The areas of work in which we have particular expertise, experience and excellence.
The areas of work in which we have particular expertise, experience and excellence.
Articles, News | Mon 6th Feb, 2023
The big news this week is that, as foreshadowed by Roderick Abbott here, CPR Part 44.14 is to be amended to reverse the decision in Ho v Adelekun [2021] UKSC 43. The amendment, which comes into force on 6th April 2023, will allow a Defendant to set off a costs award in its favour against a costs award in favour of the Claimant. So, for example, where a Claimant succeeds in obtaining an award of damages in the sum of £25,000 and an award of costs in the sum of £10,000, the Defendant may set off any costs award in its favour against the total of £35,000. This raises an interesting question. Should the Defendant’s costs award be offset against damages first, with any shortfall being offset against costs; or vice versa? If the former, the Claimant will lose his or her damages, but if the latter, his or her solicitor will lose out. The answer, surely, will be found in the terms of the retainer between solicitor and client; something to think about in the next two months, in default of which we recommend issuing claims before the amendment comes into force. This is particularly advisable given the other amendment taking place on 6th April 2023 – reversing the decision in Cartwright v Venduct [2018] EWCA Civ 1654 – accepted Part 36 offers will now have the same effect as court-ordered damages awards, meaning that Defendants may set off costs awards against settlements. All very sensible, no doubt, but we foresee an avalanche of issuing prior to 6th April; any firms representing Claimants who do not issue their claims before that date may well find themselves on the receiving end of a professional negligence action should the new rules operate to reduce a Claimant’s settlement or damages figure. You have been warned.
Civil liability for breach of merchant shipping health and safety regulations
In the case of Prior v Peras Ltd[1] heard recently in the Admiralty Court by Admiralty Registrar Davison, the Admiralty Registrar confirmed that the Merchant Shipping and Fishing Vessels (Provision and Use of Work Equipment) Regulations 2006 (the “MS(PUWE) Regs”) do confer a civil right of action. Given that the arguments in favour of those regulations conferring a civil right of action apply equally to other merchant shipping health and safety regulations, it is likely that a similar conclusion would be drawn in respect of those regulations also.
Statutory regulation of health and safety at work in the UK is largely governed by the ‘six pack’ regulations made under the Health and Safety at Work Act (“the HSWA”) 1974 (so named because there were originally six sets of statutory instruments which implemented the various EU Directives stemming from the Framework Directive 89/391/EEC). The HSWA originally provided (at s.47(2)) that any breach of a duty imposed by the regulations made pursuant to the powers contained in that Act was actionable, unless the regulations provide otherwise. Some of the regulations did make such provision: the Management of Health and Safety at Work Regulations 1999 for example originally excluded civil liability, until amended in 2003.
For a time, claimants enjoyed the additional level of protection that the regulations conferred; particularly the regulations which imposed strict liability duties, such as the Provision and Use of Work Equipment Regulations 1998. In the seminal case of Stark v Post Office[2] the Court of Appeal held that the duty in reg 6(1) of PUWE 1992 (replicated by reg 5(1) of PUWE 1998) to provide safe work equipment was an absolute obligation, so that an employer was in breach of the duty if an employee was injured as a result of defective work equipment, even if the defect was latent and could not have been discovered on inspection.
Of course, the general rule that breach of the regulations was actionable changed in 2013, when s.69 of the Enterprise and Regulatory Reform Act 2013 (“ERRA”) amended s.47 of the Health and Safety at Work Act 1974 so as to remove civil liability for breach of health and safety regulations made under that Act.
The six pack regulations contain exclusions and do not apply to the Master and crew of ships. The exclusions reflect special pleading, on the part of the maritime industries at the time of the implementation of the original EU directives in the UK, for more time to introduce changes in an international trade and for regulations that reflect the particular difficulties of operating at sea across jurisdictions. Therefore a separate body of regulation (the merchant shipping regulations) has grown up to implement the EU Directives in a way that is particular to merchant shipping. Gradually, the merchant shipping regulations have come to offer a very similar level of protection to crews as is provided by the six pack regulations. Whereas the six pack regulations were made by the Secretary of State for Work and Pensions pursuant to powers given by the HSWA, the merchant shipping regulations are made by the Secretary of State for Transport pursuant to powers given by the Merchant Shipping Act 1995.
The issue in Prior arose because the MS(PUWE) Regs and the Merchant Shipping Act 1995 do not state in terms that a breach of those regulations is intended to be actionable. Where a statute does not expressly state that breach of regulations made in the exercise of powers conferred by that statute shall be actionable, the question of whether breach confers a civil right of action is a question of construction, i.e. determining what was Parliament’s intention.
The following principles may be used to determine whether a regulation confers a civil right of action:
a. the provision of criminal penalties in section 121(5) of the Act;
b. the obligation in section 121(1) was not expressed as lying on any specific person;
c. section 121(2) gave the Secretary of State a power to exempt vessels from the ambit of any rules;
d. the certification provisions in sections 122–125 of the Merchant Shipping Act lay uneasily with the notion that a breach of the rules could lead to civil liability; and
e. the legislature must have envisaged, when enacting section 121(1) of the Act, that the Secretary of State would promulgate rules of a fairly detailed and comprehensive nature, particularly in light of the fact that the Rules had already been in existence for 20 years.
a. The General Notes to the MSA 1970 said that s.19 (the enabling provision which gave the Secretary of State power to make regulations) was ‘designed to bring so far as is possible, working conditions on board a ship into line with conditions prevailing on land’
b. When s.19 MSA 1970 was replaced by s.21 MSA 1979, the General Notes to the Act said ‘The Act represents a substantial step towards the elimination of the differences in the employment safety legislation between terrestrial and maritime employees’. The Notes to s.21 said ‘The Section is analogous to the scheme under the Health and Safety at Work Act 1974 and represents a determined policy to bring the regulation of safety and health on ships into line with those relating to persons on land’.
c. S.21 MSA 1979 was replaced by s.85 MSA 1995 with no relevant changes. It is therefore difficult to see how Parliament could be taken to have intended that it should alter the position of seamen as it had been since 1979.
In Prior v Peras Ltd the Court held that the Merchant Shipping and Fishing Vessels (Provision and Use of Work Equipment) Regulations 2006 were plainly intended by Parliament to confer a civil right of action.
The irony is of course that although Parliament intended the MS(PUWE) Regs to confer a civil right of action so as to bring the protection afforded to seamen in line with the protection afforded to workers on land, ERRA has since removed the civil right of action for breach of the six pack regulations but does not address regulations made pursuant to powers conferred by statutes other than the Health and Safety at Work Act (e.g. the Merchant Shipping Act). It may be that that omission was due to Parliamentary oversight, but until legislation is introduced to remove the civil right of action, any breach of the MS(PUWE) Regs continues to give rise to a claim and should be pleaded.
About the Author
Linda Nelson was called in 2000 and is ranked in both the Legal 500 and Chambers and Partners for her travel law work. Linda regularly advises in international personal injury cases with cross-border issues, particularly those falling within the jurisdiction of the Admiralty Court. She is well-versed in claims involving the international carriage conventions, the package holiday regulations, Merchant Shipping regulations, ship collisions and issues of jurisdiction, applicable law and limitation. She is a contributing author to Munkman on Employers’ Liability (writing the ‘Shipping and Workers on Ships’ chapter) and co-authored ‘Work Accidents at Sea’ (now in its second edition).
Jurisdiction and Applicable Law: Al Mana Lifestyle Trading LLC v United Fidelity Insurance Co PSC [2023] EWCA Civ 61
Issue
Applicable law and jurisdiction under multi-risk insurance policies which identify multiple jurisdictions: hierarchy or free choice?
Background
The claimants were a group of companies (the Al Mana Group) operating in the Middle East and Gulf region, who claimed upon a suite of seventeen “multi-risk” insurance policies which were underwritten by the defendant and issued in the United Arab Emirates, Qatar and Kuwait. The claims were all for indemnities for business interruption losses said to arise from the Covid-19 pandemic with an estimated combined value of $40m.
The relevant clause:
“APPLICABLE LAW AND JURISDICTION:
[1] In accordance with the jurisdiction, local laws and practices of the country in which the policy is issued.
[2] Otherwise England and Wales UK Jurisdiction shall be applied,
[3] Under liability jurisdiction will be extended to worldwide excluding USA and Canada.”
The defendants’ case was that the clauses provides for the exclusive jurisdiction of the court of the country in which the policy issued (“the local court”), with English or Welsh jurisdiction serving as a fallback in the event the local court could/would not accept jurisdiction.
The claimants’ case was that the clause gave them a free choice between the local court or England. Alternatively the English court’s jurisdiction would be available as long as the local court’s jurisdiction is not mandatory under the law of that country.
First instance
Mrs Justice Cockerill in the High Court accepted the Claimants’ primary case. She employed the approach of the Supreme Court in Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1, [2021] AC 649 at [77] : considering “how the words of the contract would be understood by a reasonable person to whom the document should be taken to be addressed”, that is to say “an ordinary policyholder” and not “a pedantic lawyer who will subject the entire policy wording to a minute textual analysis”.
The word “otherwise” in the clause is most naturally considered as equivalent to “or” i.e. the clause provides for a choice.
Moreover the problem with regarding the first sentence as providing the primary rule, with the second sentence providing for a fallback, is that the clause does not identify the circumstances in which the fallback is triggered.
Finally there are also “the commercialities or practicalities”: either there was a real prospect that the local court would not accept jurisdiction, in which case it was unattractive for a claimant to have to bring proceedings there in order to find out whether it would accept jurisdiction; or there was no realistic prospect of jurisdiction being declined in which case the second sentence of the clause was otiose; and it made sense to provide for a single neutral venue, namely the English court, particularly as common issues could arise under policies issued in each of the three jurisdictions where the defendants are located.
Appeal
Judgment delivered: 31st January 2023
Bench: LLJ Males, Andrews, Nugee
Decision: majority LLJ Males & Nugee; dissent LJ Andrews
The first instance judge asked herself the right question, which is how the words of the contract would be understood by a reasonable policyholder. Her construction of the clause, however, was mistaken.
The strong first impression was that the first sentence contained the primary jurisdiction selected by the parties (local law), while the second provided for the jurisdiction of England and Wales as a fall-back. It is significant, upon further textual analysis, that the first sentence deals both with jurisdiction and governing law (local), whereas the second sentence is confined to jurisdiction. Even if English jurisdiction was invoked, the English courts would have to apply the local law and practices. This is second best to the local court applying the local law.
The fact the second sentence deals only with jurisdiction shows that the opening words “in accordance with” were intended to be mandatory. Thus the choice of jurisdiction of the local court was also mandatory.
The word “otherwise” was apt to introduce the jurisdiction of the English court only as a fall-back, available if the local court did not accept jurisdiction.
In conclusion the local courts had been willing to accept jurisdiction, therefore the clause did not give the English court jurisdiction over the claims.
Lady Justice Andrews dissented, agreeing with the Cockerill J for the reasons she gave.
Commentary
A cautionary tale for underwriters: to guarantee English jurisdiction as a true choice, make this clear in the language. “Otherwise” may be understood as “alternatively” more readily than “or”, and “in accordance with” can confer priority. As ever, get the language right to save the fight.
About the Author
One of the more junior members of the team, Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. He is now instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims.
[1] Unreported, 30 November 2022. Linda Nelson acted for the Claimant.
[2] [2000] ICR 1013
[3] Per Lord Simonds in Cutler v Wandsworth Stadium Ltd [1949] AC 398 at 407
[4] Per Lord Kinnear in Black v Fife Coal Co Ltd [1912] AC 149, cited with approval by Lord Simonds in Cutler at 407
[5] [2001] 2 Lloyd’s Rep. 443
[6] Per Lord Kay in George Ziemniak v ETPM Deep Sea Ltd [2003] EWCA Civ 636 at paragraphs 49-54
[7] Lord Kay in Ziemniak at paragraphs 42-47
Call: 2000
Call: 2016
