After the Government Actuary in Scotland announced in September 2019 that the personal injury discount rate of minus 0.75% was to remain some commentators have predicted that forum shopping in Scotland is likely to increase due to the greater levels of compensation a claimant may receive North of the Border.
Obvious examples of forum shopping are when both the wrongdoer and the victim are domiciled in England and the accident occurs in Scotland or when an accident occurs in England and the defendant is domiciled in Scotland.
But what are the prospects of a claimant being able to secure higher levels of compensation in the future? The answer will, it seems, turn on the particular facts and circumstances of each case.
If claimants’ agents intend to go on a forum shopping spree in Scotland then they will have to have the jurisdiction of a Scottish Court, which is relatively straightforward: proceedings can be raised in Scotland if the defendant is domiciled in Scotland or if the harmful event occurred in Scotland in terms of Schedule 8, rule 2 of the Civil Jurisdiction and Judgments Act 1982 (the Act).
It is possible that forum shopping could be most prevalent in motor claims on the basis that proceedings can be raised against the insurer of the wrongdoer in terms of Regulation 2 of the European Communities (Rights against Insurers) Regulations 2002. It is sufficient for the purposes of jurisdiction for the insurer to have a place of business in Scotland rather than their registered office in terms of Section 42’(4) of the Act. This means that if an motor insurer has a place of business in Scotland but the accident occurs in England and the claimant is domiciled in England proceedings can still be raised in Scotland.
Forum shopping in Employer and Public liability claims involving large Corporate insured’s who have a place of business in Scotland are as equally likely on the basis that the Corporate Insured will have a place of business in Scotland.
Once the claimants’ agents have established that a Scottish court has jurisdiction to hear the case, they will require to satisfy the Scottish Court, firstly, that it is the natural or most appropriate forum to hear the case (the doctrine known as forum non conveniens) and, secondly, that the law that should govern the case should be the Law of Scotland.
If proceedings are raised in Scotland when the accident occurred in England then the onus rests on the defendants’ agents to establish that there is another available forum which is clearly more appropriate to hear the case than the Scottish Court e.g. an English court.
It is essential on considering this matter to identify the issues that are likely to arise at the Trial. Which Court has the most real and substantial connection to the case? Factors to consider are the availability of witnesses including medical experts. How many are there and will they be inconvenienced by having to travel significant distances to attend the trial and at considerable expense?
The process of citing witnesses outside the jurisdiction of the Court is more cumbersome and less straightforward. Are there any relevant documents held such as Police records and medical records? Less weight will be attached to the fact the accident occurred in England and the domicile of the defender if, for example, liability is not in dispute.
In the conjoined cases of Cook vVirgin Media Ltd and McNeil V. Tesco Plc (2015) EWVA Civ 1287 the claimants’ accidents occurred in Scotland, were both domiciled in Scotland, but raised proceedings in England. Jurisdiction was founded on the domicile of the defendants. A judge struck out the claims on the basis that Scotland was the more appropriate forum by exercising the courts management powers in terms of Section 49 of the Act. The subsequent appeal by the claimants was unsuccessful.
This case provides a salutary lesson to claimant’s agents to take care when considering whether to raise proceedings in Scotland when the most convenient forum to hear the case is in England. If the claimant is domiciled in England and the accident occurs in England then the possibility exists that a Scottish court may stay/sist or dismiss a court action raised in Scotland if the court finds that it is clearly more appropriate for the case to be dealt with in the English courts.
If a Scottish Court does consider that it is the most appropriate forum to hear a case then the next hurdle the claimants’ agents will still have to overcome is to establish that the applicable law for the case should be the Law of Scotland.
Regulation No 864/2007 of the European Parliament and Council (known as Rome ll) provides that although in general terms the law in delict/tort is determined by the place of the relevant accident where the wrongdoer and the victim both have their habitual residence in the same Member State then the place of mutual residence dictates the choice of law.
If both the claimant and the wrongdoer are domiciled in England, for example, then English Law is likely to govern the claim unless the claimants’ agents can establish that delict/tort is manifestly more closely connected with another country in which case the law of that country applies.
Rome ll provides that the quantification of damages in delictual actions is determined according to the applicable law. It therefore appears likely that the issue of the discount rate would fall to be determined by the applicable law rather than the law of the Court hearing the case.
Another potential argument that will no doubt be advanced by insurers is that a different discount rate of minus 0.75% should be applied in the appropriate case. Section 1 of the Damages (Investment Returns & Periodical Payments) (Scotland) Act 2018 inserted section B1 to the Damages Act 1996.
The section provides that the Court may take a different rate of return into account if a party to the action shows that the different rate is more appropriate in the circumstances. However, it is likely that there must be something exceptional or special about the case for the Court to apply a different discount rate. In Tortolano v Ogilvie Construction Ltd. S.C 313 which related to an earlier version of the legislation it was highlighted that an example could be when the claimant was a non-UK taxpayer.
In conclusion, the disparity between the discount rates North and South of the Border is likely to increase forum shopping but to do so successfully is by no means straightforward and will depend on the particular facts and circumstances of each case.
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Calum Mathieson, Partner
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