In Cole and Others v IVI Madrid SL and Zurich Insurance Plc (Unreported) QBD, 24 September 2019, the court decided to refer to the CJEU the question of whether it was a requirement of art. 13(3) that, for an injured person to make a parasitic claim against the insured, the claim against the insured had to involve “a matter relating to insurance”.
The law in this important area has been in a state of flux since the parties to the litigation in Hoteles Pinero Canarias SL v Keefe  EWCA Civ 598 compromised their dispute after the Supreme Court had referred the issue to the CJEU (Case C-491/17) but before the CJEU was able to give a response. The outcome of these proceedings may therefore prove highly significant for cross-border personal injuries practitioners.
IVI Madrid SL was a Spanish company which provided fertility treatment to Alison Cole and Timothy Martin (the First and Second Claimants). Zurich Insurance Plc were IVI Madrid’s liability insurers.
In late 2010 or early 2011, Ms Cole and Mr Martin entered into a contract with IVI Madrid for the provision of fertility treatment at IVI Madrid’s clinic in Madrid. The treatment involved sperm being taken from Mr Martin, that sperm being inserted into an egg from a donor, and then the fertilised egg being inserted into Ms Cole’s womb.
Unfortunately, the sperm in combination with the donor egg was a source of mutation that caused George Martin and Molly Martin (the Third and Fourth Claimants) to be born with cystic fibrosis.
The Claimants brought claims against IVI Madrid: (a) in tort for breach of the duty of care they said IVI Madrid owed them; and (b) in contract.
The Claimants also brought a direct claim against Zurich as the insurer of IVI Madrid. This was on the basis that the level of insurance cover available to IVI Madrid from Zurich may not have been sufficient to cover the value of their claims.
It was common ground between the parties that the claims were governed by Spanish law. It was also common ground that Spanish law allowed a direct claim against Zurich as liability insurer.
However, IVI Madrid applied for an order under CPR Part 11 declaring that the English courts had no jurisdiction to try the claims against it.
The Keefe question: article 13(3)
The parties agreed that the English courts had jurisdiction to hear the direct claims against Zurich. This followed from the extension of article 11(1)(b) of Brussels I (Recast) by article 13(2) (as interpreted by the CJEU in FBTO Schadeverzekeringen NV v Odenbreit (C-463/06)).
What was not agreed was whether article 13(3) allowed the Claimants to sue IVI Madrid in England as a claim “parasitic” upon the direct claim which the Claimants had brought against the Zurich under article 13(2). It will be recalled that article 13(3) says this:
“if the law governing such direct actions provides that the policy holder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them.”
The Claimants’ argument was straightforward. They relied on the binding authority of Hoteles Pinero Canarias SL v Keefe  EWCA Civ 598, which held that a parasitic claim was permissible regardless of whether the claim against the insured could be regarded as involving a matter relating to insurance. It was also pointed out that Keefe had recently been followed in Lackey v Mallorca Mega Resorts and Anor  EWHC 1028 (QB) (a decision of Master Davison, considered here).
IVI Madrid disagreed. They argued that the court should not follow Keefe for three reasons:
- The Supreme Court gave permission to the insured in Keefe to appeal against the Court of Appeal decision and the Supreme Court decided to refer the article 13(3) question to the CJEU, before proceeding to consider the appeal itself.
- The claim was settled before the CJEU provided its answer. But written submissions produced by the European Commission’s in the meantime supported the view that the injured party’s claim must involve a matter relating to insurance in order for the insured to be joined.
- In Kabeg v MMA IARD (Case C-340/16), Advocate General Bobek expressed the view that the cause of action against a particular defendant must relate to the ascertainment of rights or duties arising out of the insurance relationship in order for Section 3 of Brussels I (Recast) to be engaged. The opinion of Advocate General Bobek was followed by the CJEU (albeit that it did not refer to the question of whether the claim against the insurer had to concern a “matter relating to insurance”). The decision to ignore this development in Lackey was under appeal (and I am informed that permission has now in fact been granted by the High Court).
IVI Madrid therefore invited the court to refer to the CJEU the question of whether it was a requirement of article 13(3) that the injured party’s claim against the insured involved a matter related to insurance.
Referral to CJEU
HHJ Rawlings (sitting as a judge of the High Court in the Birmingham District Registry) said that, if there had been no relevant developments since the Court of Appeal decision in Keefe which called into question the correctness of the Court of Appeal’s decision, then he would have been inclined to conclude that there was no uncertainty as to the proper application of article 13(3) and followed the interpretation of the Court of Appeal. However, the matters relied on by IVI Madrid were relevant developments.
Furthermore, the diverging views of the Court of Appeal and Advocate General Bobek were based on differing conceptions of the policies or purposes behind Section 3 of Brussels I (Recast):
- The Court of Appeal emphasised the need for jurisdictional rules to protect the weaker party in matters relating to insurance (recital 13) and to minimise the chances of irreconcilable judgments being given against insurer and insured (recital 15).
- Advocate General Bobek emphasised the need for predictability in jurisdictional rules subject only to well-defined exceptions which were to be interpreted restrictively (recital 11).
The judge considered that the choice of which of the underlying policies or purposes behind Section 3 took precedence over other policies or purposes was uncertain and a matter on which guidance from the CJEU was necessary, as well as guidance upon the correct interpretation of “a matter relating to insurance”.
The disagreement between the Court of Appeal on the one hand and Advocate General Bobek (and the European Commission) on the other showed that the answers to these questions were not “equally obvious to the courts of the other Member States and to the Court of Justice” (the test described in SRL Cilfit (In Liquidation) and 54 others v Ministry of Health and Lanificio Di Gavardo SPA (Case 283/981)).
This meant that it was appropriate for the question to be referred to the CJEU.
Could the children benefit from the insurance exception?
IVI Madrid also argued that the children could not be regarded as “injured parties” under article 13(2) (so that they were unable to rely on Odenbreit at all) because –
- It was the very act that the Claimants said was a negligent act by IVI Madrid that caused the children to be conceived and without which they would not exist; and
- Under European law, the rights of foetuses were vested in the mother.
There was no expert Spanish law evidence before the court dealing with this issue. The court will usually in these circumstances apply English law (see an earlier blog on this subject here). However, the judge declined to draw any conclusions as to whether such a claim was permissible under either English or Spanish law because the conclusion on jurisdiction ultimately turned on the correct interpretation of article 13(2).
The answer was again not obvious, and so this question was also referred to the CJEU.
Alternatively, could the Claimants rely on the “consumer contract” exception?
The Claimants also argued that they were entitled to rely on the “consumer contract” exception to the normal rule that a defendant must be sued in the Member State in which they are domiciled, set out in articles 17 and 18 of Brussels I (Recast).
This topic is of sufficient interest that it merits its own blog. But, in summary, the judge found that:
- IVI Madrid did direct its activities to the UK and therefore the court had jurisdiction to determine the claims of Ms Cole and Mr Martin under article 18.
- The children did not fall within article 17(1) as “consumers” who concluded a contract with IVI Madrid because they were not parties to any contract with IVI Madrid. They therefore could not bring their claims against IVI Madrid in England under article 18.
This aspect of the decision may have further significance.
- The CJEU generally declines to answer referred questions if they are hypothetical or academic. Given that the English court does have jurisdiction to hear the claims of Ms Cole and Mr Martin against IVI Madrid under article 18, arguably the separate question of whether they can bring a parasitic claim under article 11(3) has become academic.
- The children cannot bring their claims in England under article 18. But the CJEU would only have to answer the so-called Keefe question if it concluded that they were “injured parties” within the meaning of article 11(2) – something that it may well decline to do. It is therefore possible that the current state of flux may continue notwithstanding the referral of these questions.