Sedgwick v Mapfre Espana Compania De Seguros Y Reaseguros Sa [2022] EWHC 2704 (KB) discusses the application of Article 19 Rome II on direct actions against insurers, and the procedural carve-out of the Regulation.
Claimant lives in Wales. At the time of the accident she was on her honeymoon, staying at the Hotel Blue Sea Callao Garden in Santa Cruz which was owned and operated by a company registered and incorporated in Spain. She was descending an inadequately lit concrete staircase when she fell and sustained severe fracture injuries to her left knee and to her right heel.
Spanish law is the governing law of the insurance contract/policy which provides the tortfeasor with the right of indemnity within the terms of the policy and that the claimant has, under Spanish law, a direct right of action against the insurer. Parties also agree that Spanish law applies per A4(1) Rome II.
The scope of the law applicable is set out in A15 Rome II, which reads in relevant part: “…the law applicable to non-contractual obligations under this Regulation shall govern in particular: (a) the basis and extent of liability including the determination of persons who may be held liable for acts performed by them; (b) the grounds for exemption from liability, any limitation of liability and any division of liability; (c) the existence, the nature and the assessment of damage or the remedy claimed;…”
A1(3) Rome II carves out all matters of procedure and evidence to the law of the forum court: “This Regulation shall not apply to evidence and procedure “. I have reported on the carve-out frequently (see eg here and linked postings there, or use search tag ‘evidence and procedure’).
On a technical side-note, Matthew Hoyle here (he also has a general excellent note on proving foreign law here) correctly notes a confusion with the judge [11] on the issue of proving foreign law, seeing as she conflates assumption of English law as the lex causae when the content of a suggested foreign law is not proven and pleaded (it was so in the case at issue), and assumption in certain circumstances, of the foreign law as being identical to English law.
Issues for determination, are:
i) the resolution of a series of questions relevant to the award of general damages (for non-pecuniary loss) under Spanish law; these are purely issues of Spanish law and of no interest to the blog.
ii) whether the claimant is able to pursue a claim for subrogated losses on behalf of her travel insurer. The contentious issue is whether the claimant herself is able to bring a claim for subrogated losses or whether the claim must be brought in a separate action by the insurer.
[60] if the claim is to be brought separately, it can no longer so be brought because it is now time-barred.
Defendant submits that the claim for those losses incurred by the travel insurer must be brought in accordance with Spanish law and that the proper person entitled to bring a claim against the defendant insurer under A43 Spanish Insurance Contract Act 50/1980 is the third party insurer, not the claimant, as those subrogated losses are losses of the third party payer.
Claimant submits that Spanish law is relevant only to the extent that, as the applicable law of the tort, it provides for recovery of expenses. Spanish law does not govern the relationship between the claimant and the travel insurer, nor the travel insurer’s rights of subrogation by means of the claimant’s claim under those policies. Those matters are regulated, it is argued, by the law governing the insurance policy, in this case, English law, consequential to A19 Rome II (“where a person (the creditor) has a non-contractual claim upon another (the debtor) and a third person has a duty to satisfy the creditor, or has in fact satisfied the creditor in discharge of that duty, the law which governs the third person’s duty to satisfy the creditor shall determine whether and the extent to which the third person is entitled to exercise against the debtor the rights which the creditor had against the debtor under the law governing their relationship.”)
The issue therefore is whether the question of whether the insurer may bring a claim in the name of the insured (rather than by other means) a question of “whether, and the extent to which” the insurer is entitled to exercise the rights of the insured against the third party? Lambert J [73] says it is, as a matter of language and construction, and she also expresses it (less immediately convincing to my mind) as an issue of common sense:
‘Putting the matter another way, it would be distinctly odd if English law determined the right of subrogation and limits upon that right (e.g. the legal principle that there must be full indemnity before subrogated rights attach) but an important aspect of the English law of subrogation (namely that the claim may and must be brought in the name of the insured) may not apply depending on where loss is caused which is to be indemnified.’
Finally, iii) the appropriate rate of interest to apply to the damages award, whether the Spanish (penalty) rate of interest applies or a rate applied under s 35A [E&W] Senior Courts Act 1981. Clearly the issue is whether penalty interest rules are substantive rather than procedural: in the latter case, they are carved out from Rome II, and English law as the lex causae applies.
Troke v Amgen is referred to, and the judge in Swedgwick decides [101]
Whether the decision in Troke is binding upon me or not, I agree with its conclusion and the underlying reasoning which I endorse and follow.
and [102]
the penalty interest provisions are discretionary; they may be excluded if there is a good reason to do so and they are procedural in character.
In my review of Troke I noted its reasoning was unconvincing. Lambert J [101] adds more arguments here, and I find these more convincing, if not conclusive.
Geert.
EU Private International Law, 3rd ed. 2021, Heading 4.8.
gavc law - geert van calster 
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