Subrogation within the EU: not so simple
Chris Deacon, a solicitor at Stewarts Law LLP, highlights a case that could prevent the recovery of insurer outlays in claims arising from a fatal accident brought under English law
In Bianco v Bennett [2015] EWHC 626 (QB) the English High Court ruled that the widow of the deceased, who had received payments upon his death under an Italian workplace insurance scheme, could not recover those sums from the negligent third party/his insurer because the widow’s claim was brought under the English Fatal Accidents Act (FAA). When assessing a claimant’s entitlement to damages under the FAA, ‘benefits paid as a result of the death’ are disregarded.
The decision is equally relevant to travel and private medical insurers, because payments they make to the deceased’s estate or dependents following a fatal accident overseas may fall into the same ‘benefits’ category and, if this decision is correct, would therefore be irrecoverable from the third party.
The case is one of the first to consider Article 19 of the Rome II Regulation. Article 19 suggests that the law applicable to the relationship under which the right to subrogation arises (which is usually a contractual relationship under the policy of insurance) should determine the recoverability of the subrogated claim. In Bianco, the judge held that as English law did not recognise the subrogated cause of action under the FAA the subrogation rights arising under Italian law could not be pursued.
An alternative interpretation of Article 19 is that once the claimant has established their claim under the applicable law of the tort (in Bianco, English law), then the law governing the insurance contract under which the right to subrogation arises (in Bianco, Italian law) then determines the assessment of the insurer’s subrogated claim. This line of argument would not have been available to the claimant in Bianco because she had failed to plead the relevant provisions of Italian law.
The decision highlights the importance of seeking specialist advice on the interplay between the potential applicable laws, particularly where the subrogated claim is a valuable one. It is understood the decision may be subject to appeal.