In this latest post Patrick Vincent KC considers the recent decision of the Supreme Court in SSAFA v Allgemeines Krankenhaus Viersen GmbH.
The Civil Liability (Contribution) Act 1978 has been good for lawyers. Sections 1 and 2 of this short Act have generated numerous weighty judgments and hundreds of thousands of words of academic commentary.
The latest analysis has been undertaken by the Supreme Court in SSAFA v Allgemeines Krankenhaus Viersen GmbH  UKSC 29. The only judgment was delivered by Lord Lloyd-Jones. It demonstrates that this is one of those cases where it suddenly becomes clear that the answer to the question being asked is so obvious that it is difficult to see how the distinguished judges below managed to time themselves in knots in arriving at the wrong answer.
The issue concerned the law applicable to contribution proceedings in an English claim where any liability to the claimant of the two parties to the contribution proceedings was governed by German law and, but for the 1978 Act, the law applicable to those contribution proceedings would be German law.
The Claimant sued the Defendant (effectively the MOD) for medical negligence alleged to have occurred at a hospital in Germany. The MOD sought a contribution from the German hospital which was not itself a Defendant. If English law applied to the contribution claim there was no limitation problem. If German law applied, it was time barred. Under the relevant domestic choice of law rules, German law would apply (as it did to the Claimant’s claim).
The MOD’s case was that the 1978 Act managed to apply itself to all cases brought in the English courts regardless of what conventional domestic choice of law rules might say should be the proper law of a contribution claim. The Judge at first instance and the Court of Appeal agreed.
The Hospital’s case was that the 1978 Act was English law and thus only applied to a contribution claim if the domestic choice of law rules dictated that English law applies. If not, the appropriate applicable law applies to the contribution claim. That seems so clearly correct that many (author included) are wondering how they ever thought this was a nuanced issue.
The answer is that there seems to have been a judicial overreaction to the fact that the 1978 Act mentions foreign law.
Section 1(6) defines a “liability” as a liability which has been or could be established in a claim brought in England and Wales. The section goes on to say “…but it is immaterial whether any issue arising in any such action was or would be determined (in accordance with the rules of private international law) by reference to the law of a country outside England and Wales”
It might be said that the trouble started because of a failure to ask the question – to what was the involvement of foreign law “immaterial”. Since subsection 1(6) deals only with what is or is not a “liability” for the purposes of the Act, the natural answer would be that it is immaterial to – and only to – the determination of what a “liability” is – if the Act applies.
Instead, the Respondents, the Court of Appeal, the judge at first instance and several other judges in earlier cases reached the view that, although the Act does not say it in terms, Parliament must have intended it to have a meaning that can only be reached by adding the words “And the law applicable to any claim for contribution in England and Wales is the law of England and Wales regardless of whether any issue arising in such a claim was or would be determined by reference to the law of a country outside England and Wales and regardless to what would be the applicable law of any contribution claim according to domestic choice of law rules.”
The rationale for that view (see David Richards LJ in the Court of Appeal) was that since it seemed impossible to imagine how the application of domestic choice of law rules to a case where the underlying liabilities were governed by foreign law, could result in a contribution claim being governed by English law (thus enabling the application of the 1978 Act), section 1(6) would have no effect unless interpreted so as to be giving litigants something. And what it must be giving them was the blanket application of English law in all contribution claims.
Lord Lloyd-Jones had only to point to several circumstances where English law might indeed apply to a contribution claim involving parties whose liabilities were governed by foreign law, to show that such a strained interpretation was not necessary, let alone desirable.
The MOD also relied upon Section 2(3)(c) of the 1978 Act, which also mentions “the law of a country outside England and Wales”. But all that section does is confirm that a contribution cannot exceed the contributor’s actual or potential liability to a claimant under any foreign law applicable to that liability.
Finally, the Respondents relied upon section 7(3) of the 1978 Act. That section provided that the right to recover a contribution under the Act superseded any right to recover contribution other than that provided under the Act. Lord Lloyd Jones pointed out that all that meant was that the previous common law of England and Wales was displaced. It did not mean that the 1978 Act escaped the consequences of the application of domestic choice of law rules.
Lord Lloyd-Jones characterized the MOD’s construction of the 1978 Act as achieving “overriding effect” rather than extraterritorial effect, and so did not have to address the issue of whether that construction amounted to interfering with the law of foreign nations. He did, however, make the point that there was no place for an argument that the “overriding effect” was intended or desirable because it corrected some sort of defect in applicable foreign law with less favourable contribution laws.
The Supreme Court has simply pointed out that the 1978 Act means no more and no less than what it says. It is a tribute to legal ingenuity over the years that it ever got that far.