Norwegian Supreme Court on the Law Applicable to Traffic Accidents

Norway is not bound by the EU choice of law regulations. Still, Article 7 of the Rome I Regulation applies fully in Norway and the Rome II Regulation governs what law that applies in any non-contractual matter between an insurance company and a person claiming compensation after a traffic accident. This was the view expressed by the Norwegian Supreme Court in a judgment on 21 June 2024, concluding that Danish law should be applied in a non-contractual matter between a Danish plaintiff and a Danish defendant insurance company regarding damages that occurred in Norway.

Background

A crane truck driver was severely injured when the vehicle he drove overturned during the construction of a wind turbine park in Norway. The crane truck driver was a Danish citizen, habitually residing in Denmark and employed by a Danish company that was contracted to build the windmill park. The crane truck was registered in Denmark, owned by the employer company and insured through a Danish insurance company.

As a result of the accident, the crane truck driver was on sick leave for about eight months. He received compensation in accordance with Danish occupational injury rules, but that compensation did not cover his entire loss. Therefore, he made a claim for payment against the Danish insurance company in a Norwegian court. According to the insurance certificate, it did not cover compensation to the driver of the vehicle in case of an accident. Such an exclusion is allowed under Danish law, but not under Norwegian law. Consequently, a decisive aspect of the claim was whether Danish or Norwegian law should be applied.

The courts of first and second instance both held that Norwegian law should be applicable. The defendant Danish insurance company appealed to the Supreme Court, arguing that the courts of lower instances had characterized the issue incorrectly. In the judgment of the court of appeal, the Norwegian Act on Choice of Law in Insurance (Lov om lovvalg i forsikring) was applied when concluding that Norwegian law was applicable. The insurance company argued that the choice of law rule applied was applicable to contractual matters only and that the case at hand was a non-contractual matter, to which Norway should apply the choice of law rules in the Rome II Regulation (864/2007).

Judgment

First, the Norwegian Supreme Court held that the application of the substantive claim made by the plaintiff under the Norwegian Act Relating to Compensation for Injury Caused by a Motor Vehicle (Lov om ansvar for skade som motorvogner gjer) was subject to private international law choice of law rules for matters with international connecting factors.

Thereafter, the Supreme Court assessed what choice of law rules should be applied to the matter. In line with the defendant insurance company’s argumentation, the Supreme Court concluded that the Act on Choice of Law in Insurance applies to contractual matters only. Here, the court noted that that act was enacted to implement Norway’s obligations under the EEC treaty. The EEC rules that the Norwegian choice of law act implemented correspond to those in the contemporary Solvency II Directive (2009/138). Article 178 in this directive states that the choice of law rules in Article 7 of the Rome I Regulation (593/2008) shall apply. The Supreme Court concluded that this means that Article 7 of the Rome I Regulation applies in Norway, even though Norway is not bound by the rest of that regulation.

Having established that Norway is bound by Article 7 of the Rome I Regulation, the Supreme Court turned to the issue of whether the matter at hand was contractual. To draw the line between contractual and non-contractual obligations stemming from traffic accidents, the Norwegian Supreme Court referred to paragraph 48 of the CJEU’s judgment ERGO Insurance and Gjensidige Baltic, C-359/14 and C-475-14, ECLI:EU:C:2016:40. Here, the CJEU expressed that whether or not there is an obligation to compensate someone must be determined by the law applicable to the tort, not the law applicable to the insurance contract. The Supreme Court also held that the possibility to make direct claims against the insurer of the person liable under Article 18 of the Rome II Regulation is based on the logic that non-contractual obligations can exist in an insurance relation. Holding that the choice of law rules for non-contractual matters apply in determining the liability to pay compensation and that the contractual obligations determine the insurance compensation, the Supreme Court concluded that the matter at hand was non-contractual. Hence, the Norwegian choice of law rules implementing Article 7 of the Rome I Regulation were not applicable.

Where there are no explicit Norwegian choice of law rules, Norwegian private international law generally relies on EU private international law rules. Holding that this principle applied also in this case, the Supreme Court concluded that the choice of law rules of the Rome II Regulation should apply. Even if the general rule in Article 4 p. 1 of the Rome II Regulation states that the law in the state where the damage occurs shall apply, Article 4 p. 2 gives precedence to the law of the common habitual residence of the parties. As both the plaintiff and the defendant were habitually residing in Denmark, the Norwegian Supreme Court held that Danish law should apply.

Comment

A rationale for the Norwegian shadow application of EU choice of law rules is the striving for uniform choice of law rules. Adherence to this purpose is certainly desirable, especially as Norwegian judgments enjoy free circulation in the legal community that applies either the Brussels I bis Regulation (1215/2012) or the Lugano Convention.

As regards the law applicable to traffic accidents, the uniformity created by the Rome II Regulation is less obvious. In fact, the EU member states are split on what choice of law rules should apply. Instead of applying the Rome II Regulation, around half of the EU member states (13 of 27) apply the 1971 Hague Convention on the Law Applicable to Traffic Accidents.

Although the default choice of law rule in Article 3 of the 1971 Hague Convention relies on applying the law of the state where the accident occurred (lex loci delicti), instead of the law of the state where the damage occurred (lex loci damni), as set out in Article 4 of the Rome II Regulation, this generally has little effect in the case of traffic accidents. Damage from a traffic accident will usually occur at the same place as the accident (especially as indirect damages are not recognized in this regard in the Rome II Regulation). In other words, the basic rules of the 1971 Hague Convention and the Rome II Regulation will result in application of the same law.

However, the exceptions to the general rules of the 1971 Hague Convention and the Rome II Regulation differ. Whereas the exceptional rule in Article 4 p. 2 of the Rome II Regulation, which the Norwegian Supreme Court applied, states that it is the common habitual residence of the parties that is relevant, the 1971 Hague Convention has several exceptions that rely on the application of the law in the state where the vehicle involved was registered. In the Norwegian Supreme Court case, the vehicle involved was registered in Denmark. It is therefore likely that the choice-of-law rules of the 1971 Hague Convention would also lead to the application of Danish law. Still, the uniformity between the two instruments in this case is sheer coincidence. It could just as well have been that the vehicle driven was registered in Norway or that the injured person and the insurance company habitually resided in different states.

In my opinion, it is quite unsatisfactory that there is no EU consensus for the application of the choice of law rules to such a common type of torts as traffic accidents. This creates incentives for forum shopping for those who have been injured in traffic accidents. When doing a forum shopping analysis, potential parties will now know that Norway is part of the Rome II team instead of the 1971 Hague team.