England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2005

Mr Justice David Richards:

Introduction

1. By this application the administrators of T&N Limited (T&N) seek the determination of certain issues of conflicts of law, as they would apply to asbestos-related personal injury claims against T&N in respect of torts assumed to be committed in the United States (US Asbestos Claims).
2. The issues in summary are as follows. First, assuming that the relevant act or omission giving rise to a particular US Asbestos Claim occurred before 1 May 1996 but the resulting damage did not occur until after that date, will the choice of law applicable in England to the claims be governed by the common law or by the Private International Law (Miscellaneous Provisions) Act (the 1995 Act)? This turns on the construction of section 14 of the Act. Secondly, assuming that the choice of law applicable to a claim would be governed by the common law, would the court apply English law to the claim, unless and to the extent that US law was applied by way of the exception confirmed by the Privy Council in Red Sea Insurance Ltd v Bouygues SA [1995] 1 AC 190. Thirdly, if by way of the exception US law was exclusively applied to the claim, would the quantification of damages be treated as a matter of procedure and therefore governed by English law as the lex fori? Fourthly, the same question is raised on the assumption that the choice of law applicable to the US Asbestos Claims was governed by the 1995 Act.

Background

3. T&N and its subsidiaries were for many years engaged in the manufacture and distribution of asbestos-based products. It was until 1998 an independent company, listed on the London Stock Exchange. In 1998 it was taken over by Federal Mogul Corporation Inc (FMC) and since then the T&N group has been part of the FMC group. T&N and its subsidiaries have viable businesses, principally in the manufacture of automotive parts. However, faced with a rising tide of asbestos-related claims, T&N and 132 subsidiaries applied for administration orders on 1 October 2001. On the same day, those companies together with FMC and 22 US affiliates filed for relief under Chapter 11 of the US Bankruptcy Code.
4. In previous judgments I have set out the background in some detail. See Re T&N Ltd [2004] EWHC 2361 (Ch), [2005] 2 BCLC 488 paragraphs 6-44 and paragraphs 3–11 of my judgment handed down on 14 December 2005 [2005] EWHC 2870 (Ch).
5. For the purpose of the present application, I need only repeat or add the following points.
6. The activities of the T&N group included the sale of raw asbestos fibre to subsidiaries and other purchasers in the United States. Asbestos materials, such as thermal insulation and lagging, and products containing asbestos, such as automotive parts, were manufactured and distributed by subsidiaries in the United States. Limpet, a liquid asbestos product sprayed on to walls and other surfaces for insulation and fireproofing, was manufactured in England and distributed in the United States by a subsidiary.
7. It is a feature of asbestos-related diseases that there is a long period between an individual's exposure to asbestos and the onset of any disease. For example, asbestosis is rarely detectable until more than 20 years after first exposure and will not have started to develop until a considerable time after exposure. The mean latency period for mesothelioma is 40 years and the first damage, which is the development of the first malignant cell, occurs about 10 years before the first manifestation of symptoms. The disease is fatal and death usually occurs within about 12 months after the appearance of symptoms. It follows that in English law no compensatable loss may occur, and therefore no cause of action in negligence may accrue, until many years after both the exposure to asbestos and any causative acts or omissions of T&N. This is true also of pleural plaques which are not usually detectable until after 20 years from first exposure. Pleural plaques are only an indicator that serious conditions may develop. The presence of pleural plaques, if combined with anxiety, has been held at first instance to constitute compensatable loss: Grieves v F T Everard & Sons Ltd [2005] EWHC 88 which is currently under appeal. It should be noted that in the great majority of cases of exposure to asbestos, no condition of any sort develops. It is also the case that only in a very small percentage of cases of individuals with pleural plaques, does a further condition develop.
8. While T&N is exposed to a substantial level of personal injury claims in the United Kingdom, they are dwarfed by the scale of claims in the United States. There is some measure of agreement that UK claims pending at 1 October 2001 have a value of £14 million and future claims, including any made since 1 October 2001, have a current discounted value of about £229 million. For the purposes of a proposed plan of reorganisation to be promoted in the Chapter 11 proceedings in the United States, the US District Court, after a contested hearing involving expert evidence, has estimated the current discounted value of all pending and future claims at $9 billion.
9. Whereas many claims in the UK are by former employees, almost all US claims are or will be product liability tort claims. In broad terms, US claims have been successfully asserted in the United States against T&N on the basis that claimants have been exposed to asbestos and asbestos-containing products supplied by T&N in the course of its activities described above. The legal basis upon which US claims have successfully been made is a failure to warn, either under strict products liability law or under the law of negligence.
10. The present application is made on the assumption that there are or may be material differences in the substantive tort laws of England and the United States applicable to the US Asbestos Claims. Miss Dohmann QC, appearing for the Official Committee of Asbestos Claimants and the Legal Representative of Future Asbestos Claimants, accepted that this was an appropriate assumption, but she was anxious that it should not be thought that the differences were necessarily substantial. Mr Snowden QC, for the administrators, referred me to the decision of the Court of Appeal in Holtby v Brigham & Cowan (Hull) Ltd [2000] 3 All ER 421 in which the majority refused to adopt in English law an approach to the apportionment of loss between different manufacturers which was adopted by US Court of Appeals Fifth Circuit in Borel v Fibreboard Paper Products Corp (1973) 493 F 2d 1076. Miss Dohmann referred me to the judgments in Borel to show that the underlying principles of negligence were familiar to an English lawyer. Mr Snowden also referred to the decision of the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32. Lord Bingham refers at para 29 to Sindell v Abbott Laboratories (1980) 26 Cal 3d 588 in which the Supreme Court of California apportioned liability among the manufacturers of a particular drug on the basis of market share, an approach which Lord Hoffmann described as "imaginative" at paragraph 74. Miss Dohmann informed me, on instructions from US attorneys acting for her clients, that Sindell has not been followed and is not considered to be the relevant law of the State of California.
11. The application assumes, against all likelihood, that T&N goes into liquidation. The issues raised by the application would then arise in relation to proofs of debt submitted by US Asbestos Claimants in the liquidation. The expectation is that a solution to the problems facing T&N and its subsidiaries will be reached in the United Kingdom by means of schemes of arrangement under section 425 of the Companies Act 1985 and/or company voluntary arrangements (CVAs) under Part I of the Insolvency Act 1986, and in the United States by means of a plan of reorganisation under Chapter 11. A Settlement Agreement dated 26 September 2005, to which I refer in paragraph 10 of my judgment of 14 December 2005, makes provision for schemes and/or CVAs. The treatment of US Asbestos Claims in an English liquidation is or may be relevant to the formulation of the schemes or CVAs.

Application

12. The directions or declarations sought by the administrators relate, as paragraph 2(1) of the application notice states, to

"the treatment of personal injury claims arising from alleged exposure to asbestos in the United States on the part of persons resident in the United States ("US Asbestos Claims"), on the following assumptions:

(a) The claimants are United States residents;

(b) The claimants allege exposure in the United States to an asbestos product causing an asbestos related disease or diseases;

(c) The claimants allege that the Company is liable in respect of that exposure and the disease or diseases;

(d) The Company went into liquidation and was wound up pursuant to the provisions of the Insolvency Act 1986;

(e) The claimants sought to prove in the liquidation of the Company;

(f) Such claims constitute foreign claims for the purposes of English private international law."

13. The original respondents to the application were European International Insurance Company Limited, Curzon Limited and the Trustees of the T&N Retirement Benefit Scheme (1989). The first two were made respondents solely for the purpose of an order declaring that prosecution of the application would not breach provisions of certain of T&N's insurance and reinsurance arrangements. No issue arises on that point for consideration in this judgment. At their request, the Official Committee of Asbestos Creditors and the Legal Representative of Future Claimants were joined as respondents.
14. The application notice issued by the administrators raised a number of issues concerning the principles which would be adopted under English law and US law respectively in relation to the quantification of damages, and as to various other issues which might be argued to be relevant in the treatment of US Asbestos Claims in English proceedings. Many of these issues would have required detailed and probably contentious expert evidence. I directed that the hearing should be confined to the more general issues raised by paragraphs 3, (4)(1)-(3) and 5(1) and (2) of the application notice. The administrators also amended the application notice in certain respects.
15. The administrators, represented by Mr Snowden QC, Mr Arden and Mr Johnson, submitted that the choice of law principles applicable to the US Asbestos Claims would be governed by the common law and not by the 1995 Act and that the quantification of damages would be governed by English law. These submissions were supported by the representative UK asbestos claimants, for whom Mr Allan QC appeared, and by the Trustees of the T&N Retirement Benefit Scheme (1989), represented by Mr Mortimore QC. The Trustees are the largest single creditor of T&N. In March 2005, the deficit in the pension fund as at March 2004 was calculated at £1.8 billion. Miss Dohmann QC and Mr Briggs, representing the Official Committee of Asbestos Creditors and the Legal Representative of Future Claimants (appointed respectively by the Office of the United States Trustee and the US Court in the Chapter 11 proceedings), submitted that the 1995 Act applied to the US Asbestos Claims and that the quantification of damages was an issue of substantive law to be governed in accordance with the law of the United States.
16. The Official Committee of Asbestos Property Damage Claimants, also appointed in the Chapter 11 proceedings, were represented at the start of the hearing. The resolution of issues on this application might subsequently affect their claims. They had no submissions to make on this application but would wish to be able to make submissions on any appeal.
17. The law of torts in the United States relevant to the US Asbestos Claims would not be federal law, but the laws of individual States. For the sake of convenience only I refer in this judgment to US law. An issue raised by the application is whether "country" in section 11 of the 1995 Act means, in a federal system where the constituent states have their own tort laws, the relevant state. All parties agreed that this should be answered affirmatively, and I agree. This accords with the usual meaning of "country" in private international law and section 11 could not otherwise be applied to a federal system.

The 1995 Act

18. One of the purposes of the 1995 Act was to make provision for choice of law rules in tort and delict, and the relevant provisions are contained in Part III (sections 9 to 15).
19. The main purpose of Part III is to abolish the common law rules of double actionability, established in Phillips v Eyre (1870) LR 6 QB 1 and developed by the House of Lords in Boys v Chaplin [1971] AC 356, and the exceptions to it discussed in Boys v Chaplin and Red Sea Insurance Ltd v Bouygues SA, and to establish a new general choice of law rule. The effect of the double actionability rule was, in short, that in order to bring proceedings in England in respect of a tort committed abroad, the acts or omissions of the defendant had to be actionable as a tort in England and actionable in the foreign country in which the tort was committed. The provisions of the Act were based on the recommendations made by the Law Commission and the Scottish Law Commission in their joint report entitled Private International Law: Choice of Law in Tort and Delict (Law Com. No 193).
20. Section 9(1) of the 1995 Act provides:

"The rules in this Part apply for choosing the law (in this Part referred to as "the applicable law") to be used for determining issues relating to tort or (for the purposes of the law of Scotland) delict."

Section 9(4) provides:

"The applicable law shall be used for determining the issues arising in a claim, including in particular the question whether an actionable tort or delict has occurred."

21. Section 10 provides for the abolition of the common law rules:

"The rules of the common law, in so far as they—

(a) require actionability under both the law of the forum and the law of another country for the purpose of determining whether a tort or delict is actionable; or

(b) allow (as an exception from the rules falling within paragraph (a) above) for the law of a single country to be applied for the purpose of determining the issues, or any of the issues, arising in the case in question,

are hereby abolished so far as they apply to any claim in tort or delict which is not excluded from the operation of this Part by section 13 below."

22. The general rule which replaces the common law rules is contained in section 11:

"(1) The general rule is that the applicable law is the law of the country in which the events constituting the tort or delict in question occur.

(2) Where elements of those events occur in different countries, the applicable law under the general rule is to be taken as being—

(a) for a cause of action in respect of personal injury caused to an individual or death resulting from personal injury, the law of the country where the individual was when he sustained the injury;

(b) for a cause of action in respect of damage to property, the law of the country where the property was when it was damaged; and

(c) in any other case, the law of the country in which the most significant element or elements of those events occurred.

(3) In this section "personal injury" includes disease or any impairment of physical or mental condition."

23. Section 12 makes provisions for displacing the general rule set out in section 11, in circumstances where it is substantially more appropriate for the applicable law to be that of a different country. Section 12 requires a comparison of the significance of the factors connecting the tort with each of the relevant countries and contains a non-exhaustive list of factors that may be taken into account. Consideration of section 12 does not arise on this application.

Does the 1995 Act apply to the US Asbestos Claims?

24. Paragraph 3 of the application notice raises the following issue:

"On the assumption that all of the exposure giving rise to US Asbestos Claims occurred before 1 May 1996, but

(1) The onset of the disease or diseases in respect of which a claim is made occurred after 1 May 1996; or

(2) The disease or diseases in respect of which a claim is made became apparent after 1 May 1996; or

(3) The onset of the disease or diseases in respect of which a claim is made occurred before 1 May 1996 but the disease or diseases worsened after 1 May 1996; or

(4) The onset of a disease or diseases occurred prior to 1 May 1996 but the onset of a further disease or diseases in respect of which a claim is made occurred after 1 May 1996;

Whether the choice of law applicable to any such and if so which claims would be governed by:

1. The provisions of the Private International Law (Miscellaneous Provisions) Act 1995 ("the 1995 Act") or

2. The common law."

25. The principal assumption on which this issue arises is that the claimants' exposure to asbestos occurred before 1 May 1996, but the damage, i.e. any injury or loss recognised as being capable of compensation by an award of damages, occurred after that date. It follows inevitably that the acts or omissions of T&N or its subsidiaries alleged to give rise to the claims would also have occurred before 1 May 1996. In view of the extended latency period for asbestos-related conditions, it is highly likely that there are and will be a significant number of claims in this category.
26. The issue turns on the construction of section 14(1), which provides:

"Nothing in this Part applies to acts or omissions giving rise to a claim which occur before the commencement of this Part."

The commencement date was 1 May 1996. Mr Snowden submits that the words "acts or omissions giving rise to a claim" are apt to describe the defendant's acts or omissions, but not the damage caused to the claimant. If it had been intended that the damage also must have occurred before the commencement date, it could without difficulty have been drafted to refer to the damage or to the accrual of a cause of action (as in the Limitation Acts). It was consistent with an intention that the legislation should not have retrospective effect that a defendant should be liable under the new rules only if his acts or omissions occurred after the commencement date. Mr Mortimore pointed out that the phrase "the events constituting the tort" is used in section 11 which, in its context, clearly includes the injury to the claimants (see section 11(2)(a)). That inclusive language is contrasted with the more restrictive reference to "acts or omissions giving rise to a claim" in section 14. Mr Allan submitted that the administrator's construction produced a degree of certainty not available if the resulting damage had also to have occurred before 1 May 1996. In the case of asbestos-related conditions, pinpointing the date on which damage first occurred is impossible. For example, in the case of mesothelioma, while it is possible to conclude that the first malignant cell developed in a particular two or three year period (see Bolton Metropolitan BC v Municipal Mutual Insurance Ltd, Judge Kershaw QC, unreported, 28 May 2005) it is impossible to say whether it was before or after a particular date. These are not difficulties which usually arise, because limitation periods commence with knowledge of the injury or damage: section 11 of the Limitation Act 1980. I considered these difficulties in greater detail in paragraphs 101-102 of the judgment given on 14 December 2005, in the context of the admissibility of tort claims to proof in a winding-up, under rule 13.12 of the Insolvency Rules 1986.

27. Miss Dohmann submitted that section 14(1) could be read in one of two ways. Either it could be read as "Nothing in this Part applies to acts or omissions which occur before the commencement of this Part and which give rise to a claim", which is consonant with the construction for which the administrators contend. Or it could be read as "Nothing in this Part applies to acts or omissions which occur and give rise to a claim before the commencement of this Part", "claim" here meaning an accrued cause of action rather than the issue of proceedings. She pointed out that damage is essential to tort; without damage resulting from the defendant's acts or omissions, there is no tort, and it would therefore be reasonable to define the commencement date by reference to the damage which founds the cause of action. This would also be consistent with the commencement date of limitation periods. She also pointed out that, just as the occurrence of damage may be difficult to pinpoint or may be continuing over a period, the relevant acts or omissions may be a continuing course of conduct rather than an isolated event. In such cases, it is equally difficult to apply a cut-off point.
28. In my judgment it is clear that section 14(1) is directed at the acts and omissions of the defendant, not the damage resulting from them. This flows naturally from the terms of the sub-section. Miss Dohmann's alternative reading is in my view inconsistent with the language used: the words "which occur before the commencement of this Part" govern "acts or omissions", while "giving rise to a claim" qualify "acts or omissions". The submission of Mr Snowden based on retrospective effect is a good reason for this approach. As Mr Mortimore submitted, Part III of the 1995 Act made a very substantial change in this part of English law and one would not expect it to have the effect of making actionable in England acts or omissions abroad which were not actionable in England or under English law when they occurred. Likewise, Mr Allan's submission on the difficulty of pinpointing the date of damages provides a sound basis for the administrators' construction. It is clear from paragraph 3.58 of the Law Commission Report that the possibility of damage occurring at a date later than the defendant's acts or omissions was considered prior to the Act.
29. As to Miss Dohmann's reference to limitation periods, the point has already been made that personal injury claims will not be time-barred until three years from the date of knowledge. In any event, the references in the Limitation Act 1980 to the accrual of a cause of action provide a comparison which tends to support the administrators' submission. As to acts or omissions of the defendant which straddle the commencement date, the 1995 Act will apply to the extent that the claimant bases his claim on such acts or omissions as occurred after that date. This is the view expressed in Cheshire and North's Private International Law (13^th ed 1999), which I regard as correct.
30. The administrators' submission is supported by both Dicey & Morris: The Conflict of Laws (13^th ed) para 35-014 and Cheshire & North: Private International Law (13^th ed) pp 616-617. It is also supported by the comments of Nourse LJ, giving the judgment of the Court of Appeal, in Kuwait Oil Tanker SAK v Al Bader [2000] 2 All ER (Comm) 271 at para 166. Halsbury's Laws of England, 4^th ed Reissue, Vol 8(3) para 367 (footnote 3) suggests that it is unclear whether section 14(1) is meant to refer only to the defendant's acts or omissions occurring before 1 May 1996 or to the occurrence of damage as well as the defendant's acts or omissions. With respect, I do not consider that it is unclear.
31. I therefore conclude that provided the acts or omissions of the defendant occurred before 1 May 1996, the 1995 Act will not apply, irrespective of the date of the resulting damage. Accordingly, in each of the hypotheses raised in paragraph 3 of the application, the choice of law will be governed by the common law, not by the 1995 Act.

Common law rule of double actionability and its exception

32. Paragraph 4(1) and (2) of the application notice raises the following issues:

"To the extent that the choice of law applicable to the US Asbestos Claims would be governed by the common law:

(1) Whether the general rule is that the substantive law to be applied to such claims and all issues arising in respect of such claims would be English law;

(2) If the answer to sub-paragraph (1) above is "yes", whether a liquidator should apply the general rule unless satisfied, in relation to any such claim, that it falls within the exception to the general rule established or confirmed by the Privy Council in Red Sea Insurance Ltd v Bouygues SA [1995] 1 AC 190."

The administrators submit that both questions should be answered affirmatively.

33. Miss Dohmann objected that paragraph 4(1) did not refer to the alternatives and should be re-formulated to refer to English law, US law or both. She submitted that the answer was both. She took no substantial issue with paragraph 4(2), assuming paragraph 4(1) was answered in the way she submitted.
34. Mr Snowden submitted that the effect of the double actionability rule is that, subjection to the exception, English law will be the substantive law applied to the issues arising in the claim, but with effect being given to provisions of US law which limit, deny or qualify the claim or the right to damages. The relevance of the foreign law was a cross-check, so as to apply any limiting factor in the foreign law and so ensure that the double actionability test was satisfied. It was not the case that the English court applies both laws, which was submitted to be an impossible concept.
35. Miss Dohmann submitted that Mr Snowden's approach to this issue reflected the law as it stood before Boys v Chaplin and the law as some argued it stood after that decision, but it failed to reflect accurately the law as confirmed by the decision in Red Sea Insurance v Bouygues SA.
36. There was undoubtedly a shift in the understanding of the double actionability rule, which is well reflected in the changes to the rule as expressed in successive editions of Dicey & Morris. In the 8^th edition (1967) at pp 919-920 rule 158 stated:

"An act done in a foreign country is a tort and actionable as such in England, only if it is both (1) actionable as a tort, according to English law, or in other words, is an act which, if done in England, would be a tort; and (2) not justifiable, according to the law of the foreign country where it was done."

This reflected the law as stated in Phillips v Eyre. Owing to the different views expressed in the speeches in Boys v Chaplin, there was uncertainty as to the correct formulation of English law on this question, but the rule in Dicey & Morris was restated as follows:

"(1) As a general rule, an act done in a foreign country is a tort and actionable as such in England, only if it is both (a) actionable as a tort according to English law, or in other words is an act which, if done in England, would be a tort; and (b) actionable according to the law of the foreign country where it was done. (2) But a particular issue between the parties may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and the parties."

37. At this stage there are three significant points to note about this formulation. First, to be actionable as a tort in England, an act done in a foreign country must be "actionable" according to the law of the foreign country where it was done, not the lesser test of being "not justifiable" according to the foreign law. Secondly, while it must be actionable as a tort in England, it is sufficient that it is actionable in the foreign country, not necessarily as a tort. Thirdly, the exception in paragraph (2) would permit the English court to apply the law of either country to the exclusion of the other, whereas in Boys v Chaplin the House of Lords applied English law to the exclusion of Maltese law, the lex loci delicti; it was uncertain whether the English court would exclude English law in favour of foreign law.
38. The issue, in effect, in Red Sea Insurance v Bouygues SA was whether the reformulated rule in Dicey & Morris was a correct statement of English law. The Privy Council held that it was: see p 199 E-F (paragraph 1) and pp 206-207 (paragraph 2). The only refinement was that under paragraph 2 it was open in an appropriate case to apply the foreign law to the whole case, rather than to a particular issue only.
39. Although Red Sea Insurance v Bouygues was a decision of the Privy Council on appeal from Hong Kong, English law applied in Hong Kong to the issues raised (see p 198E) and I take it as an authoritative statement of English law.
40. In view of the position established by Red Sea Insurance v Bouygues SA I questioned with Mr Snowden the purpose of the determination sought in paragraphs 4(1) and (2) of the application. Mr Snowden accepted that, without descending into facts, it was difficult to point to particular matters on which the direction or declaration would assist, but it was important to establish the foundation of the approach taken by a liquidator or the court when dealing with the claims.
41. It is clear that, at common law, and subject only to the exception, a claimant suing in tort in the English courts in respect of an act committed abroad must establish, first, all the elements necessary to succeed in a tort claim in English law and, secondly, all the elements necessary to succeed in a civil claim under the law of the country where the act was committed. It is a double test. I am unable to see any advantage in making a declaration, at a very high level of generality, that the court would be applying the substantive law of England or of the United States or of both. In my view, it is a question to be answered, if at all, in the context of a real issue whose resolution makes it necessary or desirable. Mr Snowden agreed that, on each claim to which the double actionability rule applied, a liquidator would have to be satisfied on the facts of the claim that it would succeed in England and in the United States. At present I do not see that the administrators need any further guidance than that.
42. As regards the exception established or confirmed by the Privy Council in Red Sea Insurance v Bouygues SA, the liquidator or the court would have to decide whether the circumstances of a particular case made it appropriate, either as regards the whole case or as regards any particular issue or issues, to apply English law to the exclusion of US law or vice versa. Unless it was appropriate to apply the exception, the double actionability rule would apply. That, as it seems to me, is clear from the authorities and I hardly see the need for a declaration to that effect.
43. I have therefore concluded that at present it is neither useful nor necessary to make declarations under paragraph 4(1) or (2) of the application.
44. I should make clear that the submissions on paragraph 4(1) and (2) were not concerned with any question of the quantification of damages. This arises separately under paragraph 4(3) and raises distinct issues. I should also make it clear that all counsel agreed that I was not being asked to give any indication as to whether the exception to the double actionability rule would apply in a particular case or category of case. It was agreed that such a decision could be made only on the basis of the relevant facts.

Choice of law at common law as to the quantification of damages

45. If the rule of double actionability and, at least in general terms, the exception to it can be stated with some confidence, the same cannot be said of the choice of law rules as regards damages.
46. The issue raised by paragraph 4(3) of the application notice is:

"To the extent that the choice of law applicable to US Asbestos Claims would be governed by the common law:

(3) Whether, regardless of the substantive law to be applied to such claims, the law to be applied to the quantification of damages in respect of such claims would be English law."

The assumption is that the US Asbestos Claims are foreign torts which are either subject to the double actionability rule or are, by way of exception, subject only to US law. The issue is whether in such circumstances the quantification of damages will be subject to English law as the lex fori. If quantification is a matter of procedure, then English law will apply, even in a case where some or all substantive issues are governed exclusively by US law.

47. Traditionally the position at common law was that issues as to damages, which therefore concerned the remedy given by the court, were questions of procedure to be decided exclusively in accordance with English law as the lex fori.
48. In J D'Almeida Araujo Lda v Sir Frederick Becker & Co Ltd [1953] 2 QB 329, Pilcher J held that in a claim for damages for breach of contract, issues of remoteness of damage were issues of substantive law to be governed by the proper law of the contract, not procedural issues to be governed by the lex fori. He relied on Canadian authorities and on passages in Dicey & Morris (6^th ed) and Cheshire's Private International Law (4^th Ed). The latter stated at pp 659-660:

"The truth would appear to be that judicial pronouncements and the statements in text-books are unintelligible unless two entirely different questions are segregated. In brief, remoteness of liability or remoteness of damage must be distinguished from measure of damages. The rules relating to remoteness indicate what kind of loss actually resulting from the commission of a tort or from a breach of contract is actionable; the rules for the measure of damages show the method by which compensation for an actionable loss is calculated…

Alive to the distinction between remoteness of liability and measure of damages we can now attempt to state the relevant principles of private international law.

There can be no doubt, at least on principle, that remoteness of liability must be governed by the proper law of the obligation that rests upon the defendant. Not only the existence, but also the extent, of an obligation, whether it springs from a breach of contract or the commission of a wrong, must be determined by the system of law from which it derives its source."

This passage points the way to saying that heads of loss, like remoteness, should be governed by the lex loci delicti. This was the view expressed in Dicey & Morris (8^th ed 1967) at p 944.

49. In Boys v Chaplin, the House of Lords had to decide whether the plaintiff could recover in an English action damages for pain and suffering in respect of injuries suffered as a result of a motor accident in Malta. Under the law of Malta, damages were not recoverable for pain and suffering. Both the plaintiff and the defendant were at the time of the accident members of the British armed services and were normally resident in England. A majority of the members of the House (Lords Hodson, Wilberforce and Pearson) considered that damages for pain and suffering were a separate head of loss and as such were an issue of substantive, not procedural, law ([1971] AC 356 at 379, 392B and 393 and 394). Lord Hodson and Lord Wilberforce considered that under the double actionability rule this would lead to such damages being irrecoverable, but both decided, albeit by different routes, that the English court could in an appropriate case apply English substantive law on an issue to the exclusion of the lex loci delicti (ibid at 379-380 and 389-393). Lord Pearson preferred the double actionability rules as stated in Phillips v Eyre and, as the defendant's negligent driving was "not justifiable" under the law of Malta, the English court applied its own substantive law. Lord Donovan, agreeing with the judgment of Lord Upjohn in the Court of Appeal, considered that the issue was one of remedies on which the English court would apply exclusively English law. Lord Guest, like Lord Hodson and Lord Wilberforce, considered that questions affecting heads of damage were issues of substantive law which are for the lex loci delicti, while the quantification of damages was for the lex fori. However, he differed in holding that damages for pain and suffering were not a head of damage but were merely an element in the quantification of the total compensation. They were therefore to be determined exclusively under English law.
50. There are various statements in the speeches in Boys v Chaplin which address the distinction between issues as to damages which are substantive and those which are procedural. Lord Hodson said at p 378G:

"The nature of a plaintiff's remedy is a matter of procedure to be determined by the lex fori. This includes the quantification of damages…"

And at p 379D, he said:

"I am now, however, persuaded that questions such as whether loss of earning capacity or pain and suffering are admissible heads of damage must be questions of substantive law. The law relating to damages is partly procedural and partly substantive, the actual quantification under the relevant heads being procedural only."

Lord Guest said at p 381H:

"There would appear to be a distinction between questions affecting heads of damages which are for the lex loci delicti and quantification of damages which is for the lex fori."

Lord Wilberforce said at p 393:

"There certainly seems to be some artifice in regarding a man's right to recover damages for pain and suffering as a matter of procedure. To do so, at any rate, goes well beyond the principle which I entirely accept, that matters of assessment or quantification, including no doubt the manner in which provision is made for future or prospective losses, are for the lex fori to determine."

51. The context of that last comment is that Lord Wilberforce considered that, in view of the fact that both parties were English residents, an English court ought to apply its own rule that damages for pain and suffering were recoverable (p 392E-F). While that result could be achieved by treating heads of loss as a procedural issue to be determined exclusively by English law, that would involve "some artifice". He reached the desired result by creating and applying an exception to the double actionability rule, by reference to the policy underpinning the Maltese rule (p 392B-F).
52. Lord Pearson said at p 394 C-D:

"English law is the lex fori. The lex fori must regulate procedure, because the court can only use its own procedure, having no power to adopt alien procedures. To some extent, at any rate, the lex fori must regulate remedies, because the court can only give its own remedies, having no power to give alien remedies. For instance, the English court could not make provision in its order to enable the plaintiff, in the event of a possible future incapacity materialising, to come back and recover in respect of it. That is alien procedure or an alien remedy and outside the powers of an English court. On the other hand, an English court may sometimes be able to give in respect of a tort committed in a foreign country a remedy which the courts of that country would be unable to give. For instance, the foreign courts might have no power to grant an injunction or to make an order for specific performance or for an account of profits."

He regarded heads of loss as an issue of substantive law and said at p 394G – 395A:

"But I am not convinced that the difference between the English law and the Maltese law can reasonably be regarded as only a difference of procedural law. There is a radical difference in the cause of action, the right of action, the jus actionis. A claim to be reimbursed or indemnified or compensated for actual economic loss is substantially different in character from a claim for damages for all the relevant consequences of the accident to the plaintiff, including pain and suffering. If an accident caused no economic loss, but only pain and suffering, there would be a cause of action according to English law, but not according to Maltese law. Surely that must be a matter of substantive law. Then if the validity of a claim for damages for pain and suffering is a matter of substantive law when that is the only claim, is it not a matter of substantive law equally when such a claim happens to be associated with a claim in respect of actual economic loss?"

Importantly for later developments, he continued at p 395 A – B:

"I do not think there is any exact and authoritative definition of the boundary between substantive law and procedural (or adjectival or non-substantive) law, and the boundary remains to be settled by further decisions in particular cases. In the present case I think it would be artificial and incorrect to treat the difference between the English law and the Maltese law, which materially affects the determination of the rights and liabilities of the parties, as a matter only of procedural law."

53. Following the decision in Boys v Chaplin, Dicey & Morris summarised the position as to damages in, for example, the 12^th edition (1993) at p 183-184:

"The rule that questions of heads of damages are substantive applies to actions in tort as well as to actions in contract. Thus in Boys v Chaplin a majority of the House of Lords held that the question whether damages were recoverable for pain and suffering was a question of substance...

Statutory provisions limiting a defendant's liability are prima facie substantive but the true construction of the statute may negative this view."

Specifically in relation to tort, it was stated as pp 1531-1532:

"As pointed out elsewhere in this book the law relating to damages is partly procedural and partly substantive. The quantification or assessment of damages is a matter of procedure for the lex fori. Thus, even where according to the lex loci delicti damages for personal injuries can be re-assessed in the light of changed circumstances, the English court will assess them "once and for all". The English court will, whatever the lex loci delicti, assess general damages in accordance with its own domestic law. It has also been said that whatever social security benefits are deductible from an award of general damages is a rule for the quantification of damages and not a rule dealing with a head of damage. The question will, accordingly, be referred to English law.

On the other hand, questions such as whether loss of earnings capacity or pain and suffering are admissible heads of damage, all questions of remoteness of damage, the existence and extent of the plaintiff's duty to mitigate damage and whether exemplary damages are recoverable are questions of substantive law."

54. In the joint report of the Law Commissions, they recommended as regards damages:

"3.38 The consultation paper provisionally recommended that there should be no change in the present law on the question of damages, which we confirm. Accordingly, the applicable law in tort or delict determines the question of the availability of particular heads of damages whereas the measure or quantification of damages under those heads is governed by the lex fori."

55. As regarding limitations on recovery, echoing the views in Dicey & Morris cited above, the Law Commissions' report stated at para 3.39:

"We agree with the view taken by all consultants who commented on this matter, that a statutory ceiling on damages is a substantive issue for the applicable law in tort or delict rather than a procedural issue for the lex fori. We do not think there is a need for this matter to be included in implementing legislation, since it is connected with the question of damages generally, on which we are making no proposals for a change in the law."

56. The distinction between substance and procedure has recently been considered twice by the Court of Appeal, first in Roerig v Valiant Trawlers Ltd [2002] 1 WLR 2304 and subsequently in Harding v Wealands [2005] 1 WLR 1539. The 1995 Act applied in both cases. Section 14(2) and (3) of the 1995 Act provides:

"(2) Nothing in this Part affects any rules of law (including rules of private international law) except those abolished by section 10 above.

(3) Without prejudice to the generality of subsection (2) above, nothing in this Part—

(a) authorises the application of the law of a country outside the forum as the applicable law for determining issues arising in any claim in so far as to do so—

(i) would conflict with principles of public policy; or

(ii) would give effect to such a penal, revenue or other public law as would not otherwise be enforceable under the law of the forum; or

(b) affects any rules of evidence, pleading or practice or authorises questions of procedure in any proceedings to be determined otherwise than in accordance with the law of the forum."

57. The claimant in Roerig v Valiant Trawlers Ltd was the Dutch widow of a Dutchman killed while working on an English-registered trawler. Her claim was brought under the Fatal Accidents Act 1976. The Court of Appeal upheld the decision at first instance that, under section 11 of the 1995 Act, English law was the applicable law and that it was not appropriate under section 12 to displace it in favour of Dutch law as regards any issue in the case. Under Dutch law, but not under English law, the dependency benefits accruing to her under Dutch law would be deducted from her claim. As English law was the applicable law, any issue as to deduction of such benefits did not arise. However, the judge at first instance had considered it, in case he was wrong on the choice of law. He held, and the Court of Appeal affirmed, that it was a procedural issue to which English law therefore applied, so that the benefits would not in any event be deducted from the damages awarded.
58. Waller LJ gave the only reasoned judgment, with which Simon Brown and Sedley LJJ agreed. He referred to passages in the speeches of Lords Hodson, Wilberforce and Pearson in Boys v Chaplin and continued in para 25:

"The passages referred to support the view that so far as damages are concerned it is a question for the substantive law whether a head of damage is recoverable, but quantification of the actual head is procedural. If one poses the question whether the issue in this case is about the right to recover certain benefits or whether it is about the quantification of the damages for loss of dependency the answer seems to me to be that it is about the quantification of the damages. The concern of the court in considering a tortious claim should be as to liability, including liability for particular heads of damage without the existence of which liability might not be complete. The question whether deductions should be made for benefits is not a question which goes to liability: it is a question going to assessment."

Waller LJ supported that conclusion with practical considerations in paragraphs 26 and 27. He also arrived at the same answer to the particular point at issue, by a different route involving the proper scope and application of section 4 of the Fatal Accidents Act.

59. Mr Snowden on behalf of the administrators relied on the authorities cited above in support of his primary submission that all issues concerning the quantification of damages, as opposed to remoteness and heads of damage, were at common law procedural, to be determined in accordance with English law as the lex fori.
60. Dicey & Morris and the Law Commission's Report did not provide complete support for Mr Snowden's submissions, because both suggested that a limitation on the amount of damages was substantive, rather than procedural. The issue of a limitation on the amount of damages was one of the issues considered by the Court of Appeal in Harding v Wealands. The claimant, a British national and resident, had been very seriously injured in a car accident while on holiday in New South Wales. He and the defendant driver lived together in England in a long term relationship but she was an Australian national. They were staying with her parents and she was driving her own car, which was kept, registered and insured in New South Wales. The Motor Accidents Compensation Act 1999 of New South Wales (MACA) contained provisions which limited the awards of damages in motor accident cases, with the express purpose of controlling motor insurance premiums. The relevant provisions were (a) a cap on the amount of damages for non-economic loss (which was very substantially less than the amount ordinarily recoverable in English law by a person in the claimant's position), (b) in assessing loss of earnings, the court was required to disregard the amount by which the claimant's net weekly earnings exceeded A$2,500 and also the first 5 days' loss of earning capacity, (c) limitations on the circumstances in which an award for gratuitous care could be made and on the amount of any such award, (d) the discount rate in respect of future economic loss was prescribed at 5 per cent, (e) no interest was payable on damages for gratuitous care or non-economic loss, (f) interest on other heads of loss was payable only in specified circumstances and at a specified rate, and (g) insurance recoveries had to be brought into account.
61. The Court of Appeal by a majority (Arden LJ and Sir William Aldous, Waller LJ dissenting) held, reversing Elias J at first instance, that all these provisions of MACA were substantive, not procedural. Also reversing the judge, they held unanimously that the law of New South Wales should not be displaced under section 12 of the 1995 Act in favour of English law on any issue.
62. Harding v Wealands, like Roerig v Valiant Trawlers Ltd, is a decision which involves the construction and effect of section 14(2) and (3) of the 1995 Act. However, Waller LJ regarded the sub-sections as doing no more than preserving, in the sense of not interfering with, the common law as to the definition of procedure and the application of the lex fori to procedural issues: see paragraphs 22, 23 and 40. At paragraph 23 he went on to say:

"No one, I think would also quarrel with the proposition that the law of damages is partly substantive and partly procedural. Indeed, it is possible to go further and say that no-one would now quarrel with the proposition, that the question whether or not a head of damage was recoverable would be a substantive question. Equally, no one would quarrel with the fact that at some stage quantification becomes a matter for the forum."

He adhered to the view of the Court of Appeal in Roerig v Valiant Trawlers Ltd that while the identification of recoverable damage was for the lex loci delicti, the quantification of damages was for the lex fori. On that basis all the provisions of MACA were procedural, as going to quantification, and were not therefore applicable to the calculation of Mr Harding's damages.

63. Waller LJ rejected the submission of counsel for the defendant that, with the disappearance under the 1995 Act of the double actionability rule, the basis on which the traditional view was formed has fallen away and the common law should be free to develop so as to take the view of procedure supported by Mason CJ in his dissenting judgment in the decision of the High Court of Australia in Stevens v Head (1993) 112 ALR 7 that "rules which are directed to governing or regulating the mode or conduct of court proceedings" are procedural and all other provisions or rules are substantive. This became the unanimous view of the High Court in John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. Both decisions were explicitly directed at the choice of law within a federal system rather than in an international context.
64. In his judgment, Sir William Aldous approached the issue very differently. He regarded it as turning on the construction of section 14: paragraph 77. At paragraph 86, he said:

"In my view the restrictions in the 1999 Act are substantive law. The word "procedure" in the 1995 Act should be given its natural meaning namely, the mode or rules used to govern and regulate the conduct of the court's proceedings. To do so, gives effect to the views expressed in Dicey & Morris and the Law Commissions' Report. It is also supported by persuasive authority. Further there is no authority which binds this court to conclude that the restrictions are procedural. It also avoids forum shopping, an aim of the 1995 Act. That being so, I can see no reason why the restrictions cannot be applied by an English court adopting its normal procedure."

And at paragraph 103, he said:

"In England the double actionability rule was swept away by s.10 of the 1995 Act and therefore care must be taken before adopting the reasoning in Stevens v Head. Even though section 14 (2) of the 1995 Act preserved the previous rules of common law there is, in my view, no reason to put a strained construction upon the word "procedure" in the 1995 Act. The court should seek the intention of Parliament."

He referred to paragraphs 3.38 and 3.39 of the Law Commissions' joint report, commenting that the Commissions' view was consistent with the view of the High Court of Australia in the Pfeiffer case. He continued at paragraph 105:

"The restrictions on damages imposed by New South Wales statutes are according to Australian law substantive not procedural. In my view the same conclusion should be reached under English law. To conclude otherwise would be to stretch the word "procedure" to cover issues not truly procedural and would also encourage forum shopping which the 1995 Act sought to prevent."

65. Sir William Aldous did not regard Boys v Chaplin as shedding much light on the issue. It was decided before the abolition of the double actionability rule, and a statement that quantification of a head of loss is procedural

"does not answer the crucial question in this case namely whether the restrictions upon the amount of damages are procedural. No doubt such restrictions affect the amount of damages and are therefore part of the quantification, but they are not part of the rules governing or regulating the mode of conduct of the court when assessing the damages."

66. In short, Sir William Aldous held that "procedure" should be construed in its statutory context, and meant the rules governing or regulating the mode of conduct of court proceedings.
67. Arden LJ steered a somewhat different course. There is in her judgment a detailed consideration of the speeches in Boys v Chaplin, but at the same time the statutory context of section 14(3) of the 1995 Act is treated as a significant factor. At paragraph 52 she says:

"How then is the distinction between substance and procedure to be ascertained in any particular case? In my judgment, the first step is to have regard to the context. The meaning of substance and procedure for the purposes of section 14 of the 1995 Act must be sought in the context of the 1995 Act and not, for instance, in those cases where the matter has arisen for other purposes, for instance, for determining whether the presumption against retrospectivity in legislation applies. In the context of section 14, a principled approach requires the court to start from the position that it has already decided that the proper law of the tort is not the law of the forum, i.e. that some other law applies to the tort, either because it is the lex loci delicti or because it is substantially more appropriate than the lex loci delicti. On this basis, a reference to the law of the forum must be the exception, and it must be justified by some imperative which, relative to the imperative of applying the proper law, has priority. It may, for instance, be appropriate to apply the law of the forum where the court cannot put itself into the shoes of the foreign court. This would arise where it has no power to award damages on a structured basis, even though such a power exists in the court of the jurisdiction which is the proper law. It would also arise where the court cannot put itself into the shoes of the foreign court of the lex loci delicti in the sense that it cannot do justice unless it applies its own law. As I see it, this is the reason for treating the assessment of damages as a matter for the law of the forum."

68. Applying this approach there is no need to treat restrictions on recoverable damages as procedural. They are capable of application without any difficulty by the English court, and indeed a cap does not "involve in any real sense an 'assessment' of damages, since no evaluation of damages is involved: the application of a cap is a mechanical exercise" (para 50). Moreover, they are restrictions on the right to recover damages and therefore substantive (para54). See also paragraphs 66, where Arden LJ concludes that all the provisions of MACA are substantive because they are limitations on the substantive right to recover damages under the proper law and because no element of discretion for the trial judge in England is involved. A particular issue is one of procedure, rather than substance, when the court "cannot, for whatever reason, apply the relevant foreign law to that issue". See also paragraph 66. Again Arden LJ relies on the statutory context, particularly the drafting of section 14, to support this approach: paragraph 61. She expresses the view that in that context "procedure" covers matters as to the mode and conduct of trial, but concludes that it is unnecessary to decide on its comprehensive meaning, which should be "elucidated on a case by case basis".
69. It is uncontroversial, I think, to say that no clear principle emerges from Harding v Wealands to distinguish substance from procedure in the context of damages and choice of law. The decision is on appeal to the House of Lords, with a hearing fixed for May 2006.
70. One approach might be to treat the Court of Appeal's decision as one on the true construction of section 14 of the 1995 Act, with no impact on the common law as it exists apart from the Act. The judgment of Sir William Aldous provides support for this approach but there is only a limited degree of support in the judgment of Arden LJ. In my view, it would not be a correct approach. I consider it to be tolerably clear, both from the terms of section 14(2) and (3) and from the Law Commissions' Report which preceded it, that the intention of the 1995 Act was that (a) the definition of procedure, and (b) the rule that issues of procedure were to be determined by the lex fori, were to continue to be governed by the common law. The 1995 Act was not itself intended to change the common law in those respects.
71. Equally, however, the 1995 Act does not provide, nor in my view was it intended to produce the result, that there could be no development in the common law on these issues after 1 May 1996. The common law is by its nature dynamic, and I see no hint in the 1995 Act that it set in stone the common law as understood at that time. The effect of the 1995 Act, in my view, is that these issues are left to be governed by the common law, as developed from time to time. This was clearly the view of Waller LJ (para 40) and also, I think, the view of Arden LJ (para 47).
72. Development of the common law does not take place in a vacuum. Account can properly be taken of other developments, for example legislative changes. There is no reason why regard should not be had to the changes made by the 1995 Act, as Arden LJ does at paragraph 52 (although whether the principle there deduced is correct will be a matter for the House of Lords). See also the judgment of the Court of Appeal delivered by Roch LJ in Pearce v Ove Arup Partnership Ltd [1999] 1 All ER 769 at 804a. I would, however, with respect, doubt whether it is right to look closely at the precise drafting of section 14(3), if the issue is not one of statutory construction.
73. It follows that it is not open to me to put Harding v Wealands on one side, as Mr Snowden would have preferred, and treat Boys v Chaplin, as interpreted in Roerig v Valiant Trawlers Ltd, as a complete statement of the common law position.
74. Miss Dohmann submitted that Harding v Wealands stands as authority for the proposition that at common law the quantification of damages is a matter of substantive law, to be governed by the law or laws which govern the substance of the claim. (In the case of a claim to which the 1995 Act does not apply, this will involve both the lex loci delicti and lex fori if the double actionability rule applies or one or other of them if the exception applies). It is clear to me that this is not the position at common law. It is on any basis too sweeping a proposition. For example, as appears later, the established position is that any assessment of damages, as an exercise in discretion or judgment, is governed by the lex fori.
75. Miss Dohmann further submitted that the underlying basis of the decision was that "procedure" is restricted to those rules of English law which are used to govern and regulate the mode and conduct of the proceedings. This was certainly the approach of Sir William Aldous, probably as a matter of construction of section 14(3). But it was not the approach of Arden LJ. She was sympathetic to it, but did not adopt it or base her decision on an acceptance of it: paragraph 61. As I read the judgment of Arden LJ, there are two principal grounds for her conclusion that the MACA provisions were substantive, not procedural. First, the provisions operated as a restriction on the claimant's right to recover damages. This indicated that they were provisions of substantive law. Secondly, they involved no element of discretion on the part of the trial judge and did not therefore trespass into areas of procedure. On the basis that there is no clear dividing line between substance and procedure in relation to damages, it was necessary to examine in some detail the precise features and effect of the provisions under consideration.
76. An alternative submission by Miss Dohmann was that, at common law, rules of the applicable foreign law were to be applied, but not assessments depending on the facts of the case. So, for example, if the foreign law imposed a cap (as in Harding v Wealands) or a minimum or both, they would be rules of substantive law while the assessment of the actual amount of damages within those constraints would be for the trial judge applying the lex fori. It is possible to develop this submission from the reasoning of Arden LJ. Miss Dohmann relied by way of parallel on article 10(1)(c) of the Rome Convention, given effect in UK law by the Contracts (Applicable Law) Act 1990. It provides that the law applicable to a contract by virtue of the Convention shall govern:

"(c) within the limits of the powers conferred on the court by its procedural law, the consequences of breach, including the assessment of damages in so far as it is governed by rules of law."

This demonstrated that the approach would cause no insuperable difficulties to English courts. In commenting on the expression "rules of law" in article 10(1)(c), Dicey & Morris (13^th ed 2000) at para 32-198 refers to the Giuliano-Lagarde report and continues:

"This obscure phrase is, apparently, intended to have the effect that rules of law relating to the assessment of damages (such as rules limiting the amount of compensation or rules governing contractual pre-estimates of damage or contractual limitations of recoverable damages) will depend on the governing law of the contract, but that questions of fact will depend on the lex fori."

77. I do not consider that the decision in Harding v Wealands justifies this alternative submission of Miss Dohmann. First, and foremost, Arden LJ (like Lord Pearson in Boys v Chaplin) favours a case by case elucidation of the distinction between substance and procedure. The "damages principle", that all matters concerning the quantification of damages are matters of procedure, is of uncertain meaning and application (para 51) and there is no "bright line" between substance and procedure in this field (paras 51 and 62). Secondly, the case concerned caps and restrictions on damages. This had been specifically addressed by the Law Commissions and by Dicey & Morris over a number of editions. An important part of the reasoning of Arden LJ is that they were restrictions on the claimant's right to recover damages. She does not discuss other foreign law rules not in issue in the case, and, while there is an obvious logic in saying that, if a cap is substantive, then so is a minimum or a fixed range, it does not follow from this important part of Arden LJ's reasoning. Thirdly, Miss Dohmann's submission would mean that the view of the Court of Appeal in Roerig v Valiant Trawlers Ltd that the Dutch rule concerning deductions from damages was procedural was wrong. Arden LJ does not comment on that point, but Sir William Aldous says at paragraph 101:

"In Roerig's case the court had decided that the applicable law was English law and it did not matter whether the question concerning benefits under Dutch law was procedural or substantive. In any case there appears to be a real difference between assessing loss taking into account or refusing to take into account benefits and arriving at an amount of damages in the light of restrictions imposed by the 1999 Act. The latter is by Australian law substantive whereas the former might be considered to be procedural according [to] English or even Dutch law."

78. No specific issue of US law has been put before me. As mentioned above, Miss Dohmann gave as an example that there might be a range of damages with a fixed minimum and maximum for, say, pain and suffering established by authoritative decisions of the US courts. This was put forward on a hypothetical basis only. I do not think that any view can be reached on issues of this sort without knowing precisely what they are. And the state of the law does not permit, at first instance, a general statement of principle such as that advanced by either Mr Snowden or Miss Dohmann.
79. Moreover, treating as substantive a foreign law rule requiring a minimum level of awards raises serious issues which have not yet been considered by the courts. One issue is what does the court do if the minimum under the foreign law exceeds the amount which, on its own assessment, would be awarded by the English court. The mechanistic answer would be to award the minimum set by the foreign law but that may involve a result which is unjust according to both systems of law: too much by the standards of one and too little by the standards of the other.
80. More important perhaps is the issue which would arise if T&N were in liquidation and proofs of debt for general damages were submitted. It can be assumed that proofs would be submitted by claimants from a number of jurisdictions, including the United Kingdom and the United States. The claimants would be suffering from the same conditions – asbestosis, lung cancer, mesothelioma and so on. Their pain and suffering will, subject to individual variations, be the same, or at any rate it will not differ on grounds of nationality or residence. If Miss Dohmann is right, these claimants may be admitted to proof in substantially different amounts for substantially the same loss. It would be seen by many as an unjust result. At common law, this result could perhaps be avoided by not displacing the double actionability rule as regards damages or this aspect of damages. Under the 1995 Act, if the applicable law under section 11 was US law, it could not be displaced under section 12 in favour of English law on this issue, having regard to the comparison of factors required by section 12(1)(a) and (b). Nor would any provision of the Insolvency Act 1986 or Insolvency Rules 1986 permit a different approach. Rule 4.86(1) requires the liquidator to "estimate the value of any debt which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value" and, under rule 4.86(2), that value is the amount provable in the liquidation. In valuing proofs, the liquidator must apply English law, but that includes English choice of law rules, resulting in the application of foreign law in appropriate cases: Re BCCI (No 10) [1997] Ch 213 at 246E.
81. In the result therefore, I decline to make a declaration in the terms proposed by the administrators, which would treat all issues as to the quantification of damages in relation to US Asbestos Claims as governed by English law. Equally, however, I do not accept Miss Dohmann's alternative formulations.
82. In the alternative, the administrators submit that the method to be used for making an assessment of the amount of damages would be governed by English law as the lex fori. This leaves out of account any issues of caps, minimum amounts and so on. The assessment would, if the matter went to court, be made by a judge alone applying the relevant principles of English law to the facts of the case.
83. Plainly there is no question of an English court empanelling a jury to assess the damages, nor equally is evidence of the levels of awards made by foreign courts (whether judges or juries) relevant. This is well illustrated by Hulse v Chambers [2001] 1 WLR 2386, a decision of Holland J, under the 1995 Act. It concerned a claim for damages for personal injuries sustained in a motor accident in Greece. It was agreed by the parties that the applicable law under section 11 was Greek law and that it should not be displaced under section 12. The head of general damages was recoverable under both Greek and English law but the amount would be markedly less under Greek law. The defendant submitted that the assessment of the amount of general damages should be governed by Greek law as substantive law. Holland J rejected the submission, holding that the assessment of the general damages should be made by reference to English law as the lex fori. Assessment was a matter for the court's own judgment, not for decision on the basis of evidence as to what a Greek court might order. There was no suggestion that Greek law imposed a fixed minimum or maximum amount of damages. Hulse v Chambers was referred to in argument in Harding v Wealands but not commented on in the judgments. In my view, it is good law and is consistent not only with the judgment of Waller LJ but also with the judgments of Arden LJ and Sir William Aldous. I refer to the last two sentences of paragraph 52 in Arden LJ's judgment cited above. She also distinguished the MACA provisions from the assessment of damages on the grounds that the latter involved evaluation and an element of discretion (paras 50 and 55). Sir William Aldous cited with approval passages from Dicey & Morris (13^th ed, 2000) one of which (para 35-053) includes the statement:

"The English court will, whatever foreign applicable law may say, assess general damages in accordance with its own domestic law."

He also cited with approval a statement to similar effect from the Law Commissions' joint report, and paragraphs 105-106 of his judgment are consistent with this approach.

84. If follows that, leaving aside questions concerning any specific non-discretionary US rules (such as minimum or maximum amounts), the liquidator or the court, in assessing claims by US Asbestos Claimants, would not be concerned to assess the level of damages which might be awarded in the United States, but would be exercising their own judgment in accordance with English law.

Choice of law as to the quantification of damages if the 1995 Act applies to US Asbestos Claims

85. Paragraphs 5(1) and (2) of the application notice raise issues, on the assumption that the 1995 Act applied to any US Asbestos Claims. Paragraph 5(1) raises as an issue whether on a true construction of section 11 the substantive law to be applied would be the law of the state in the United States in which the claimant was when he sustained the injury for which he claims. In view of the agreed construction of "country" in section 11 as meaning, in a federal system, the relevant individual state, the answer to paragraphs 5(1) is clearly affirmative, as all parties agree.
86. Paragraph 5(2) raises the issue as to whether the quantification of damages would be governed by English law, if the 1995 Act applied to the claim and US law was the applicable law for substantive issues.
87. For the reasons already given, I do not consider that the 1995 Act gives to the word "procedure" in section 14(3) any different meaning from its meaning at common law, and I consider that to be the majority view in the Court of Appeal in Harding v Wealands. It follows that I would answer the issue raised in paragraph 5(2) in the same way as the issue at paragraph 4(3). However, it is right to note that, as Mr Snowden informed me, the administrators envisage that the overwhelming majority of US Asbestos Claims will result from the alleged acts or omissions of T&N prior to 1 May 1996 and will therefore be claims to which the 1995 Act does not apply.