Supreme Court decision on fatal accidents abroad provides certainty to businesses, says expert

Lawyers for Katerina Cox, the widow of a serving British officer who had been stationed in Germany at the time of the accident that caused his death, had argued that damages should be calculated by reference to the UK's 1976 Fatal Accident Act (FAA). The claim was brought to court before the Rome II Regulation, which applies where there is a conflict with regards to which EU member state's law should apply in relation to non-contractual obligations, came into force.

Personal injury expert Ian Evans of Pinsent Masons, the law firm behind Out-Law.com, said that the decision would provide certainty to organisations faced with claims involving overseas fatalities.

"The court decided that the FAA could only apply if the claim itself was being brought under the Act," he said. "As it was German law that was applicable then the claim could not be brought under the FAA and therefore damages could not be quantified as per the FAA. The German process for quantifying dependency was not so dissimilar to that which would have been undertaking by way of the FAA and there was no reason to quantify the claim in any other way than that under German law."

"The decision is important as the Supreme Court has made it clear that the FAA is not intended to be applied to incidents outside the jurisdiction and that courts do not have to apply the FAA over and above any foreign law which applies," he said.

Mrs Cox and her husband, Major Christopher Cox, lived in Germany, where Major Cox had been posted since August 2003. In May 2004 Major Cox, who had been riding his bicycle near the barracks, was knocked over by a car which had left the road. He suffered injuries from which he died. The driver of the car was a German resident who held third party liability insurance with Ergo Verischerung AG, a German-registered insurer.

After the accident, Mrs Cox returned to live in England where she has been ever since. She had since remarried and had two children with her new partner. Mrs Cox brought claims in the English courts against the German insurer, including a claim for damages. Although she accepted that German law governed the liability of the driver, her legal team argued that the amount of damages recoverable in the case was governed by English law. Damages under the FAA would have been more favourable in the case, mainly because they excluded Mrs Cox's new partner's payments for maintenance when making the calculation.

Under English rules of private international law, a distinction can be made between questions of procedure and questions of substance. The former would be governed by English law, as the law of the court in which the claim was brought; while the latter would be governed by German law, as the law of the place in which the fatal accident occurred. Although in a previous case, then highest court the House of Lords had ruled that 'questions of procedure' need not be confined only to rules governing the manner in which proceedings were to be conducted, the relevant German rules "determine[d] the scope of the liability" and were therefore substantive.

"Sir Christopher Holland has found that the rule of German law requiring credit to be given for maintenance received from a subsequent partner reflects the principle requiring the victim of a tort to mitigate loss and to give credit for successful mitigation," said Lord Sumption in his leading judgment. "In German law this is classified as a substantive rule. Its classification in an English court is a question of English law, but English law would regard it in the same light."

"Whether [the FAA rules] are procedural or substantive, they do not apply on their own terms. These provisions do not lay down general rules of English law relating to the assessment of damages, even in personal injury actions, but only rules applicable to actions under the Act itself ... An action to enforce a liability whose applicable substantive law is German law is not an action under section 1 of the FAA to which the damages provisions of the Act can apply," he said.

Turning to the question of whether the relevant English statute could be applied directly abroad, the judge said that there was "nothing in the language" of the FAA to suggest that it was intended to apply irrespective of the choice of law derived from ordinary principles of private international law. Although the FAA has successfully been applied to accidents outside of England, specifically a run of cases involving deaths at sea, in those cases it has not created "new rules of conduct" but rather "regulate[d] the consequences of existing rules of conduct", Lord Sumption said.

"The German rules with which this case is concerned are based on a perfectly orthodox principle which is by no means unjust and is accepted in principle by English law in every other context than statutory liability for fatal accidents," he concluded. "It must follow ... that [arguments] based on the mandatory character of the rules contained in the Fatal Accidents Act also [fail]."