The Supreme Court’s judgment on whether the Civil Liability (Contribution) Act 1978 has extra-territorial effect
The Soldiers, Sailors, Airmen and Families Association – Forces Help and another (Respondents) v Allegemeines Krankenhaus Viersen GmbH (Appellant)
Introduction
On 2 November 2022, the Supreme Court gave a long-awaited judgment concerning the proper law to govern contribution claims in cross-border torts.
In a unanimous decision delivered by Lord Lloyd Jones, the court held that the Civil Liability (Contribution) Act 1978 (the 1978 Act) does not have mandatory or overriding effect so that it applies to all contribution claims brought in England and Wales. Instead, the issue of whether a third party is obligated to make a contribution to a tort claim is a matter to be determined by the proper law of the tort.
Background
On 14 June 2000, Mrs Lauren Roberts, the wife of a British soldier serving in Germany and herself a former soldier, gave birth to her son, Harry, in the Allegemeines Krankenhaus in Viersen (AKV), a hospital in North-Rhine Westphalia.
AKV was contracted to provide medical services to families and members of the UK Armed Forces by Guy’s & St Thomas’s Hospital NHS Trust in London, which had in turn been contracted by the British Ministry of Defence (MOD). Midwifery services were supplied by nurses employed by the Soldiers, Sailors, Airmen and Families Association (SSFA), under the direction of AKV.
Through his mother, Harry Roberts alleged that he had suffered a severe brain injury at the time of his birth as a result of the alleged negligence of the SSAFA. He brought legal proceedings against the SSAFA and the MOD. The SSAFA and the MOD then served contribution notices on AKV on the basis that if there was fault in Harry Robert’s birth, the hospital was partially responsible.
Although proceedings had been brought in England, all parties agreed that any tort which had occurred would be governed by German law. AKV argued that the contribution claim against it was time-barred under German law. The SSAFA and MOD argued that the 1978 Act had an overriding effect, and therefore the contribution claim was governed by English law, pursuant to which the limitation period had not yet expired.
Accordingly, the parties agreed that the following question fell to be determined as a preliminary issue, as defined by Master Yoxall:
“…whether or not the 1978 Act has mandatory or overriding effect and applies automatically to all proceedings for contribution brought in England and Wales, without reference to any choice of law rules. If not, German law will apply to the Defendants’ claims for contribution against the Part 20 Defendant and they will be time-barred.”
High Court
The issue first came before Mr Justice Soole in the High Court in March 2019.
Mr Justice Soole approached the question in accordance with the Supreme Court judgment of Lord Sumption in Cox v Ergo Versicherung AG [2014] UKSC 22; [2014] AC 1379 (Cox).
Lord Sumption’s starting point was that whether an English statute applies extraterritorially depends on its construction.
However, there was a presumption against extraterritorial application which was “more or less strong”. A statute could impose extraterritorial application expressly, but implied extraterritorial effect was only likely to arise where “(i) the terms of the legislation cannot effectually be applied or its purpose cannot effectually be achieved unless it has extraterritorial effect; or (ii) the legislation gives effect to a policy so significant in the law of the forum that Parliament must be assumed to have intended that policy to apply to any one resorting to an English court regardless of the law that would otherwise apply.”
Mr Justice Soole did not accept that the 1978 Act expressly provided that it has overriding effect. However, he held that overriding effect was implicit in its provisions. He also concluded that the implication of overriding effect was justified because the 1978 Act passed the two tests identified by Lord Sumption in Cox, since (i) its purpose could not otherwise effectually be achieved; and (ii) it gives effect to a policy so significant that Parliament must be assumed to have intended it to apply to anyone resorting to an English court.
He also affirmed as correct the only decision in which the point had previously been determined; namely Chadwick J’s first instance judgment in Arab Monetary Fund v. Hashim (No.9) The Times 10 October 1994) that the 1978 Act did have overriding effect.
Accordingly, Mr Justice Soole held that the 1978 Act applied to all claims for contribution in courts in England and Wales regardless of the law applicable to the contribution claim under any anterior choice of law analysis.
Court of Appeal
The Court of Appeal (composed of Lords David Richards, Irwin and Phillips) unanimously dismissed AKV’s appeal in a judgment dated 17 July 2020.
The court was invited by the appellant to find that Hashim was wrongly decided, and that the 1978 Act did not pass the two tests identified by Lord Sumption in Cox, since it could be and was effectually applied without being given extraterritorial effect.
In the leading judgment, Lord Justice Irwin rejected both these arguments. He began by setting out the background facts, before considering the various authorities on the issue. He noted that the Law Commission had expressed the opinion in a Working Paper that the “better view” was that the 1978 Act did not have extraterritorial effect, and that this opinion was shared in the 12th edition of Dicey and Morris on the Conflict of Laws.
He also noted the widespread academic criticism of Chadwick J’s decision in Hashim, including Professor Robert Stevens in the 1995 edition of Restitution and the Conflict of Laws, Professor Briggs in a 1995 article in the Lloyds Maritime and Commercial Law Quarterly, and Dr Charles Mitchell writing in Restitution Law Review in 1997.
However, Lord Justice Irwin concluded that the language of the 1978 Act, although “somewhat tortuous in its structure”, favoured the respondent’s interpretation. Turning to consider the purpose of the 1978 Act, he found it to be “tolerably clear” and accepted Chadwick J’s reasoning in Hashim that there would be a “defect” if principal liability could be established in an English court against one tortfeasor, including establishment of principal liability according to foreign law, but a contribution claim could be defeated.
Finally, applying Lord Sumption’s two tests from Cox, Lord Justice Irwin accepted that the provisions of the 1978 Act could be applied without extraterritorial effect, but considered that the policy to be construed from the Act could not.
Both other members of the court gave short concurring judgments.
Accordingly, the appeal was dismissed.
Supreme Court
Unsurprisingly, given that the Court of Appeal’s decision rejected the view almost universally taken by academics, including two leading texts on private international law, it was subject to considerable criticism.
The decision of the Supreme Court, given by Lord Lloyd Jones, was to allow AKV’s appeal and unanimously hold that the 1978 Act did not have overriding effect.
The ordinary and natural meaning of its provisions were neutral as to whether it had overriding effect, and the court found no assistances in its legislative history.
However, the court was persuaded that the 1978 Act was not intended to displace conventional choice of law rules. In particular, their Lordships could see no good reason why Parliament should have intended to give overriding effect to the 1978 Act. The justification given by Chadwick J in Hashim, that Parliament intended to remedy a failure in foreign law to provide for contribution claims, was disapproved. There was no “sound reason” for the UK Parliament to legislate to remedy perceived deficiencies in foreign laws. Additionally, it would be contrary to principle for a court to apply English law if a contribution claim was more closely connected with foreign law, and inconsistent with giving effect to the reasonable and legitimate expectations of the parties (citing Dicey, Morris & Collins and Briggs).
Accordingly, the 1978 Act did not have overriding effect. It does not apply automatically to all contribution claims brought in England and Wales. German law applied to SSAFA and the MOD’s claims against AKV and as such those claims were time-barred.
Comment
The Supreme Court’s judgment brings welcome clarity to third party defendants and practitioners, as well as bringing the case law back into alignment with the weight of academic opinion.
However, it has practical implications for any defendant hoping to claim a contribution from a third party based over a border in relation to a case heard in England and Wales. Practitioners dealing with similar cases will have to take careful note of foreign limitation periods, or risk ending up in the same spot as the SSAFA and the MOD.
Links to judgments:
Roberts – High Court: https://www.bailii.org/ew/cases/EWHC/QB/2019/1104.html
Supreme Court – Cox v Ergo: https://www.bailii.org/uk/cases/UKSC/2014/22.html
Roberts – Court of Appeal: https://www.bailii.org/ew/cases/EWCA/2020/926.html
Roberts – Supreme Court: https://www.bailii.org/uk/cases/UKSC/2022/29.html
Article written by Alethea Redfern.
