Private International Law of Reinsurance and Insurance

Raymond Cox; Louise Merrett and Marcus Smith

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3 INTERPRETATION

3.1 As we have seen, the result of the developments discussed in Chapter 2 is that private international law issues in insurance and reinsurance, both in the context of jurisdiction and choice of law, are now governed by a complex patchwork of statutory schemes enacting into law various European Conventions and Directives, European Regulations as well as residual areas which remain governed by the common law. The existence of European rules, whether implemented by statute or applying directly, raises issues of interpretation which are discussed in this chapter. Some of the issues are common to all European legislation and will therefore apply to both jurisdiction and choice of law, in other areas more specific considerations will need to be addressed. But the underlying principle is one of uniformity. The aim of achieving a single European market, with consistency and uniformity throughout, would be undermined if the courts of each Member State interpreted community provisions in a different way. 3.2 This need for a uniform interpretation and application of community rules is met in a number of ways, each of which will be outlined in this chapter. First and foremost has been the development of an autonomous approach to interpretation. One of the key features of European Court of Justice case law, reflected in the approach taken by the courts of the Member States themselves, is the adoption of a “purposive” or “teleological” approach to construction which in turn leads to autonomous or independent community meanings for the terms used in community instruments. Other means by which the aim of uniformity is achieved are (a) the power and duty of national courts to make references to the European Court of Justice and to take into account decisions of the European Court of Justice and other national courts on questions of interpretation; and (b) the use of other sources, particularly the official reports. 3.3 As a preliminary matter it is also important to note that the text of European legislation is written in all official languages of the European Union and all of them are “equally authentic”. Thus, although the English versions of both the Brussels Convention and Rome Convention are appended for convenience to the enacting legislation, all versions are equally authentic.1 Thus, English courts will have to be prepared to consider the texts of the Brussels Regulation and the Rome Convention in other languages, where there are material differences between the texts.

B. AUTONOMOUS INTERPRETATION

3.4 It is a general principle of English law that treaties that have been incorporated into the law of the UK (such as the Brussels Convention or the Rome Convention, but not the Brussels Regulation) are to be construed on broad principles, rather than in the strict manner according

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to which statutes are generally construed.2 Article 18 of the Rome Convention reinforces this, providing that in the interpretation and application of the Convention rules, “regard shall be had to their international character and to the desirability of achieving uniformity in their interpretation and application”.3 3.5 But in the European context, these general principles have been refined and developed into a new approach to the interpretation of community instruments; that is a “purposive” or “theological” approach.4 The approach the courts will take (for example to the interpretation of the insurance directives) is described by Hobhouse LJ in Credit Lyonnais v. New Hampshire Insurance Co Ltd.5

“It is clear from the recitals to the [insurance] directive that one of its purposes is to protect the interests of policyholders. It therefore has a similar character to those articles of the Rome and Brussels Conventions which make special provision for classes of contract where it is considered that the parties are not or may not be in an equal bargaining position and considerations of policy are to be applied.… such concerns underlie and inform the understanding of the drafting of provisions such as these. Similarly it is always important to have in mind that they are intended to have a uniform international application. Their provisions and the Acts by which they are incorporated into English law should not be given a construction deriving from specifically English concepts which are not within the scheme of the relevant international convention.”

3.6 The “purposes” by reference to which legislation is to be interpreted are to be identified from the preamble or recitals, the text of the instrument itself and from its context.6 Some purposes are common to all the European legislation under consideration. Thus, courts very often refer to the fact that the interpretation adopted should be one which contributes to legal certainty.7 Certainty is required in order to “eliminate obstacles to legal relations and to strengthen in the Community the legal protection of persons therein established” which is the ultimate object of the Brussels Regulation and the Rome Convention.8 3.7 Another overriding aim which is apparent in the jurisdiction rules is the need to avoid inconsistent decisions and, linked to this, the need to trust the courts of the other Member States.9 Other considerations are relevant in specific contexts: thus the court has stressed that those provisions which allow a defendant to be sued in a Member State other than that of his domicile (principally those in Article 5 of the Brussels Regulation) should be construed narrowly (since the fundamental purpose behind the jurisdictional rules is to allow a defendant to defend himself in his own state). Other provisions may have been guided by different aims - such as the protection of a particularly vulnerable party as in the context of the insurance

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directives as seen above and the special rules which apply to consumers in both the Brussels Regulation and Rome Convention. The approach to construction in a case where European legislation is in issue is thus to ascertain the purposes behind the provision and then to seek to give the provision an independent community meaning which is consistent with those purposes.10 3.8 As we will see in the following chapters, autonomous meanings have been given to a number of the basic features of the community legislation which will be discussed. Thus, whether a case involves a “civil or commercial matter” will depend on an autonomous meaning of that phrase developed in the case law of the European Court of Justice and the national courts, not any English law definition which would apply in a purely domestic case (see paras 5.3 below). Similarly, as we will see, “matters relating to contract”, “matters relating to tort”, the meaning of a “branch or agency” and many other concepts have been given an independent community meaning. 3.9 This purposive approach to construction and the search for an independent community meaning are clearly vital. But there are other special considerations which may apply in situations involving European legislation and which must also be borne in mind when a question of construction arises.

1. Official Commentaries

3.10 As we have seen, the Conventions are each supplemented by a report written by members of the working group who were responsible for drafting the Convention, giving background and an explanation of the text. The most important for our purposes are the Jenard report11 which accompanied the Brussels Convention, the Schlosser report12 which accompanied the amended Brussels Convention on the accession of the UK, and the Giuliano-Lagarde13 report which accompanied the Rome Convention. In each case, the enacting legislation expressly permits the English courts to consider the relevant Report in ascertaining the meaning and effect of any provision in the Convention.14 National courts as well as the European Court of Justice make reference to the various reports as a matter of course and numerous references will be found to them in the following chapters. In any case where there is a doubt about the construction of a particular provision the relevant official report may well be the best place to start.15 3.11 Reference to other travaux préparatoires or preparatory work is more difficult. The general approach of English courts to travaux préparatoires has been cautious. Such references should be “rare” and should only be made where the material involved is “public and accessible” and “clearly and indisputably points to a definite legislative intention”.16 This is likely to be particularly so in the case of the Conventions for two reasons. In the first place, the existence of the reports referred to above. Given that the purpose of these reports was clearly to provide an authoritative opinion as to the purpose and meaning of the relevant

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Conventions - they are each published in the Official Journal 17 and were written by persons who played a role in the drafting of the Convention - it may be questioned whether reference to the travaux préparatoires could provide any real help in establishing a definite legislative intention. 3.12 Secondly, although English law permits recourse to the travaux préparatoires of an international treaty, this is not the case as regards all states party to the Rome Convention. Reference to such materials may, therefore, result in inconsistencies in interpretation being introduced.18 3.13 There is no official report accompanying the Brussels Regulation. It is likely that in practice the courts will continue to have recourse to the reports already referred to.19

2. References to the European Court of Justice

3.14 The position is complex and differs depending on the instrument involved. 3.15 The European Court of Justice was given jurisdiction in relation to the Brussels Convention by a Protocol originally agreed in 1971 (see paras 2.13-2.21 above).20 In general, it allowed but did not require references to be made by appellate courts, but provided that a reference shall be made by the House of Lords together with all other final courts of appeal, wherever a decision on interpretation is necessary to enable it to give judgment. 3.16 In relation to the Brussels Regulation the position is different. The procedure is set out in Article 68 of the EC Treaty which provides: “Where a question of the interpretation of [the Brussels Regulation] is raised in a case pending before a court or tribunal of a Member State against whose decision there is no judicial remedy under national law, that court or tribunal shall, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon.” Thus the only court which can now make a reference is the House of Lords.21 3.17 As it is not a European Treaty, the Lugano Convention is not within the jurisdiction of the European Court of Justice.22

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3.18 The position in relation to the Rome Convention is more complicated. At the time the Rome Convention was concluded, there was considerable controversy over the question of referrals to the European Court of Justice. Clearly, without such a mechanism there is a danger that the courts in each Member State will interpret the Convention differently, jeopardising the harmonisation of conflict rules that the Convention seeks to achieve. But some countries have internal problems relating to allowing such a reference. Furthermore, some Member States, including the United Kingdom, argued that provision for the European Court of Justice to have jurisdiction at all was undesirable as it was feared that foreign businessmen would opt for trial outside England, and indeed the Community, rather than face the prospect of a referral to the European Court of Justice on choice of law. 3.19 Eventually, on 19 December 1988, two Protocols on the interpretation of the Rome Convention were signed in Brussels, namely “the first Protocol on the interpretation by the Court of Justice of the European Communities of the Convention” and “the second Protocol conferring on the Court of Justice of the European Communities certain powers to interpret the Convention”.23 The reference in section 3(1) of the 1990 Act to the “Brussels Protocol” is a reference to the first Protocol.24 3.20 The first Protocol defines the scope of the jurisdiction of the European Court of Justice and the conditions under which that jurisdiction is to be exercised. States accept the jurisdiction of the European Court of Justice under this Protocol. The concerns over compulsory references were dealt with by providing that the courts may rather than must request a ruling, unlike the position under the Brussels Regulation.25 In exercising its discretion, the referring court is entitled to take into account any appropriate factor, including the wishes of the party not to refer. 3.21 The second Protocol confers powers on the European Court of Justice to interpret the Rome Convention, i.e. it gives the European Court of Justice the power to deal with references made under the first Protocol. 3.22 The coming into force of the two Protocols was inter-related. The first Protocol had to be ratified by seven States in respect of whom the Rome Convention was in force.26 It would then enter into force three months later, unless the second Protocol was itself not in force. If the second Protocol enters into force on a later date, then the first Protocol would enter into force on the same date.27 3.23 The second Protocol needed to be ratified by all the States party to the treaty establishing the European Economic Community. That only occurred with the ratification of Belgium on 5 May 2004. 3.24 As has been described,28 the Rome Convention may eventually be turned into a Community instrument. References to the European Court of Justice would then also be under Article 234 of the EU Treaty. From a Community standpoint, this would have the advantage that the European Court of Justice would have identical jurisdiction over all Community private international law instruments. In particular, such references would no longer be optional. 3.25 In relation to the Insurance Directives, as Community “acts”, Directives are susceptible to preliminary reference under Article 234 of the Treaty.29 The position is thus the same as for the Brussels Regulation.

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3.26 The English courts must determine cases in accordance with the principles laid down by any relevant decision of the European Court of Justice.30 Thus, if there is a European Court of Justice decision on the meaning of “relating to contract” in the context of the Brussels Convention, the English court must take notice of such decision if the same issue arose before it, arguably whether in the context of the Rome Convention, the insurance directives, or the Lugano Convention, and regardless of whether or not that court would have had the power to make a reference itself on the particular point.31

3. Other sources

3.27 In addition to having regard to the different languages in which the Convention has been expressed (see para. 3.3 above), English Courts may properly have regard to foreign case law32 (although the level of the court deciding the case in question and the process of law reportingmust be borne in mind33) and relevant text books and articles34 when considering the construction of community legislation.