Case Note: Nicholls & Anr v Mapfre [2024] EWCA Civ. Spanish Interest Awards and Subrogated Loss



Background & issues

The judgment of the Court of Appeal was handed down on Thursday 27 June 2024 in three conjoined appeals. The Appellant in each case (and Defendant at first instance) was a Spanish insurance company (Mapfre) sued (in direct right pursuant to Spanish law) under the Odenbreit jurisdiction that was available prior to the end of the Brexit transition period. The appeals reached the Court of Appeal by different routes (reflecting the Courts in which the first instance decisions had been reached):

  • Nicholls and Woodward were separately tried in the County Court (in Luton and Norwich respectively). At first instance, each Claimant was awarded interest (on damages assessed pursuant to Spanish law) on the basis of principles developed from and (generous) rates stipulated by Spanish Insurance Contract Law 50/1980. In Woodward the Trial Judge (HHJ Walden-Smith) rejected the Claimant’s primary submission that an award of “Spanish law interest” should be awarded pursuant to Article 15 of the Rome II Regulation (No 864/2007). However, in both Woodward and Nicholls, the Trial Judges exercised a procedural discretion to award interest pursuant to section 69 of the County Courts Act along Spanish law lines (following the principles and awarding an interest rate equivalent to that directed by the applicable Spanish law). The Defendant in each case (Mapfre) appealed the first instance decisions as to interest. The appeals were jointly heard by Martin Spencer J ([2023] EWHC 1031 (KB)) who, dismissing the appeals, accepted the (primary) submission that the award of interest was a matter of substantive law within the meaning of Article 15 of Rome II to be dealt with according to the applicable law of the tort (Spanish law). On appeal, it was further held (strictly, obiter) that the first instance Judges did not have a procedural discretion to award interest on a Spanish law basis. Mapfre further appealed the Nicholls and Woodward decision on first-tier appeal (with permission granted for a second-tier appeal by Stuart-Smith LJ);
  • Sedgwick [2022] EWHC 2704 (KB) was tried by Lambert J in the High Court in late 2022. In common with the County Court judgments in Woodward and Nicholls (but in contrast with Martin Spencer J’s judgment on first-tier appeal), Lambert J rejected the primary submission that the award of interest was a matter of substance and determinable by the applicable law of the tort, but did accept the secondary submission that the award of Spanish law interest could and should be made through the exercise of a procedural discretion pursuant to section 35A of the Senior Courts Act. Lambert J also awarded Ms Sedgwick the subrogated claim for losses (repatriation and expenses) funded by third party insurers and, in doing so, rejected the submission by Mapfre that Ms Sedgwick lacked standing/entitlement to bring this claim (and that, as a matter of substantive Spanish law, it required the third party insurer to be a co-Claimant in order to recover its own loss). The determination of this issue (in the Claimant’s favour) required consideration of Article 19 of the Rome II Regulation. Mapfre also sought to appeal the interest and subrogation elements of the Sedgwick decision. Permission to appeal was again granted by Stuart-Smith LJ.

On reaching the Court of Appeal, Nicholls, Woodward and Sedgwick were joined to be heard/resolved at the same time (before a three-judge panel: Coulson, Dingemans and Stuart-Smith LJJ). The following issues fell to be decided on appeal (slightly, but – it is hoped – neutrally reworded from the Court of Appeal judgment):

Issue 1: whether interest payable under Article 20 of Spanish Insurance Contract Law 50/1980 (a species of interest commonly, but perhaps inaccurately, referred to as “Spanish penalty interest”) is a matter of “procedure” within the meaning of Article 1.3 of the Rome II Regulation (No 864/2007)?

Issue 2: if Spanish interest of this kind is a matter of procedure, does an English Judge trying a personal injury claim nevertheless have the procedural discretion (pursuant to section 35A of the Senior Courts Act or section 69 of the County Courts Act) to award interest at a rate equivalent to the rate which would apply under Article 20 of the Spanish law?

Issue 3 (for the purposes of the Sedgwick appeal only): was the Respondent (Ms Sedgwick) entitled to bring in her own name the subrogated claim for (third party insurer funded) losses reflecting the costs of repatriation and medical expenses?

Dingemans LJ delivered the leading judgment. Stuart-Smith LJ added a short paragraph indicating initial scepticism with the Court’s approach to Issue 1, but also indicating that, ultimately, he agreed with this approach. Coulson LJ added a short concurring note.

Issue 1: Spanish interest principles and rates were procedural or substantive?

This issue was resolved in the Claimants’/Respondents’ favour and Mapfre’s appeal was dismissed.

In summary, the Court’s conclusions rested on the central premise that the award of interest under Article 20 of Law 50/1980 was an integral part of substantive Spanish law damages assessment (and could not, therefore, be detached as a separate item of procedure pursuant to Article 1.3 of Rome II):

  1. Spanish interest is “effectively part of the nature and the assessment of damage or remedy claimed” (see, Article 15(c) of Rome II). It is so effectively “intertwined” with the assessment of Spanish law damages under the Baremo system that it falls naturally within Article 15(c) (the Court did not obtain much assistance in reference to Article 15(d)) and, accordingly, was not a matter of procedure within Article 1.3 of Rome II;
  2. Under the Spanish system of assessment an award of Spanish interest under Article 20 of Law 50/1980 precluded the uprating of damages to reflect the passage of time since damage/loss was sustained (“in accordance with the increase of pensions in Spain”) which would otherwise take place. The interplay of Spanish interest and Baremo assessment supported the Court’s conclusions as to the substantive nature of Article 20 interest;
  3. Ungenerous (to an English lawyer’s eyes) Baremo awards could be (effectively) increased by the payment of penalty interest and, in the circumstances, this again supported the contention that Spanish interest was an integral element of the system of assessing a personal injury Claimant’s damages.

In reaching these conclusions the Court was keen to emphasise that it was not deploying Spanish law in order to set a dividing line between procedure (Article 1.3 of Rome II) and substance (Article 15 of Rome II): for these purposes, “procedure” has an autonomous meaning which is not to be identified by recourse to the approach taken in any particular EU/former EU Member State. Instead, the Court was using Spanish law for a different and permissible purpose: to reach an accurate understanding (by reference to the Spanish law expert evidence presented at first instance) of the manner in which Spanish law damages are assessed (in order to understand whether Spanish interest is/is not an integral/intertwined element of the Spanish law damages award).

Issue 2: if, conversely, Spanish interest was procedural, was there a procedural discretion to adopt a Spanish law approach?

This secondary issue was also – albeit making no difference to the outcome – resolved in the Claimants’/Respondents’ favour and Mapfre’s appeal was dismissed.

The Court’s primary conclusion was that Maher v Groupama [2010] 1 WLR 1564 (CA) sanctioned the approach taken by the first instance Judges; it was implicit, therefore, that the Court rejected Mapfre’s submission that the Rome II Regulation had altered/affected the discretion as to interest which was available to a Trial Judge (a submission derived from the fact that Maher – a Court of Appeal decision – was a pre-Rome II authority). Second, the Court referred back to its conclusion that Spanish interest was an integral element of a Spanish law damages award and this justified the exercise of the Court’s unfettered discretion to award interest along Spanish law lines. Third, CPR Part 36 awards did not affect this conclusion: the Part 36 regime ran along a parallel, but separate, procedural track.

Issue 3 (Sedgwick appeal): was Ms Sedgwick entitled to bring the subrogated claim in her own right?

This issue was resolved in Ms Sedgwick’s favour and Mapfre’s appeal was dismissed. In common with Lambert J at first instance, the Court did not appear to have been much assisted by the CJEU authorities on which Mapfre relied (see, Ergo Insurance v IF P & C [2016] RTR 14 and Fonds des Garantie v Victoria Seguros [2023] IL Pr 24). In Ms Sedgwick’s case, Spanish law permitted the recovery of a third party insurer’s losses, but Spanish law required this insurer (as Claimant) to bring the claim in this regard. However, Ms Sedgwick’s third party insurance contract was an English contract governed by English law.

The Court resolved the Spanish law/English law conflict in this regard by reference to Article 19 of Rome II and by proceeding from first principles construing Article 19 thus: “Where … [an accident victim] … has a … [tort] claim … [against a tortfeasor or, here, Spanish insurer], and …   [a travel/medical insurer] has a duty to satisfy the … [the victim], or has in fact satisfied the … [the victim] in discharge of that duty, the law which governs the … [travel insurer’s] duty to satisfy the … [victim] shall determine whether, and the extent to which, the … [travel insurer] is entitled to exercise against the … [tortfeasor/Spanish insurer] the rights which the … [victim] had against the … [tortfeasor/Spanish insurer] under the law governing their relationship.” Dingemans LJ held as follows, “This means that the laws of England and Wales determinewhether, and the extent to which, [the third party insurer] is entitled to exercise against [Mapfre] the rights which [Ms Sedgwick] had against [Mapfre].’ In my judgment, this means that the laws of England and Wales will determine whether Ms Sedgwick can bring that part of the claim which has been paid by in her own name. Under the laws of England and Wales Ms Sedgwick can bring the claim against Mapfre for the costs of repatriation and medical costs, subsequently paid to her by under her travel insurance. This does not seem to be a surprising conclusion.”


Nicholls et al, is a further contribution to the growing (but still limited) body of English case law which considers the boundary between substance and procedure in a Rome II context. It is further support for the contention – suggested by Professor Dickinson,[1] among others – that a sensible distinction can be drawn between:

  • Those rules which govern the administrative or judicial machinery by which the assessment of damages exercise is to be conducted (a steer that the rule should be regarded as procedural within the meaning of Article 1.3); and,
  • Those rules which are so intertwined with the assessment of damages (that is, the loss suffered by the Claimant and/or the financial award made) that they should be regarded as substantive and not procedural.[2]  

Nicholls et al performs the further service of reconciling a number of irreconcilable decisions on the same point decided by English Courts in the past several years: see, excluding the first instance decisions which were the subject of this appeal, AS Latvijas Krajbanka v Antonov [2016] EWHC 1679 (Comm); Scales v MIB [2020] EWHC 1747 (QB); Troke v AMGEN [2020] 4 WLR 159 (QB); Royalty Pharma Collection Trust v Boehringer [2021] EWHC 2692 (Pat)).

Matthew Chapman KC represented the claimants, instructed by Blake Morgan LLP, Slater and Gordon UK and Leigh Day.

Read the full judgment now handed down by the Court of Appeal.

[1] A Dickinson, The Rome II Regulation (2008).

[2] See, M Chapman, The Rome II Regulation in the English Courts [2015] JPIL 114, 120.

Featured Counsel

Matthew Chapman KC

Call 1994 | Silk 2017

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