 11(2), as interpreted in Odenbreit, is that, where a person who is injured in an accident has a right to bring a claim directly against the liability insurer of the person allegedly responsible for the accident, Article 11(2) adds injured parties to the list of claimants contained in Article 9(1)(b) who are entitled to sue a liability insurer (which is domiciled in a Member State) in the courts of the Member State where such claimant is domiciled. That is so irrespective of whether the national law of the claimant’s domicile classifies a direct claim by an injured party against an alleged tortfeasor’s liability insurer as an action in tort or as an action relating to insurance.[26]Odenbreit was a case where the claimant, who was domiciled in Germany, had been injured in a road traffic accident in The Netherlands. The driver of the vehicle had been insured with the defendant insurance company, FBTO, which was domiciled in The Netherlands. There appeared to be no dispute that, in the light of Directive 2000/26 of the European Parliament and of the Council of 16 May 2000 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles This is referred to as the Fourth Motor Insurance Directive (OJ 2000 L 181/65). This amended Council Directives 73/239/EEC and 88/357/EEC, and was subsequently amended by Directive 2005/14/EC of the European Parliament and of the Council of 11 May 2005 (OJ 2005 L 149/14). These Directives are no longer in force following the entry into force on 27 October 2009 of the codified Directive 2009/103/EC relating to insurance against civil liability in respect of the use of motor vehicles. , (“Directive 2000/26”), both under German law and under the law of The Netherlands, the claimant would have had the right to bring a direct claim against the insurer. The only question was where he was entitled to bring such a claim. The issue arose because, under German law, a direct claim against an insurer was arguably characterised as a right in tort, rather than as a right under an insurance contract. If that was so, it was argued that the provisions of Article 9(1)(b) and Article 11(2) (in effect permitting an injured party to sue in the court of his domicile) did not apply, and therefore the German court did not have jurisdiction, because the claim against the insurer was not a “matter… relating to insurance” as required by Section 3. Accordingly, it was argued that the normal rules of Articles 2 and 5(3) applied to what was effectively a tort claim, and that the insurer had to be sued in The Netherlands.[27]The CJEU rejected this argument. It held that it did not matter how the national court (Germany) characterised the direct claim against the insurer. It is helpful to quote from the judgment at some length: “Directive 2000/26/EC 7 Directive 2000/26/EC of the European Parliament and of the Council of 16 May 2000 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles and amending Council Directives 73/239/EEC and 88/357/EEC (OJ 2000 L 181, p. 65), as amended by Directive 2005/14/EC of the European Parliament and of the Council of 11 May 2005 (OJ 2005 L 149, p. 14) ('Directive 2000/26'), provides in Article 3, entitled 'Direct right of action': 'Each Member State shall ensure that injured parties referred to in Article 1 in accidents within the meaning of that provision enjoy a direct right of action against the insurance undertaking covering the responsible person against civil liability.' 8 In addition, Recital 16a in the preamble to Directive 2000/26 states as follows: 'Under Article 11(2) read in conjunction with Article 9(1)(b) of … Regulation… No 44/2001…, injured parties may bring legal proceedings against the civil liability insurance provider in the Member State in which they are domiciled.' The dispute in the main proceedings and the question referred for a preliminary ruling 9 On 28 December 2003 Mr Odenbreit was involved in a road traffic accident in the Netherlands with a person insured with FBTO. As the injured party he brought a direct action against the insurer before the Amtsgericht Aachen (Aachen Local Court), which is the court for the place where he is domiciled, on the basis of Articles 11(2) and 9(1)(b) of Regulation No 44/2001. 10 By judgment of 27 April 2005 that court dismissed the action as inadmissible on account of the lack of jurisdiction of the German courts. Mr Odenbreitbrought an appeal against that judgment before the Oberlandesgericht Köln (Higher Regional Court, Cologne). By interlocutory judgment of 12 September 2005 that appeal court recognised the jurisdiction of German courts over an action to establish liability, on the basis of the same provisions of Regulation No 44/2001. 11 FBTO brought an appeal on a point of law ('Revision') against that interlocutory judgment before the Bundesgerichtshof (Federal Court of Justice). 12 As is clear from the order for reference, the interpretation of Articles 11(2) and 9(1)(b) of Regulation No 44/2001 relating to jurisdiction in actions brought by an injured party directly against the insurer is a controversial subject in German legal literature. 13 Thus, according to the prevailing view, such direct actions are not matters relating to insurance within the meaning of Article 8 et seq. of Regulation No 44/2001, since the right of action of the injured party in German private international law is regarded as a right in tort and not as a right under an insurance contract. According to that interpretation, Article 9(1)(b) of the regulation covers only matters relating to the insurance policy, in the strict sense, and the concept of 'beneficiary' appearing in that provision does not include the injured party. The latter cannot become a main party to the proceedings under Article 11(2) of the regulation. Against that academic opinion it is argued that, on account of the reference to Article 9 of Regulation No 44/2001 in Article 11(2) of Regulation No 44/2001, the courts for the place where the injured party is domiciled has jurisdiction to hear an action brought by the injured party directly against a liability insurance provider. 14 The Bundesgerichtshof shares that latter interpretation. In its view, there are cogent grounds for allowing an injured party to bring an action directly against the insurer before the courts for the place where that injured party is domiciled. 15 However, taking into account the differences in academic interpretation of those provisions of Regulation No 44/2001, the Bundesgerichtshof decided to stay proceedings and to refer to the Court the following question for a preliminary ruling: 'Is the reference to Article 9(1)(b) in Article 11(2) of … Regulation … No 44/2001 … to be understood as meaning that the injured party may bring an action directly against the insurer in the courts for the place in a Member State where the injured party is domiciled, provided that such a direct action is permitted and the insurer is domiciled in a Member State?' The question referred for a preliminary ruling Observations submitted to the Court 16 The defendant in the main proceedings, all the Member States which submitted observations to the Court and the Commission of the European Communities consider that the reference made in Article 11(2) of Regulation No 44/2001 to Article 9(1)(b) of that regulation should be interpreted as meaning that an injured party can bring an action directly against an insurer in the courts for the place where he is domiciled, provided that such a direct action is permitted and the insurer is domiciled in a Member State. 17 On the basis of a literal interpretation of the provisions of Regulation No 44/2001, the German Government and the Commission submit that, in so far as the reference in Article 11(2) of Regulation No 44/2001 makes all the content of Article 9(1)(b) of that regulation applicable to actions brought by an injured party, it is not necessary for the latter to be mentioned in the article referred to, since otherwise the reference made by Article 11(2) would be superfluous. On the basis of the same interpretation, the Polish Government considers, by contrast, that the injured party must be classified as a 'beneficiary' within the meaning of Article 9(1)(b) of that regulation. When the contract of insurance is concluded, the potential injured party to whom compensation would be paid if the event for which the contract was entered into occurred is unknown. The injured party cannot therefore be named in it as a beneficiary. 18 The defendant in the main proceedings, all the Member States which submitted observations to the Court and the Commission maintain that the provisions of Regulation No 44/2001 on jurisdiction in matters relating to insurance reflect the need to protect the economically weaker party, a principle of interpretation which is set out in Recital 13 in the preamble to that regulation and established in the case-law of the Court (Case 201/82 Gerling Konzern Speziale Kreditversicherung and Others [1983] ECR 2503, Case C-412/98Group Josi [2000] ECR I-5925, paragraph 64, and Case C-112/03Société financière et industrielle de Peloux [2005] ECR I-3707, paragraph 30). The very aim of Article 11(2) is therefore to extend to the injured party the arrangements provided for the benefit of plaintiffs by Article 9(1)(b) of that regulation. 19 In that regard, the German Government and the Commission submit that the inclusion of Article 11(2) in Regulation No 44/2001 shows the intention of the Community legislature, in accordance with the Commission's proposal, to give greater protection than that provided for by the Convention, of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (OJ 1978 L 304, p. 36) ('the Brussels Convention'). 20 Finally, the defendant in the main proceedings, all the Member States which submitted observations to the Court and the Commission state that such an interpretation is confirmed by Directive 2000/26 and particularly by Recital 16a in the preamble to that directive. In inserting that recital, after Regulation No 44/2001 was adopted, the Community legislature did not prescribe a binding interpretation of the provisions of that regulation, but provided an argument of considerable force in favour of recognising the jurisdiction of the courts for the place where the injured party is domiciled. Reply of the Court 21 It should be recalled, at the outset, that s.3 of Ch.II of Regulation 44/2001, containing Arts 8 to 14 , provides rules of jurisdiction in matters relating to insurance, which are additional to the general rules contained in s.1 of the same chapter of that Regulation. 22 Section 3 lays down a number of rules of jurisdiction in relation to actions brought against an insurer. It provides, inter alia, that an insurer, domiciled in a Member State may be sued in the courts of the Member State where it is domiciled [Art.9(1)(a)], in the courts for the place where the plaintiff is domiciled if the action is brought by the policy holder, the insured or a beneficiary [ Art.9(1)(b) ] and, finally, in the courts for the place where the harmful event occurred, in respect of liability insurance or insurance of immovable property (Art.10). 23 As regards liability insurance, Art. 11(2) of Regulation 44/2001 refers back to those rules of jurisdiction in the case of actions brought by the injured party directly against the insurer. 24 Therefore, in order to reply to the question referred by the national court, it is necessary to define the scope of the reference made in Art.11(2) of Regulation 44/2001 to Art.9(1)(b) of that Regulation. It is necessary, in particular, to establish whether that reference should be interpreted as recognising only those courts designated in the latter provision, that is, those of the place of domicile of the policy holder, of the insured or of a beneficiary, as having jurisdiction to hear a direct action brought by the injured party against the insurer, or whether that reference allows the rule of jurisdiction of the courts for the place where the plaintiff is domiciled, set out in Art.9(1)(b) of Regulation 44/2001 , to be applied to that action. 25 It is necessary to point out, in that regard, that Art.9(1)(b) does not merely attribute jurisdiction to the courts for the place where the persons listed therein are domiciled, but, on the contrary, it lays down that the courts for the place where the plaintiff is domiciled have jurisdiction, thereby giving such persons the option of suing the insurer before the courts for the place of their own domicile. 26 Thus, to interpret the reference in Art.11(2) of Regulation 44/2001 to Art.9(1)(b) of that Regulation as permitting the injured party to bring proceedings only before the courts having jurisdiction under that latter provision, that is to say, the courts for the place of domicile of the policy holder, the insured or the beneficiary, would run counter to the actual wording of Art.11(2) . The reference leads to a widening of the scope of that rule to categories of plaintiff other than the policy holder, the insured or the beneficiary of the insurance contract who sue the insurer. Thus, the role of that reference is to add injured parties to the list of plaintiffs contained in Art.9(1)(b) . 27 In that regard, the application of that rule of jurisdiction to a direct action brought by the injured party cannot depend upon the classification of that injured party as a beneficiary within the meaning of Art.9(1)(b) of Regulation 44/2001, since the reference to that provision in Art.11(2) thereof allows that rule of jurisdiction to be extended to such disputes without the plaintiff having to belong to one of the categories in Art.9(1)(b). 28 That line of reasoning is also based on a teleological interpretation of the provisions at issue in the main proceedings. According to Recital 13 in the preamble to Regulation 44/2001, the Regulation aims to guarantee more favourable protection to the weaker party than the general rules of jurisdiction provide for (see, to that effect, Group Josi, at [64], Société Financière et Industrielle du Peloux, at [40] (both cited above), and Groupement d'Interet Economique (GIE) Reunion Europeenne v Zurich Espana (C-77/04) [2005] E.C.R. I-4509; [2005] I.L.Pr. 33, at [17]). To deny the injured party the right to bring an action before the courts for the place of his own domicile would deprive him of the same protection as that afforded by the Regulation to other parties regarded as weak in disputes in matters relating to insurance and would thus be contrary to the spirit of the Regulation. Moreover, as the Commission correctly observes, Regulation 44/2001 strengthened such protection as compared with the protection resulting from application of the Brussels Convention. 29 Such an interpretation is supported by the wording of Directive 2000/26 on matters relating to insurance against civil liability in respect of the use of motor vehicles, as amended—after the entry into force of Regulation 44/2001—by Directive 2005/14. In Directive 2000/26, the Community legislature not only provided, in Art.3, that injured parties should have a direct right of action against the insurance undertaking in the legal systems of the Member States, but also referred expressly, in Recital 16a to Arts 9(1)(b) and 11(2) of Regulation 44/2001 in mentioning the right of injured parties to bring proceedings against the insurer in the courts for the place where they are domiciled. 30 As regards the consequences of allowing an injured party to bring a direct action against the insurer which, as is clear from the order for reference, is a controversial subject in Germany, it is necessary to point out that the application of the rule of jurisdiction provided for by Art.9(1)(b) of Regulation 44/2001 to such an action is not precluded by the latter's classification, in national law, as an action in tort relating to a right extrinsic to legal relations of a contractual nature. The nature of that action in national law is of no relevance for the application of the provisions of the Regulation, since those rules of jurisdiction are contained in a section (namely s.3 of Ch.II of the Regulation) which concerns, in general, matters relating to insurance and is distinct from those relating to special jurisdiction in matters relating to a contract or to tort or delict (namely s.2 of that Chapter). The only condition which Art.11(2) of Regulation 44/2001 lays down for the application of that rule of jurisdiction is that such a direct action must be permitted under the national law. 31 In light of all the foregoing considerations the reply to the question referred for a preliminary ruling must be that the reference in Art.11(2) of Regulation 44/2001 to Art.9(1)(b) of that Regulation is to be interpreted as meaning that the injured party may bring an action directly against the insurer before the courts for the place in a Member State where that injured party is domiciled, provided that a direct action is permitted and the insurer is domiciled in a Member State. …….. Order On those grounds, the Court (Second Chamber) hereby rules: The reference in Art.11(2) of Council Regulation 44/2001 of December 22, 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to Art.9(1)(b) of that Regulation is to be interpreted as meaning that the injured party may bring an action directly against the insurer before the courts for the place in a Member State where that injured party is domiciled, provided that such a direct action is permitted and the insurer is domiciled in a Member State.” [My emphasis.] 'Each Member State shall ensure that injured parties referred to in Article 1 in accidents within the meaning of that provision enjoy a direct right of action against the insurance undertaking covering the responsible person against civil liability.' 'Under Article 11(2) read in conjunction with Article 9(1)(b) of … Regulation… No 44/2001…, injured parties may bring legal proceedings against the civil liability insurance provider in the Member State in which they are domiciled.' The question referred for a preliminary ruling Observations submitted to the Court Reply of the Court Order

On those grounds, the Court (Second Chamber) hereby rules:

[28]The passages in Odenbreit, which I have highlighted,make it clear that, the entitlement of an injured party to bring an action directly against the insurer before the court of the injured party’s domicile (and consequently his entitlement to join the insured to such an action), is subject to the additional condition that “such a direct action must be permitted under the national law”: see e.g. paragraph 30 of the judgment. That requirement reflects not only the language used in Article 11(2) itself : viz. “where such direct actions are permitted....”; but also that used in Article 11(1) “the insurer may also, if the law of the court permits it”. The issues[29]In my view, the issues which – at least theoretically - arise in relation to Article 11 in the present case may be summarised as follows: i) Issue 1: By reference to which system of “national law” See Odenbreit at paragraph 30. does the direct action against the insurer envisaged in Article 11(2) have to be “permitted” for the condition to be satisfied? Is it the law of the court to be seised (lex fori): in this case England? Or is it the law governing the tort claim or the insurance contract (lex causae): in this case Spain? ii) Issue 2: What is meant in the context of Article 11(2), as interpreted by Odenbreit, by the phrase “permitted under the national law”? If that is a reference to the national law of the courts seised (lex fori), does that mean that a direct action against an insurer has to be permitted by(a) the substantive law of the lex fori,(b) the procedural law of the lex fori or(c) the law governing the injured party’s tort claim, or the relevant insurance contract, to which the private international law rules of the lex fori point? iii) Issue 3: If a direct action against the insurer is not “permitted under the national law” of the lex fori, does Article 11(3) nonetheless apply to an action which has (on this hypothesis) been wrongly brought by the injured party against the insurer, to permit joinder of the insured or policyholder, or does it not apply at all ? iv) Issue 4: What is meant in the context of Article 11(3), given the interpretation of Article 11(2) in Odenbreit, by the phrase “If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action...”? Is it the law of the court to be seised (lex fori): in this case England? Or is it the law governing the tort claim or the insurance contract (lex causae): in this case Spain? v) Issue 5: If such reference in Article 11(3) is indeed a reference to the national law of the courts seised (lex fori), does that mean that joinder of the insured (or policyholder) to the action against the insurer has to be “provide(d)” for under (a) the substantive law of the lex fori, (b) the procedural law of the lex fori or (c) the law governing the injured party’s tort claim, or the relevant insurance contract, to which the private international law rules of the lex fori point? vi) Issue 6: Does Article 11(3) apply at all to the claim which the Claimant in the present case wishes to pursue against the Second Defendant? That in turn requires a determination of whether the claim is to be characterised as being one made “in matters relating to insurance”. vii) Issue 7: If the “same” court does have jurisdiction under Article 11(3) against both the insurer and the insured, does that mean that the court seised of the direct action against the insurer is bound to exercise such jurisdiction if the injured party seeks to join the insured to the direct action against the insurer, or does the court have a discretion to decline to do so? viii) Issue 8: If the Court seised (i.e. the English court) did have a discretion, should it in all the circumstances have exercised it in favour of the Second Defendant?[30]These were not issues that arose on the facts in Odenbreit. It is clear from the judgment in that case that German law permitted such a direct action against an insurer (although its correct characterisation was debatable) and that the CJEU assumed (see e.g. paragraph 7 of the judgment) that, because of article 3 of Directive 2000/26, all Member States were under an obligation to ensure that an injured party in a motor accident had a direct right of action against the insurance undertaking covering the responsible person against civil liability. Nor did any issue arise under Article 11(3).[31]Although Mr Mead did not preface his arguments with an analysis of the issues which I have identified at sub-paragraphs i) – v) and vii) above, it seems to me that inevitably any discussion of the effect, scope and application of Articles 11(2) and 11(3) has to be based on an understanding of the system of law by reference to which Article 11 operates.[32]For example, if the relevant system of “national law” is English law, then, arguably, on one approach, the condition referred to in Article 11(2) (namely that the direct action against the insurer has to be “permitted” under the “national” law), could not be satisfied in the circumstances of this case. That is because, by virtue of the doctrine of privity of contract, and domestic insurance law, other than in the contexts There are other exceptions to the doctrine of privity which are not relevant for present purposes: see Chitty on Contracts, 31st Edition (2012), Volume I, paragraphs 19-07et seq. of motor accident claims pursuant to Directive 2000/26, and The European Communities (Rights against Insurers) Regulations 2002 (“the 2002 Regulations”), which were enacted (purportedly Article 3 of the 2002 Regulations only confers a direct right of action in cases where the accident occurs in the UK. It does not provide such a right in relation to accidents abroad. ) to give effect to Directive 2000/26; or under the Contracts (Rights of Third Parties) Act 1999, where an insurance contract specifically identifies See section 1(3) which provides that it is a requirement of the third party’s right to enforce A’s promise that the third party must have been “expressly” identified in the contract between A and B by name, as a member of a class or as answering a particular description. a third party; or under the Third Party (Rights Against Insurers) Act 1930 The Third Party (Rights Against Insurers) Act 2010 has not yet been brought into force. ; an injured party, as a matter of English substantive law, is not “permitted” to bring a direct claim against the liability insurer of an alleged tortfeasor in respect of an insurance contract governed by English law.[33]But the present case is not a motor vehicle injury case where the provisions of Directive 2000/26 mandate a Member State to ensure that an injured party has a direct right of action against an insurer of the driver/insured keeper of the motor vehicle. In those circumstances the issues (which I have identified above) arise as to whether the additional condition can be satisfied so as to confer jurisdiction upon the English Court in the first instance to entertain a claim against the insurer, and secondly a claim against the insured under Article 11(3). Discussion of

The issues

[34]The starting point is that the Judgments Regulation has to be construed in an autonomous, European Law manner and not by reference to concepts of an individual Member State’s national law, save where the article expressly directs application of a Member State’s own law. That was common ground.

Issues 1 and 2

[35]In my judgment, on the construction of Article 11(2), the relevant law, by reference to which one has to answer the question whether “a direct action” is “permitted" for the purposes of Article 11(2), is the law of the court where the action is to be brought (lex fori), i.e. the court proposed to be seised; in this case, the court of the injured party’s domicile, England. However, that law, at least in the case of English law, is not limited to the general English law governing contracts of insurance governed by English law; nor is it limited to English procedural law. It includes the private international law rules to which the law of the lex fori points to determine the law applying to the resolution of the particular issue.[36]My reasons for this conclusion are as follows: i) Article 11(1), by the use of the words “if the law of the court permits it”, is clearly referring to the law of the court where the action has been, or is to be, brought: i.e. the lex fori. ii) It would be surprising if Article 11(2), with its reference to “where such direct actions are permitted.... “ were referring to a different system of law permitting direct actions by an injured party against an insurer from that referred to in Article 11(1). In the normal way, words used in one article of a regulation, or one section of a statute, should be construed in the same manner, save where the wording or the context predicates a diffrent meaning. In Article 11(2) “where“ is a reference not to a place but rather to cases where, or situations in which, such direct actions are permitted iii) The CJEU in Odenbreit clearly considered that the law by reference to which one had to decide whether the condition was satisfied was the law of the “national court” to be seised. That is the only inference that can be drawn from the references in Odenbreit to the condition that the “national law” has to permit such direct claims E.g. in paragraphs 30 and 31. . Undoubtedly, in context, that was the German court where the injured party was domiciled. iv) That approach, namely that the relevant system of law which has to “permit” such direct claims for the purposes of Article 11(2) is the national law of the Member State to be seised, is supported by the editors of Civil Jurisdiction and Judgments, (Briggs and Rees) 5th Edition, 2009: see paragraph 2.88(v)(f) and footnotes 7 and 8. v) The editors of the current edition of Dicey, Morris & Collins, The Conflict of Laws 15th Edition (2012) likewise support an approach that the relevant system of law which has to “permit” such direct claims for the purposes of Article 11(2) is the national law of the Member State to be seised. However, and perhaps more importantly, in relation to Issue 2, the editors of Dicey go on to suggest that such law will include “the law to which the private international law rules of the lex fori point”. Thus at paragraph 11 – 348 they state: “These provisions [Articles 11(2) and 9(1)(b)] apply only ‘‘where such direct actions are permitted’’ under the lex fori, including its rules of private international law. The policyholder or insured may be joined ‘if the law governing such direct actions’ provides for such joinder.912 The governing law in this context means, it seems, the law to which the private international law rules of the lex fori point. The Rome II Regulation (Art.18) provides that the person who suffers damage may bring the claim against the insurer of the person liable to provide compensation if the law applicable to the tort/delict or that applicable to the insurance contract so provides.913 The question whether the policyholder or insured may be joined to such proceedings may be a question purely of procedure for the lex fori. In Maher v Groupama Grand Est 914 the view was expressed, obiter, that the French insured could be joined to the direct action by the English victims of a road accident in France against the French insurer. 912 Art.11(2). 913 paras 34–071 et seq. 914 [2009] EWCA Civ 1191, [2010] 1 W.L.R. 1564.” vi) Apart from the fact that the reference in footnote 912 should be to Article 11(3), that seems to me to be the correct approach to Article 11(2), even without reference to Rome II, which of course was not in force at the time of the accident in the present case. Rome II, as Dicey points out, now makes it clear in relation to accidents that happened that the person who suffers damage may bring the claim against the insurer of the person liable to provide compensation if the law applicable to the tort/delict or that applicable to the insurance contract so provides See Article 18: “The person having suffered damage may bring his or her claim directly against the insurer of the person liable to provide compensation if the law applicable to the non-contractual obligation or the law applicable to the insurance contract so provides.” , but, in my view, the same result would have prevailed even before Rome II. vii) That is because English private international law rules, as the law of the lex fori, would have characterised or classified the issue As to the necessity to characterise the issue, rather than the claim, by reference to the law of the lex fori, see per Moore-Bick LJ in Maher v Groupama Grand Est supra at paragraphs 8-10, citing Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 WLR 387, CA and Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Co Ltd[2004] EWCA Civ 1598; [2005] 1 All ER (Comm) 715; [2005] 1 Lloyd's Rep 67, CA. (i.e. whether an injured party had a direct cause of action against the alleged tortfeasor’s insurer to recover damages) as a matter of substantive law, not one of procedural law, irrespective of how the relevant foreign law would have characterised it See per Moore-Bick LJ in Maher v Groupama Grand Est supra at paragraph 22. . The issue is not merely whether the insured can procedurally be joined as a defendant to a direct action brought by the injured party against the insurer alone, but rather whether the injured party has a substantive right to claim and obtain payment directly from the alleged tortfeasor’s insured. viii) On that analysis, English private international law rules in operation before Rome IIwould in the present case have regarded Spanish law as the applicable law governing both the insurance contract between the Insurer and the Second Defendant and the tortious obligation of the Second Defendant to the Claimant. In relation to contracts of insurance concluded prior to 17 December 2009, the relevant law for determining the applicable law of a general insurance contract was The Financial Services and Market Act 2000 (Law Applicable to Contracts of Insurance) Regulations 2001 (“the 2001 Regulations”) See Dicey op.cit. at paragraphs 33-189. ; and in relation to tort, the Private International Law (Miscellaneous Provisions) Act 1995 (“PILA”). Whether the Claimant’s substantive right to claim against the Insurer pursuant to the provisions of article 76 of the Spanish Insurance Contract Act 50/1980 arose as an incident of the tort or of the insurance contract was not in issue before us. Both parties agreed that, as a matter of Spanish law, and whatever its juridical basis, the Claimant had a direct cause of action against the Insurer as a matter of Spanish law. Whether that claim fell to be characterised as a claim in tort (as Moore-Bick LJ considers See paragraph 80 below. ), or one in contract (an issue which I do not consider it necessary to decide), both the 2001 Regulations and PILA produced the result that Spanish law was the “applicable law” to determine whether the Claimant had a claim in contract or in tort against the Insurer: see: Articles 4-7 of the 2001 Regulations; and sections 9(2), 11 and 12 of PILA. ix) An example of English law, as a matter of practice, permitting direct actions by injured parties against the insurers of alleged tortfeasors, pursuant to foreign law statutory or other direct action rights, to take place in England is Youell v Kara Mara Shipping Co Ltd [2002] 2 Lloyd’s Law Reports 102. In that case injured parties, pursuant to Louisiana statutory direct action rights, sued insurers in Louisiana under an insurance contract subject to English law and an exclusive English jurisdiction clause; the English court, at the suit of insurers, granted an anti-suit injunction effectively requiring the injured parties to observe the requirements of the exclusive English jurisdiction clause and litigate in England.[37]Accordingly, I conclude, that, in the present case, “a direct action” against the Insurer was “permitted" under “the national law” of the lex fori (i.e. England) for the purposes of Article 11(2) because English law would regard the question as to whether the Claimant had a direct cause of action against the Insurer as one to be determined by reference to Spanish law pursuant to English law’s private international law rules in operation before Rome II. In Maher v Groupama Grand Est supra at paragraph 11, Moore-Bick LJ approached the question as to whether a direct cause of action against the insurer was "permitted" for the purposes of Article 11(2) simply by reference to the applicable law of the insurance contract In Maher, however, the question did not arise as it was common ground that under French law the injured party had a direct cause of action and the judge below had made no finding about the juridical basis of the cause of action. , but, as is apparent from paragraph 80 of his judgment in this case, he now concludes that the existence of a direct right of action against the insurer is to be determined by reference to the law of the place where the wrongful act of the insured occurred.

Issue 3

[38]It follows that Issue 3 does not arise in the present case. Therefore we do not strictly need to consider the question whether, if a direct action against the insurer is not “permitted” under the national law” of the lex fori, Article 11(3) does or does not apply to an action which has (on this hypothesis) been wrongly brought by the injured party against the insurer. It also means that we do not have to consider the question briefly canvassed in argument as to whether the fact that the Insurer did not challenge the jurisdiction in the present case, with the result that in any event jurisdiction was conferred on the English court by virtue of Article 24, makes any difference to the availability of Article 11(3). However, like Moore-Bick LJ, I do not consider that an insurer can force an insured tortfeasor to be sued by the injured party in the court of the latter’s domicile by the simple expedient of consenting to the jurisdiction of that court, in circumstances where it would not otherwise have jurisdction over the insured tortfeasor.

Issues 4 and 5

[39]Contrary to what Dicey states at paragraph 11 – 348 in relation to Article 11(3), in my judgment the reference in Article 11(3) to "the law governing such direct actions" is a reference to the applicable law governing the direct cause of action, rather than a reference to the law of the lex fori, whether procedural, substantive or otherwise. The words used in Article 11(3) – "law governing" - are different in concept and form from those used in Article 11(1) and Article 11(2), where the reference is to what is "permitted" by a "court", which, as I have already concluded, suggest the court seised. If that construction is right, then Issue 5 does not arise for determination.[40]It also follows that, whether the direct claim by the Claimant against the Insurer under article 76 of the Spanish Insurance Contract Act is characterised as a claim in tort or in contract, there can be no doubt that, applying PILA or the 2001 Regulations, the law governing both the contract and the tort is Spanish law.[41]In the present case Issues 4 and 5 are of theoretical interest only. That is for two reasons. First, it was not in dispute between the parties that the applicable law governing the direct cause of action (whether its juridical basis was tort or contract) was Spanish law, which permits the joinder of the insured as a party to a direct action against the insurer. Second, even if the reference in Article 11(3) were to the procedural law of the lex fori, English procedural law would clearly permit the joinder of an insured to a direct action brought by an injured party against an insurer, pursuant to CPR 19(2) in circumstances where :
“(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”

Issue 6

[42]Mr Mead’s principal arguments on the appeal, as I have already summarised, were that Article 11(3) simply did not apply to the claim which the Claimant wished to pursue against the Second Defendant because, as a claim “for the uninsured excess”, it could not be characterised as being one made “in matters relating to insurance”; it was a tort claim which fell to be determined in accordance with Articles 8-14 inclusive of Section 3 of the Judgments Regulation and was therefore outside the scope of Article 11(3); in the absence of a policy dispute, no joinder of the Second Defendant was possible.[43]I cannot accept these arguments. My reasons are as follows.[44]It is clear from the decision in Odenbreit that the Judgments Regulation has to be construed purposively with due regard to the objectives set out in the recitals to the Preamble. As the CJEU said at paragraph 28 cited above, according to Recital 13, the Regulation aims to guarantee more favourable protection to the weaker party than the general rules of jurisdiction provide for. Given that aim, there is no possible justification, whether linguistic or purposive, for construing the words in Article 8 “in matters relating to insurance”, or any of the respective provisions of Article 11(1), Article 11(2) or Article 11(3), as subject to some sort of implied restriction that the insurer may only be joined under Article 11(1) or Article 11(2), or likewise the insured/alleged tortfeasor may only be joined under Article 11(3), in circumstances where there is a policy dispute. Indeed a similar argument in relation to Article 11(2), based on the characterisation under German law of the direct action against the insurer as a tort claim, was expressly rejected in Odenbreit See paragraph 17 and 27. . There would be no logical reason for imposing such a restriction only for the purposes of Article 11(3), when the injured party sought to add the insured to the action already started against the insurer, and not imposing such a restriction under Article 11(1) and Article 11(2). In many cases a direct action against an insurer will not involve a policy dispute, but merely raise questions about liability and quantum.[45]As Ms Deal pointed out in her submissions, one of the objectives of the Judgments Regulation is that jurisdiction “must be predictable” and ascertainable by a claimant at a time before proceedings are issued and jurisdiction established: see recital (11) and Canada Trust Co v Stolzenburg (No. 2) [2002] 1 AC 1. In many situations (such as the present case), the need to bring proceedings against the insured/alleged tortfeasor – for example because of the insolvency of the insurer, a coverage dispute or a limitation in respect of the sum insured under the policy – might well not be known at the time proceedings are issued against the insurer. If the requirement for a policy dispute were determinative, it could produce the illogical result of there being no jurisdiction if the party injured attempted to join the insured/alleged tortfeasor as a defendant to the original proceedings (because no policy dispute was evident at the time of issue) but there being jurisdiction if the insured/alleged tortfeasor was joined subsequently once the dispute became apparent. That would be likely to result in an increased risk of separate proceedings in separate Member States, since in many cases there might be a need to issue proceedings against the insured/alleged tortfeasor as a matter of some urgency, before the existence of any policy dispute emerged – for example, to comply with time limits in personal accident claims, to ensure the preservation of relevant evidence, or to obtain pre-judgment freezing order relief.[46]Nor am I impressed by Mr Mead’s argument that the Claimant’s claim against the Second Defendant was “simply a claim in tort” which fell to be determined in accordance with Articles 5 and 6 of Section 2 of the Judgments Regulation or was a claim for “the uninsured excess” under the insurance policy (whatever that might mean, if different from being a tort claim). It is of course correct that there is a separate regime relating to special jurisdiction in contract and tort matters under Section 2. But the whole point of Article 11 was to enable direct actions against liability insurers to be brought in the courts of the injured party’s domicile (irrespective of whether there was any dispute in relation to the policy of insurance.) Once that is taken as a given, there is no logical reason for restricting joinder of the insured/alleged tortfeasor under Article 11(3) to situations where there is a policy dispute, even taking into account the well-recognised principle that Article 11(3) was an exception to the general rule on jurisdiction prescribed by Article 2, (viz. that a defendant should be sued in the court of the Member State where he is domiciled), and therefore should be narrowly construed.[47]Nor, in my view, can any assistance be obtained from the CJEU cases of Brogsitter v Fabrications de Montres Normandes EURL supra or Folien Fischer AG and another v Ritrama SpA supra upon which Mr Mead sought to rely. Brogsitter was another case where, in the context of considering whether, for the purposes of the Judgments Regulation, certain claims should be characterised as “matters relating to a contract” or as “matters relating to a tort, delict or quasi-delict”, the CJEU emphasised that the concepts had to be interpreted autonomously and by reference to the scheme and purpose of the Judgments Regulation, not by reference to the characterisation of the legal relationship under the national state’s law See paragraph 18. . The articulation of the test in Brogsitter for determining whether a civil liability claim was a “matter… relating to a contract” is of no relevance to the determination of the issues in the present case.[48]In Folien Fischer the CJEU restated the proposition that the objective of ensuring that the court with jurisdiction is foreseeable and certain is not connected to the allocation of the respective roles of the parties or “to the protection of either”. In particular the court stressed that that objective was not the same as that pursued by the rules of jurisdiction laid down in sections 3 to 5 of Chapter II of the Judgments Regulation “which are designed to offer the weaker party stronger protection”. But again, that obvious proposition is of no assistance in the present case. Contrary to Mr Mead’s submission, I see no reason why the Second Defendant should be entitled to assert some sort of legitimate expectation on grounds of certainty and predictability that it was entitled to be sued in Spain as the place where “it knew it would be answerable for its tortious conduct”. In my view, given that it is running a hotel intended to attract tourists from throughout the EU, the Second Defendant had no basis for an assumption that it was somehow immune from the joinder provisions of Article 11(3) just because the foreign tourists staying at the Second Defendant’s hotel might have a variety of domiciles. The principle is certain, irrespective of the fact that the guests might have come from many different member states.[49]Mr Mead did not seek to re-run the argument advanced in Maher, and based on the Jenard Report, that joinder of the insured as a third party was only permitted at the suit of the insurer. That argument was rejected (albeit obiter) by Moore-Bick LJ at paragraph 18 of his judgment. Instead, what Mr Mead sought to contend, based on what Moore-Bick LJ had said at paragraphs 17-21, was that joinder was only permissible under Article 11(3) in circumstances where(a) there was a dispute as to liability of the insurer to pay the injured party and(b) “where it is necessary to do so to avoid the risk of irreconcilable judgments” See per Moore-Bick LJ at paragraph 21. . Mr Mead further submitted, based on a suggested anology with the decision of the CJEU in Painer v Standard Verlags GmbH supra, that for there to be a finding of a risk of irreconcilable judgments, a mere difference in outcome was insufficient; it was necessary to determine that “there was a risk of an irreconcilable outcome in a situation involving the same situation of fact and law”, for jurisdiction to be available under Article 11(3). Here, he said, any possible divergence of outcome leading to the risk of irreconcilable judgments did not arise as a result of the same situation of fact and law; the claim against the Second Defendant was a tort claim, whereas the claim against the Insurer, was not a tort claim but referable to what was insured. Moreover, in the present case, there was in reality no likelihood of the risk of irreconcilable judgments; the claim against the Insurer was admitted as to liability and there was no dispute as the liability of the Insurer (subject to the limit) to pay the Claimant and no dispute as to the applicability of the policy.[50]I reject these submissions. I have already dealt with my reasons for rejecting the alleged requirement for there to be a policy dispute. Whilst recitals (12) and (15) to the Judgments Regulation emphasise the need to minimise the risk that irreconcilable judgments will be given in two Member States, there is nothing in those recitals, the objectives behind Section 3, Articles 9 and 11 (most clearly reflected in recital (13) “(13) In relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules provide for.“ ), or Article 11 (3) itself that predicates that there has to be a satisfaction of some sort of threshold requirement that there is a risk of irreconcilable judgments “in a situation involving the same situation of fact and law”, before an injured party can issue proceedings under Article 11(3) against an insured/alleged tortfeasor. Nor, to my mind, can anything in Moore-Bick LJ’s judgment in Maher be read as laying down such a requirement. Nor is the suggested analogy with Painer v Standard Verlags GmbH supra apt or of any assistance. Under Article 6(1) (which is a derogation from the rule in Article 2 that a defendant should be sued in the court of the Member State where he is domiciled) joinder, where he is one of a number of defendants, to an action in a Member State (which is not the state where he is domiciled) is only permitted:
“provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings;”
[51]There is no such “close connection” requirement in the context of Article 11 although, in most cases, there very probably will be such a nexus. It follows that in my judgment there was no need for the Claimant to demonstrate that he satisfied any such test before the English court could join the Second Defendant as a party under Article 11(3). I reach this conclusion on the assumption, in favour of the Second Defendant, that there is no longer any genuine dispute in respect of the coverage or limits on the policy, although Ms Deal suggested in argument that there might remain a dispute about whether the policy limit applied to the policy for the relevant year in question and as to whether it included legal costs.[52]Moreover, I also reject Mr Mead’s submissions that in the present case, as a matter of fact “there was no risk of an irreconcilable outcome in a situation involving the same situation of fact and law”. In context it is wholly unrealistic to say that there was no such situation because the claim against the Insurer should be characterised as an insurance claim and the one against the Second Defendant as a claim in tort as the judge pointed out in paragraph 31 of his judgment. In my view there clearly would have been a risk of irreconcilable judgments in England and Spain if the Second Defendant had not been joined as a party to the English action, and proceedings were started or continued against it in Spain. That is so irrespective of the fact that, as a result of Master Cook’s liability judgment, the Insurer is apparently no longer in a position to dispute that the accident had been caused by the Second Defendant’s negligence or breach of duty under Spanish law, or its (the Insurer’s) liability to indemnify the Claimant in respect of any damage caused by the accident. But, as the defence made clear, causation and quantum of damage very much remain in issue, despite the liability judgment. This gives rise to the very real risk that, notwithstanding that there can no longer be any risk of irreconcilable judgments as to liability (as this had never been effectively challenged by the Insurer), there nonetheless might well be irreconcilable judgments and findings of fact in order to determine the assessment of damages (whichever law governs the identification of the heads of damage (Spanish law) or the actual quantification of damage (the lex fori See Harding v Wealands supra. ). Ms Deal gave the example that if a Spanish court were to find as a fact on the basis of the evidence of fact and opinion adduced before it that the Claimant is fit to work and so has no claim for loss of earnings, or has no residual neuro-psychological deficits, or does not lack capacity, contrary findings of the English court simply could not be reconciled. On any basis (even if it were a relevant threshold test, which in my view it is not) the potential for different findings of fact in the present case clearly gives rise to a real risk of “an irreconcilable outcome in a situation involving the same situation of fact and law”, as the judge trenchantly observed at paragraph 31 of his judgment.[53]Accordingly, in relation to Issue 6, I conclude that Article 11(3) does indeed apply to the claim which the Claimant wishes to pursue against the Second Defendant.

Issue 7

[54]The next issue which arises is if, as I have held, the “same” court does have jurisdiction under Article 11(3) against both the insurer and the insured, does that mean that the English court, as the court seised of the direct action against the insurer, is bound to exercise such jurisdiction if the injured party seeks to join the insured to the direct action against the insurer, or does the court have a discretion to decline to do so?[55]In my judgment, if a claimant seeks to invoke a court’s jurisdiction under Article 11(3) to join an alleged tortfeasor/insured as a party to a direct claim against an insurer, then, irrespective of whether the national state’s procedural rule is discretionary (as it is in the case of CPR 19(2)), the national court is bound to accept that jurisdiction. My reasons for this conclusion are: i) Article 11(3) contains no objective proviso of the type to be found in Article 6(1) and (2) which requires the court to be satisfied respectively either that “the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings“ (Article 6(1)); or that the proceedings were not “instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case“. ii) On the contrary, the use of the words in Article 11(3) “the same court shall have jurisdiction over them” (my emphasis) suggests that the court is obliged to accept jurisdiction. iii) Such an interpretation gives effect to the policy objectives expressed in recitals (11) – (15) of predictability, certainty, the protection of the weaker party in contracts of insurance, the harmonious administration of justice and the avoidance of risk of irreconcilable judgments etc. iv) As Ms Deal submitted, the selection of the court in which to bring a claim was a matter for a claimant. I agree that if the Judgments Regulation confers jurisdiction, it is a matter of no relevance that a defendant might have preferred another jurisdiction, or even might have expected another jurisdiction: see per Advocate General Mengozzi at paragraph 52 of his opinion in Freeport plc v Arnoldsson (Case C-98/06) [2008] QB 634.[56]Accordingly, in my judgment, if the Claimant was entitled to invoke Article 11(3) against the Second Defendant, his choice to pursue the Second Defendant in England could not be undermined, even if this worked to the Second Defendant’s financial disadvantage, by an argument that the English court should exercise its discretion not to permit joinder on the grounds that the Claimant was seeking the procedural advantage of the higher quantum of damages that would be awarded by an English court.

Issue 8

[57]If I am wrong in my previous conclusion in relation to Issue 7, and the English court does indeed have a discretion to decline jurisdiction, then I have no doubt that in all the circumstances such discretion should have been exercised in favour of the Claimant to permit the joinder of the Second Defendant to the existing action against the Insurer. In my view there is no force in Mr Mead’s argument that the result of Master Cook’s and the judge’s decision had been “wrongly to oust the jurisdiction of the Spanish court”. In the light of Article 11, there can be no presumption that the Spanish court is the “proper” or “primary” jurisdiction simply because of Article 2(1). Recital (13) expressly recognises that in relation to insurance and other consumer contracts, the weaker party is “protected by rules of jurisdiction more favourable to his interests than the general rules provide for.” If the Claimant is entitled to apply under Article 11(3) to join the Second Defendant, the mere fact that he is doing so to obtain the benefit of a favourable rule of English procedural law in force as at the date of the accident (namely that the assessment of the quantum of damages is considered to be a matter for the law of the lex fori, and not a matter for the applicable law of the tort), does not amount to an abuse such that the English court should as a matter of discretion decline jurisdiction. The policy objectives of the Judgments Regulation, as well as practical and cost considerations, clearly point to the action being heard in one place against both Defendants.

Disposition

[58]Accordingly, albeit for slightly different reasons, I agree with the conclusion reached by Master Cook and the judge. I would dismiss this appeal.

Postscript

[59]It was common ground before us that, in relation to accidents occurring on or after 11 January 2009, the effect of Articles 4 and 11 of Rome II is that a claimant will no longer be able to take advantage of the principle articulated in Harding v Wealands that the quantification of damage in a tort claim is a matter for the procedural law of the forum. That is because, under those articles, the applicable law for the quantification of damage in respect of a tort obligation 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.”
It is thus unlikely that there will be many cases in the future where the present point will arise, although there may be some in the pipeline.[60]I agree with Gloster LJ and with Moore-Bick LJ (whose judgment I have had the benefit of seeing in draft) that the appeal should be dismissed. The essence of their reasoning is the same and I agree with it. First, Section 3 of Chapter II of the Judgments Regulation applies here because this is a matter relating to insurance, irrespective of whether the insurer is disputing its liability on policy grounds and notwithstanding that Mr Keefe’s claim against the hotel is designed to recover such damages as are not covered by the insurance policy. Any other interpretation of Section 3 would be too narrow. Secondly, a direct action against the insurer is permitted and the law governing such direct actions provides that the insured may be joined as a party to the action, therefore Article 11(3) applies so that “the same court shall have jurisdiction” in relation to the claim made against the insured as a joined party. The route to this conclusion is either by the application of Part III of the Private International Law (Miscellaneous Provisions) Act 1995, or by the application of The Financial Services and Market Act 2000 (Law Applicable to Contracts of Insurance) Regulations 2001 (“the 2001 Regulations”). Both dictate, on the present facts, that the applicable law is Spanish law, either because it is the applicable law of the contract or because Spain is the country in which the events constituting the tort occurred. It does not matter for this case which is the correct juridical analysis and we had no argument on the point. Thirdly, whether or not there is a discretion to decline the jurisdiction conferred by Article 11(3), in this case there is every reason not to do so because there is a real risk of irreconcilable judgments if proceedings were to be brought in both Spain and England.[61]I agree that the appeal should be dismissed, but in view of the difficulty and importance of the issues to which it gives rise I shall give my own reasons for reaching that conclusion.[62]The question that arises in this case is whether the appellant, Hoteles Piñero Canaria SL (“the hotel”), can properly be joined as a defendant to proceedings in this country against its liability insurer, Mapfre Mutualidad Compania de Seguros y Reaseguros S.A. (“the insurer”). Master Cook held that it could and his decision was upheld by His Honour Judge Higgins sitting as a judge of the High Court. This is the hotel’s appeal against his decision.[63]The background to the proceedings has been described by Gloster L.J., whose account I gratefully adopt. Put simply, the respondent, Mr. Keefe, suffered serious injury while staying at the hotel in respect of which he seeks compensation. For reasons to which I shall return in due course, it is not disputed that under Article 11(2) of Council Regulation (EC) No.44/2001 (“the Judgments Regulation”) he was entitled to sue in England, where he himself is domiciled, the insurer which had agreed to indemnify the hotel against any liability to him, despite the fact that it is domiciled in Spain. Nor is it disputed that, under the law as it stood at the time of the accident, damages are to be measured by the law of this country as the lex fori: see Harding v Wealands [2007] 1 A.C.1. It appears that English law principles governing the assessment of damages for personal injury are rather more generous to a successful claimant that those of Spanish law. As a result, Mr. Keefe can expect to recover a significantly greater sum by way of damages if his claim is determined in this country than he would if it were determined in Spain.[64]This difference between English and Spanish law would not matter were it not for the fact that the limit of cover under the policy of insurance is €601,012.10, inclusive of costs, which is significantly less than Mr. Keefe can expect to recover by way of damages on a full liability basis. (We were told that in England he could expect to recover something in excess of £5 million.) Although he can bring proceedings against the insurer in this country, he cannot recover against it more than the full amount it agreed to pay under the policy and Mr. Keefe will therefore not receive by means of a judgment against the insurer the full compensation to which, under English law, he is entitled. Not surprisingly, therefore, he sought to join the hotel (whose liability is not subject to any limit) as a defendant to the action. The hotel’s position is that, if it is to be sued at all, it should be sued in Spain, where it is domiciled, and should not be exposed to a far greater liability as a result of being joined to proceedings in this country.

The judgments below

[65]Mr. Keefe’s argument below was simplicity itself. It ran as follows: he was entitled to sue the insurer in this country; as a result, the court had jurisdiction over the hotel under Article 11(3) of the Judgments Regulation; and it was sensible to join the hotel as a defendant in order to avoid multiplicity of proceedings and the risk of irreconcilable judgments.[66]Before the Master the hotel advanced two principal arguments in support of its submission that it should not be joined as a defendant. The first was that the claim against it was for an uninsured excess and not one relating to insurance at all. As a result, it fell outside the scope of Section 3 of Chapter II of the Regulation, of which Article 11(3) forms part, and the court therefore had no jurisdiction over it. The second was that there was no risk of irreconcilable judgments in this case and that therefore, even if the court did have jurisdiction over it, it would be unfair and inappropriate for it to be joined as a defendant. Mr. Mead, who appeared for the hotel then, as he did before us, submitted that since the rules contained in Section 3 involve a derogation from the basic rule under which a defendant can be sued only in the courts of the place where he is domiciled, Article 11(3) should be construed narrowly. The Master rejected both arguments and ordered that the hotel be joined as a party to the proceedings.[67]Before the judge Mr. Mead put forward much the same submissions, which the judge rejected on much the same grounds. Mr. Mead sought to persuade the judge that, because Article 11(3) formed part of Section 3 of the Judgments Regulation, which deals with matters relating to insurance, it was concerned only with disputes relating to the meaning and effect of the policy. However, the judge rejected that submission and was in any event prepared to hold that the case did raise a question concerning the scope and terms of the policy. Moreover, the judge considered that there was a clear risk of irreconcilable judgments if claims against the insurer and the hotel proceeded in different countries. He drew some assistance from my judgment in Maher v Groupama Grand Est [2009] EWCA Civ 1191, [2010] 1 W.L.R. 1564 and concluded that there were strong reasons for joining the insurer and the hotel as parties to the same proceedings. He therefore dismissed the appeal.[68]In a nutshell, therefore, both the Master and the judge held that Mr. Keefe was entitled to sue the insurer in this country, that as a result Article 11(3) gave the court jurisdiction over the hotel and that it was desirable to exercise that jurisdiction to avoid the risk of irreconcilable judgments.

The effect of the Judgments Regulation

[69]The problems to which this appeal gives rise flow from the special rules relating to jurisdiction in matters relating to insurance contained in Articles 9, 10 and 11 of the Judgments Regulation and the decision of the Court of Justice of the European Union in the case of FBTO Schadeverzkeringen N.V. v Odenbreit(“Odenbreit”) (Case C-463/06), [2008] I.L.Pr.12.[70]The Judgments Regulation contains a code governing the rights of courts of the Member States of the European Union (the “EU”) to assert jurisdiction over persons domiciled within the territory of the EU in relation to civil and commercial matters. The basic principle, which is contained in Article 2(1), is that a person domiciled in a Member State shall, whatever his nationality, be sued in the courts of that state. That basic rule is, however, subject to various special rules designed to facilitate and improve the sound administration of justice. Thus, for example, by Article 6(1) a person who is one of a number of defendants may be sued in the courts of the Member State in which any one of them is domiciled.[71]Section 3 of Chapter II contains special rules applicable to jurisdiction in matters relating to insurance. Thus, Article 9(1)(b) provides that in the case of a claim against an insurer by the policyholder, the insured or a beneficiary, the insurer may be sued in the courts of the country where the plaintiff is domiciled.[72]Under the law of some Member States, including Spain, it is possible for an injured person to make a direct claim against the wrongdoer’s liability insurer, to which the wrongdoer himself may also be joined. With that in mind Article 11 provides as follows: i) In respect of liability insurance, the insurer may also, if the law of the country permits it, be joined in proceedings which the injured party has brought against the insured. ii) Articles 8, 9 and 10 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. iii) If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them.”[73]Since the insured may ordinarily be sued only in the country where he is domiciled, the effect of Article 11(1) is that a liability insurer may also be sued in the courts of the country of the insured’s domicile (even if the insurer himself is not domiciled there), if the law of that country provides a right of direct action against it.

Odenbreit

[74]In Odenbreit the claimant, who was domiciled in Germany, was injured in a road traffic accident in the Netherlands. The driver responsible for the accident was insured by an insurer established in the Netherlands. The claimant brought an action against the insurer in Germany, his country of domicile, relying on Articles 9(1)(b) and 11(2) of the Judgments Regulation. German law recognised a direct right of action against a liability insurer, but characterised it as a right sounding in tort rather than as a right under the insurance contract. A question therefore arose whether the claim concerned “a matter relating to insurance”, so as to fall within Section 3, or a claim in tort, so as to fall within Section 1 and thus be governed by the basic rule. The European Court held that for these purposes characterisation under domestic law was irrelevant. What mattered was whether the claim fell within Section 3 in terms of the Regulation. Since it did, Articles 9(1)(b) and 11(2) applied, with the result that the insurer could be sued in Germany.[75]The reasoning by which the court reached that conclusion requires a little elucidation. Recital 13 in the preamble to the Regulation provides that in relation to insurance the weaker party should be protected by rules of jurisdiction more favourable to his interests than those provided under the general rules. That principle is reflected in Article 9(1)(b), under which the policyholder, the insured or a beneficiary may sue the insurer in the courts of the place where he is domiciled, rather than being required to sue in the courts of the place where the insurer is domiciled. An injured person who has a direct right of action against the insurer is in broadly the same position as the policyholder or insured and is therefore to be regarded as a weaker party for the purposes of his claim against the insurer. To enable him to sue only in the place where the insurer, the policyholder, the insured or a beneficiary is domiciled would be to ignore the fact that the three latter parties can all sue in the courts of the places where they are themselves domiciled and would be contrary to the spirit of the Regulation (paragraph 28). Therefore, an injured party should also be entitled to sue in the courts of the place of his own domicile and Article 11(2), which provides that Article 9 applies to actions brought by an injured party directly against the insurer, requires Article 9(1)(b) to be interpreted as if the word “injured party” were added to the categories of those who are entitled to sue the insurer in the courts of the place of their own domicile. The only condition which Article 11(2) imposes on the right of an injured person to sue the insurer in the place of his own domicile is that a direct action must be permitted under the national law (paragraph 30).

Is a direct action permitted under national law?

[76]Under English law the answer to the question whether national law permits a direct action against an insurer depends on whether one is considering substantive or procedural law. Unlike Spanish and German law, English law does not recognise a direct right of action by an injured person against the wrongdoer’s liability insurer, except in cases to which the Third Parties (Rights of Action against Insurers) Acts 1930 and 2010 apply. (I leave aside for present purposes the special provisions governing liability for motor accidents.) In terms of substantive law, therefore, English law does not ordinarily permit direct actions against insurers. In terms of procedural law, however, the position is different. English courts have territorial jurisdiction over insurers who are present in England and Wales and, subject to the provisions of the Judgments Regulation, can exercise jurisdiction over insurers elsewhere in the EU if process is served on them in the proper way. In that sense national law permits the court to entertain a direct action against an insurer. In the present case, for example, Mr. Keefe has made a direct claim against the insurer in this country and, since the insurer has not sought to contest the court’s jurisdiction, the proceedings will continue against it.[77]I think one can safely assume that a similar position obtains in the other Member States of the EU, so it is difficult to think that when in Odenbreit the European Court referred to a requirement that a direct action be permitted under national law it can have had in mind national procedural law. In my view it must have had in mind substantive rights and have intended to recognise that if an injured party has a substantive right to recover against the wrongdoer’s insurer, he can assert that right by suing the insurer in the courts of the place where as claimant he is domiciled. Only in that way would the injured party be placed on the same footing as the policyholder, insured and beneficiary to whom Article 9(1)(b) specifically refers. If that is so, it is necessary to identify the system of law which governs the relationship between the injured party and the insurer to see whether it does recognise a substantive right in the claimant to recover his loss from the insurer. It is that system of law which, as the law governing direct actions, also determines under Article 11(3) whether the insured (in this case the hotel) can be joined as a party to proceedings against the insurer, presumably because the injured party has a concurrent right of action against him.[78]In the present case the insurer has not attempted to challenge the court’s jurisdiction; on the contrary, it has admitted liability to compensate Mr. Keefe, subject to issues of causation and the quantification of damage and subject to the limitation of liability under the policy. In those circumstances it must be taken to have accepted both that Mr. Keefe has a direct claim against it and that its insured, the hotel, is liable to him, because the insurer could not be liable if the hotel were not. Accordingly, if the only question were whether it would be sensible to join the hotel as a defendant, the answer would be obvious. The facts on which the insurer’s liability depends (including questions of causation, which are still in issue) are the same as those on which the hotel’s liability depends and joinder of the hotel would avoid the risk of multiple proceedings and the risk of irreconcilable judgments.[79]The hotel and the insurer are both domiciled in Spain and the contract of insurance is governed by Spanish law. Moreover, it appears to have been accepted by the hotel that under Spanish law the insured and insurer are jointly liable for any damage and that both can be joined as parties to proceedings by the injured party. In those circumstances it may be argued that there is no bar to joining the hotel under Article 11(3) of the Judgments Regulation, because the insurer is already a party to direct proceedings against it. However, I do not think that an insurer can confer on the courts of the place of the injured party’s domicile jurisdiction over the insured simply by submitting to the jurisdiction of those courts in relation to a claim made directly against it by that party. That would give him a unilateral right to deprive the insured of his right to be sued in the courts of his own domicile, even in a case where in fact the relevant national law did not permit a direct action against the insurer. In principle the insured should be entitled to mount an independent challenge to the existence of the court’s jurisdiction over the insurer, since the existence of such jurisdiction is a pre-condition to the exercise of jurisdiction over himself.[80]That makes it necessary to identify the system of law by reference to which the existence of a direct right of action against a liability insurer is to be determined. In Maher v Groupama (in which the issue did not arise for decision) I suggested in passing that it was the proper law of the contract, but on further reflection I think that may not be correct. There will be no contractual relationship in the ordinary sense between the injured party and the insurer. The right of the injured party to recover directly from the insurer will therefore not arise under the contract of insurance (unless, perhaps, the proper law of the contract recognises some kind of third party right of a contractual nature). Nor does it depend on any breach of duty by the insurer personally. If it exists at all as a substantive right, it is likely to equate to a right to hold the insurer vicariously liable for the tort of his insured. In the present case the answer will be the same in any event, since the proper law of the contract of insurance is Spanish law and the accident occurred in Spain, but, for the reasons which follow, I think the existence of a direct right of action against the insurer will generally fall to be determined by reference to the law of the place where the wrongful act of the insured occurred.[81]Since the accident to Mr. Keefe occurred before Regulation (EC) No 864/2007 (“Rome II”) came into force, Part III of the Private International Law (Miscellaneous Provisions) Act 1995 (“the Act”) provides the rules for choosing the law (described in the Act as “the applicable law”) to be used for determining issues relating to tort. By section 9(4) the applicable law is to be used for determining the issues arising in a claim, including the question whether an actionable tort or delict has occurred. Characterisation of issues remains a matter for the lex fori. Section 11(1) establishes as a general rule that the applicable law is the law of the country in which the events constituting the tort in question occurred. Section 12 of the Act provides for the displacement of the general rule in cases where there is a close connection between the tort and a country other than that whose law would otherwise be the applicable law.[82]In the present case the accident occurred in Spain and the wrongdoer was a Spanish hotel; there are no factors connecting the tort with England, other than the nationality and residence of Mr. Keefe. In my view they are not sufficient to displace the general rule, so it follows that the existence of liability is to be determined by reference to Spanish law. Moreover, section 9 of the Act makes it clear that the applicable law governs all questions relating to the existence of the wrongful act and the identity of those who are liable for it. That includes the determination of the question whether anyone other than the hotel (in this case the insurer) is liable for the tort. It is not disputed that Spanish law does allow a direct action by the injured party against the wrongdoer’s liability insurer and therefore in this case national law does permit a direct action by Mr. Keefe against the insurer. It is also accepted that Spanish law permits an insured to be joined in the action against the insurer and accordingly the English court has jurisdiction over the hotel by virtue of Article 11(3) of the Judgments Regulation. I am unable to accept that its jurisdiction is limited to disputes relating to the meaning or effect of the policy. Article 11(3) is worded in quite general terms and, for the reasons I gave in Maher v Groupama, I think that its purpose was to ensure that issues common to both the insured and insurer are decided in the same proceedings. The insurer’s liability to the injured party may depend on the terms of the policy (which may effectively limit or exclude its liability) or on the facts which give rise to liability on the part of the insured. It would be anomalous if the claimant could join the insured if the insurer disputed liability on policy grounds but not if it disputed liability on the facts.[83]In seeking to answer that argument Mr. Mead submitted that this was not a case in which there was a risk of irreconcilable judgments as that concept is understood in the context of the Judgments Regulation and in support of that submission he drew our attention to Painer v Standard Verlags G.m.b.H. (Case C-145/10). The case was concerned with multiple infringements of copyright of a substantially identical nature in different jurisdictions and therefore subject to different national rules of law. In that context it is not surprising that the Court of Justice expressed the view that for there to be a risk of irreconcilable judgments it is not sufficient that there be a divergence of outcome; it is necessary that the divergence arises in the same situation of fact and law (paragraph 79). In the present case, however, that is exactly what might occur, given that the insurer’s liability depends, in part if not in whole, on exactly the same legal and factual basis as that of the insured. Similarly, I am unable to accept that the exercise by the English court of jurisdiction over the hotel amounts in this context to an impermissible ouster of the jurisdiction of the Spanish courts. It is no more than a consequence of the combination of two principles: that the injured person as the weaker party in a direct claim against the insurer is entitled to sue in the courts of his own place of domicile (Articles 11(2) and 9(b)); and that, if the court has jurisdiction over the insurer in relation to a direct claim, it also has jurisdiction over the insured, if the law under which the direct claim arises permits the insured to be joined in the same action.[84]I fully appreciate Mr. Mead’s submission that it is hard on the hotel to find that because its insurer has been sued in this country it faces a liability for damages considerably greater than would have been the case if it had been sued in Spain, but that is primarily a consequence of the differences between English and Spanish law in relation to the assessment of damages. I do not think that can affect the construction of Article 11 of the Judgments Regulation.[85]Finally, I do not think that Mr. Mead is able to derive any assistance from what was said in Maher v Groupama, in which the court was concerned with a different question relating to the construction of Article 11(3). That case concerned a claim for personal injury sustained in a road traffic accident in France. It was accepted that the claimants had a right to sue the wrongdoer’s motor insurers in this country, both under French national law and under the provisions of Directive 2000/26/EC (the Fourth Motor Insurance Directive). The question for determination was whether damages and pre-judgment interest were to be assessed by reference to English or French law. One question raised in the course of argument was whether the wrongdoer could have been joined as a defendant to proceedings against the insurers in this country, because, it was said, it would be anomalous if the claimants could recover more against his insurers by suing them in England than they could have recovered against him personally in France. The court did not find it necessary to decide that point, but in the course of my judgment (with which Mummery and Etherton LJJ. agreed) I expressed the view that the wrongdoer could have been joined as a party under Article 11(3). It had been argued that that article allowed the joinder of the insured only as a third party to a claim against the insurer, but, as I pointed out, Article 11(3) is concerned only with jurisdiction. It says nothing about the capacity in which the insured can be joined and there are powerful policy reasons for ensuring that all issues arising between the claimant, the insurer and the insured are decided in the same proceedings.[86]For the reasons I have given, I am of the opinion that Mr. Keefe has a direct right of action against the insurer under national law, which in this case is the law of Spain, and that Spanish law allows the insured to be joined to a claim against the insurer. The court therefore has jurisdiction to join the hotel as a defendant and there are powerful reasons for exercising its discretion in favour of doing so.

Cited in 4 later judgments