Rome II Compels English Court to Calculate Damages Under Spanish Law

The English High Court has applied Rome II for the first time in a reported decision (Jacobs v Motor Insurers Bureau [2010] EWHC 231 (QB)) reaching the rather disquieting conclusion that Spanish law should be applied to determine the computation of compensation payable to a UK resident under a UK statutory compensation scheme (the Motor Insurers Bureau's scheme for uninsured motorists).

Impact Of Rome II

Rome II (more correctly referred to as Council Regulation (EC) No 864/2007) came into effect in January 2009 and binds all EU member states (except Denmark). It is relevant wherever there is a conflict of laws in a commercial or civil situation arising out of a non-contractual obligation. In this case, the conflict of laws arose when the English claimant was injured in Spain when he was struck by an uninsured German driver (resident, at the time of the accident, in Spain).

Although the facts of this case may not be directly relevant, the case does illustrate for the first time how Rome II can often produce an unforeseen outcome, even in common commercial situations. There are reciprocal arrangements in all Member States for compensating those injured by uninsured drivers and the claimant acted correctly in applying to the English scheme for compensation, yet his lawyers were no doubt surprised to discover that they would need a Spanish legal opinion in order to calculate the level of compensation due. The fact that the case came before the English High court suggests that the sum due under Spanish law was somewhat less than that which the claimant would have received under English law.

What Should Businesses Do To Mitigate Rome II

(i) At the point of contract

Businesses can - and should - take steps to mitigate the potential uncertainties the impact of Rome II on their non-contractual liabilities (typically torts or delicts such as negligence, misrepresentation or economic torts such as inducing a breach of contract or conspiracy). Whilst its impact cannot be avoided in all situations (explained further below) parties "pursuing a commercial activity" in a "freely negotiated" agreement are, in most situations, where third parties are not thereby affected, able to agree in advance (or, indeed, after the event) which law will apply to determine their non-contractual obligations.

Businesses are therefore advised to consider the wording of their governing law and jurisdiction clauses and, where appropriate, to amend the wording to specify...