Moreno v The Motor Insurers' Bureau

This is a trial of a preliminary issue:

“Whether the scope of (the Defendant’s) liability to the Claimant is to be determined in accordance with the law of England or the law of Greece.”

The order for a trial of that issue was made by consent by Master Yoxall on 10th November 2014.

On 17th May 2011 the Claimant, who was then aged 25, and who lives in England and Wales,was on holiday on the island of Zakynthos in Greece. She was on the verge of a road on that island when a car left the road and struck her. She suffered grievous injury to her legs. She has since received extensive surgical and other medical and therapeutic treatment. Her right leg has been amputated through the tibia, and her left leg required extensive surgery to repair the knee ligaments. She has had repeated surgery to her legs. She must wear a prosthesis, and also has to use a wheelchair. She continues to suffer from pain and disability. She has also endured a psychological reaction, and an exacerbation of pre-existing depression. She has suffered losses of earnings, and it is claimed that she will be at a disadvantage on the open labour market.

The car in question was registered in Greece. The Claimant’s solicitors wrote to the Defendant Motor Insurers’ Bureau (“MIB”) to obtain insurer details for the vehicle. Upon enquiry, its Greek equivalent considered that the vehicle was uninsured, and that the driver (who was of Albanian extraction and perhaps nationality) was responsible for the accident.

The Claimant has made a claim against the MIB under Regulation 13(2) of the Motor Vehicles (Compulsory Insurance)(Information Centre and Compensation Body Regulations) 2003 (SI 2003/37) (“The 2003 Regulations”).

In the Defence, it is admitted that the driver was liable under the law of Greece for the accident. It is admitted that, under the law of Greece, the Greek Guarantee Fund for the purposes of the relevant EU Motor Insurance Directives (of which more below) would be liable to compensate the Claimant. Liability is therefore admitted under Regulation 13, but it is contended that the measure of compensation payable should be assessed in accordance with the law of Greece. This is a case where the level of damages available to a claimant for personal injuries would be higher if assessed according to the laws applying in England and Wales than in Greece. (Although as will become apparent it cannot be assumed that the level of provision is more generous in England and Wales than in all other EU jurisdictions.)

Judgment has been entered for the Claimant by consent on 9th July 2014, and an interim payment made under CPR 25. That was without prejudice to the Defendant’s arguments on the applicable law.

The Court of Appeal in Jacobs v MIB [2010] EWCA Civ 1208 [2011] 1 WLR 2609has held that in a Regulation 13 claim (i.e. the case of a person from England and Wales suffering injury in another EU state at the hands of a culpable but uninsured or unidentified driver, but claiming in England and Wales), the law by which the assessment of compensation is to be made is that of England and Wales. It held that the right to compensation arose under the Regulations. In the judgment of Moore-Bick LJ, he addressed the effect of the coming into force of Regulation (EC) No 864/2007 of the European Parliament and Councilon the law applicable to non-contractual obligations (“Rome II”)on this issue. Moore-Bick LJ there said that the law applying to the existence of tortious liability has, since Rome II, been the law of the country where the injury was caused, but that the law by which the court makes the assessment of compensation under the 2003 Regulations remains the law of England and Wales. That approach was endorsed in Bloy and Ireson v MIB [2013] EWCA 1543 [2014] PIQR P9. While the comments in the judgment of the Chancellor (Etherton LJ) in that case are obiter on the effect of Rome II, its ratio adopted the interpretation of Regulation 13(2) given in Jacobs.

European Union Directives are not shy of using the traditional Latin names for the concepts involved. Those tags also have the advantage of being succinct and precise, and I shall use one or two. By lex fori is meant the law of the state in which the court dealing with the claim is situated, whereas lex loci delicti is the law of the state where the injury occurred, and in this case refers to Greece. (There are questions that can arise about the location of the relevant damage, but they are addressed in Rome II, and need not detain us here). Rome II applies the lex loci delicti to the issues of both liability and quantum, save in exceptional cases. The Court of Appeal has thus held in Jacobs that the lex fori applies to the assessment of compensation in claims under Regulation 13. However the Court of Appeal has since applied Rome II to actions in tort against the tortfeasor’s insurer, including the rule that the assessment of compensation is made according to the lex loci delicti (see Wall v Mutuelle de Poitiers Assurances [2014] EWCA Civ 138 per Longmore, Jackson and Christopher Clarke LJJ)). The Court of Appeal there applied the lex loci delicti to the two issues of liability and the assessment of damages, while matters of procedure - such as the way in which expert evidence would be adduced – was held to be a matter for the lex fori.

The MIB contended in Jacobs and before me that since Rome II, Regulation 13 of the 2003 Regulations cannot be applied so as to provide for a level of compensation different from that obtainable in the country where the accident occurred – i.e. the application of lex loci delicti. The MIB obtained permission to appeal from the Supreme Court in Jacobs v MIB but before the appeal could be made and heard, the Court of Justice of the European Union (CJEU) gave judgment in Homawoo v GF Assurances C-412/10 [2011] ECR 1-11603. That held that Rome II was not in force at the relevant date in Jacobs, so that the appeal would have served no purpose and was not proceeded with. Bloy, which was decided after Jacobs, related to an accident which occurred before Rome II came into effect.

In this case, the MIB argues that this is a case where there can be an appeal straight from the High Court to the United Kingdom Supreme Court. It does so without demur from the Claimant, whose consent to an appeal direct to the Supreme Court under section 12 of the Administration of Justice Act 1969 is recorded in the order of Master Yoxall already referred to. As I indicated to the parties at the hearing, I shall consider whether to make such an order having received submissions in the light of my judgment.

The issue before the Court is twofold:

Given the existence of what is agreed to be authority binding on me (Jacobs) I can only find for the Claimant on the merits of these arguments. But given the fact that this matter may well be the subject of subsequent appeal, it is right that I should set out the respective arguments of the parties.

To do so, I shall approach the matter under the following heads:

It was common ground before me that there may be situations where the level of damages awarded by a court under the applicable laws of states other than the United Kingdom may be higher. I was presented with a report prepared for the European Commission in 2009 which considered levels of compensation. It shows that in most respects the UK is one of the more generous systems, but not the most generous. Unfortunately, the example chosen for comparison in the report was a case where there is a claim after a death in a road accident. That raises potential problems, as the existence of a claim for wrongful death is undoubtedly a matter for the lex loci delicti - see Cox v Ergo Versicherung AG [2014] UKSC 22 [2014] AC 1379.

I was also provided with some details of the level of general damages for pain, suffering, and loss of amenity set out in the Book of Quantum used in the Republic of Ireland, first introduced in 2004 as part of the move to abolish jury trial in personal injury actions. Comparison with the Judicial College equivalent reveals that some suggested figures are higher, and some lower, than their English and Welsh equivalents. It of course relates only to one aspect of damages. As Mr Beard QC pointed out, claims, and especially those for the more serious injuries, may well involve claims for past loss of earnings, continuing and future losses of earnings, the costs of care and so on. There may also be arguments about the deductibility of benefits paid to an injured person in the form of pensions, disability benefits etc etc.

No firm conclusions can be drawn from the material placed before me. The safest course, and one accepted by both parties, is that one is unable to say whether English/Welsh assessments are more or less generous, either generally or in a particular type of case. Both parties agree that in this case the level of compensation assessed according to Greek law would be lower than that assessed according to the law of England and Wales. But in my judgment one cannot approach matters of interpretation of legislation (whether of European Regulations or Directives, or a domestic statutory instrument) on the basis of the facts of one case, or of a comparison between levels of compensation between two particular countries, or of comparisons in one class of case (say compensation for loss of earnings, or compensation for pain suffering and loss of amenity).

I have referred to this topic because one of the criticisms made by Mr Mercer QC of Bloy is that the Court of Appeal relied on an assumption that the levels of compensation awarded in the United Kingdom would be more generous than those awarded in other EU states. The same matter was addressed in Jacobs albeit rather more diffidently.

In Harding v Wealands [2006] UKHL 32 [2007] 2 AC 1 the House of Lords considered the rule in the context of a claim brought in England against an Australian national in respect of injuries sustained in a motor accident in Australia. It affirmed the traditional approach that the assessment of damages was for the lex fori- see Lord Hoffman at [51]-[53].

The United Kingdom is not a signatory to the Hague Convention on the Law Applicable to Road Traffic Accidents 1971, which set some choice of law rules to which I shall refer in due course.

It is to be noted also that the approach in England and Wales was by no means shared by other EU states. Many applied the lex loci delicti to both the issue of liability for the injury, and to the assessment of compensation. When Rome II was undergoing consideration and preparation, the difference between the approaches in various states was noted, but the final version of Rome II reflected the position of the states who apply the lex loci delicti, as I shall refer to in due course.

Between 1972 and 2005 five Motor Insurance Directives were adopted. In October 2009 the Sixth Directive codified those that had preceded it. As Directives (by virtue of Article 288 of the Treaty establishing the European Community as amended by the Lisbon Treaty) they are

“ ……. binding as to the result to be achieved, upon each member State to which it is addressed, but shall leave to the national authorities the choice of form and methods”

The First Directive (1972/166/EC) dealt with the provision of motor insurance which covered drivers for accidents anywhere within what was then the EEC. It also provided for a national body (such as the MIB) to guarantee settlement of claims arising in its own state arising from the use of a car normally based in another state.

The Second Directive (84/5/EC) of 30th December 1983 required each member state to set up or authorise a body to provide compensation to those injured by uninsured or unidentified drivers. The MIB is the guarantee body for the purposes of the UK. Given the terms of the 2003 Regulations, it is necessary to set out parts of Article 1 (Footnote: ¹)

“Article 1

1.

The insurance referred to in Article 3 (1) of Directive 72/166/EEC shall cover compulsorily both damage to property and personal injuries.

2.

Without prejudice to any higher guarantees which Member States may lay down, each Member State shall require that the amounts for which such insurance is compulsory are at least:

……………………………………………………………………… …

3.

…………………………………………………………………………

4.

Each Member State shall set up or authorize a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in paragraph 1 has not been satisfied.

The first sub-paragraph shall be without prejudice to the right of the Member States to regard compensation by that body as subsidiary or non-subsidiary and the right to make provision for the settlement of claims between that body and the person or persons responsible for the accident and other insurers or social security bodies required to compensate the victim in respect of the same accident. ………………………………..

5.

The victim may in any case apply directly to the body which, on the basis of information provided at its request by the victim, shall be obliged to give him a reasoned reply regarding the payment of any compensation.

………………………………………………………………………..

6.

………………………………………………………………………..

7.

Furthermore, each Member State shall apply its laws, regulations and administrative provisions to the payment of compensation by this body, without prejudice to any other practice which is more favourable to the victim.”

Up to now, the Directives did not enable someone injured by an uninsured or unidentified driver to seek compensation anywhere other than the state where the accident had happened. However the Fourth Directive (Directive 2000/26/EC) of 16th May 2000 made substantial changes. One of its main purposes was to enable an EU resident to be able to obtain compensation in respect of injury sustained in a motor accident in another EU state.

Articles 1 and 3 set the scene for the Directive:

“Article 1

Scope

1.

The objective of this Directive is to lay down special provisions applicable to injured parties entitled to compensation in respect of any loss or injury resulting from accidents occurring in a Member State other than the Member State of residence of the injured party which are caused by the use of vehicles insured and normally based in a Member State.

……………………………………………………………………………..

2.

Articles 4 and 6 shall apply only in the case of accidents caused by the use of a vehicle

(a)

insured through an establishment in a Member State other than the State of residence of the injured party, and

(b)

normally based in a Member State other than the State of residence of the injured party.

3.

……………………………………………………………….

Article 3

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.”

By Article 4, each insurer is to identify claims representatives in each member state. Article 5 deals with the establishment of Information Centres. By Articles 6 and 7:

“Article 6

Compensation bodies

1.

Each Member State shall establish or approve a compensation body responsible for providing compensation to injured parties in the cases referred to in Article 1.

Such injured parties may present a claim to the compensation body in their Member State of residence:

(a)

if, within three months of the date when the injured party presented his claim for compensation to the insurance undertaking of the vehicle the use of which caused the accident or to its claims representative, the insurance undertaking or its claims representative has not provided a reasoned reply to the points made in the claim; or

(b)

if the insurance undertaking has failed to appoint a claims representative in the State of residence of the injured party in accordance with Article 4(1). In this case, injured parties may not present a claim to the compensation body if they have presented a claim for compensation directly to the insurance undertaking of the vehicle the use of which caused the accident and if they have received a reasoned reply within three months of presenting the claim.

Injured parties may not however present a claim to the compensation body if they have taken legal action directly against the insurance undertaking.

The compensation body shall take action within two months of the date when the injured party presents a claim for compensation to it but shall terminate its action if the insurance undertaking, or its claims representative, subsequently makes a reasoned reply to the claim.

The compensation body shall immediately inform:

(a)

the insurance undertaking of the vehicle the use of which caused the accident or the claims representative;

(b)

the compensation body in the Member State of the insurance undertaking's establishment which issued the policy;

(c)

if known, the person who caused the accident,

that it has received a claim from the injured party and that it will respond to that claim within two months of the presentation of that claim.

This provision shall be without prejudice to the right of the Member States to regard compensation by that body as subsidiary or non-subsidiary and the right to make provision for the settlement of claims between that body and the person or persons who caused the accident and other insurance undertakings or social security bodies required to compensate the injured party in respect of the same accident. However, Member States may not allow the body to make the payment of compensation subject to any conditions other than those laid down in this Directive, in particular the injured party's establishing in any way that the person liable is unable or refuses to pay.

2.

The compensation body which has compensated the injured party in his Member State of residence shall be entitled to claim reimbursement of the sum paid by way of compensation from the compensation body in the Member State of the insurance undertaking's establishment which issued the policy.

The latter body shall then be subrogated to the injured party in his rights against the person who caused the accident or his insurance undertaking in so far as the compensation body in the Member State of residence of the injured party has provided compensation for the loss or injury suffered. Each Member State is obliged to acknowledge this subrogation as provided for by any other Member State.

3.

This Article shall take effect:

(a)

after an agreement has been concluded between the compensation bodies established or approved by the Member States relating to their functions and obligations and the procedures for reimbursement;

(b)

from the date fixed by the Commission upon its having ascertained in close cooperation with the Member States that such an agreement has been concluded.

The Commission shall report to the European Parliament and the Council on the implementation of this Article and on its effectiveness before 20 July 2005 and shall submit proposals if necessary.

Thus, for an injured person in the Claimant’s position (resident in England and Wales but who had suffered injury in another country at the hands of an uninsured driver) the Directive provided a straightforward and timely route to obtaining compensation within her own country. The 2003 Regulations were passed to implement the Fourth Directive in the United Kingdom. I shall return to their terms in due course.

The travaux préparatoires for the Fourth Directive ( see the proposal dated 10th October 1997 by the European Commission for the Fourth Directive) state that:

As written, the words from the proposal in relation to Article 2 can be read as saying that the choice of law is determined by the rules of private international law applicable in most member states. However the words I have italicised in the proposal relating to Article 3, having started by echoing that approach, are then quite specific that it sets no criteria for determining choice of law. As I shall describe when I come to deal with the travaux préparatoires for Rome II, there was no desire to retain those differences.

A codifying Directive (the Sixth) (2009/103/EC) was made on 16th September 2009. Amongst its recitals are the following:

“(20)

Motor vehicle accident victims should be guaranteed comparable treatment irrespective of where in the Community accidents occur.

(30)

The right to invoke the insurance contract and to claim against the insurance undertaking directly is of great importance for the protection of victims of motor vehicle accidents. In order to facilitate an efficient and speedy settlement of claims and to avoid as far as possible costly legal proceedings, a right of direct action against the insurance undertaking covering the person responsible against civil liability should be provided for victims of any motor vehicle accident.

(34)

Parties injured as a result of a motor vehicle accident falling within the scope of this Directive and occurring in a State other than that of their residence should be entitled to claim in their Member State of residence against a claims representative appointed there by the insurance undertaking of the responsible party. This solution would enable damage suffered by injured parties outside their Member State of residence to be dealt with under procedures which are familiar to them.

(35)

This system of having claims representatives in the injured party’s Member State of residence affects neither the substantive law to be applied in each individual case nor the matter of jurisdiction.

(36)

The existence of a direct right of action for the injured party against the insurance undertaking is a logical supplement to the appointment of such representatives and moreover improves the legal position of parties injured as a result of motor vehicle accidents occurring outside their Member State of residence.

(48)

The role played by the compensation body is that of settling the claim in respect of any loss or injury suffered by the injured party only in cases which are capable of objective determination and therefore the compensation body should limit its activity to verifying that an offer of compensation has been made in accordance with the time limits and procedures laid down, without any assessment of the merits.

The compensation body should have a right of subrogation in so far as it has compensated the injured party. In order to facilitate enforcement of the compensation body’s claim against the insurance undertaking where the latter has failed to appoint a claims representative or is manifestly dilatory in settling a claim, the body providing compensation in the injured party’s State should also enjoy an automatic right of reimbursement with subrogation to the rights of the injured party on the part of the corresponding body in the State where the insurance undertaking is established. This body is the best placed to institute proceedings for recourse against the Insurance undertaking.

Even though Member States may provide that the claim against the compensation body is to be subsidiary, the injured person should not be obliged to present his claim to the person responsible for the accident before presenting it to the compensation body. In such a case the injured party should be in at least the same position as in the case of a claim against the guarantee fund.

This system can be made to function by means of an agreement between the compensation bodies established or approved by the Member States, defining their functions and obligations and the procedures for reimbursement.

Where it is impossible to identify the insurer of a vehicle, it should be provided that the ultimate debtor in respect of the damages to be paid to the injured party is the guarantee fund provided for this purpose situated in the Member State where the uninsured vehicle, the use of which has caused the accident, is normally based. Where it is impossible to identify the vehicle, it should be provided that the ultimate debtor is the guarantee fund provided for this purpose situated in the Member State in which the accident occurred.”

The Articles of the codifying Sixth Directive contain the following:

Article 6 deals with national insurers’ bureaux. Articles 10 and 11 deal with the payment of compensation in cases where the accident was caused by an uninsured or unidentified vehicle. They read, insofar as is relevant

“Article 10

“1.

Each Member State shall set up or authorise a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in Article 3 has not been satisfied.

The first subparagraph shall be without prejudice to the right of the Member States to regard compensation by the body as subsidiary or non-subsidiary and the right to make provision for the settlement of claims between the body and the person or persons responsible for the accident and other insurers or social security bodies required to compensate the victim in respect of the same accident. However, Member States may not allow the body to make the payment of compensation conditional on the victim establishing in any way that the person liable is unable or refuses to pay.

2.

The victim may in any event apply directly to the body which, on the basis of information provided at its request by the victim, shall be obliged to give him a reasoned reply regarding the payment of any compensation.

……………………………………………………………………….

3.

………………………………………………………………………

4.

Each Member State shall apply its laws, regulations and administrative provisions to the payment of compensation by the body, without prejudice to any other practice which is more favourable to the victim.

Article 11

Disputes

In the event of a dispute between the body referred to in Article 10(1) and the civil liability insurer as to which must compensate the victim, the Member States shall take the appropriate measures so that one of those parties is designated to be responsible in the first instance for paying compensation to the victim without delay.

If it is ultimately decided that the other party should have paid all or part of the compensation, that other party shall reimburse accordingly the party which has paid.”

Article 18 gives an injured person a direct right of action against the insurer of the vehicle which caused the accident. Articles 19 ff (Chapter 7) deal with the “settlement of claims” in respect of vehicles which are covered by insurance. Article 22 sets out a procedure whereby insurers are to deal with claims within 3 months of receipt of a claim. Article 24 enables claims to be brought against the compensation body in the state of residence of a claimant in cases where the insurer has not responded under Article 22. It must respond within 2 months. However if the insurer does respond, then the compensation body will terminate its action. By Article 24(2):

“The compensation body which has compensated the injured party in his Member State of residence shall be entitled to claim reimbursement of the sum paid by way of compensation from the compensation body in the Member State in which the insurance undertaking which issued the policy is established.

The latter body shall be subrogated to the injured party in his rights against the person who caused the accident or his insurance undertaking in so far as the compensation body in the Member State of residence of the injured party has provided compensation for the loss or injury suffered.”

Article 25 deals with the case where the vehicle or its insurer cannot be identified within 2 months of the date of the accident:

On 29th April 2002, and in pursuit of Article 10 of the Fourth Motor Insurance Directive, the Compensation Bodies of the various states (the MIB and its equivalents) entered into an agreement. In the case of claims under Article 7 of the Fourth Directive (i.e. where a compensation body of the victim’s member state pays compensation when the vehicle cannot be identified, or no insurer can be identified within 2 months of the accident) the Compensation Body must inform the relevant Guarantee Fund (Clause 7.1). It then continues:

“ 7.2 When it makes a compensation payment to an injured party, the Compensation Body shall………apply, in evaluating liability and assessing compensation, the law of the country in which the accident occurred………”

By Clause 8, reimbursement is due to the Compensation Body from the relevant Guarantee Fund as follows:

“8.1

to the exclusion of everything else, the following:

8.1.1

the amount paid in compensation to the injured party or his/her beneficiaries; specifying the amounts paid as material damage and as bodily injury;

8.1.2

“[Fees such as those of lawyers and experts]”

8.1.3

……………………………………

8.2

the amount to be reimbursed may only be disputed by the final paying Guarantee Fund if the Compensation Body has ignored objective material information given to it or has not observed the rules of applicable law.”

The Explanatory Note to the Regulations, while of course not definitive, gives a concise and useful guide:

“These Regulations give effect to Articles 5, 6 and 7 of the Fourth Motor Insurance Directive.

In order to assist persons to seek compensation in respect of motor vehicle accidents occurring in an EEA State other than their State of residence, regulation 3 establishes the MIIC as the information centre. That body shall establish a means of access to specified information, so as to allow its dissemination to injured parties in certain circumstances. Further provisions provide that in appropriate cases the information centre is obliged to seek similar information from organisations with like functions established in other EEA States.

Regulation 4 describes the specified information. This includes, in the case of motor vehicles normally based in the United Kingdom, the name and address of the insurer and the number of the insurance policy in respect of any identified vehicle.

Regulation 5 …………………………………………………………..

Regulation 7 …………………………………………………………..

Regulation 9 empowers an injured party resident in an EEA State to require the information centre to supply him with insurance details in respect of vehicles normally based in a Member State or EEA State where:

(i)

the accident occurs in the United Kingdom; or

(ii)

where the vehicle is usually based in the United Kingdom and the accident occurs in the EEA or a state subscribing to the Green Card Scheme; or

(iii)

where the injured party resides in the United Kingdom and the accident occurs in an EEA State or a state subscribing to the Green Card Scheme.

The right of a person resident in the United Kingdom to obtain this information in respect of an accident occurring within the United Kingdom is therefore provided for, although it is not required pursuant to the Fourth Motor Insurance Directive.

Regulation 10 approves the Motor Insurers' Bureau as the compensation body for the United Kingdom.

Regulation 11 provides that in certain circumstances a person resident in the United Kingdom may claim compensation from the compensation body. The right to claim arises in respect of loss or injury resulting from an accident caused by the use of a motor vehicle in a public place. The accident must have occurred in an EEA State other than the United Kingdom, or in a country subscribing to the Green Card Scheme. The vehicle the use of which caused the damage must normally be based and insured, in an EEA State other than the United Kingdom. The claimant must have sought compensation from the liable insurer or his claims representative. That insurer must have failed to make a reasoned reply within three months. Further rules apply if no claims representative has been appointed. The claimant must not have commenced legal proceedings against the insurer.

Regulation 12 provides that in the circumstances described in regulation 11, and subject to certain provisos, if the injured party proves to the compensation body that the insured person is liable to him, then to the extent that he can prove loss and damage the compensation body must compensate him.

Regulation 13 provides that in certain circumstances a person who resides in the United Kingdom may be able to claim compensation from the compensation body where either the vehicle the use of which caused the damage, or the requisite insurer, cannot be identified. The accident must have occurred in an EEA State other than the United Kingdom, or in a country subscribing to the Green Card Scheme. The vehicle must normally be based in, and insured in, an EEA State other than the United Kingdom.

Regulations 14 and 15 set out circumstances in which the compensation body or the Motor Insurers' Bureau must indemnify a foreign compensation body.”

Turning to the Regulations themselves, it is only necessary for the purposes of this judgement to set out Regulations 10 - 13 and 16:

“Compensation body for the United Kingdom

10.

MIB is approved as the compensation body for the United Kingdom for the purposes of the fourth motor insurance directive.

Entitlement to compensation where the insurer is identified

11.

(1) This regulation and regulation 12 apply in a case where—

(a)

an injured party is resident in the United Kingdom,

(b)

that person claims to be entitled to compensation in respect of an accident occurring in an EEA State other than the United Kingdom or in a subscribing state, and

(c)

the loss or injury to which the claim relates has been caused by or arises out of the use of a vehicle which is—

(i)

normally based in an EEA State other than the United Kingdom, and

(ii)

insured though an establishment in an EEA State other than the United Kingdom.

(2)

Where this regulation applies, the injured party may make a claim for compensation from the compensation body if—

(a)

he has not commenced legal proceedings against the insurer of the vehicle the use of which caused the accident, and

(b)

either of the conditions set out in paragraph (3) is fulfilled.

(3)

The conditions are—

(a)

that the injured party has claimed compensation from the insurer of the vehicle or the insurer’s claims representative and neither the insurer nor the claims representative has provided a reasoned reply to the claim within the period of three months after the date it was made;

(b)

that the insurer has failed to appoint a claims representative in the United Kingdom, and the injured party has not claimed compensation directly from that insurer.

Response from the compensation body

12.

(1) Upon receipt of a claim for compensation under regulation 11, the compensation body shall immediately notify—

(a)

the insurer of the vehicle the use of which is alleged to have caused the accident, or that insurer’s claims representative;

(b)

the foreign compensation body in the EEA State in which that insurer’s establishment is situated; and

(c)

if known, the person who is alleged to have caused the accident, that it has received a claim from the injured party and that it will respond to that claim within two months from the date on which the claim was received.

(2)

The compensation body shall respond to a claim for compensation within two months of receiving the claim.

(3)

If the injured party satisfies the compensation body as to the matters specified in paragraph (4), the compensation body shall indemnify the injured party in respect of the loss and damage described in paragraph (4)(b).

(4)

The matters referred to in paragraph (3) are—

(a)

that a person whose liability for the use of the vehicle is insured by the insurer referred to in regulation 11(1)(c) is liable to the injured party in respect of the accident which is the subject of the claim, and

(b)

the amount of loss and damage (including interest) that is properly recoverable in consequence of that accident by the injured party from that person under the laws applying in that part of the United Kingdom in which the injured party resided at the date of the accident.

(5)

The compensation body shall cease forthwith to act in respect of a claim as soon as it becomes aware that—

(a)

the insurer referred to in regulation 11(1)(c), or the claims representative of that insurer, has made a reasoned response to the claim, or

(b)

the injured party has commenced legal proceedings against the insurer.

Entitlement to compensation where vehicle or insurer is not identified

13.

(1) This regulation applies where—

(a)

an accident, caused by or arising out of the use of a vehicle which is normally based in an EEA State, occurs on the territory of—

(i)

an EEA State other than the United Kingdom, or

(ii)

a subscribing State,

and an injured party resides in the United Kingdom,

(b)

that injured party has made a request for information under regulation 9(2) , and

(c)

it has proved impossible—

(i)

to identify the vehicle the use of which is alleged to have been responsible for the accident, or

(ii)

within a period of two months after the date of the request, to identify an insurance undertaking which insures the use of the vehicle.

(2)

Where this regulation applies—

(a)

the injured party may make a claim for compensation from the compensation body, and

(b)

the compensation body shall compensate the injured party in accordance with the provisions of Article 1 of the second motor insurance directive as if it were the body authorised under paragraph 4 of that Article and the accident had occurred in Great Britain.

Civil Liability

16.

Any sum due and owing pursuant to these Regulations shall be recoverable as a civil debt.”

While it was held in Jacobs that Regulation 13(2)(b) is not a choice of law provision, it will be observed that the effect of it is to overcome any arguments about which law applies to the claim. I shall deal with the application and interpretation of the Regulations more generally at a later stage. I shall also in due course consider the effect of Rome II (if any) on the application and interpretation of the Regulations.

This was enacted as a Regulation within the meaning of the Article 288 of the Treaty establishing the European Community as amended by the Lisbon Treaty. It follows that it is

“…..binding in its entirety and directly applicable in all Member States.”

As a result of its status as a Regulation, Member States, unless otherwise expressly provided, are precluded from taking steps for the purposes of applying the regulation , which are intended to alter its scope or supplement its provisions: see C-40/69 Hauptzollamt Hamburg-Oberelbe v Bolmann [1970] ECR 69 at [4].

I shall start by citing the relevant Articles. I shall then refer to the Recitals, and then to the travaux préparatoires, which cast some light on the intended application and interpretation.

“CHAPTER I

SCOPE

Article 1

Scope

1.

This Regulation shall apply, in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters. It shall not apply, in particular, to revenue, customs or administrative matters or to the liability of the State for acts and omissions in the exercise of State authority (acta iure imperii).

2.

The following shall be excluded from the scope of this Regulation:

(a)-(g) …………………….

3.

This Regulation shall not apply to evidence and procedure, without prejudice to Articles 21 and 22.

4.

………………………………….

Article 2

Non-contractual obligations

1.

For the purposes of this Regulation, damage shall cover any consequence arising out of tort/delict, unjust enrichment, negotiorum gestio or culpa in contrahendo.

2.

This Regulation shall apply also to non-contractual obligations that are likely to arise.

3.

Any reference in this Regulation to:

(a)

an event giving rise to damage shall include events giving rise to damage that are likely to occur; and

(b)

damage shall include damage that is likely to occur.

Article 3

Universal application

Any law specified by this Regulation shall be applied whether or not it is the law of a Member State.

CHAPTER II

TORTS/DELICTS

Article 4

General rule

1.

Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be 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.

2.

However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.

3.

Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.

CHAPTER V

COMMON RULES

Article 15

Scope of the law applicable

The law applicable to non-contractual obligations under this Regulation shall govern in particular:

(a)

the basis and extent of liability, including the determination of persons who may be held liable for acts performed by them;

(b)

………………………………………………………………..

(c)

the existence, the nature and the assessment of damage or the remedy claimed;

(d)

within the limits of powers conferred on the court by its procedural law, the measures which a court may take to prevent or terminate injury or damage or to ensure the provision of compensation;

(e)

……………………………………………………………………

(f)

persons entitled to compensation for damage sustained personally;

(g)

…………………………………………………………………..

(h)

the manner in which an obligation may be extinguished and rules of prescription and limitation, including rules relating to the commencement, interruption and suspension of a period of prescription or limitation.

Article 16

Overriding mandatory provisions

Nothing in this Regulation shall restrict the application of the provisions of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the non-contractual obligation.

Article 17

Rules of safety and conduct

In assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.

Article 18

Direct action against the insurer of the person liable

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.”

There can be no doubt that Article 4 prescribes that in claims in tort for personal injury, the lex loci delicti (or strictly, the lex loci damni, beingthe laws of the state where the damage has been inflicted) applies to issues of both liability and damages, unless one of the exceptions in Articles 4.2 or 4.3 apply. That was common ground before me, and accords with the decision in the Court of Appeal in Wall v Mutuelle de Poitiers Assurances [2014] EWCA Civ 138. A distinction must be drawn between the choice of law which informs the assessment of damages (now Article 4) and the rules on evidence and procedure which will apply at the trial- see Longmore LJ at [16-20], Jackson LJ at [34-46 ], Christopher Clarke LJ at [47-53].

It is instructive to refer also to the Recitals (as Jackson LJ did in Wall - see [37]):

“(1)

The Community has set itself the objective of maintaining and developing an area of freedom, security and justice. For the progressive establishment of such an area, the Community is to adopt measures relating to judicial cooperation in civil matters with a cross-border impact to the extent necessary for the proper functioning of the internal market.

(2)

According to Article 65(b) of the Treaty, these measures are to include those promoting the compatibility of the rules applicable in the Member States concerning the conflict of laws and of jurisdiction.

(3)

The European Council meeting in Tampere on 15 and 16 October 1999 endorsed the principle of mutual recognition of judgments and other decisions of judicial authorities as the cornerstone of judicial cooperation in civil matters and invited the Council and the Commission to adopt a programme of measures to implement the principle of mutual recognition.

(4)

On 30 November 2000, the Council adopted a joint Commission and Council programme of measures for implementation of the principle of mutual recognition of decisions in civil and commercial matters (3).The programme identifies measures relating to the harmonisation of conflict-of-law rules as those facilitating the mutual recognition of judgments.

(5)

………………………………………………………………………..

(6)

The proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought.

(7)

………………………………………………………………………

(8)

This Regulation should apply irrespective of the nature of the court or tribunal seised.

(9)

………………………………………………………………………

(10)

……………………………………………………………….

(11)

The concept of a non-contractual obligation varies from one Member State to another. Therefore for the purposes of this Regulation non-contractual obligation should be understood as an autonomous concept. The conflict-of-law rules set out in this Regulation should also cover non-contractual obligations arising out of strict liability.

(12)

The law applicable should also govern the question of the capacity to incur liability in tort/delict.

(13)

Uniform rules applied irrespective of the law they designate may avert the risk of distortions of competition between Community litigants.

(14)

The requirement of legal certainty and the need to do justice in individual cases are essential elements of an area of justice. This Regulation provides for the connecting factors which are the most appropriate to achieve these objectives. Therefore, this Regulation provides for a general rule but also for specific rules and, in certain provisions, for an ‘escape clause’ which allows a departure from these rules where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country. This set of rules thus creates a flexible framework of conflict-of-law rules. Equally, it enables the court seised to treat individual cases in an appropriate manner.

(15)

The principle of the lex loci delicti commissi is the basic solution for non-contractual obligations in virtually all the Member States, but the practical application of the principle where the component factors of the case are spread over several countries varies. This situation engenders uncertainty as to the law applicable.

(16)

Uniform rules should enhance the foreseeability of court decisions and ensure a reasonable balance between the interests of the person claimed to be liable and the person who has sustained damage. A connection with the country where the direct damage occurred (lex loci damni) strikes a fair balance between the interests of the person claimed to be liable and the person sustaining the damage, and also reflects the modern approach to civil liability and the development of systems of strict liability.

(17)

The law applicable should be determined on the basis of where the damage occurs, regardless of the country or countries in which the indirect consequences could occur. Accordingly, in cases of personal injury or damage to property, the country in which the damage occurs should be the country where the injury was sustained or the property was damaged respectively.

(18)

The general rule in this Regulation should be the lex loci damni provided for in Article 4(1). Article 4(2) should be seen as an exception to this general principle, creating a special connection where the parties have their habitual residence in the same country. Article 4(3) should be understood as an ‘escape clause’ from Article 4(1) and (2), where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country.

(19)-(32) …………………………………………………………………

(33)

According to the current national rules on compensation awarded to victims of road traffic accidents, when quantifying damages for personal injury in cases in which the accident takes place in a State other than that of the habitual residence of the victim, the court seised should take into account all the relevant actual circumstances of the specific victim, including in particular the actual losses and costs of after-care and medical attention.

(34)-(40) …………………………………………………………….”

Lest there be any doubt about the intention to harmonise the rules applying in the various states, and to do away with the rule hitherto applying in the different UK jurisdictions, one observes the terms of Recitals 15-17. But it is instructive to note also what happened during the gestation of that Regulation. In the proposal of the Commission of 22nd July 2003, it was concerned by the differences which existed between the Member States on rules relating to conflicts of laws, which it considered had adverse effects economically. Its aim was to replace the existing 15 sets of Rules with “a single set of uniform rules” which would “represent considerable progress for economic operators and the general public in terms of certainty as to the law”- paragraph 1.2. It called for the harmonisation of the rules on conflict of laws – see paragraph 2.2.

It elected to use the Regulation method because:

“it lays down uniform rules for the applicable law. These rules are detailed, precise and unconditional and require no measures by the member States for their transposal” (sic) “into national law………The nature of these rules is the objective set for them, which is to enhance certainty in the law and the foreseeability of the solutions adopted as regards the law applicable to a given legal relationship. If the Member States had room for manoeuvre in transposing these rules, uncertainty would be reintroduced into the law, and that is precisely what harmonisation is supposed to abolish. The Regulation is therefore the instrument that must be chosen to guarantee uniform application in the Member States.” (My italics)

In the paragraphs relating to what became Article 4, the Commission set out its very firm view that there should be one location, and one only, taken for the point at which the direct damage arose or was likely to arise, being the place where the harmful event occurred. That would thus equate the lex loci damni with the lex loci delicti in a motor accident case. It also contended that the solution in Article 4.1 “meets the concern for certainty in the law,” and argued that the rules reflected a reasonable balance between the various interests at stake. It did not favour the principle of favouring the victim as a basic rule, which would give the victim the option of choosing the law most favourable to him. That was considered to reintroduce uncertainty in the law. It regarded the exception in what is Article 4.3 as one which should be treated as truly exceptional, and emphasised that Articles 4.1 and 4.2 were drafted in the form of rules and not presumptions.

The European Parliament considered the proposal in a report (A-0211/2005) of 27th June 2005). It proposed at a plenary session on 6th July 2005 that what is now Article 4 (then Article 3) should be amended in various ways, including

In its justification for the proposed amendment, it was argued that the effect of the Fourth and Fifth Motor Insurance Directives enabled a victim to bring an action in his/her own country against the other party’s insurer, and that it would be more equitable to apply the law of the victim’s state of habitual residence. It referred also to the fact that it was important to have regard not only to differences in levels of compensation, but also to the heads of damage recoverable, such as the entitlements to damages for pain and suffering, nursing and attendance allowances and certain pensions.

The Commission rejected the proposed amendments, save for that relating to the location of the damage. It objected to having different rules for traffic accidents, and stated that it would cause a sharp divergence from the law in force in the Member States. The Council endorsed that approach on 25th September 2006.

In Jacobs a UK residentwas in Spain when he was struck by a car driven by a German in December 2007. No insurer was identified. The claimant issued proceedings under Regulation 13 of the 2003 Regulations. A preliminary issue was ordered as to whether the assessment of compensation should follow Spanish or UK law. The case was conducted in the belief that Rome II was in force at the relevant date (as noted above at paragraph 9 above, the CJEU subsequently held that it was not then in force). At first instance, the Claimant argued that Rome II did not apply, because this was not a situation where there was a conflict of laws. It was argued that once the pre-conditions in Regulation 13 of the 2003 Regulations were met, there was a free standing obligation to pay compensation, as if the accident had happened in Great Britain. It was also argued that the damage had occurred in Great Britain. It was held by Owen J ([2010] EWHC 231 [2011] 1 All ER (Comm) 128) that:

There was an appeal to the Court of Appeal (Laws, Moore-Bick and Rimer LJJ). Moore-Bick LJ gave the first judgment, with which the other Lords Justices agreed. After setting out the nature of the Directives he referred to the parties’ arguments. Both parties are said [38] to have agreed that Regulation 13 did not involve a choice of law, although Mr Mercer QC submitted to me that the MIB had not in fact made such a concession. The Defendant argued that before the Claimant could be compensated, it had to be established that the claimant was entitled to receive any compensation at all, and that since the accident had occurred in Spain, Article 4 applied, and that in the absence of either 4.2 or 4.3 applying, Article 4 required that the issue had to be decided in accordance with the law of Spain, where the accident had occurred.

It is necessary to set out some parts of the judgment in detail. Moore-Bick LJ addressed the scheme of the Fourth Directive at [21- 23], where he concluded that the right to compensation arose from the Regulations themselves:

“The scheme of the Directive

21

The scheme of the compensation arrangements established by the Fourth Directive appears clearly from Articles 6 and 7, to which I have already referred. In essence, the compensation bodies are intended to provide a safety net which will be called upon only in rare cases where the tortfeasor is unidentified or uninsured or where for some reason the insurer fails to respond to a claim within the prescribed time. Even then, however, the compensation bodies do not ultimately bear the burden of the claim, because the body that has paid compensation to an injured party has the right to obtain reimbursement from the corresponding body in the state where the insurer is established (that body in turn being subrogated to the driver's rights against the insurer) or has a claim against one of the guarantee funds: see Articles 6(2) and 7. The scheme appears to proceed on the assumption that the existence of the driver's liability and the determination of the amount of compensation payable to the injured party will be governed by the same principles at all stages of the process, but the Directive does not go so far as to provide that such questions are to be determined by reference to the law of the country in which the accident occurred.

22

When the Directive was published in May 2000 Rome II had not been introduced and complete harmony between the conflicts of laws rules applied in the Member States was lacking. It appears that under the law of some states all questions relating to liability and damages were determined in accordance with the law of the country in which the accident occurred, whereas in others different principles applied. In England, for example, issues of liability and heads of recoverable damage were normally determined by reference to the law of the place where the accident occurred, but the assessment of damages was determined by English law as the lex fori, as subsequently confirmed by the decision of the House of Lords in Harding v Wealands [2006] UKHL 32, [2007] 2 AC 1. The position was the same in Scotland. The Directive did not address that difficulty, which may explain why the parties to the Agreement considered it necessary to do so in express terms: see clauses 3.4 and 7.2. However, the fact remains that at the time the Regulations were made there was no universal rule of law governing the question and the Regulations themselves are silent on the point.

23

Mr. Layton submitted that the right of an injured person to make a claim against the compensation body derives from the 2003 Regulations themselves. That, in my view, is correct. The Fourth Directive obliges Member States to put in place legislation to achieve the effects for which it provides. In the absence of the 2003 Regulations there would be no compensation body and no right for an injured person to recover compensation from it. It is for Member States to decide how to achieve that end and they are entitled, if they wish, to put in place legislation that goes beyond the minimum requirements, provided its effect does not conflict with the object of the Directive. When interpreting the Regulations, however, it must be borne in mind that the scheme established by the Fourth Directive provides that liabilities imposed on the compensation body in the state where the injured person resides will be passed back, usually to the driver's insurer by way of the compensation body in the state where the insurer is established, but in the case of an uninsured or unidentified vehicle to the relevant guarantee fund. The guarantee fund might have a right of recourse against the driver himself (in the case of an uninsured driver) under local law. The central concept behind the scheme, therefore, is to provide the claimant with easy access to a defendant in his own country while ensuring that the liability ultimately comes to rest with the person or body with whom it ought to reside. Moreover, the scheme does not detract from the claimant's rights against the driver himself or against the driver's insurer. An interpretation of the Regulations which allowed a claimant to recover from the compensation body in his own country more than he could have recovered from the driver's insurer or the driver himself might therefore be regarded as anomalous.”

He then addressed Regulations 11 and 12, which deal with the case of the identified driver with an identified insurer. He said this at [24-25]:

“Regulation 12 – the assessment of compensation

24

Since the paradigm case with which the Regulations deal is that in which the driver of the vehicle involved in the accident is capable of being identified and is insured, it is helpful to begin by considering regulations 11 and 12. Regulations 11 and 12 oblige the MIB to indemnify an injured person who lives in England if he can satisfy it that the insured driver is liable to him in respect of the accident: regulation 12(4)(a). If he can do that, the MIB must indemnify him in respect of "the amount of loss and damage (including interest) that is properly recoverable . . . by the injured party from that person under the laws applying in [England]": regulation 12(4)(b). Since the accident must have taken place abroad, the need to demonstrate liability on the part of the driver clearly requires the court to consider what law governs that issue. In most cases Article 4(1) of Rome II will apply and the issue will be determined by reference to the law of the country in which the accident occurred.

25

It is less easy, however, to identify the law which governs the assessment of damages because of the reference in regulation 12(4)(b) to the laws applying in England. If that had not been included, so that the paragraph referred simply to the amount of loss and damage properly recoverable by the injured party from the person liable, the position would have been straightforward. Whatever the position in 2003, Article 4 of Rome II would now apply and the issue would normally have to be determined by reference to the law of the country where the accident occurred. On the face of it, however, the inclusion of the reference to the laws applying in England and Wales obliges the MIB to pay compensation assessed in accordance with English law.”

It will be noted that Moore-Bick LJ has therefore recognised the effect of Article 4 of Rome II, but has relied on the terms of the 2003 Regulations to say that the obligation on the MIB to compensate in accordance with English law remains. At [27] he rejected the argument that the reference to the laws applying in England was a reference to English rules on conflict of laws. He went on to say:

“27

………..At the time when the Regulations were made English conflicts of laws rules would not have referred the issue of the assessment of damages to the law of the country where the accident occurred; on the contrary, they would normally have been assessed by reference to the lex fori. If the draftsman had wished to provide that recoverable loss and damage was to be assessed in accordance with the law of the country where the accident occurred, he could easily have said so. In fact, however, he used words which broadly reflect what was then generally understood to be the position in English law. The reference to "the laws applying in that part of the United Kingdom in which the injured party resided at the date of the accident" clearly recognises that different principles may apply to determine the amount of loss and damage properly recoverable by the injured party, depending on whether he resided in England and Wales, Scotland or Northern Ireland.”

He then addressed the argument of the Defendant MIB that the logic of the Fourth Directive scheme called for loss and damage to be calculated under Regulation 12 by reference to the lex loci delicti. He said at [29-30]:

He then turned to Regulation 13:

“Regulation 13 – the assessment of compensation

31

Regulation 13(1) defines the circumstances in which a right to compensation arises, but it says nothing about how compensation is to be assessed. Regulation 12 provides an important part of the context in which Regulation 13 is to be construed, however, since one would expect the amount of compensation that can be recovered by the victim of an unidentified or uninsured driver to be neither more nor less generous that that available to the victim of an insured driver. Indeed, in Evans v Secretary of State for the Environment, Transport and the Regions & Motor Insurers' Bureau (Case C- 63/01) [2003] ECR I-14447 the European Court held that the legislature's intention was to entitle victims of damage or injury caused by unidentified or insufficiently insured vehicles to protection equivalent to, and as effective as, that available to persons injured by identified and insured vehicles. One of the curious features of regulation 13 is that, unlike regulation 12, it does not expressly require the injured person to satisfy the compensation body that the driver is liable to him in respect of his injury. It would be surprising, however, if that were not necessary, not only because the basis of compensation would be fundamentally different in nature, but also because, by introducing a form of no-fault compensation, it would represent a radical departure from the scheme of the Directive which provides for the liability to be borne by one of the guarantee funds. Accordingly, although for reasons given earlier I think Mr. Layton was right in saying that the claim against the MIB arises under the Regulations and to that extent may be said to be free-standing, it does not follow that the right to recover compensation is wholly independent of the existence of liability on the part of the driver said to have caused the accident. That depends on the correct interpretation of regulation 13. Nor, however, does it necessarily follow that if the right to claim compensation depends on the existence of liability on the part of the driver responsible for the accident the measure of compensation must equate to what could be recovered from him. Again, that depends on the correct interpretation of regulation 13.

32

In my view the answer to this particular question lies in the words "shall compensate the injured party in accordance with the provisions of Article 1 of the [Second Directive]". Article 1(4) of that Directive obliges each Member State to set up a body to provide compensation for damage to property or personal injuries caused by unidentified or uninsured vehicles. I think it is reasonably clear from the recitals to the Directive that its purpose was to assimilate the position of the victim of an unidentified or uninsured driver or vehicle to that of the victim of an identified and insured driver or vehicle; it is not its purpose to require the establishment of a system of no-fault compensation. It is, therefore, implicit in the scheme of the Directive that the victim must be able to establish that the driver is liable to him in respect of his injuries, but whether that requires proof of fault will depend on the law of the country in which the accident occurred. The reference in regulation 13(1)(c)(ii) to an insurance undertaking which insures the use of the vehicle assumes the existence of a liability on the part of the driver which ought to be, but is not, covered by insurance. It follows, in my view, that the obligation imposed on the MIB by regulation 13(2)(b) to compensate the injured party in accordance with the provisions of Article 1 of the Second Directive carries with it the implicit proviso that the injured party must be able to show that the driver is liable to him. As in the case of a claim under regulation 12, that is a question to be determined by reference to the applicable law identified in accordance with the appropriate conflicts of laws rules. At the time the Regulations were made the applicable rules were those of the Private International Law (Miscellaneous Provisions) Act 1995, but since the introduction of Rome II, the rules set out in that Regulation will apply and will normally lead to the application of the law of the country in which the accident occurred.

33

The judge approached the matter on the basis that the claim against the MIB, being based on a non-contractual obligation arising out of a tort, must be governed in all respects by a single system of law. However, it is well established that different systems of law may govern different questions raised by the same claim (see, for example, Macmillan Ltd v Bishopsgate Investment Trust Plc (No. 3) [1996] 1 W.L.R. 387, 418A-B per Aldous L.J.) and under English conflicts of laws rules the assessment of damages gives rise to a separate issue. The difficulty in the present case lies in the words "as if it were the body authorised under paragraph 4 of that Article and the accident had occurred in Great Britain". Mr. Layton submitted that those words oblige the MIB to pay compensation assessed on the basis that the accident had occurred in Great Britain, that is, assessed in accordance with English law, and he also relied on Article1(7) of the Second Directive which provides for each Member State to apply its own laws, regulations and administrative provisions to the payment of compensation by the guarantee fund for which it provides. Mr. O'Brien, on the other hand, submitted that the whole of the expression "as if it were the body authorised under paragraph 4 of that Article and the accident had occurred in Great Britain" simply reflects the fact that the MIB, which acts as the guarantee fund for Great Britain pursuant to Article 1(4) of the Second Directive under the terms of the Untraced Drivers Agreement and the Uninsured Drivers Agreement, has also been designated by the United Kingdom as the compensation body required by the Fourth Directive. Those words were, he said, necessary to impose on the MIB in its capacity as compensation body an obligation of the kind that it already bore as guarantee fund, including a liability in respect of accidents occurring abroad.

34

Sections 143-145 of the Road Traffic Act 1988 apply to the use of a vehicle in Great Britain and the EEA and the Uninsured Drivers Agreement is of corresponding scope. The Untraced Drivers Agreement, however, is limited in its scope to accidents occurring in Great Britain. (Separate arrangements exist for Northern Ireland.) However, not only do the Regulations designate the MIB as the compensation body for the whole of the United Kingdom, they impose on it an obligation relating to accidents occurring abroad. Accordingly, if the Untraced Drivers Agreement were to be retained for this purpose, it was necessary for the Regulations to bring a wider range of cases within its scope. In my view, therefore, Mr O'Brien was right in saying that the somewhat complicated language of regulation 13(2)(b) was designed to achieve that result. It does not necessarily follow, however, that it does not have the effect for which Mr. Layton contended. A legal fiction may have consequences beyond its immediate purpose.

35

The mechanism by which the MIB's obligation to compensate persons injured in accidents occurring abroad involving uninsured or unidentified drivers is established is to treat the accident as having occurred in Great Britain, but in the absence of any provision limiting its scope it is difficult to see why it should not also affect the principles governing the assessment of damages, particularly in the absence at the time of complete harmonisation throughout the EEA of the conflicts of laws rules governing that issue. Nonetheless, the matter is not free from difficulty. As I have already observed, at the time the Regulations were made damages recoverable as a result of an accident occurring in Great Britain would normally have been assessed by reference to the lex fori, yet regulation 13(2)(b) does not make any provision for the application of English or Scots law as such, presumably leaving it to the court seised of any claim to apply its own law.

36

At this point it is necessary to return to the recitals to the Fourth Directive in order to see whether they point to a conclusion different from that which the language of the Regulations suggests. It is apparent from the recitals that although the European Parliament and the Council of Ministers were concerned with equality of treatment between persons injured in road accidents across the EEA, their concern was primarily directed to the ability of injured parties to obtain compensation, not to the amount of that compensation. That concern led to the introduction of a right to make a claim directly against the wrongdoer's insurer (regarded as a logical development of the victim's right to make a claim against a representative of the insurer located in his home state), the establishment of information centres and compensation bodies. The emphasis is very much on access to information, the provision of a convenient claims procedure and the ability to obtain compensation rather than on the amount of that compensation, to which the recitals make no reference beyond recognising that it must not fall below the prescribed minimum in respect of which insurance is required. In my view nothing in the recitals lends any additional support to either party's case.

37

Having regard to the language of regulation 13(2)(b), I am persuaded that Mr. Layton is right and that compensation is to be assessed on the basis that the accident occurred in Great Britain. That has the incidental merit of ensuring that the measure of compensation recoverable under regulation 13 is likely to be broadly the same as that recoverable under regulation 12.

38 The judge considered that regulation 13(2)(b) contained a choice of proper law that was inconsistent with the provisions of Rome II. That led him to consider the doctrine of supremacy as developed in decisions such as Amministrazione delle Finanz dello Stato v Simmenthal S.p.A. (Case 106/77) [1978] E.C.R. 629 and thence to the conclusion that the rules of Rome II must prevail. However, as I have said, the parties agreed that regulation 13(2)(b) is not a choice of law clause, rightly, in my view, because it is concerned with defining the existence and extent of the MIB's obligation as the body appointed to provide compensation for injury suffered in road traffic accidents rather than with determining the liability of the wrongdoer. That being so, Rome II has no application to the assessment of the compensation payable by the MIB under regulation 13 and it is therefore unnecessary to consider the issues relating to the construction of Article 4 that would arise if it did so.

39

For these reasons I would allow the appeal and answer the questions posed by the preliminary issues compendiously by stating that the MIB is obliged to pay compensation to the claimant assessed in accordance with the law of England.”

As recorded above, the Supreme Court had granted the Defendant leave to appeal, but it was not pursued because of a subsequent CJEU decision on the date when Rome II came into force. As I shall set out in due course, Mr Mercer QC, while accepting some parts of Jacobs, makes trenchant criticisms of others.

I turn now to Bloy & Ireson v Motor Insurers' Bureau [2013] EWCA Civ 1543. In that case the two claimants (a mother and her baby son) were injured in Lithuania in September 2007. The infant claimant suffered catastrophic injuries, including brain damage, which will require lifelong care. Rome II was not in force then. The driver was subsequently convicted of driving under the influence of alcohol and careless driving, as well as driving without insurance. In Lithuania there was a limit of € 500,000 in respect of all claims arising out of any one accident. The MIB contended that the compensation payable under the 2003 Regulations should be limited to the maximum payable under Lithuanian law. The Defendants appealed on four grounds. The appeal was heard by the Chancellor (Etherton LJ), Hallett and Sharp LJJ. The Chancellor gave the judgement with which Hallett and Sharp LJJ agreed.

The first ground was that the trial judge (HH Judge Platts in Manchester) had been wrong to apply Jacobs when the issue of a cap of the kind in that case had not been addressed there. The Chancellor said [43] that the trial judge had been right to apply and follow Jacobs and then went on at [44]:

“ It is true that the arguments in the two cases have been presented differently and the MIB accepts that Rome II, which featured prominently in Jacobs, has no application to the present case. The arguments in Jacobs and in the present case, however, are all deployed in respect of the same critical question, that is whether the law applicable to the assessment of compensation under Regulation 13(2)(b) is to be assessed by reference to the law of the part of Great Britain where the injured party resides or the law of the place where the accident took place. The decision in Jacobs was that, subject to establishing the tortious liability of the culpable driver under the applicable law for the tort (in the present case, Lithuanian law, and admitted), Regulation 13(2)(b) is a deeming provision with all the consequences that follow, including that the assessment of compensation is governed entirely by the law of the relevant part of Great Britain: see Jacobs at [35] and the analogous provisions of Regulation 12(4)(b). That precisely answers the preliminary issue in the present case. Moreover, Moore-Bick LJ considered the issue against the background of all the relevant EU legislation and the 2002 Agreement, taking due note of the consequence that the MIB will only be able to obtain limited reimbursement from those Member States guaranteeing a lower level of compensation pursuant to the Motor Insurance Directives.”

Ground 2 concerned an argument on whether the cap on compensation was a rule categorised as lex causae (i.e. lex loci delicti) or lex fori. Given the fact that Rome II now applies to such issues, it is unnecessary to rehearse it. Ground 3 was concerned with what was said by the MIB to be the departure from the principle of comparative treatment. One can pick up the judgment at paragraph 58:

“58

The second European strand relied upon by the MIB is that both the 2002 Agreement and the 2003 Regulations were made pursuant to the provisions of the Fourth Motor Insurance Directive. It is not disputed that the 2002 Agreement was the agreement contemplated in what is now Article 24.3 of the Consolidated Directive (formerly Article 6.3 of the Fourth Motor Insurance Directive). Clause 5 of the 2002 Agreement expressly ties its aims to the obligations imposed by Article 7 of the Fourth Motor Insurance Directive. Mr Randolph also emphasised that clause 11 of the 2002 Agreement provided that the date of entry into force of the 2002 Agreement was to be fixed by the European Commission. The 2003 Regulations were brought into force pursuant to the obligation of the United Kingdom in the Fourth Motor Insurance Directive. Accordingly, it is argued by the MIB, the Motor Insurance Directives, the 2002 Agreement and the Regulations must be read together so as to produce a coherent scheme compliant with European law.

59

I agree with the Judge that MIB's approach is flawed. Mr Randolph is correct to say that the 2002 Agreement was entered into pursuant to the Fourth Motor Insurance Directive and, in particular, was the agreement contemplated by Article 6.3 of that Directive. The parties to it, however, are purely private bodies. They are insurance industry bodies in the different Member States. As I have already said, the MIB itself is a company limited by guarantee, whose membership is made up of insurance companies. The Comité Européen Des Assurances, whose name appears at the head of the 2002 Agreement, is a representative industry body. The 2002 Agreement is, therefore, neither legislation nor an agreement between Member States. It is a purely private agreement between insurance industry bodies. The Motor Insurance Directives have not empowered such bodies or such an agreement to impose on the governments of Member States limitations on the liability of insurers, and hence Member States, where such governments wish to provide for greater compensation for victims of traffic accidents than the minimum amounts specified in the Motor Insurance Directives. Nor did the Fourth Motor Insurance Directive confer on the European Commission any power to dictate the terms of the 2002 Agreement. Furthermore, as Mr Alexander Layton QC, for the claimants, cogently observed, the 2002 Agreement post-dated the Fourth Motor Insurance Directive and cannot determine its meaning.

60

Mr Randolph submitted that the Member States do not have a completely free hand in the light of, for example, the European legal principle of effectiveness. I do not see, however, how that principle can have any relevance to the facts of the present case or Jacobs.

61

Furthermore, if the MIB is correct in its submission that Regulation 13(2)(b) imports English conflict of laws principles, it must follow, if the limitation on the amount of compensation recoverable under Lithuanian law is properly characterised as procedural, that the 2002 Agreement cannot have had the effect for which the MIB contends.

62

In contrast to the 2002 Agreement, the 2003 Regulations represent the will and intention of Parliament. For the reasons I have given, Regulation 13(2) (b) has the meaning determined in Jacobs. Even if Jacobs is, contrary to my view, not binding in the present case, I would come to the same conclusion as the Court of Appeal in that case. Giving the words in Regulation 13(2) (b) their natural meaning, it clearly provides for compensation to be assessed in accordance with English law (or the law of Scotland or Northern Ireland as the case may be). That is consistent with Regulation 12. Regulation 12 provides the clearest possible indication that Parliament did not intend to limit compensation in the way stipulated in the 2002 Agreement. The wording of Regulation 13(2)(b) is different from Regulation 12(4)(b) but, as Moore-Bick LJ observed in Jacobs (at [34]), that is because its purpose was to bring a wider range of cases within the scope of the Untraced Drivers Agreement, which is limited to accidents in Great Britain.

63

Mr Randolph accepted that there was nothing in the Motor Insurance Directives preceding the 2003 Regulations which required Member States, in a case such as the present or in Jacobs, to limit the compensation payable to the injured party to the amount which could have been recovered by a victim from the guarantee fund in the Member State in which the accident took place and the uninsured vehicle was normally kept. In his oral submissions, however, Mr Randolph sought to recast the issue as being whether what are now Articles 24.2 and 25.1 of the Consolidated Directive require the reimbursement of a compensation fund in the position of the MIB in the present case to be a complete reimbursement rather than a partial one. On the other hand, he also acknowledged that the Motor Insurance Directives do not expressly address the present issue. I understood his contention to be, at least at one point in his submissions, that it was left to the agreement contemplated in Article 24.3 of the Consolidated Directive to determine the reimbursement arrangements.

64 What is perfectly clear is that the Motor Insurance Directives expressly stipulate that Member States can provide for their residents payment of more compensation than the specified minimum amounts. Regulation 13(2)(b) of the 2003 Regulations represents, therefore, a perfectly coherent policy of Parliament to provide residents in the United Kingdom, whose losses will accordingly be suffered here, with a more generous level of compensation than would have been recoverable in the foreign Member State where the accident took place and so putting them on a par with the victim of an accident taking place in the United Kingdom itself.

65

Finally, on this aspect, it seems to me that there is at the least, a strong argument that the Fourth Motor Insurance Directive actually did provide for precisely the policy to be found in Regulation 13(2)(b) of the 2003 Regulations. What is now Article 25 of the 2009 Consolidated Directive provides that, where it is impossible to identify the insurance undertaking within two months of the date of the accident, the injured party may apply for compensation from the compensation body in the Member State where he resides and the compensation shall be provided in accordance with the provisions of Articles 9 and 10. What is now Article 10.4 provides that each Member State shall apply its laws, regulations and administrative provisions to the payment of compensation by the compensation body without prejudice to any other practice which is more favourable to the victim. Mr Randolph submitted that Article 10.4 is not relevant to the present case and that it does not address how to deal with a "cap on liability" (as he put it). I am inclined to think, however, that Article 10.4 is, on the contrary, directly in point. This issue was raised by the claimant in Jacobs but Moore-Bick LJ did not address it because he did not need to. Similarly it is not strictly necessary for us to decide it in the present case because of all the other reasons that I have given supporting the claimants' and the Judge's interpretation of Regulation 13(2)(b) on the facts of the present case.”

It is not necessary to deal with the fourth ground, which relates to the refusal of the trial judge to refer the matter to the CJEU.

By agreement between the parties, Mr Mercer QC addressed me first, followed by Mr Beard QC in response.

Mr Mercer’s submissions were wide ranging. Few if any stones within the legislative edifices were left unturned, but that provided the court with a full picture. I hope I do his substantial submissions no injustice by condensing them. His case had two strands:

He argued the following

Mr Beard QC made the following submissions:

In my judgment the starting point is to consider the effect of Regulation 13 of the 2003 Regulations before Rome II came into effect, and then to consider whether Rome II has made any difference.

As noted earlier, and recognised in the travaux préparatoires for the Fourth Motor Insurance Directive, there were different rules on the choice of law for determining the level of compensation. It follows that at the time of the Second and Fourth Directives, a tortfeasor being sued would be required to pay compensation in accordance with the law applied in the court in question. In some Member States that would be the law of the lex loci delicti, and in others the lex fori. Until the Fourth Directive, there was no right in EU law to sue the insurer of a tortfeasor direct, and such an action was not recognised in the law of England and Wales. A foreign tortfeasor from another EU state would in most circumstances not be sued in an English/Welsh court. So the reality was that most, or at the very least significant numbers, of such claims against insured tortfeasors would not involve any dispute on the choice of law for the assessment of compensation. In most cases - i.e. where the accident occurred within the domicile of the tortfeasor - the law would be that applied by the court where the accident occurred.

The Fourth Directive, as is shown by the extracts from its travaux préparatoires cited above, did not seek to achieve uniformity in the application of rules on the choice of law. That being so, it must be taken that the Fourth Directive, in its provisions for passing on claims and for reimbursement, must be assumed to permit claims to be made, and the compensation to be assessed, in one country and then passed to another even though the claimant’s national compensation body would have applied the lex fori and the guarantee body of the lex loci delicti would not have done so. The same approach appears from Article 1 paragraph 7 of the Second Directive.

I therefore consider that there is considerable force in the Defendant’s argument that the words in Regulation 13 “as if it were the body authorised under paragraph 4 of that Article and the accident had occurred in Great Britain” were intended to enable the MIB to fulfil the objective of the Fourth Directive and accept claims which related to accidents in other states, but related to UK citizens.

Further, the terms of Regulation 13 did no more than state what was the accepted UK position as at 2003 - i.e. that compensation would be assessed in a UK court according to the relevant UK law. The fact that the Regulation included the words it did may be seen as a strong supporting argument for the MIB case. After all if any dispute between the claimant and the MIB on a claim under Regulation 13 related to the measure of compensation, one did not need the critical words in Regulation 13 to apply the lex fori. That would have applied anyway as it was a matter (the claim under Regulation 13) which could only be litigated in the UK. If the words were intended to have the effect of applying the lex fori to the assessment of compensation, the words would thus have been surplusage. In my judgment they must have been included to serve some other purpose. However, as was observed in both Jacobs and Bloy it was a consequence of what the Chancellor described as a deeming clause that it had the effect of determining which rule applied on the assessment of compensation.

It is true of course that the MIB had entered into an agreement with a provision which limited reimbursement to that available in the country where the accident occurred, but that private agreement cannot be used to interpret the Directives or the Regulations. It was an agreement which the MIB must be taken to have gone into with its eyes open, knowing what the then approach of the English and Welsh courts was to the assessment of compensation.

As a matter of interpretation, and bound as I am to follow Jacobs and Bloy on the interpretation of the Regulations, I conclude that the effect of Regulations 13 and 16 was to create a cause of action enforceable as a civil debt, in which compensation would be assessed on the basis of the law of England and Wales.

One now comes to Rome II. Whether wrongly described as a steamroller, it has undoubtedly altered the landscape. In the simplest terms, no claimant making a claim against a tortfeasor, or the insurer of a tortfeasor, can now expect that any law will apply other than the law of the state where the damage occurred as determined by Article 4, irrespective of any consequential losses. As recognised in Jacobs in motor accident cases, that will inevitably mean the law of the state where the accident occurred which caused the injuries, unless one of the exceptions in Art 4.2 or 4.3 apply.

It must also be observed that its effect will apply not just to national laws, but also to Directives. When the Second Directive referred to Member States applying their own laws to the payment of compensation, it meant the laws which have force. In the United Kingdom (and elsewhere) that law is now that contained in Article 4 of Rome II. The saving for different approaches to this issue is no longer germane (although of course the saving for other matters may well still be so - see for example the discussion in Wall v Mutuelle de Poitiers SA [2014] EWCA Civ 138 (supra) about case management and the admission of expert evidence).

So, unless one of the exceptions in Articles 4.2 or 4.3 apply, if a UK claimant is injured in a motor accident in Greece by an insured driver, and sues the driver in Greece, or sues the driver’s insurer in the UK direct under the Fourth Directive, the law by which compensation will be calculated will be the law of Greece, as the decision in Wall v Mutuelle de Poitiers SA demonstrates. That is confirmed also by the clear intention of Rome II to achieve uniformity.

Given the effect of the 2003 Regulations, it means that if the Claimant is correct, the only circumstances in which an injured claimant in such a case (absent an exception being made under Article 4.2 or 4.3) is able to ask that compensation be assessed according to UK law is if the driver is uninsured, or if the insurer has been dilatory (and not responded) under Regulation 12.

I have referred to the arguments raised before me about equivalence. On any view, while the principle remains intact, the application of it must have been affected by the enactment of Rome II. Its objective was, and its effect is, that those UK residents injured in another EU state by insured and identified drivers will now always have their damages assessed according to the laws of the country where the accident occurred (save for a case within one of the exceptions in Articles 4.2 and 4.3), whereas if Jacobs is correctly decided those injured by uninsured and unidentified drivers will not.

Mr Beard’s point that there is an important equivalence to be found in the provision of local procedures, conducted by people familiar with the local rules on compensation, is a point of substance. But perhaps some of its force is lost when one considers that since Rome II, a person injured by an insured driver abroad can deal locally with the claim, and indeed issue it here, but must adduce evidence on the relevant law of the country where the accident occurs.

Moore-Bick LJ said that there was nothing in the Motor Insurance Directives requiring equivalence of compensation. But now, if the approach in Jacobs is correct that Rome II does not affect the interpretation and application of Regulation 13, there will also be no equivalence relating to the rules that apply to the making of a claim. There will be equivalence between claimants injured by insured drivers, but not as between all claimants, once one includes those injured by uninsured or unidentified drivers. It means that if the Claimant’s arguments are correct, the victim of the uninsured driver is treated in a different way from the victim of the insured driver, and one which, if the level of compensation thereby obtained is greater is to his or her advantage. Conversely, if it is lower, it will be to his or her disadvantage. The question of whether that advantage or disadvantage is one which is determinative must essentially be a matter of policy. The Recitals and the travaux préparatoires for Rome II can leave one in little doubt that the policy of Rome II was to achieve more uniformity, and to avoid the anomalies generated by the different sets of rules on choice of law, including in particular those arising in motor accident claims. It was a policy objective of the relevant political body with the power to legislate to enact Regulations so as to achieve that end. I do not consider that a court can seek to apply a different policy objective.

The Defendant says, with some force, that given the fundamental change in the landscape, what is required is the interpretation of the 2003 Regulations so that Rome II is given effect. If that argument were accepted, the words in Regulation 13 would not provide a provision in effective conflict with Rome II. The Defendant also has force in its argument that in Jacobs the Court of Appeal has accepted that Rome II Art 4 dictates the choice of law on the issue of liability, but then has not applied it to the issue of compensation.

As I indicated at the outset of this judgment, I am bound by the two Court of Appeal authorities of Jacobs and Bloy. I would not consider that there is force in the Defendant’s case that the Regulations were misinterpreted as they stood. However I am of the view that the effect of Rome II on the correct interpretation required to bring Regulation 13 into conformity with Article 4 gives the Defendant’s arguments that Jacobs was wrongly decided, and that the approach of Owen J at first instance in Jacobs should be endorsed, very considerable force. Whether they are of sufficient force to achieve a different result will be for others to determine.

Given that the only issue remaining between the parties is the assessment of the compensation payable, I am therefore bound to answer the issue question thus: it is to be assessed in accordance with the law of England and Wales.

I could not leave this judgment without paying tribute to the immense amount of assistance I received from all counsel in this matter.

This judgment has been sent out in draft in the usual way. I have adopted some, but not all, of the amendments suggested to me by Counsel in their prompt and helpful submissions.