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PI and Civil Litigation

Law - practice - procedure

Outer Temple Chambers , 05 JUN 2015

The Limitations of Odenbreit – Williams v MAPFRE (HHJ Halbert, Chester CJC, 13/4/15)

Daniel  Clarke


The Limitations of Odenbreit – Williams v MAPFRE (HHJ Halbert, Chester CJC, 13/4/15)

A feature of many cases involving accidents abroad is the ability of claimants domiciled in England but injured in another EU Member State nevertheless to sue the defendant’s insurer directly in the English courts.

This right arises from the CJEU decision in Odenbreit, where it was held that this followed from a combination of Articles 9(1)(b) and 11(2) of Regulation (EC) No 44/2001. This was, however, subject to the condition that either the law applicable to the non-contractual obligation, or the law applicable to the insurance contract, provided for such a direct action.

In Williams v MAPFRE HHJ Halbert, sitting in the County Court at Chester, considered some important potential limitations on the scope of the jurisdiction.

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In May 2012 Mrs Williams was on holiday, staying at the Pueblo Hotel in Benidorm, when she sat on a chair which collapsed beneath her causing injury to her knee. She issued proceedings in the English courts directly against the hotel’s Spanish domiciled insurer, MAPFRE.
She relied on Spanish legislation (familiar to many practitioners in this field) providing for a direct right of action – Article 76 of the Insurance Contracts Act 1980. This provides (as translated by the experts in the case): 

“The injured person… will have a direct action against the insurance company in order to require/demand fulfilment of the obligation to compensate…The direct action is immune from exceptions which may apply to the insurer against the insured.”

The contract of insurance between MAPFRE and the hotel provided:

 “Policy coverage shall only include claims submitted within Spanish jurisdiction for events that have taken place in Spain leading to liability or other obligations imposed in accordance with legal provisions in force within the territory of Spain.”
MAPFRE disputed the court’s jurisdiction and sought strike-out or reverse summary judgment. It argued that  in Spanish law  the nature of the direct cause of action created by Article 76 was that it made the indemnity available under the insurance policy available to Mrs Williams (ie, broadly speaking put her in the hotel’s shoes vis-à-vis MAPFRE), rather than transferring the tortious liability of the hotel to the insurance company. 

This meant that, to the extent that there was no liability to indemnify the hotel, there was no direct claim. Since there was  no indemnity in relation to a claim commenced in England, there was no direct claim. Article 76 prevented MAPFRE relying as against Mrs Williams on exemption clauses in the insurance contract. But this prevention applied only to exemption clauses, not to definition clauses, ie, those which define the indemnity in the first place. The exclusion from cover of claims submitted within Spain was a definition clause not an exemption.

By contrast, Mrs Williams submitted that the right of action under Article 76 operated as a transfer of the tortious liability of the hotel to the insurance company (and was independent of the insurance contract). Further, that the exclusion of cases where proceedings were submitted outside Spain was an exemption clause.

The court held that the Spanish legislation made the indemnity available under the insurance policy available to Mrs Williams. This followed from natural and ordinary meaning of the words in the statute. Article 2 of the Act referred to the insurance contract. In Article 76 the expression: “the obligation to compensate” was obviously to be taken to refer to the obligation under the insurance contract. If Mrs Williams’ submission was correct, the statutory claim would not be governed by the terms of the insurance contract at all. Yet both Spanish law experts agreed that the financial limit on the policy and the requirement that the accident must happen in Spain did apply to the statutory liability. That could be the case only if the terms of the policy affected the statutory liability. 

The court further held that the relevant exclusion was a definition clause. This was primarily on the basis of the Spanish authority cited on this issue. It followed that there was no indemnity in relation to a claim commenced in England, and therefore no direct claim. The claimant had no cause of action against the insurer in the English courts. 

This was not inconsistent with the Brussels Conventions (I or IA). Nor was it inconsistent with the decision in  Odenbreit. The CJEU held that a claimant’s right to sue the insurer in their country of domicile was subject to the existence of a valid direct right of action under either the law applicable to the non-contractual obligation or the law applicable to the insurance contract (here both Spanish law).

The first point to note is that this result would not occurred had Mrs Williams been injured in a road traffic accident. The EU Motor Insurance Directive (2009/103) requires Member States to ensure that all insurance policies covering civil liability will respond to claims made in any of the Member States.

However, outside road traffic claims, the case illustrates the potential limitations of such direct claims. The consequences are significant. A claimant who cannot take advantage of the  Odenbreit jurisdiction may not be able to bring a claim in England. For many involved in accidents in other EU Member States, this will make proceeding far less attractive and in many cases unpalatable. 

Clearly much will turn on the terms of the particular insurance contract. The drafting of insurance contracts will vary across jurisdictions (and within the same jurisdiction). Similarly, the juridical basis of a direct cause of action will vary between jurisdictions. Those representing claimants need to be alive to these issues from the outset. It may be necessary to obtain foreign law expert advice on the nature of the cause of action in the particular jurisdiction and, if it is relevant, the status of a purported exclusion of indemnity. 
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