The Supreme Court considered whether the Civil Liability (Contribution) Act 1978 has mandatory overriding effect applying to all contribution claims in England and Wales regardless of choice of law rules. The Court held it does not, meaning ordinary choice of law rules apply. German law therefore governed the contribution claim, rendering it time-barred.
Background
The claimant, Harry Roberts, was born on 14 June 2000 at a hospital in Viersen, Germany, operated by the appellant, Allgemeines Krankenhaus Viersen GmbH. His father was stationed with UK armed forces in Germany. The claimant alleged that he suffered an acute hypoxic brain injury during birth due to the negligence of an attending midwife employed by the first defendant, the Soldiers, Sailors, Airmen and Families Association – Forces Help (SSAFA). The Ministry of Defence agreed to indemnify SSAFA. The defendants denied liability and brought third party contribution proceedings against the hospital under the Civil Liability (Contribution) Act 1978 (‘the 1978 Act’).
It was common ground that both the claimant’s claim against the defendants and any liability of the hospital to the claimant were governed by German law. The parties agreed that domestic choice of law rules would apply German law to the contribution claim unless the 1978 Act had overriding or mandatory effect. Under German law, the limitation period for the contribution claim had expired. The defendants contended that the 1978 Act applied mandatorily to all contribution claims in England and Wales, displacing the German limitation period in favour of the two-year period under section 10 of the Limitation Act 1980.
The Issue
The central question was whether the 1978 Act has mandatory or overriding effect so that it applies to all contribution claims brought in England and Wales irrespective of choice of law rules, or whether it applies only when domestic choice of law rules indicate that English law governs the contribution claim in question.
Lower Court Decisions
Soole J held that the 1978 Act had overriding effect. He relied upon sections 1(6), 2(3)(c), and 7(3) of the Act as supporting an implication of overriding effect. The Court of Appeal unanimously dismissed the hospital’s appeal, though the judges differed in their reasoning. Irwin LJ and Phillips LJ relied on sections 1(6) and 7(3); David Richards LJ considered section 1(6) decisive, reasoning that the chances of a contribution claim being governed by English law where underlying liabilities were governed by foreign law were ‘small to the point of invisibility’.
The Court’s Reasoning
Correct Starting Point
Lord Lloyd-Jones, delivering the unanimous judgment of the Supreme Court, held that the correct starting point was the identification of the appropriate law by applying domestic choice of law rules. He characterised a contribution claim under the 1978 Act as sui generis but closely analogous to a restitutionary or quasi-contractual claim, and considered that the proper law would prima facie be the law with which the contribution claim is most closely connected.
Overriding Effect Distinguished from Extraterritoriality
Lord Lloyd-Jones emphasised the importance of accurately framing the issue:
The issue is not whether the 1978 Act applies outside the jurisdiction but whether it mandates the application of English law to issues which would otherwise be governed by a foreign law.
He preferred to address the issue as one of ‘overriding effect’ rather than ‘extraterritorial application’, distinguishing it from cases where legislation seeks to regulate activities outside the jurisdiction.
Analysis of the Statutory Provisions
Section 1(6): Lord Lloyd-Jones held that this provision was concerned with defining what liabilities may be taken into account for the purposes of section 1, and cast no light on the prior question of whether the 1978 Act had any application at all. The law governing the principal liability of the tortfeasors to the victim and that governing contribution between them are distinct matters. The Court of Appeal’s reasoning was described as a ‘non sequitur’.
Critically, Lord Lloyd-Jones rejected David Richards LJ’s premise that where underlying liabilities are governed by foreign law, the chances of English law governing the contribution claim would be vanishingly small. He identified numerous situations where a special relationship between the parties (employer/employee, principal/agent, co-trustees, co-directors) governed by English law could mean the contribution claim was most closely connected with English law despite foreign underlying liabilities. He noted a distinguished body of academic opinion supporting this view, including Professor Glanville Williams and the editors of Dicey & Morris.
Section 2(3)(c): This provision was held to be equivocal, equally applicable on either construction, and providing no independent support for overriding effect.
Section 7(3): The reference to superseding ‘any right’ to recover contribution was held to be most obviously a reference to previous common law and equitable rights of contribution in English law. Lord Lloyd-Jones agreed with David Richards LJ that this provision was consistent with either conclusion and therefore provided no assistance.
Legislative History
The Law Commission Report (Law Com No 79, 1977) which gave rise to the 1978 Act was directed at expanding the statutory right to contribution and amending successive proceedings rules — purposes achievable without overriding effect. Subsequent Law Commission working papers expressly stated the 1978 Act applied only where English law was the applicable law:
First, it should be borne in mind that the 1978 Act will only apply to those claims for contribution involving rules of private international law where the law governing the contribution claim (as opposed to [the Plaintiff’s] right of action) is English law.
Prior Authorities
Lord Lloyd-Jones examined authorities including The Benarty, The Kapetan Georgis, The Baltic Flame, and the decision of Chadwick J in Arab Monetary Fund v Hashim (No 9). While acknowledging that overriding effect appeared to have been assumed in several cases, he found that the point had not been directly argued in most of them. As to Arab Monetary Fund, Lord Lloyd-Jones identified two principal criticisms: first, that much of the reasoning was circular, assuming what it sought to demonstrate; secondly, that the absence of foreign law contribution rights should not be regarded as a defect in English law.
Academic Commentary
The weight of academic commentary strongly favoured the appellant’s case. Professor Adrian Briggs was cited as observing that the blanket application of English law to contribution claims is inappropriate where the claim would not otherwise have belonged within English jurisdiction or to English law. Professor Robert Stevens questioned the principled basis for applying the lex fori. Dr Charles Mitchell also criticised Arab Monetary Fund.
Decisive Considerations
Lord Lloyd-Jones identified two considerations as particularly influential. First, there will be many situations in which a contribution claim is governed by English law notwithstanding that underlying liabilities are governed by foreign law, especially where a special relationship exists between the parties. The second part of section 1(6) therefore has scope for application without overriding effect. Secondly, there was no good reason why Parliament should have intended to confer a statutory right of contribution whenever the party from whom contribution was sought could be brought before an English court regardless of the law most closely connected to the claim:
I can see no sound reason why the UK Parliament should be legislating in order to remedy perceived deficiencies in foreign laws in the manner suggested and there is nothing in the legislation to suggest that that was the objective.
Practical Significance
This decision establishes definitively that the 1978 Act does not have overriding or mandatory effect. Contribution claims brought in England and Wales are subject to ordinary choice of law rules and will be governed by the law with which the contribution claim is most closely connected. This has significant implications for cross-border litigation, particularly where underlying liabilities are governed by foreign law. The decision reinforces the fundamental principles of the conflict of laws, including the reasonable and legitimate expectations of the parties, and rejects the approach taken in Arab Monetary Fund v Hashim (No 9) which had been influential for nearly three decades. Practitioners must now carefully analyse choice of law questions as a preliminary step in contribution proceedings with international elements.
Verdict: The Supreme Court unanimously allowed the appeal. The Civil Liability (Contribution) Act 1978 does not have overriding or mandatory effect and does not apply automatically to all proceedings for contribution brought in England and Wales without reference to choice of law rules. German law applied to the defendants’ claims for contribution against the hospital, and those claims were time-barred.
