jurisdiction and applicable law: impact on claims settlement and subrogation of social security...

Jurisdiction and applicable law:

Impact on claims settlement and subrogation of social security institutions, legal developments in Europe,

problems with personal injury claims in Europe

Düsseldorf, 28 April 2005

Düsseldorf, 28 April 2005 Holger Backu, lawyer

Introduction

Characteristics of international vehicle claims, diverging legal indemnification systems

Legal-political discussion, approach to improvement: Fourth Motor Insurance Directive European Road Traffic Law Days Trier:

o Definition of uniform criteria for the assessment of immaterial indemnification ( Trier I, 2000 )

o Protection of vulnerable road users ( Trier II, 2001 )o Refund of legal expenses and harmonisation of limitation rules in Europe

( Trier III, 2002 )o Jurisdiction and applicable law – application of the injured party’s national

law ( Trier IV, 2003 )o Harmonisation of private international law / Rom II ( Trier IV, 2004 )



Introduction

Legal-political discussion, approach to improvement:

Consideration of different purchasing power when assessing the compensation for pain and suffering

Compensation of surviving dependants

Principle of reciprocity

Correct application of national law to international damages claims ( e.g. depreciation )



Belgium

Amount of compensation

Refund of expenses

Temporary incapacity for work/disablement (Incapacité/Invalidité temporaire):

Compensation of moral and material damage

Permanent disablement / final incapacity for work: Compensation of moral and material damage

Compensation of surviving dependants: Funeral costs Moral compensation for the demise of the deceased Material compensation for loss of earnings

Indemnification of personal injury in Europe

Belgium

Amount of the compensation

Temporary incapacity for work/disablement (Incapacité/Invalidité temporaire):

Moral indemnification (one-off compensation for customary pain and suffering of the victim as a result of the injuries ):

31 EUR per day of hospitalisation 38 EUR per day of severe hospitalisation 25 EUR per day for 100% incapacity for work 19 EUR per day for 75% incapacity for work

Pretium Doloris ( for extraordinary pain ) :

At 100%: 20 EUR per day + 2.50 EUR per degree on a scale of 1-7 degrees( e.g. 4/7 for 14 days: 4 x 2.50 x 14 = 140 )

Moral damage for the loss of one school year: approximately 3,720 EUR

Material damage (loss of earnings)

Housekeeping damage

Lost vacation enjoyment



Belgium


Temporary incapacity for work/ permanent disablement (Incapacité/Invalidité permanente):

Moral indemnification (data national Association of Police Judiciary)

Person of or under 10 years : 900 EUR/disablement percentage



Amounts not imperative, at discretion of the judge(kind and severity of the injury, age, special situation of the victim)

Belgium


Final incapacity for work / permanent disablement(Incapacité/Invalidité permanente):

Material damage / one-off compensation (table: for permanent disablement below 15%, victim not yet gainfully employed, etc.)

Person of or under 10 years: 2,400 EUR/disablement percentage Person of or under 35 years: 1,775 EUR/disablement percentage Person of or under 64 years: 1,050 EUR/disablement percentage

Amounts not imperative, at discretion of the judge

Material damage / capitalisation (for permanent disablement exceeding 15%, damages can be quantified)

Capitalisation formula: average earnings over the past 12 months x disablement percentage x coefficient potential duration of gainful employment


Belgium


Final incapacity for work / permanent disablement (Incapacité/Invalidité permanente):

Aesthetic damage: degree 1 – 7

degree 1: between 250 and 744 EUR degree 4: between 2,233 and 8,677 EUR degree 5: 8,677 EUR or more degree 7: 24,790 EUR or more e.g. pupil, 16 years, hideous scars in the face (Pol. Lüttich, 2001) 18,600 EUR

Loss of joie de vivre Sexual damage Affective damage Assistance of third person


Belgium


• Compensation in the case of death:

Moral indemnification (tables as per degree of relationship)

Loss of spouse: 9,916 EUR Loss of parents: 10,000 EUR each Loss of child: 9,915 EUR

Maintenance damage

Expenses (including but not limited to funeral costs)


France


Temporary (complete or partial) incapacity for work (Incapacité temporaire totale/partielle = ITT/ ITP):

Economic damage:o ITT = net earnings x period of absence from work

Physiological damage (for particularly severe injuries):o 300 – 800 EUR/month ITT


France


Permanent (complete or partial) incapacity for work (Incapacité permanente totale/partielle = ITP/IPP):

Economic damage Loss of earnings

Physiological damage IPP = point value x degree of disablement

Immaterial damage (pretium doloris, aesthetic damage, lost joie de vivre, sexual damage, immaterial damage next of kin)

Compensation for death of close relatives


5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100Taux d’IPP% (incapacity for work) Valeur du point Euro (point value)

4600

4360

4110

3875

3625

3505

3370

2770

2650

2585

2435

2400

2280

2180

1945

1695

1445

1325

1125

955

890


Diagram: assessment of the point value for physiological damage

Indemnification = Point value x Percentage of

incapacity for work

France


Compensation for pain and suffering and aesthetic impairment

Degree 1 very slight (très léger) 765 – 1530 €Degree 2 slight (léger) 1530 – 3060 €Degree 3 moderate (modéré) 3060 – 4600 €Degree 4 medium (moyen) 4600 – 9200 €Degree 5 quite severe (assez important) 9200 – 18400 €Degree 6 severe (important) 18400 – 30500 €Degree 7 very severe (très important) 30500 – 60100 €Degree 8 extraordinary (exceptionnel) more


France



The Cour d’appel d’Aix-en-Provence (2003/04) awards the following compensation amounts for moral damage suffered by the next of kin of a deceased road victim :

Spouse 15,300 – 23,000 €

Children

minor 15,300 – 23,000 €

minor fatherless/motherless plus 50%

of age, in the household 11,500 – 15,300 €

of age, independent / married 7,650 – 11,500 €

Parent

if victim in the household 15,300 – 23,000 €

if victim not in the household 12,200 – 15,300 €

grandparents / grandchildren / siblings

in the same household 9,150 – 12,200 €

in different households 6,100 – 9,150 €

Cohabitation partner individual case decision

Spain


Law No 30/95 of 8 January 1995 on third party liability and motor insurance :

Obligation of motor insurers to settle personal injury claims in compliance with the annex to the law

Uniform table system (5 tables) without regional differences

Material personal damage (mainly loss of earnings) are not compensated as incurred but based on corrective factors provided in the tables (percentage increase depending on the income)

Physician, hospital, and funeral costs if applicable are refunded separately (Rule 6 of the Annex to Law 30/95)


Spain


Temporary incapacity for work (incapacidad temporal)

58.19 EUR per hospital day, 47.28 EUR per day of incapacity for work, 25.46 EUR for all other lost income days

Corrective factors based on income situation

Permanent injuries (lesiones permanentes)

Basis: medical assessment of damage points (pursuant to the medical assessment table of the Law 30/95); The value of each point is determinedin the table

Compensation = number of points x value of point + corrective factor


Spain


Damages for pain and suffering (danos morales complementarios) Compensation of max. 77,639 EUR for consequential damage of more than

75 points

Aesthetic damage 6 degree scale assigns damage points according to the applicable degree

Compensation for death of the injured person According to the degree of relationship max. 116,458.68 EUR


Italy


Material personal damage Danno Biologico: general impairment of the quality of life caused by a

medically diagnosable bodily harm or damage to health (compensation for all negative effects on the physical and mental condition of the injured party)

Danno Morale: pretium doloris as compensation and satisfaction for mental pain and suffering

Danno Esistenziale: loss and impairment of constitutional values other than body and health, in particular free personality development with a view to social relationships


Italy


Temporary biological damage: Law 57/2001: daily rate for (100%) disablement = 38.71 EUR

Permanent biological damage: „Microlesioni“: governed by national law

o Law 57/2001: national table for injuries rated at up to 9 disablement points – „microlesioni“ (decreasing values with increasing age)

o First point value : 663.50 (age 1-10)o National table injuries/number of points up to 9 points

Court tables for major injurieso At the discretion of the courtso regional differences


Italy


Moral damage

Up to 2/3 of danno biologico

Compensation in the case of death

Iure proprio claim of close relatives for compensation of moral damage

Biological damage only for damage to health


No table systems: Germany The Netherlands Austria Portugal UK

Compensation and satisfaction

Court decisions / amount of damages for pain and suffering


Amount of damages for pain and suffering / countries without table systems:


A G NL P

Whiplash injury 1,000 € - 3,000 € 100 € – 3,000 € 1,000 € - 5,000 € 500 €

Rib bruise 1,000 € - 2,000 € 300 €– 1,000 € 400 € 500 €

Broken arm 3,500 € - 5,000 € 1,000 € – 2,500 € 800 € 1,200 €

Paraplegia 150,000 € 250,000 € 125,000 € 50,000 €

Maximum amount 220,000 € 500,000 € 150,000 € 100,000 €

Problems arising for cross-border claims:

Compensation of pain and suffering in the case of death

Diverging expert assessment methods: solutions

Regional differences

Principle of reciprocity

Purchasing power equality in the assessment of compensation for pain and suffering


Applicable law and jurisdiction

• Applicable law and jurisdiction

Differences in the law of damages International jurisdiction stipulates the applicable

conflict-of-law provisions


Applicable law and jurisdiction Competent courts

Action against the person causing the damage: Residence of responsible person Place of damaging event In intervention proceedings: place of criminal court where public law action is

brought

Action against the insurer: Place of registered office Place of subsidiary Place where the damage occurred Place where action against the person causing the damage can be brought


• International procedural law – legal bases EU: European Convention on Jurisdiction and Enforcement of

Judgements in Civil and Commercial Matters (Brussels Convention of 1968)

EU: Council Regulation 44/2001 EFTA: Convention on Jurisdiction and Enforcement of

Judgements in Civil and Commercial Matters (Lugano Jurisdiction Convention of 1988)

No international rules: §§ 17 and 32 and § 328 of the German Code of Civil Procedure

• Scope: International jurisdiction Recognition and enforcement of judgements in civil and

commercial matters


Court competence

• Choice between various international jurisdictions

• Impact on applicable law (forum shopping)

Consequence:• Additional jurisdictions (e.g. jurisdiction in the injured party‘s

country / Fifth Motor Insurance Directive) potentially result in variations concerning the applicable law


• Private international law – legal bases

Contractual relations Rome Convention on contractual obligations Art. 27 – 37 of the German Introductory Law of the Civil Code German Introductory Law of the Insurance Contract Act

Tort relationships Hague Convention on the Law applicable to Traffic Accidents of

4 May 1971 Foreign private international law Art. 40 ff. of the German Introductory Law of the Civil Code


Hague Convention on the Law applicable to Traffic Accidents 1971

Signatory States:

Belgium, France, Yugoslavia, Croatia, Luxembourg, the Netherlands, Austria, Switzerland, Slovak Republic, Slovenia, Spain, Czech Republic

Principle: lex loci delicti commissi (Art. 3)

Art. 4 – 6 law of the country of registration or where the vehicle is normally based

Involvement of a vehicle (claims of passengers)

Several vehicles (all registered in the same State)

Involvement of persons outside the vehicle (all persons with habitual residence in the country of registration)

German Introductory Law of the Civil Code (Germany)

Lex loci delicti commissi principle Art. 40 paragraph 1

„Tort liability is based on the law of the country where the liable person has committed the harmful event“. Choice between the place where the event happened and the place where that event results in damage, Art. 40 paragraph 1 No 2.

„ The injured party may require the application of the law of the country where the harmful event resulted in damage.“


German Introductory Law of the Civil Code (Germany)

Exception from the lex loci delicti commissi principle:

Art. 40 paragraph 2 – common habitual residence„If the liable person and the injured party at the time the event occurred had their habitual residence in the same State, the law of such State shall apply“.

Art. 41 – considerably closer connectiono Accessory connection to contract law or actual relationship

between the parties involved (Art. 41 paragraph 2 No 1)o General clause (Art. 41 paragraph 1)

Art. 42 – subsequent choice of law



Applicable law/ Italian private international law (Art. 62 Law 218/1995)

Translation:

1. Tort liability is based on the law of the country where the harmful event occurred. The injured party may require the application of the law of the country where the tort was committed.

2. Where the harmful event involves the citizens of only one country, and they are also domiciled in such country, the law of such country shall apply.

The injured party may select between the place where the event happened (Art. 62 paragraph 1 No 1) and the place where that event results in damage (Art. 62 paragraph 1 No 2). By way of exception the law of joint country of domicile applies, if the parties involved are citizens of such country (Art. 62 paragraph 2).


Jurisdiction in the injured party‘s country of residence?

A possible basis is the reference pursuant to Art. 11 paragraph 2 in conjunction with Art. 9 paragraph 1 b) of the Regulation, since Art. 11 paragraph 2 of the Regulation VO 44/2001 is mainly deemed as a reference to legal consequences and not to legal bases.

Application of the injured party‘s country of origin

Discussion Rome II

Costs of bringing an action


Harmonisation of the rules governing the law applicable to non-contractual obligations - Rome II:

Commission proposal of 22 July 2003:

Art. 3 – General Rules

1. The law applicable to a non-contractual obligation shall be the law of the country in which the damage arises or is likely to arise, irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event arise.

2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country when the damage occurs, the non-contractual obligation shall be governed by the law of that country.

3. Notwithstanding paragraphs 1 and 2, where it is clear from all the circumstances of the case that the non-contractual obligation is manifestly more closely connected with another country, the law of that other country shall apply. A manifestly closer connection with another country may be based in particular on a pre-existing relationship between the parties, such as a contract that is closely connected with the non-contractual obligation in question.



Commission proposal of 22 July 2003:Art. 4 - Product liability:

Without prejudice to Article 3(2) and (3), the law applicable to a non-contractual obligation arising out of damage or a risk of damage caused by a defective product shall be that of the country in which the person sustaining the damage is habitually resident, unless the person claimed to be liable can show that the product was marketed in that country without his consent, in which case the applicable law shall be that of the country in which the person claimed to be liable is habitually resident.



Parliament draft of 29 March 2005:

Notwithstanding any provision of this Regulation to the contrary or a valid jurisdiction agreement the court seized of the matter applies its national law to the quantification of the damage, unless the circumstances of the case require the application of the law of another country.

Social security subrogation

Conflict-of-law provision

EEC Regulation No 1408/1971

Art. 93: Vicarious statute (legislation of the country where the social security institution is based)

DAK versus Laererstandes Brandforsikring (judgement of 2 June 1994, case C-428/92)

Caisse de pension des employés versus Dieter Kordel and Frankfurter Allianz Versicherungs AG (judgement of 21 September 1999, case C-397/96)


Notions

Subrogation claim and extent governed by the law of the country where the social security institution is based (EEC Regulation No 1408/71)

National subrogation limits do not restrict subrogation claims of liable institutions of other Member States

Claims of the injured party or surviving dependants are governed by the law of the place where the damage occurred (pursuant to applicable private international law). National insured sums apply.


Rome II – Commission proposal of 22 July 2003Art. 15 – Subrogation and multiple liability1. Where a person ("the creditor") has a non-contractual claim upon another

("the debtor"), and a third person has a duty to satisfy the creditor, or has in fact satisfied the creditor in discharge of that duty, the law which governs the third person's duty to satisfy the creditor shall determine whether the third person is entitled to exercise against the debtor the rights which the creditor had against the debtor under the law governing their relationship in whole or in part.

2. The same rule shall apply where several persons are subject to the same claim and one of them has satisfied the creditor.



Conclusion Jurisdiction:

Significant to determine the applicable law Jurisdiction in the injured party‘s country: Application of foreign law,

inclusion of foreign evidence problematic (longer trials and higher costs)

Applicable law: Relevance of diverging – partly conflicting – conflict-of-law

provisions Application of the law of damages in the injured party‘s country of

origin controversial (currently not viable) Compensation of personal damage:

Quantification of immaterial compensation based on table system and court rulings, diverging medical assessment methods

Consideration of the situation in the injured party‘s country in the compensation of damages



Social security subrogation: National differences apply to subrogation Subrogation entitlement and extent governed by the law of the country in

which the social security institution is based, national subrogation bans are not considered

Handling of international claims: Comprehensive, pragmatic line of thought Knowledge of different legal systems Knowledge of relevant private international law and international

procedural law provisions Familiarity with different mentalities and languages Internationality

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