England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		16/02/2010

The Honourable Mr Justice Owen :

1. The claimant, Clinton David Jacobs, who at all material times has been resident in the United Kingdom, sustained a serious injury in a road traffic accident in Fuengirola, Spain on 19 December 2007. He was standing at the rear of his stationary vehicle in the car park of a shopping complex when struck by a car driven by Winfred Rudolph Willem Bartsch, a German National then resident in Spain.
2. Mr Bartsch's car carried what appeared to be a UK registration plate number G447 XPL. But the registration plate did not correspond to the vehicle; and the vehicle that originally bore the plate had been scrapped in the UK in January 2004.
3. It has not proved possible to identify any insurance undertaking which insured Mr Bartsch or anyone else to drive the vehicle.
4. On 16 December 2008 the claimant issued proceedings against the defendant, the Motor Insurers Bureau (MIB), in its capacity as compensation body under regulation 13 of the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation body) Regulations 2003 (the 2003 Regulations), seeking:

i) a declaration that the MIB is liable to pay compensation pursuant to the 2003 regulations and

ii) compensation or damages.

5. On 19 June 2009 Irwin J made an order by consent for the trial of the following preliminary issues:

"1. Whether the defendant, acting as compensation body for the purposes of the Motor Vehicles (Compulsory Insurance)(Information Centre and Compensation Body)Regulations 2003, is required to pay compensation to the claimant pursuant to regulation 13 (2)(b) assessed in accordance with the law in Spain or in accordance with the law of England:

i) because Regulation EEC (No 864/2007) on the law applicable to non-contractual obligations (Rome II) applies to determine the applicable law in this case; and/or

ii) because the defendant's obligation to pay compensation is limited to the amount for which the tort feasor against whom proceedings could not have been brought in England, would have been liable.

2. If Rome II does not apply and the defendant's obligation to compensate is not limited to the amount for which the tort feasor would have been liable, the Private International Law (Miscellaneous Provisions) Act 1995 applies to determine the applicable law in this case".

6. In short the parties seek a determination of the basis upon which the defendant is obliged to compensate the claimant under the 2003 Regulations, and in particular whether compensation has to be assessed on the basis of English law only, Spanish law only, or in part English law and in part Spanish law.
7. The legal framework

The MIB has been in existence since 1946, when it was established by a private law agreement between the Minister of War Transport and insurers authorised by the legislation covering insurance companies to issue third party motor insurance. It currently operates under the terms of two agreements with the relevant Secretary of State, the Uninsured Drivers Agreement of 13 August 1999, and the Untraced Drivers Agreement of 14 February 2003.

8. Where an accident has occurred in one country caused by a vehicle insured in another, there has since 1949 been a system (the Green Card system) agreed and operated by the bureaux representing motor insurers in various countries, whereby the bureaux member in one state agrees to handle claims on behalf of the insurer in another. The MIB was and is the Green Card bureaux operating the system in the UK.
9. The EEC/EU Directives

In 1972 the EEC issued the first of a series of motor insurance directives. The first Directive 72/166/EEC (the 1^st Directive), made on 24 April 1972, was intended to encourage free movement by reducing border insurance checks, and imposed an obligation on the member states, then six in number, to require that the use of motor vehicles based in their territories should be covered by insurance, and that such insurance should cover accidents in each of the other member states. On joining the EEC on 1 January 1973, the UK became subject to the 1^st Directive.

10. The second motor insurance directive 84/5/EEC (2^nd Directive) dated 30 December 1983 required each member state to set up or authorise a body to guarantee that a victim would not remain without compensation where the vehicle which caused the accident was uninsured or unidentified. The body required to be set up or authorised by the 2^nd Directive is currently referred to as the "guarantee body" or "guarantee fund". The MIB performs the functions of the guarantee body in the UK insofar as its private law obligations under the uninsured and untraced drivers agreements require it to do so.
11. The fourth motor insurance directive 2000/26/EC (4^th Directive) dated 16.05.00 further addressed the position of the victim of a motor accident occurring in a member state other than his state of residence. Much of the directive deals with the establishment by motor insurers in one Member State of claims representatives in other member states, so that the victim can negotiate his claim in his country of residence. It also deals with the establishment of information centres through which the insurer of a vehicle involved in an accident can be ascertained. But a number of its Articles are of direct relevance to the preliminary issue before me. The 4^th Directive has been superseded by 2009/103/EC directive (referred to during the trial as the sixth motor insurance directive), of 16 September 2009, which consolidates the earlier directives, in the case of the 4^th Directive in a slightly amended form. But such amendments do not affect the preliminary issue before me, and it is convenient for present purposes to work to the 4^th Directive which was in force at the material time, and was implemented by the 2003 regulations.
12. The objective of the 4^th Directive was to "lay down special provisions applicable to injured parties entitled to compensation in respect of any loss or injury resulting from accidents occurring in a Member State other than the Member State of residence of the injured party caused by the use of vehicles insured and normally based in a Member State" per Article 1. The relevant parts of Articles 6 and 7 are in the following terms –

"Article 6

Compensation bodies

1.…

2. the compensation body which has compensated the injured party in his Member State of residence shall be entitled to claim reimbursement of the sum paid by way of compensation from the compensation body in the Member State of the insurance undertaking's establishment which issued the policy.

The latter body shall then be subrogated to the injured party in his rights against the person who caused the accident or his insurance undertaking in so far as the compensation body in the Member State of residence of the injured party has provided compensation for the loss or injury suffered. Each Member State is obliged to acknowledge this subrogation as provided for by any other Member State.

"Article 7

If it is impossible to identify the vehicle or if, within two months following the accident, it is impossible to identify the insurance undertaking, the injured party may apply for compensation from the compensation body in the Member State where he resides. The compensation shall be provided in accordance with the provisions of Article 1 of Directive 84/5/EEC (the 2^nd Directive). The compensation body shall then have a claim, on the conditions laid down in Article 6(2) of this Directive:

1. where the insurance undertaking cannot be identified; against the guarantee fund provided for in Article 1(4) of Directive 84/5/EEC in the Member State where the vehicle is normally based;

2. in the case of an unidentified vehicle; against the guarantee fund in the Member State in which the accident took place;

3. in the case of third-country vehicles: against the guarantee fund of the Member State in which the accident took place."

13. The following recitals in the preamble to the 4^th Directive are also of relevance:

(25) It is necessary to make provision for a compensation body to which the injured party may apply where the insurance undertaking has failed to appoint a representative or is manifestly dilatory in settling a claim or where the insurance undertaking cannot be identified to guarantee that the injured party will not remain without the compensation to which he is entitled; the intervention of the compensation body should be limited to rare individual cases where the insurance undertaking has failed to comply with its duties in spite of the dissuasive effect of the potential imposition of penalties.

(26) The role played by the compensation body is that of settling the claim in respect of any loss or injury suffered by the injured party only in cases which are capable of objective determination and therefore the compensation body must limit its activity to verifying that an offer of compensation has been made in accordance with the time-limits and procedures laid down, without any assessment of the merits.

(28) The compensation body should have a right of subrogation in so far as it has compensated the injured party; in order to facilitate enforcing the compensation body's claim against the insurance undertaking where it has failed to appoint a claims representative or is manifestly dilatory in settling a claim, the body providing compensation in the injured party's State should enjoy an automatic right of reimbursement with subrogation to the rights of the injured party on the part of the corresponding body in the State where the insurance undertaking is established; the latter body is the best placed to institute proceedings for recourse against the insurance undertaking.

(29) Even though Member States may provide that the claim against the compensation body may be subsidiary, the injured person should not be obliged to present his claim to the person responsible for the accident before presenting it to the compensation body; in this case the injured party should be in at least the same position as in the case of a claim against the guarantee fund under Article 1(4) of Directive 84/5/EEC.

(30) This system can be made to function by means of an agreement between the compensation bodies established or approved by the Member States defining their functions and obligations and the procedures for reimbursement.

(31) Where it is impossible to identify the insurer of the vehicle, provision should be made so that the ultimate debtor in respect of the damages to be paid to the injured party is the guarantee fund provided for in Article 1(4) of Directive 84/5/EEC situated in the Member State where the non-insured vehicle, the use of which has caused the accident, is normally based; where it is impossible to identify the vehicle, provision must be made so that the ultimate debtor is the guarantee fund provided for in Article 1(4) of Directive 84/5/EEC situated in the Member State in which the accident occurred,

14. The agreement contemplated in recital 30 was duly entered into under the aegis of the Comité Européen Des Assurances. Clause 7 of the "Agreement Between Compensation bodies and Guarantee Funds" dated 29 April 2002 to which the MIB was a party, is in the following terms

"7.1. In either of the situations referred to in Clause 6 above (where identification of the vehicle is not possible or where it is impossible to identify an insurance undertaking) the Compensation Body which has received a claim must immediately inform, depending on the circumstances, either the Guarantee Fund defined in Article 1 of Directive 84/5/EEC (the 2^nd Directive) of the Member State in which the accident took place or the Guarantee Fund of the Member State in which the road traffic vehicle which caused the accident is normally based.

7.2. When it makes a compensation payment to an injured party, the Compensation Body shall:

…

- apply, in evaluating liability and assessing compensation, the law of the country in which the accident occurred.

15. The 2003 Regulations, by which the 4^th Directive was implemented, approved the MIB as the compensation body for the purposes of the directive. Regulations 13 and 14 are of particular relevance and are in the following terms:

Entitlement to compensation where vehicle or insurer is not identified"

"13. – (1) This regulation applies where –

(a) an accident, caused by or arising out of the use of a vehicle which is normally based in an EEA State, occurs on the territory of -

(i) An EEA State other than the United Kingdom, or

(ii) a subscribing State,

and an injured party resides in the United Kingdom,

(b) that injured party has made a request for information under regulation 9(2), and

(c) it has proved impossible –

(i) to identify the vehicle the use of which is alleged to have been responsible for the accident, or

(ii) within a period of two months after the date of the request, to identify an insurance undertaking which insures the use of the vehicle.

(2) Where this regulation applies –

(a) the injured party may make a claim for compensation from the compensation body, and

(b) the compensation body shall compensate the injured party in accordance with the provisions of Article 1 of the second motor insurance directive as if it were the body authorised under paragraph 4 of that Article and the accident had occurred in Great Britain.

Reimbursement of foreign compensation body where insurer is identified

14. – (1) Where –

(a) an injured party is resident in an EEA State other than the United Kingdom,

(b) that person has been compensated in respect of an accident by the foreign compensation body of the State where he resides,

(c) the foreign compensation body has paid the compensation to that person under a provision corresponding to regulation 12(3),

(d) the accident in respect of which compensation has been paid was caused by, or arose out of, the use of a vehicle the use of which is insured under a UK insurance policy by an insurer established in the United Kingdom, and

(e) the place where the vehicle is normally based is an EEA State other than the State in which the injured party resides,

the compensation body shall be liable to indemnify the foreign compensation body.

(2) Where the compensation body has indemnified the foreign compensation body under paragraph (1), it is subrogated to the rights of the injured party against the person who caused the accident or that person's insurer to the extent that it has indemnified the foreign compensation body.

(3) All similar rights of subrogation as provided for in other EEA States are hereby acknowledged to the extent required under Article 6(2) of the fourth motor insurance directive.

16. Regulation (EC) No. 864/2007 of the European Parliament and of the Council, dated 11 July 2007 (Rome II), contains the following provisions of relevance to the preliminary issue:

"Article 1

Scope

1. This regulation shall apply, in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters.

Article 2

Non-contractual obligations

1. For the purposes of this Regulation, damage shall cover any consequence arising out of tort/delict, unjust enrichment, negotiorum gestio or culpa in contrahendo.

Article 3

Universal application

Any law specified by this Regulation shall be applied whether or not it is the law of a Member State.

Article 4

General rule

1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs 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 occur.

2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.

3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.

Article 15

Scope of the law applicable

The law applicable to non-contractual obligations under this Regulation shall govern in particular:

i) The basis and extent of liability, including the determination of persons who may be held liable for acts performed by them;

ii) The grounds for exemption from liability, any limitation of liability and any division of liability;

iii) The existence, the nature and the assessment of damage or the remedy claimed;

iv) Within the limits of powers conferred on the court by its procedural law, the measures which a court may take to prevent or terminate injury or damage or to ensure the provision of compensation;

v) The question whether a right to claim damages or a remedy may be transferred, including by inheritance;

vi) Persons entitled to compensation for damage sustained personally;

vii) Liability for the acts of another person;

viii) The manner in which an obligation may be extinguished and rules of prescription and limitation, including rules relating to the commencement, interruption and suspension of a period of limitation."

17. The preamble to Rome II contains inter alia the following recitals:

"(6) The proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought.

(15) The principle of the lex loci delicti commissi is the basic solution for non-contractual obligations in virtually all the Member States, but the practical application of the principle where the component factors of the case are spread over several countries varies. This situation engenders uncertainty as to the law applicable.

(16) Uniform rules should enhance the foreseeability of court decisions and ensure a reasonable balance between the interest of the person claimed to be liable and the person who has sustained damage. A connection with the country where the direct damage occurred (lex loci damni) strikes a fair balance between the interests of the person claimed to be liable and the person sustaining the damage, and also reflects the modern approach to civil liability and the development of systems of strict liability.

(17) The law applicable should be determined on the basis of where the damage occurs, regardless of the country or countries in which the indirect consequences could occur. Accordingly, in cases of personal injury or damage to property, the country in which the damage occurs should be the country where the injury was sustained or the property was damaged respectively.

(18) The general rule in this Regulation should be the lex loci damni provided for in Article 4(1). Article 4(2) should be seen as an exception to this general principle, creating a special connection where the parties have their habitual residence in the same country. Article 4(3) should be understood as an 'escape clause' from Article 4(1) and (2), where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country.

(32) According to the current national rules on compensation awarded to victims of road traffic accidents, when quantifying damages for personal injury in cases in which the accident takes place in a State other than that of the habitual residence of the victim, the court seized should take into account all the relevant actual circumstances of the specific victim, including in particular the actual losses and costs of after-care and medical attention."

18. Does Rome II apply?

The primary issue between the parties is whether Rome II applies to this claim. It is the defendant's case that it does, and that under Article 4(1) the applicable law is that of Spain. It is submitted on behalf of the claimant that it does not, and that in consequence and by virtue of regulation 13 of the 2003 Regulations, the claim must be assessed on the basis of the law of England and Wales, alternatively that if Rome II does apply, then on the proper interpretation of Article 4, the applicable law is that of England and Wales.

19. By Article 1 Rome II will apply, "in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters". The proceedings before me proceeded on the premise that the case involved non-contractual obligations in civil or commercial matters. Mr Alexander Layton QC, who appeared for the claimant, did not concede that that was the case, preferring to reserve his position. But although I did not hear full argument on the point, it appears to me to be clear that the case involves a non-contractual obligation in a civil or commercial matter.
20. But Mr Layton's primary submission is that this is not a situation that involves a conflict of law, and that in consequence Rome II does not apply. He submits that regulation 13(2) provides a free standing right to compensation, the enforcement of which does not involve a choice of law. He argues that once the pre-conditions set out in regulation 13 are met, the MIB is obliged to pay compensation, and, per regulation 13(2)(b), shall compensate the injured party in accordance with Article 1 of the 2^nd Directive as if the accident had occurred in Great Britain. Article 1(7) of the 2^nd Directive as amended provides that each Member State shall apply its laws, regulations and administrative provisions to the payment of compensation by the compensation body
21. In addressing that submission it is first necessary to consider the relationship between Rome II and the 2003 Regulations, in particular regulation 13(2)(b). The 2003 regulations give effect to the 4^th Directive, the purpose of which was to make provision for compensation for injuries resulting from accidents occurring in states other than the state of residence of the injured party. Such situations will typically give rise to a conflict of laws. Regulation 13(2)(b) resolved that conflict in cases where the injured party is a UK national, and where the vehicle in question is uninsured or unidentified, by providing that the injured party shall be compensated by the defendant, as the compensation body, in accordance with Article 1 of the 2^nd Directive and "as if the accident had happened in Great Britain".
22. But Rome II may provide a different answer depending upon the proper interpretation and application of Articles 1 and 4. The approach to the interpretation and application of a regulation of the European Parliament and Council is not in issue. It should be broad and purposive. Secondly recitals in the preamble to an EC measure can assist in the interpretation to be given to an operative provision, see Case 107/80 Adorno v Commission [1981] ECR 1469 at 1484-1485. The use that can be made of a recital to an EC regulation was also addressed in Case C-429/07 Inspecteur van De Belastingdienst v XBV (Judgment of 11.06.2009) at paragraph 31:

"… Moreover, whilst a recital in the preamble to a regulation may cast light on the interpretation to be given to a legal rule, it cannot in itself constitute such a rule (Case 215/88 Casa Fleichhandels [1989] ECR 2789, paragraph 31, and Case C-136/04 Deutsches Milsch Kontor [2005] ECR 110095, paragraph 32 and caselaw cited.)"

23. The purpose of Rome II is to establish uniformity of approach to situations involving a conflict of laws in the context of non-contractual obligations in civil and commercial matters, so that the same law will apply irrespective of the jurisdiction in which an action is brought or of the State of residence of the injured party. Its purpose is confirmed by a number of the recitals contained in the preamble, in particular recital 6 which expressly addresses its purpose, namely to establish uniformity of approach in situations involving a conflict of laws, so as to improve predictability of the outcome of litigation, certainty as to the applicable law and free movement of judgments. Recital 15 identifies the problem that Rome II is intended to address, namely that the practical application of the principle of lex loci delicti, the basic solution for non-contractual obligations in virtually all Member States, varies where the component factors of a case are spread over several countries. Recital 16 states that uniform rules should enhance the foreseeability of court decisions, and ensure a reasonable balance between the interests of the person claimed to be liable and the person who has sustained damage.
24. Both the objective of Rome II, and the reason for the choice of a regulation as opposed to a directive as the means of achieving it, are addressed in the travaux preparatoires, the proposal presented by the Commission to the European Parliament and Council, 2003/0168 (COD). At paragraph 2.3 it states –

"The technique of harmonising conflict-of laws rules fully respects the subsidiarity and proportionality principles since it enhances certainty in the law without demanding harmonisation of the substantive rules of domestic law.

…for the purposes of this proposal a Regulation is the most appropriate instrument. It lays down uniform rules for the applicable law. These rules are detailed, precise and unconditional and require no measures by the Member State for their transposition into national law. They are therefore self-executing. The nature of these rules is the direct result of the objective set for them, which is to enhance certainty in the law and the forseeability of the solutions adopted as regards the law applicable to a given legal relationship. If the Member States had room for manoeuvre in transposing these rules, uncertainty would be reintroduced into the law, and that is precisely what the harmonisation is supposed to abolish. The Regulation is therefore the instrument that must be chosen to guarantee uniform application in the Member States."

25. In the case of a non-contractual obligation arising out of a tort/delict, the purpose of Rome II is achieved by application of the general rule in Article 4(1), namely that the applicable law shall be the law of the country in which the damage occurs, subject only to the exceptions to be found in Article 4(2) and (3). By Article 15 the scope of the general rule is wide, embracing inter alia all aspects of liability, assessment of damages and limitation.
26. Thus when read together, the effect of Articles 1 and 4 is to provide a comprehensive code for the resolution of conflicts of law in all cases involving obligations arising out of a tort/delict.
27. Rome II is a regulation of the European Parliament and of the Council and as such "It shall be binding in its entirety and directly applicable in all member states", see Article 249 of the EC Treaty. Furthermore Article 3 specifically provides that "Any law specified by this Regulation shall be applied whether or not it is the law of a Member State".
28. Domestic courts are obliged to interpret national legislation in a manner which is consistent with and gives effect to rules of European law. The interpretative obligation applies whether the national legislation came into effect before or after the relevant European law. The question therefore arises as to whether regulation 13(2)(b) can be interpreted and applied in a manner consistent with Rome II. It provides that the compensation body must compensate the injured party as if it were the body authorised under Article 1(4) of the 2^nd Directive, which includes the provision that "…each Member State shall apply its laws, regulations and administrative provisions to the payment of compensation by this body…", and "as if the accident had happened in Great Britain". Those provisions are clear. If regulation 13(2)(b) were to be applied in full, the claim would be subject to the law of England and Wales. Thus in so far as it regulates the law to be applied to a claim to the MIB as compensation body, I do not therefore consider that it is possible to interpret and apply it in a manner that is consistent with Rome II.
29. A rule of European law will prevail over inconsistent rules of national law. Such primacy is absolute, and applies whether the natural rule came into being before or after the rule of European law, see Case 106/77 Simmenthal [1978] ECR 629 paras 17-22. Thus if, as I find, regulation 13(2)(b) cannot be interpreted consistently with Rome II, then in so far as they cannot be reconciled, Rome II must prevail.
30. The question then arises as to whether Art. 4 applies in this case. Does the claim involve obligations arising out of a tort/delict? The obligations in this case, whether those of Mr Bartsch, or those of the defendant to compensate the claimant under the 2003 Regulations, both arise out of a tort/delict, namely the culpable want of care by Mr Bartsch. But for his tort/delict, the defendant's obligation to compensate the claimant would not have arisen. It is secondary to the primary liability of the tort feasor.
31. Accordingly I am satisfied that on the proper interpretation of Art. 1, the situation in question is that giving rise to the claim, namely the injury to a UK national in Spain caused by the negligent driving of a German national resident in Spain. That is a situation involving a conflict of laws, and in consequence Rome II applies.
32. But that is not an end to the argument. Mr Layton submits that if Rome II applies, then on the proper application of Article 4, the applicable law is that of England and Wales. There are three strands to the argument. Under Article 4(1) the applicable law is the law of the country in which the damage occurs. Mr Layton argues that the damage in question is that suffered by the claimant when the defendant failed to meet its obligation to compensate him under the 2003 Regulations.
33. Recital 17 (see paragraph 17 above) gives guidance as to the interpretation of Article 4(1). It states that "…in cases of personal injury ... the country in which the damage occurs should be the country where the injury was sustained…". Such an interpretation is entirely consistent with the purpose of Rome II, and is supported by the authors of Dicey, Morris and Collins on The Conflict of Laws 14^th ed 2006 Vol 1 para S35-195.
34. Furthermore it is necessary to analyse the true nature of the damage suffered by the claimant. The purpose of the 2003 Regulations is to provide the machinery for compensating a UK national who has sustained injury in an accident in another member state. The failure of the defendant to fulfil its obligations under regulation 13(2)(b) simply means that the claimant has not been compensated for the injuries sustained in the accident.
35. The point is further demonstrated by the scheme under the 4^th Directive for the reimbursement of compensation bodies, see Articles 6 and 7 at paragraph 12 above. The effect of those provisions is that a compensation body will be entitled to reimbursement from the compensating body or guarantee fund in the member state of the insurance undertaking, or the member state where the vehicle is normally based, or the member state in which the accident took place, whichever is appropriate. Such compensating body or guarantee fund will then be subrogated to the injured party in his rights against the person who caused the accident or his insurer. The 4^th Directive provides a comprehensive scheme for resolution of the difficulties that may arise where a person suffers injury in an accident caused by the use of a motor vehicle and occurring in a member state other than that in which he or she resides. The effect of its provisions is that the compensation body in the injured party's state simply acts as an intermediary. That is also demonstrated by the use of the term "ultimate debtor" in recital 31, see paragraph 13 above. In this case, the defendant is obliged to compensate the claimant under regulation 13(2)(b), but will be entitled to reimbursement from the guarantee fund in Spain; and the Spanish guarantee fund will be subrogated to the claimant's rights against Mr Bartsch.
36. The right to reimbursement gives rise to a further point. The reason for inviting the court to determine the preliminary issue was the recognition that there are differences between the law of England and Wales (and of the other two jurisdictions making up the UK) and the law of Spain with regard to evaluating liability and assessing compensation. For the purposes of this hearing it was not necessary to identify such differences; but I address the preliminary issue on the premise that the computation of the claim under the law of England and Wales or under the law of Spain may yield different results.
37. If the defendant assesses and pays compensation to the claimant on the basis of the law of England and Wales, and is reimbursed by the Spanish guarantee body, the latter's subrogated claim against Mr Bartsch, if it chose to enforce it, would be brought in the Spanish courts, and adjudicated upon under Spanish law. That would be wholly inconsistent with the objective of Rome II, namely that in such cases the same law should apply, whatever court is seized of the matter. Furthermore there could in those circumstances be a shortfall between the sum paid by the Spanish guarantee body to the MIB in reimbursement of the sum paid to the claimant, and the sum recovered by the guarantee body from Mr Bartsch, if under the law of Spain compensation were to be assessed at a lower level than under the law of England and Wales. I should add that the converse could not arise as the subrogation to the rights of the injured party provided for in Arts. 6 and 7 of the 4^th Directive, is limited to the compensation provided to the injured party by the compensation body in his state of residence.
38. Mr Layton's argument in relation to Art. 4(1) can also be tested by considering its possible consequences, albeit in a different factual scenario. If the claimant had been standing talking to a Spanish national when struck by the car driven by Mr Bartsch, and the Spaniard had also sustained injury, then if his submission as to the interpretation and application of Art. 4(1) is well founded, the claims made by the claimant and the Spanish national would be assessed under English and Spanish law respectively. Such an outcome would again be inconsistent with the objective of Rome II.
39. In short the effect of the construction for which the claimant contends would be to allow the injured party's state of residence to determine the law to be applied to the computation of his claim, an outcome wholly contrary to the object of Rome II.
40. I am therefore satisfied that 'the damage' in Art. 4(1) must mean the injury and consequential loss and damage suffered at the hands of the tortfeasor. The claim that gives rise to the right to be compensated by the defendant is that against the tortfeasor, Mr Bartsch, and, subject to the question of whether the claim falls within the exceptions contained in Art. 4(2) and (3), the law applicable to that claim must be the law of the country in which the damage occurred, namely Spain.
41. I should add that I also derive some support for that conclusion from the decision of the Court of Appeal in Henderson v Jaouen and another [2002] 1 WLR 2971, albeit that it concerned the interpretation of a different phrase, 'harmful event', in the context of Article 5(3) of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.
42. But Mr Layton further submits that the case falls within the Art. 4(2) exception, namely that the person claimed to be liable and the person sustaining damage, both have their habitual residence in the same country at the time when the damage occurred. The argument is founded on the proposition that 'the person claimed to be liable' is the defendant. But I do not consider that 'the person claimed to be liable' can sensibly be said to be the MIB. It must refer to the person whose conduct caused the damage, the tortfeasor. That interpretation is consistent with Article 17 which provides that:

"Article 17

Rules of safety and conduct

In assessing the conduct of the person claimed to be liable, account should be taken, as a matter of fact and insofar as it is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability."

43. Furthermore assistance as to the interpretation of Art. 4(2) is to be found in recital 18 which states that –

"Article 4(2) should be seen as an exception to this general principle, creating a special connection where the parties have their habitual residence in the same country."

'Parties' in this context must in my judgment mean the injured party and the tortfeasor.

44. The Art. 4(2) exception would, for example, be likely to apply in a case in which a UK resident was driving in another member state with a passenger who was also a UK resident, and as a result of his negligent driving injured the passenger. But it does not in my judgment have any application to the instant case.
45. Thirdly Mr Layton contends that the case falls within the exception to the general rule contained in Art. 4(3). Assistance as to its interpretation is also to be found in recital 18, the relevant part of which provides that -

"Article 4(3) should be understood as an 'escape clause' from Article 4(1) and (2), where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country."

46. Mr Layton asserts that the case falls within the Article 4(3) exception as "… the right to compensation against the compensation body is manifestly more closely connected to England and Wales" (see claimant's skeleton argument para 35). But the question under Art. 4(3) is not whether the right to compensation is manifestly more closely connected to England and Wales, but whether the tort/delict has such a connection. The answer to that is clear. The tort/delict is that committed by the tortfeasor, Mr Bartsch, against whom the claimant's cause of action lies. It cannot be said to be more closely connected to England and Wales than to Spain.
47. I therefore also reject the contention that the law of England and Wales applies by virtue of Art. 4(3).
48. My conclusion that by virtue of the application of Art. 4(1) of Rome II, the law applicable to the assessment of the claim is that of Spain, also has the consequence that in making a compensation payment to the claimant on that basis, the defendant will be complying with its obligations under as a signatory to the 'Agreement Between Compensation Bodies and Guarantee Funds" of 29 April 2002 (see paragraph 14 above), clause 7 of which provides that when making a compensation payment to an injured party, a compensation body shall apply the law of the country in which the accident occurred.
49. Conclusion

It therefore follows that the questions raised by the preliminary issue must be answered as follows:

i) Rome II applies to determine the applicable law.

ii) By the application of Article 4 the defendant is required to pay compensation to the claimant pursuant to Regulation 13(2)(b) to be assessed in accordance with the law of Spain.

50. Finally I should add that Mr Layton invited me to consider exercising my power to refer two questions to the European Court, namely

1. "Is the reference to the law, regulations and administrative provisions of a Member State in Article 10(4) of Directive 2009/103/EC (the Sixth Motor Insurance Directive) a reference to the domestic law, regulations and administrative provisions of the Member State, or does it include reference to the rules of private international law of the state, including Regulation (EC) No. 864/2007 (the Rome II Regulation)?

2. If the latter, is "the person claimed to be liable" in Article 4(2) of the Rome II Regulation the Compensation Body or the person responsible for the accident?"

As will be apparent from the conclusions at which I have arrived, I do not consider that it is necessary for me to request the European Court to give a ruling to enable me to determine the preliminary issue.