Jane Nicholls & Anor v Mapfre Espana Compania de Seguros y Reaseguros SA
[2023] EWHC 1031 (KB)
Jane Nicholls & Anor v Mapfre Espana Cia de Seguros y Reaseguros SA
27 June 2024
[2024] EWCA Civ 718
Court of Appeal
Three people hurt in Spain sued the insurance company. The case was about whether to add extra interest based on Spanish law (a big penalty for late payment). The Court decided this interest was actually part of the amount owed, not just a separate punishment, so the Spanish interest should be added. The court also said that one person could rightly sue to get back money she'd already been paid by her travel insurance.
Key Facts
- •Three claimants (Sedgwick, Nicholls, Woodward) suffered personal injuries in Spain.
- •Defendant Mapfre admitted liability, damages assessed under Spanish law (Rome II).
- •Disputes arose over interest payable under Spanish Insurance Contract Act 50/1980 (Act 50/1980), and subrogation of medical costs paid by a travel insurer.
- •Lower courts differed on whether Act 50/1980 interest was procedural (English law) or substantive (Spanish law).
- •Act 50/1980 interest is penal, rising to 20% per annum after two years, aimed at encouraging early settlement.
Legal Principles
Rome II (Regulation (EC) No 864/2007) governs the applicable law to non-contractual obligations in civil and commercial matters.
Rome II
Rome II distinguishes between substantive law (governed by lex causae) and procedure (governed by lex fori). Article 1(3) excludes evidence and procedure from its application.
Rome II, Article 1(3)
Article 15 of Rome II specifies matters governed by the applicable substantive law, including the assessment of damages.
Rome II, Article 15
Article 19 of Rome II addresses subrogation, stating that the law governing the third party's duty to satisfy the creditor determines the third party's rights against the debtor.
Rome II, Article 19
Domestic courts have discretion to award interest under section 35A of the Senior Courts Act 1981 (and section 69 of the County Courts Act 1984), considering relevant foreign law provisions.
Senior Courts Act 1981, section 35A; County Courts Act 1984, section 69
Outcomes
Interest under Act 50/1980 is substantive, not procedural under Rome II, and therefore governed by Spanish law.
The interest is intrinsically linked to the assessment of damages under Spanish law, even if penal in nature. It is an integral part of the compensation scheme. Different interpretations of Rome II's ‘procedure’ clause were analyzed and rejected.
Even if Act 50/1980 interest were procedural, the judges were entitled to award equivalent interest under their statutory discretion.
Domestic courts may consider foreign law provisions when exercising their discretion to award interest. The Act 50/1980 interest, while penal, is a crucial part of Spanish damage assessment. Awarding it does not give claimants an unfair advantage over domestic litigants.
Ms. Sedgwick was entitled to bring the subrogated claim for medical and repatriation costs in her own name.
Article 19 of Rome II, applied in conjunction with the English law governing the insurance contract, allows this. The English law of subrogation governs the insurer's right to exercise the insured's rights against the third party.
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