In this blog post, Spencer Turner considers the recent decision of Andrews J in Hutchinson v Mapfre España Compañia de Seguros Y Reaseguros SA and another  EWHC 178 (QB). The case involved a number of important issues for cross-border practitioners:
- The extent to which the consumer contract provisions of Brussels I (Recast) depend on a defendant’s commercial activities influencing a particular consumer’s decision to contract.
- The so-called “Keefe” question concerning joinder of a foreign insured to a direct claim against its liability insurer.
- And, most significantly, the impact of a ‘territorial scope’ clause in the liability insurance policy on the availability of a direct action under the Odenbreit principles.
The Claimant was a former professional footballer who was on holiday in Ibiza. He visited a nightclub which was run by the Second Defendant, Ice Mountain. The Claimant and his friend had purchased a ticket for general entry to the nightclub after being handed a promotional flyer on the promenade in San Antonio, Ibiza.
Whilst at the nightclub the Claimant suffered life-changing injuries as a result of a fall into a swimming pool. He is now tetraplegic and requires around-the-clock care.
The Claimant brought a claim against the Defendants in England for in excess of £10 million. The claim against Ice Mountain was pleaded in contract, in tort and for breaches of statutory duty under the provisions of the Spanish Consumer Protection Act 1/2007. The claim against Mapfre – Ice Mountain’s civil liability insurer – was brought under Article 76 of the Insurance Contracts Act 50/1980. The Claimant’s case was, as one would expect, that since Spanish law provided the necessary direct right of action against Ice Mountain’s civil liability insurer, the English court could hear his claim pursuant to Article 13 of Brussels I (Recast).
It was common ground between the parties that Spanish law applied to the claim, but the Defendants challenged the jurisdiction of the English court to try the claim. Ice Mountain sought to advance the argument that that the Claimant did not enter the consumer contract as a result of him reading promotional materials in the UK but rather had entered into the contract after being handed the promotional materials in Ibiza. Therefore, it was said, Article 17(1) of Brussels I (Recast) should not be interpreted to apply to the consumer contract entered into by the Claimant outside of the Member State which was his domicile.
In addition, Ice Mountain argued that the Claimant had approached the pool from the VIP area; an area which he was not contractually entitled to use.
Mapfre advanced the argument that, relying on a ‘territorial scope’ clause in the policy, that the policy only covered liability arising from a judgment given by a Spanish court, not an English one.
The Claim Against Ice Mountain – the Consumer Contract
The court dismissed Ice Mountain’s argument on this point. Ice Mountain had been specifically targeting British tourists with an online marketing campaign to encourage them to go to the nightclub. They could not escape the provisions of Recast as a result of the fact that the ticket was ultimately bought in Ibiza. The court considered the CJEU judgment in Emrek v Sabranovic which held that that there was no requirement for there to be a causal link between the direction of a defendant’s commercial activities to the Member State of a claimant’s domicile and the contract that was subsequently concluded, because the introduction of such a requirement would serve to undermine the consumer protection at which these provisions were aimed. Article 17 of Brussels I (Recast) does not expressly require proof of a causal link and no such requirement is implied. Andrew J said that:
‘It [Ice Mountain] cannot escape the consequences of the provisions of Recast Brussels 1 that are aimed at the protection of consumers, by relying on the fortuity that the particular British tourist who was injured on its premises did not buy his ticket as a direct result of those promotional activities on his home territory, but rather as a result of promotional activities aimed at British tourists who happened to be already in Spain.’
Andrew J further dismissed Ice Mountain’s argument that the Claimant was not entitled to enter into the VIP area under the contract as ‘hopeless’. Counsel for Ice Mountain accepted that the pool, where the accident occurred, was an area of the nightclub where anyone with a standard entry ticket had access. The court reached the conclusion, therefore, that is had jurisdiction over the claim in contract against Ice Mountain.
The Claim Against Ice Mountain – the Non-Contractual Claims
The court stayed the non-contractual claims in tort and for breach of statutory duty pending the determination by the CJEU of a preliminary reference made in another case concerning the interpretation and scope of Article 13(3) of Recast. The court held that Article 13(3) would be the only possible basis for jurisdiction over these non-contractual claims (and could form an alternative base for the contractual claim).
Andrew J accepted that there was ‘genuine uncertainty’ as to the interpretation of Article 13(3) of Recast. Given that HHJ Rawlings, sitting as a judge of the High Court in the Birmingham District Registry, had made a reference to the CJEU seeking guidance on (i) whether the jurisdiction to join the assured under Article 13(3) only applies to “a matter relating to insurance” and (ii) if so, what that phrase encompasses, the court decided to stay the non-contractual claims until the CJEU has responded to the reference.
Ice Mountain further sought to argue that there are ongoing criminal proceedings in Spain arising out of the accident which led to the Claimant’s injuries, and because he failed to expressly reserve his right to bring separate civil proceedings, the Public Prosecutor in Spain was obliged to bring civil proceedings on his behalf within the ambit of those criminal proceedings. In short, Ice Mountain sought to advance the position that the Spanish court was seised of any civil claim. Andrew J dismissed this line of argument:
‘If Ice Mountain is right, he will have been deprived of any choice in the matter of where to bring his civil claim merely because, without his knowledge or consent, a doctor in the hospital filed a report which triggered a criminal investigation into the accident, of which he was never told. That is not an attractive proposition, and I would take a great deal of persuasion to accept it. Fortunately, the evidence falls a long way short of supporting that conclusion.’
The Claim Against Mapfre
The crucial point advanced by Mapfre was that there was no indemnity under the policy between the Defendants and therefore the Claimant could not benefit from a direct right of action. Mapfre and Ice Mountain argued that the clause was not an exclusive jurisdiction clause, but rather a risk-limiting clause governing the forum for disputes between an insurer and their insured.
The judge was not attracted to Mapfre’s argument. She found that:
‘If a clause which has that effect can be relied on against a person such as Mr Hutchinson it would drive a coach and horses through the special rules on insurance laid down under Section 3 of Chapter II. It would provide every liability insurer (not just Spanish insurers) with the simplest means of depriving the injured party of the choice of additional jurisdictions conferred upon him by Articles 11 to 13 of Recast Brussels 1. It would be the easiest thing in the world for an insurer, as the economically strongest party, to include a standard term in the policy that he is only liable for claims that have been brought against the policyholder in the courts of the policyholder’s and/or the insurer’s own domicile.’
She went on to conclude that the restriction in the policy could not be relied upon by Mapfre against the Claimant. The approach of the court was to protect the weaker party in accordance with the purpose of the provisions of Brussels I (Recast). The court concluded that it would take jurisdiction over the claim against Mapfre.
Even if that analysis were wrong, on the basis of the expert evidence on Spanish law that was currently before the court, the court found that the Claimant had established a plausible evidential basis for finding that the clause in question was not binding upon him as a third party to the contract, and therefore was ineffective to prevent Mapfre from being directly liable if his claim was otherwise well-founded on the merits. He had therefore established a good arguable case that the jurisdictional gateway under Article 13(2) of Brussels I (Recast) applied.
The court has clearly indicated that it will take a purposive approach to the interpretation of Recast. The court has, once again, favoured the policy goal of providing protection to the weaker party in claims against an insurer over the commercial interest of the insurer. The protection of the weaker party is specifically provided for in the provisions of Brussels I (Recast) and the court has maintained this approach in this decision.
This case is ultimately a demonstration of the difficulty and cost of jurisdictional challenges. The scope of challenges to jurisdiction has narrowed in light of this decision and insurers looking to avoid the jurisdiction of the English courts should ensure they fully understand the merits of such a position before embarking on an expensive challenge.