The UK Supreme Court (Lord Sumption; Lord Mance concurring) today gave judgment in an important case, Cox v Ergo Versicherung AG (‘Cox’), involving three questions of private international law and some ancillary points relating to the doctrine of mitigation. The Indian courts, faced with similar (even identical) questions, have had to apply old common law rules that have been legislatively abolished in the United Kingdom, and the contrast in the results that they have reached is striking.
In May 2004, Major Christopher Cox was killed in a road accident in Germany. His widow, Mrs Cox, who moved back to England soon after the incident, brought a claim against the driver’s German insurer, Ergo, in the English court. This she was entitled to do by virtue of the 2001 Judgments Regulation about which nothing further needs to be said. But what was the applicable law: German or English? This is governed by the Private International Law (Miscellaneous Provisions) Act, 1995. The 1995 Act largely abolished the common law choice of law rule for foreign torts—‘double actionability’—which still applies in India (see below).
Under the 1995 Act, Mrs Cox’s claim against the insurance company was governed by German law. §844 of the German BGB (which is in the section of the civil code dealing with tort) provided, in essence, that Mrs Cox was entitled to damages that would restore her to the financial position in which she would have been had Major Cox not died (). The difficulty arose because Mrs Cox remarried after Major Cox’s death and had two children with her new partner. Under German law, this meant that her new partner was under a legal obligation to provide maintenance and this ‘benefit’ had to be taken into account in computing the damages to which she was entitled under §844. However, in English law, the Fatal Accidents Act, 1976, provides that the court “shall not take into account the re-marriage of the widow or her prospects of re-marriage”: if this Act could be invoked, Mrs Cox was entitled to recover considerably more than under German law.
Mrs Cox argued that §844 did not apply because it was a rule of ‘procedure’: it is a well-established rule in the conflict of laws that questions of procedure are governed by the lex fori. That rule has been partly abolished in England but remains the law in India and was the law in England at the time of Major Cox’s accident. The Supreme Court held, casting some doubt on Lord Hoffmann’s speech in Harding v Wealands, that §844 was a rule of substance, not procedure, because it dealt with the ‘scope’ of the defendant’s duty. Lord Sumption also pointed out that §844 is simply a rule of causation—and therefore a matter of substance—because all it says is that a widow who remarries must give credit for the benefits arising therefrom to the extent it reduces her loss (see ). Lord Sumption therefore appears to treat mitigation as a rule of causation, a view persuasively canvassed by Mr Dyson and Mr Kramer in the latest volume of the Law Quarterly Review. But Lord Sumption held that it was unnecessary to characterise the Fatal Accidents Act because it did not apply to a German tort even if it was a rule of procedure: the Act, properly construed, only contains rules about the assessment of damages for a cause of action arising under the Act. If, therefore, the English court had to apply its own rules of assessment (and not §844), it had to apply the common law rules (including mitigation), not the Fatal Accidents Act. Mrs Cox’s case would fail on either hypothesis.
The Indian courts have considered virtually identical questions in recent years. The starting point is that there is no statutory choice of law rule in India that corresponds to the 1995 Act. As a consequence, any foreign tort litigated in an Indian court is governed by the ‘double actionability’ rule. This was the English choice of law rule until it was largely abolished by the 1995 Act. Double actionability has been the choice of law rule in India since at least 1915. In 1960, the Rajasthan High Court applied it to the Fatal Accidents Act and in 2010, the Punjab & Haryana High Court applied it to the Motor Vehicles Act. This means that the defendant’s act must be shown to be ‘wrongful’ (civilly, not criminally) both in the foreign country and under Indian law, and this can often lead to difficult questions, as Boys v Chaplin amply demonstrates. In Sona Devi, it led to the conclusion that the Motor Vehicles Accident Claims Tribunal in Punjab had jurisdiction to award compensation with respect to a motor accident in Nepal, because the bus was operated by an Indian company and was carrying Indian passengers.
The third question considered in Cox is perhaps even more important in India: when can statutes apply irrespective of proper law? That is, can the Fatal Accidents Act—or other legislation, for example the Workmen’s Compensation Act—apply to an incident that takes place outside India but which has some connection with India? Where statutes explicitly provide that they apply if some particular form of connection exists, there is no difficulty, but statutes are usually silent about this. Mrs Cox argued that the Fatal Accidents Act ought to apply even if the proper law was German because it was an ‘overriding’ or ‘mandatory’ rule of the forum. As Lord Sumption explains, the presumption against extra-territorial operation—which at first sight might appear to be a reason for not construing the Fatal Accidents Act in this way—in fact consists of two distinct questions:
28. It is, however, important to understand what is meant when we talk of the extra-territorial application of an English statute. There are two distinct questions, which are not always distinguished in the case-law. The first question is what is the proper law of the relevant liability. The answer will usually depend on the extent of any connection between the facts giving rise to liability and England or English law. If the proper law of the liability is English law, no question of extra-territorial application arises. In principle the exercise is no different from that which the court performs when it identifies the proper law of a non-statutory tort, by reference to the connection between the facts and the various alternative systems of law … The second question is one of extra-territorial application, properly so-called. It is the question posed by section 14(3)(a)(i) and 14(4) of the Private International Law (Miscellaneous Provisions) Act 1995, which had its counterpart in the common law, namely whether the choice of law arrived at in accordance with sections 11 and 12 is displaced by some mandatory rule of the forum. This is not a choice of law principle at all, but turns on the overriding rules of policy of the forum.
It is thus entirely possible for a statute to apply to a transaction outside India even though the statute is not expressly made applicable to it: while Lord Sumption concluded that the presumption against extra-territorial operation was not rebutted for the Fatal Accidents Act, the problem in general is a difficult one in the conflict of laws, and frequently of practical importance in litigation concerning international transactions (more detail is available in Professor Briggs' article on the subject in the Singapore Journal of Legal Studies, 2005, at page 189).