Jane Nicholls & Anor v Mapfre Espana Cia de Seguros y Reaseguros SA

For the purposes of Rome II, whether a matter constitutes evidence or procedure has an autonomous meaning. The words should receive their natural meaning in their context and in light of the Regulation’s objectives.

Interest payable under article 20 of the Spanish Insurance Contract Act 50/1980 forms part of substantive Spanish law. Although penal in effect, it is integral to and inseparable from the Spanish assessment of compensation payable by insurers. Alternatively, an English court may take the foreign interest regime into account when exercising its statutory discretion to award interest.

Under article 19 of Rome II, the law governing an insurer’s duty to indemnify determines whether and to what extent it may exercise the insured’s rights against the tortfeasor.

Three claimants suffered personal injuries in Spain and brought direct claims in England against the Spanish insurers of the tortfeasors. Liability was admitted and damages were governed by Spanish law under Rome II. The High Court decisions in [2023] EWHC 1031 (KB) and [2022] EWHC 2704 (KB) both awarded interest corresponding to article 20 of the Spanish Insurance Contract Act 50/1980, but differed on whether that interest was substantive or procedural.

The insurer appealed. The principal issues were whether article 20 interest fell outside Rome II as procedure; whether equivalent interest could alternatively be awarded under the English statutory discretions; and whether one claimant could recover, in her own name, medical and repatriation costs already paid by her travel insurer.

1. The appeals were dismissed. Interest under article 20 of the Spanish Insurance Contract Act 50/1980 was substantive and was properly awarded under Spanish law. The claimant whose medical and repatriation expenses had been paid by her travel insurer could claim those expenses in her own name.

2. The concepts of evidence and procedure in article 1(3) of Rome II require an independent and uniform interpretation. They are construed by reference to the wording and context of the Regulation and its objectives. Neither an artificially broad nor a strict or narrow interpretation is appropriate. The relevant inquiry was whether article 20 interest was so intertwined with the assessment of damages that it formed part of the applicable substantive law: per Dingemans LJ, with whom Stuart-Smith and Coulson LJJ agreed.

3. Article 15(c) assigns the existence, nature and assessment of damage or the remedy claimed to the law governing the non-contractual obligation. Article 20 interest was part of the Spanish process for assessing the sum due from an insurer. Its relationship with the ordinary Spanish legal interest rate, the Baremo damages regime and the overall compensation payable made it difficult to separate from the assessment of damages.

4. The penal character of the increased rate, including the minimum rate of 20 per cent after two years, did not make it procedural. The classification could not be determined through an exclusively English perspective. Spanish law used the interest as an integral part of its distinct compensatory regime, notwithstanding that it also encouraged prompt payment by insurers.

5. Alternatively, if article 20 interest had been procedural, a court could award an equivalent rate under section 35A of the Senior Courts Act 1981 or section 69 of the County Courts Act 1984. Foreign rules governing interest may be relevant to that discretion. Given the importance of article 20 interest to the overall Spanish award, omitting it would be unusual. Any additional interest under Part 36 of the Civil Procedure Rules involved a separate discretion which was not determined.

6. Article 19 of Rome II directed attention to the law governing the travel insurer’s duty to indemnify the insured. English law therefore determined whether and to what extent the insurer could exercise the claimant’s rights against the tortfeasor’s insurer. English subrogation rules permitted the claimant to sue in her own name and required her to hold any recovery of the reimbursed expenses for her travel insurer.

• Court of Appeal (Civil Division): By [2024] EWCA Civ 718, dismissed the insurer’s appeals against both High Court orders.
• High Court, King’s Bench Division: In [2023] EWHC 1031 (KB), Martin Spencer J held on appeals from two County Court judgments that article 20 interest was substantive Spanish law. He also held that an equivalent award would not have been a legitimate exercise of the English statutory discretion.
• High Court, King’s Bench Division: In [2022] EWHC 2704 (KB), Lambert J held that article 20 interest was procedural but awarded an equivalent rate under section 35A of the Senior Courts Act 1981. She permitted the insured claimant to recover medical and repatriation expenses in her own name.
• County Courts: The County Court judges in the other two claims treated article 20 interest as procedural and awarded equivalent interest under section 69 of the County Courts Act 1984.