In Case C‑581/18 RB v TÜV Rheinland LGA Products GmbH, Allianz IARD SA, the CJEU rejected a challenge to a territorial restriction clause in a liability insurance contract brought on the basis that it amounted to discrimination on grounds of nationality contrary to art. 18 TFEU. The ruling may be said to represent a blow to Hutchinson v Mapfre España Compañia de Seguros Y Reaseguros SA and another  EWHC 178 (QB), which we considered separately here. But it seems to me that there are ways to reconcile the two, which are considered below.
A German patient received, in Germany, defective breast implants manufactured by Poly Implant Prothèse SA (‘PIP’), a French undertaking that had become insolvent. She sought compensation before the German courts from Allianz IARD SA, the French insurer of PIP.
PIP had concluded an insurance contract with Allianz, which contained a territorial clause limiting the cover to damage caused on French territory only. Thus, PIP medical devices that were exported to another Member State and used there were not covered by the insurance contract.
A reference was made to the CJEU by the German court to establish whether the fact that PIP was insured by Allianz for damage caused by its medical devices on French territory only, to the exclusion of that potentially caused in other Member States, was compatible with art. 18 TFEU and the principle of non-discrimination on grounds of nationality contained therein.
The CJEU rejected the challenge to the territorial restriction clause.
Article 18 TFEU only applied to discrimination falling within the scope of EU law. But there was no provision of EU law which imposed an obligation on the manufacturer of medical devices to take out civil liability insurance designed to cover risks linked to those devices or which regulated such insurance.
This was to be contrasted with the position in respect of liability insurance for motor vehicles, which was specifically regulated by “Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles”. This imposed an obligation on each Member State to take the appropriate measures to ensure that an insurance contract also covered harm caused on the territory of other Member States.
The CJEU considered an alternative argument that the situation gave rise to discrimination interfering with a fundamental freedom protected by the TFEU. The obvious candidates were the free movement of persons, the free movement of goods, or the freedom to provide services.
But there was in reality no interference with any of these freedoms:
“However, it is clear that the applicant in the main proceedings, a German citizen who seeks the payment of insurance compensation for harm caused by the insertion of breast implants in Germany, the Member State in which she resides, has not made use of her freedom of movement. Consequently, there is no specific connecting factor linking the situation at issue in the main proceedings and the freedom of movement of Union citizens.
… that freedom also includes the freedom of recipients of services to travel to another Member State in order to receive a service there and that persons receiving medical treatment can be regarded as recipients of services (judgment of 31 January 1984, Luisi and Carbone, 286/82 and 26/83, EU:C:1984:35, paragraph 16). However, it is undisputed that the applicant in the main proceedings received medical treatment in Germany, that is, in her Member State of residence, and not in another Member State.”
Significantly, the fact that the Claimant was not a party to the insurance contract meant that there could be no finding “that the situation at issue in the main proceedings falls within the scope of the freedom to provide insurance services.”
And, finally, there was no interference with the free movement of goods since “the dispute in the main proceedings relates not to the cross-border movement of goods in itself, but to the harm caused by the goods that have been so moved.”
The result was that the situation did not fall within the scope of EU law as contained in art. 18 TFEU:
“Consequently, the answer to the first question is that the first paragraph of Article 18 TFEU must be interpreted as meaning that it is not applicable to a clause, stipulated in a contract concluded between an insurance company and a manufacturer of medical devices, limiting the geographical extent of the insurance coverage against civil liability arising from those devices to harm that has occurred in the territory of a single Member State, since such a situation does not fall, as EU law currently stands, within the scope of application of EU law.”
How can this decision be reconciled with Hutchinson? It seems to me that there are two key points.
First, the CJEU in RB was only considering the narrow question of whether a territorial restriction clause in a liability insurance contract was contrary to the non-discrimination provision of art. 18 TFEU. It was not considering the separate questions of: (i) whether and to what extent reliance on a territorial restriction clause was consistent with the teleological approach to interpretation of the Odenbreit jurisdiction provisions of what is now Brussels I (Recast); (ii) what impact (if any) the EU law principle of effectiveness has on national laws permitting territorial restriction clauses that will impede a victim’s ability to bring a direct claim against a liability insurer.
Considerations of this kind were at the forefront of the reasoning of Andrews J in Hutchinson:
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.
Second, whereas the Claimant in RB was at all relevant times within her own Member State (Germany), such that there was no arguable engagement of the TFEU’s protection of the free movement of persons, the (English) Claimant in Hutchinson was injured whilst on holiday in Ibiza and while taking advantage of services marketed abroad provided by the Ocean Beach Club. Arguably, at least two of the fundamental freedoms were engaged in his case. This distinguishes it from RB.