Foreign accident claims – identifying and managing the key challenges

Posted: 05/10/2015

Introduction

Since the implementation of the Jackson reforms and fixed costs, traditional personal injury firms have reassessed their offering and structure in an effort to remain profitable. This exercise has resulted in some practitioners retraining and expanding into areas of niche personal injury work that are not, at least for now, constrained by fixed costs.

This has inevitably resulted in a surge of new entrants into the travel litigation market, with travel law seen as one of the last bastions of the pre Jackson arena, at least from a costs perspective. Whilst proportionality and costs budgeting apply to English litigated travel cases, the spectre of fixed costs is not currently on the agenda. It now seems inevitable that fixed fees will be introduced for clinical negligence claims and this trend is therefore likely to increase as other practices look to diversify.

Whilst one can understand the strategy behind this transition, law firms would be well advised to consider the numerous potential pitfalls associated with this area of work. This article is intended to give an overview of some of the most commonly encountered challenges that need to be borne in mind.

Foreign lawyers

In order to handle personal injury claims derived from accidents abroad competently, one should firstly have in place a truly international network of tried and trusted personal injury lawyers. The English practitioner must rely upon their expert counsel to successfully steer claims pursued abroad and also for expert evidence on foreign law if the claim is litigated in the UK.

Personal injury claims are usually much less prevalent in foreign jurisdictions and consequently suitably qualified and experienced personal injury lawyers can be thin on the ground. The best ones will have local knowledge of the defendant’s insurers and the local court. They will also be accustomed to working against fixed reserves to enable their instructing solicitor to manage costs and to comply with legal expenses insurers’ reporting requirements.

Applicable law

For claims that are pursued abroad, foreign law will apply to all issues associated with the case, to include liability, quantum, limitation and costs recovery. Aside from this, there are also important cultural differences to be considered, and advice from the local agent can be invaluable in that regard.

The question of applicable law is less clear cut for foreign accident cases litigated in the English courts.

European law allows an English claimant involved in an RTA to initiate a claim against the defendant’s foreign insurer in the UK (provided the country of origin permits a direct right of action). This is often advantageous since the case proceeds through the English courts, and reasonable costs should be recovered if the claim is successful.

However, in that scenario, the English judge must ordinarily assess liability and quantum with reference to the law of the country where the accident occurred. This again reinforces the importance of credible, and experienced local lawyers, who can assist in an advisory capacity and also prepare formal reports for the courts and attend trial to give evidence. A local agent who does not have an appropriate level of experience will inevitably be exposed as the litigation process continues.

Whilst foreign law applies to these cases, the quantification of any asociated care claim can arguably be determined in line with the actual cost as incurred in the UK. Whilst this remains a grey area, it can have a very significant impact on the level of damages ultimately recovered. It should also be noted that gratuitous care is often not recognised as a head of loss in foreign jurisdictions.

Liability and quantum will be determined by English law if the claim lies against a driver who is habitually domiciled in the UK. A typical example might be the English passenger who decides to sue the English driver of the vehicle in which he was travelling when the accident occurred. However, even in that scenario, it is the foreign limitation period that will ordinarily apply.

An injured claimant might also wish to bring a claim in the UK against his or her tour operator pursuant to the Package Travel Regulations. These claims are based on a breach of contract and subject to English law. It is almost always necessary to obtain evidence from a foreign expert regarding the local standards and regulations that apply in the foreign jurisdiction, despite the application of English law, since it is those standards that the judge must consider when determining the issue of liability.

Jurisdiction

It is also very important to consider the question of jurisdiction and to evaluate the options before deciding where to pursue the claim. One should not assume that it is necessarily best to issue the claim in the UK. It may instead be in the claimant’s best interests to pursue the claim abroad, where the accident happened, or against a defendant that is domiciled in a different jurisdiction. This therefore requires careful consideration.

For example, this is true of fatalities in Greece and Spain. It will usually be the case that the family and dependants of the deceased will recover more in damages in either of those jurisdictions than in the UK. In Greece, for example, many more relatives can claim for damages, unlike the UK where the claimants are restricted to dependants only.

Indemnity caps

For high value cases it is important to clarify, where possible, the level of any indemnity cap that may be contained in a foreign insurers’ liability policy.

This needs to be considered to properly assess the overall strategy of the case.

Since 1 June 2012 EC law has imposed a statutory minimum level of insurance cover of EUR 5 million (the minimum level of indemnity was previously fixed at EUR 2.5 million from 1 December 2009 and, before then, at EUR 1.8 million).

Limitation

Last, but by no means least, there is the minefield that is limitation. In our experience, it is this area more than any other which exposes the unwary to difficulties.

Whilst the European Commission has recognised that EC citizens are likely prejudiced by the range and variety of limitation periods in the European Union, these have yet to be harmonised. As a consequence there remains a very diverse range of limitation periods that apply across member states, ranging from a year in Spain to ten years in France.

The Montreal and Athens conventions (which govern accidents on planes and accidents on cruise ships) apply a statutory limitation period of two years from the date of the accident, compared with the usual three year limitation period for personal injury claims in the English jurisdiction. This two year limit cannot be extended.

The approach adopted in the USA perhaps illustrates best how complex the question of limitation can be. The first key point is that the statute of limitation for injury claims varies from state to state. Depending where the injury occurs, a claim may be governed by a statute that ranges anywhere from three months to four years. It is therefore critical to identify early on the statute for the state where the accident occurred, which is usually the appropriate forum for any proceedings.

In New York, any claims against the municipality (such as slip and trip claims on raised pavements) are subject to a strict three month time limit within which the complaint must be reported officially to the municipality. If this is not done, any possible compensation claim becomes statute barred.

Law firms handling claims in the US must therefore have an expansive network of personal injury attorneys, across the country, to identify the relevant limitation period at the outset and to then advise on the law applicable in that state.

Even within the same state, there may be different time limits for different claims. For example there is a one year time limit for medical negligence claims in Florida, but a four year time limit for other personal injury claims.

A few additional peculiarities, which may add further complications across a range of jurisdictions, are listed below:

• Unlike the UK, the fact that a claim is being brought by a minor is irrelevant in many jurisdictions. The same limitation dates instead applies for minors and adults.
• It is not always easy to clarify when the limitation date begins to run. In Spain, for example, the one year period does not commence until criminal proceedings have concluded or the injuries have “consolidated” (and the question of consolidation can be a tricky one!).
• Extending limitation dates can be simpler than in the UK. In some jurisdictions, a telegram to the third party insurers detailing the claim is sufficient (eg Spain).
• There may be different limitation dates against different defendants within the same country (eg Greece where there is a direct right of action against the third party insurer – two years – but five years against the negligent individual).
• It must not be assumed that simply issuing proceedings will interrupt the limitation period (as it would in the UK). In Greece, for example, formal proceedings must not only be issued, but also served against the defendant.

In summary the issue of limitation is fraught with potential difficulties and it is very important to establish the correct date(s) and the relevant defendants at the outset of any claim.

This article was published in Modern Claims Magazine in September 2015.

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