Supreme Court finds that the Civil Liability (Contribution) Act 1978 is not overriding to displace the law otherwise applicable to the contribution claim

The Soldiers, Sailors, Airmen and Families Association - Forces Help and another (Respondents) v Allgemeines Krankenhaus Viersen GmbH (Appellant) [02.11.22]

Date published

03/11/2022

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This case review was co-authored by Nikita Singh, Trainee Solicitor, London.

The Supreme Court has delivered a much-awaited judgment concluding that the Civil Liability (Contribution) Act 1978 does not have extra-territorial effect. Contribution claims will instead be governed by private international laws otherwise applicable to the contribution claim.

Background

The question of law for the court’s determination arose following proceedings brought on behalf of Mr Roberts, who suffered brain damage at birth in 2000 at the German hospital, Allgemeines Krankenhaus Viersen GmbH (AKV). A claim was made against the Soldiers, Sailors, Airmen and Families Association Forces Help (SSAFA), who employed the midwife present at Mr Roberts’ birth, and an additional claim was made against the Ministry of Defence (MoD), who would indemnify SSAFA in the event of a successful claim.

The SSFA and MoD denied liability and brought a contribution claim against the hospital, AKV, on the basis that, under the Civil Liability (Contribution) Act 1978 (the 1978 Act), they were liable to cover some of the damages of the defendants.

Whilst proceedings were brought in England, it was agreed that the applicable law was German law. Under German law, the contribution claim against AKV would be time-barred. The question for the High Court when considering the applicability of the contribution claim was whether or not the 1978 Act had an overriding effect over private international laws. If it did, the limitation period would be subject to the law of England and Wales and the contribution claim would not be time-barred.

At first instance, the High Court ruled that the 1978 Act did have an overriding effect, notwithstanding German law. AKV appealed. The Court of Appeal unanimously agreed that the 1978 Act was overriding. AKV appealed again and judgment was delivered by the Supreme Court on 2 November 2022.

Issue for determination

The Supreme Court accepted that the ordinary and natural meaning of the 1978 Act was not helpful in determining whether or not it would be extra-territorial. There were no express provisions in the legislation to suggest this, so the question came down to whether any such meaning could be implied from the statutory provisions.

Lord Lloyd-Jones therefore had to consider two central points in the context of the findings of the Court of Appeal when arriving at his conclusion:

  1. There will inevitably be many situations in which a contribution claim will be governed by the law of England and Wales, irrespective of whether the underlying liabilities are governed by a foreign law. The chances of domestic choice of law rules leading to the application of English law to contribution proceedings would not be “small to the point of invisibility”.
  2. There is no sound reason why the UK Parliament should be legislating in order to remedy perceived deficiencies in foreign laws. Further, there is no indication in the provisions themselves to suggest this was the aim.

The Supreme Court held that it would be contradictory to apply English law if the contribution claim was most closely connected to the foreign law, as it was in the case in question.

AKV’s appeal was accepted. The defendants’ claims for contribution against AKV fell to be considered under German law and were therefore time-barred.

Comment

The judgment brings a logical conclusion to the preliminary issue of the applicability of the Civil Liability (Contribution) Act 1978 and sets an important precedent for cross-border civil proceedings.

The lower judgment from the Court of Appeal was already subject to considerable criticism, particularly regarding Chadwick J’s interpretation of Arab Monetary Fund v Hashim [1994], which led to his conclusion that English law would apply to all contribution claims, irrespective of the law which governed the underlying liability.

Prior to this interpretation, two of the leading texts on private international law supported the view that the 1978 Act did not have overriding effect (Dicey & Morris, The Conflict of Laws, 12th ed (1993) and Cheshire & North, Private International Law, 10th ed (1979)). The Court of Appeal judgment therefore sat uncomfortably with the perceived logic.

In practical terms, the judgment will bring welcome clarity to third party defendants. Prior to the ruling, the choice of law rules for contribution claims against third parties in cross border cases would have been determined by English law. Contributory negligence claims made against claimants on the other hand, would have been determined by the governing law of the underlying tort. The Supreme Court judgment has corrected this discrepancy.

However, practically this does mean that in cross border cases being heard in England, defendants hoping to pass the claim to a third party must check the limitation rules underpinning such a recovery at the outset of a case so as not to be left holding the baby.