Keefe v (1) Mapfre Empresas Compañía de Seguros y Reaseguros, S.A. & (2) Hoteles Piñero Canarias SL - DAC Beachcroft

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Keefe v (1) Mapfre Empresas Compañía de Seguros y Reaseguros, S.A. & (2) Hoteles Piñero Canarias SL

Published 24 June 2015

Keefe v (1) Mapfre Empresas Compañía de Seguros y Reaseguros, S.A. & (2) Hoteles Piñero Canarias SL

The facts

Mr Keefe was on holiday in Tenerife in October 2006. He was lying by the Hotel’s pool. A gust of wind caused a parasol to be lifted into the air and, as it returned to earth, the spike of the parasol struck Mr Keefe in the eye, causing loss of vision and brain damage.

The background

Proceedings were commenced in England against Mapfre, the insurers of the Hotel, under the principle in Odenbreit. The Odenbreit principle allows a party injured in a foreign member state of the EU to return to his or her own country and instigate proceedings in their home court against the insurers of the foreign tortfeasor, provided the law of the relevant foreign member state where the damage occurred allows a direct right of action against the insurer of a tortfeasor.

Mapfre’s policy of insurance contained an indemnity limit of €601,012.10 including legal costs. Mapfre filed a defence to the action pleading the indemnity limit. This was the first time that the policy limit became known to Mr Keefe.

It should be observed at this point that this case pre-dates the provisions of Rome II (which amongst other things determines the applicable law in cases such as Mr Keefe’s). Therefore the applicable law for assessing quantum in Mr Keefe's claim falls to be determined in accordance with the provisions of Part III of the Private International Law (Miscellaneous Provisions) Act 1995 (The Act). In considering the Act, the House of Lords in Harding v Wealands [2007] determined that in cases litigated in England, but where the accident was in a foreign jurisdiction, heads of recoverable loss are determined by the substantive law of the foreign jurisdiction. The assessment of those damages, however, is determined in accordance with English principles of assessment.

Therefore, in accordance with Harding, Mr Keefe’s damages will be assessed by reference to English principles. The difference between Spanish and English law when assessing quantum means that the eventual damages figure is likely to be considerably more if assessed in England than in Spain under Spanish law. It was common ground that the eventual size of his claim is likely to exceed the policy limit by a significant margin.

Unsurprisingly, his solicitors issued and served proceedings on the Hotel so as to bring them into the claim in order to make up any shortfall in any damages eventually awarded because of the insurance policy indemnity limit. It was little wonder, therefore, that the Hotel was so keen to avoid the jurisdiction of the English court.

The dispute between Mr Keefe and the Hotel

Within the EU, the rules to determine which Member State's court should hear an action are laid down in Council Regulation (EC) 44/2001 (the Judgments Regulation). As a general principle in matters of tort, a defendant should be sued in its own domicile. There are, however, exceptions to this rule. The Hotel relied on Article 2 of the Judgments Regulation:

Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

Mr Keefe argued that, because Mapfre had already been sued, the relevant parts of Article 11 provided the English court with jurisdiction over the Hotel:

  1. In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured.
  2. If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them.

The Hotel argued that this was not a dispute involving insurance, but a lack of insurance, and so Article 11 was not applicable. If Article 11 was not applicable, then the general principle that a defendant should be sued in its own domicile must apply. The Hotel's argument was founded on the fact that Mr Keefe had sued the Hotel to recover damages over and above the indemnity limit of the policy, and therefore was not in reality a dispute involving insurance. The Hotel also argued that there must be a policy dispute between the Hotel and Mapfre for the provisions of Article 11 to allow Mr Keefe to rely on it to join the Hotel to the English action.

Recital 15 to the Judgments Regulation states "in the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States..." The Hotel also, therefore, had to persuade the English court that there was no risk of an irreconcilable judgment if the Hotel was sued separately in Spain. In support of this argument the Hotel relied on the fact that Mapfre had not contested liability. 

Judgment

The Hotel’s attempt to avoid joinder to the action by disputing the English court’s jurisdiction was unsuccessful before the Master, the High Court, and in the Court of Appeal.

The Court of Appeal held that the Hotel's argument that the claim was for the uninsured excess of the policy (and so was not an 'insurance dispute' and therefore fell outside the scope of Article 11(3)), could not be sustained. The Court of Appeal dismissed this submission primarily because, applying a purposive construction to the Judgments Regulation, it was clear that weaker parties should be given more favourable protection than the general rules of jurisdiction allow for. Further, there was no requirement for there to be a policy dispute between insurer and insured before Mr Keefe could rely on Article 11.

The Court of Appeal also rejected the Hotel's argument that there was no risk of irreconcilable judgments if separate proceedings were issued in Spain against the Hotel. Plainly, there would be such a risk. Although liability was not challenged by Mapfre, the Court of Appeal was concerned that there might be irreconcilable judgments and findings of fact in order to determine the assessment of damages. Accordingly, the English court had jurisdiction over the claim against the Hotel.

DAC Beachcroft represent Mapfre.

Authors

Alastair Homan

Alastair Homan

London - Walbrook

+44 (0)20 7894 6103

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