Case law Developments in PIL

The Limits of Jurisdiction over Insurance Matters: CJEU in BT v. Seguros Catalana Occidente and EB

The provisions of the Brussels I bis Regulation on insurance matters (Articles 10-16) are complex and often misunderstood. Now the CJEU has clarified their scope in an important judgment.

Suing an Irishman in Britain…

A British domiciliary, BT, had an accident on a Spanish property. He brought a suit in Britain against not only the Spanish insurer of the property (Seguros Catalana Occidente), but also against the insured landlord (BE). BE, being domiciled in the Republic of Ireland, objected to the jurisdiction of the British courts.

Incidentally, this was one of the last preliminary references submitted by a British court before Brexit. The County Court at Birkenhead sought clarification on the meaning of Art 13(3) Brussels Ibis, which gives parallel jurisdiction over the injured party and the insured where the applicable law allows the latter to be joined as a party (which apparently English law does).

The Tripartite Insurance Relationship in Jurisdictional Terms

Disputes over liability in insurance matters usually involve three parties: the victim (the “injured party” in the terminology of Section 3 of the Brussels I bis Regulation), the tortfeasor (the “insured person” in the terminology of the same section), and the tortfeasor’s insurer. Hence, the issue in the present case was whether Article 13(3) Brussels I bis allows the injured party to sue the insured party and the insurer in the same court under the special jurisdiction rules of Section 3.

The Court’s Ruling in a Nutshell

The CJEU’s answer is negative. It ruled that the insured person could not be joined to the claim brought by the injured party against the insurer in the court conferred special jurisdiction in a matter relating to insurance. That meant that the County Court at Birkenhead did not have jurisdiction over BT’s claim against BE, but only over BT’s claim against Seguros Catalana Occidente.

Classic Legal Reasoning

This scission of jurisdiction between the dispute against the insured party and the insurer may seem surprising at first, as it appears inefficient and at odds with the principle of the sound administration of justice. Yet the decision of the CJEU is to be applauded.

As the CJEU correctly points out, Section 3 of the Brussels I bis Regulation only deals with “Jurisdiction in matters relating to insurance”, as indicated by its heading. The action of BT against EB is not an insurance suit, but rather a typical claim in contract or tort, which is governed by the special jurisdiction rules in Section 2 of the Regulation. This approach of the CJEU draws upon classic arguments arising from the Regulation’s text and structure.

Second, the Court also makes a teleological or purposive argument by stressing that the rules of Section 3 seek to correct a certain imbalance in power between either the injured and/or the insured as the weaker party, and the insurer as the supposedly stronger party. Such imbalance does not exist where neither party to the action is an insurer, like in the case of BT’s claim against BE.

Finally, and perhaps most importantly, the CJEU had recourse to the legislative history: According to the Jenard Report (p. 32), Article 13(3) of the Brussels I bis Regulation was enacted to give the insurer the possibility of joining the insured as a third party to proceedings between the insurer and the injured person. It was not intended to give the injured person the right to join the insured party to a suit against the insurer. The latter will usually be brought in the home jurisdiction of the injured person, which is allowed under Article 13(2) in conjunction with Article 11(1)(b) of Brussels I bis (see CJEU Case C-463/06 FBTO Schadeverzekeringen NV v. Jack Odenbreit). The CJEU is correct to stress that allowing the injured person to join the claim against the insured person would open the doors to all sorts of manipulation. For instance, the party injured by a tort could bring an action against the insurer and join the tortfeasor to the dispute instead of using the rules on general and on special jurisdiction (Articles 4, 7(2) of Brussels I bis).

The Take-Away

In sum, injured persons cannot join insured persons to direct claims they bring against the insured person’s insurer. They have to bring the two actions separately, and possibly in different courts. BT would thus have to sue EB either in Ireland, EB’s country of domicile (Article 4(1) of the Brussels I bis Regulation), or in Spain as the place where the alleged harm occurred (Article 7(2)). This seems correct as EB is not an insurer and should thus not be subject to the special jurisdiction rules for matters relating to insurance.

— Many thanks to Amy Held, Felix Krysa and Verena Wodniansky-Wildenfeld for their comments on the draft post.