Supreme Court confirms wide interpretation of "damage" for the purposes of the common law jurisdictional gateway for tort claims and clarifies when English law may apply to foreign law claims

The Supreme Court has held in the context of a personal injury claim (Lord Leggatt dissenting) that direct damage in the jurisdiction is not required in order for a claim to come within the tort jurisdictional gateway in the CPR, so that permission can be granted to serve the proceedings on a defendant outside the jurisdiction (subject to also establishing that there is a real issue to be tried and the English court is the appropriate forum): FS Cairo (Nile Plaza) LLC v Brownlie [2021] UKSC 45.

It has been unclear for some time whether the common law test was the same as the test under the recast Brussels Regulation (and the Lugano Convention), where direct damage in the jurisdiction is a requirement, so this decision provides clarification.

Outside of the personal injury context, the mere fact there has been some financial loss incurred where the claimant is based may still be insufficient to come within the gateway, but it will be necessary to see how the principles laid down by this decision are applied in future cases.

In all cases a claimant will still have to prove that England is the appropriate forum for the claim, so even where the gateway is passed the court retains the power to prevent unsuitable cases proceeding before the English courts.

The Supreme Court also provided guidance on pleading and proving foreign law. There are two conceptually different rules: the "default rule"; and the "presumption of similarity" rule. The default rule treats English law as applicable when foreign law is not pleaded by any party. The presumption of similarity rule applies where a foreign law is pleaded as being applicable, but no detail is provided as to the content of that law. In those circumstances, the court may (in effect) apply English law if it is reasonable to expect that the foreign law is likely to be materially similar to English law on that issue.

Given the uncertainty over when a court will consider it reasonable to expect that a foreign law is materially similar to English law, the safer course is to obtain foreign law advice and expressly plead the content of that law.

Background

This case has had a long and complicated procedural history which has resulted in a number of different courts considering the legal issues in the case and reaching different conclusions.

Lady Brownlie was injured and her husband died in a car accident in Egypt in 2010 during an excursion organised through the concierge at the Four Seasons Hotel Cairo. Other family members also died or were injured.

Lady Brownlie brought proceedings in England to recover damages in contract and in tort, initially against a different company in the Four Seasons group, and obtained permission to serve that company outside the jurisdiction. That permission was overturned by the Court of Appeal on the basis that the claim did not come within the tort gateway in the CPR. Permission was granted to appeal to the Supreme Court, given the uncertainty over how the tort gateway should be interpreted.

The Supreme Court, however, following the admission of further evidence, considered there was no good arguable case that the company sued was in fact the owner or operator of the hotel, and therefore overturned the grant of permission to serve outside the jurisdiction. In those circumstances, the correct interpretation of the tort gateway did not arise. However, the appropriate test was considered by the court at length in obiter comments. The majority (Lady Hale and Lords Wilson and Clarke) considered that direct damage in the jurisdiction was not required in order to come within the tort gateway. Lords Sumption and Hughes disagreed. (See our post on that decision here.)

In light of the finding concerning the ownership of the hotel, Lady Brownlie obtained permission to substitute FS Cairo (Nile Plaza) LLC (“FS Cairo”), an Egyptian company, as the defendant and to serve it outside of the jurisdiction.

FS Cairo appealed to the Court of Appeal. The two issues before the court were whether the claims came within the tort gateway in the CPR and whether there was a serious claim to be tried on the merits (which entailed considering to what extent foreign law needed to be pleaded and proved).

The tort gateway in the CPR provides (PD 6B, para 3.1(9)):

“3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where….

(9) A claim is made in tort where –

(a) damage was sustained or will be sustained within the jurisdiction; or

(b) damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction.”

The Court of Appeal held by a majority that the claims came within the tort gateway and satisfied the test that there was a serious issue to be tried (see our blog post here).

FS Cairo appealed to the Supreme Court.

Decision

The court dismissed the appeals, finding that the claims came within the tort gateway and had a reasonable prospect of success, applying where necessary the presumption of similarity rule in respect of Egyptian law.

The tort gateway

Lord Lloyd-Jones (with whom Lord Reed, Lord Briggs and Lord Burrows agreed) gave the lead judgment on this issue. Lord Leggatt dissented.

The court considered there was no reason to limit "damage" in gateway 9(a) to damage which completes a cause of action. There was also no reason to apply in English domestic rules the distinction between direct and indirect damage which had developed in the Brussels regime. It was an over generalisation to say the gateway had been amended with a view to assimilating the common law rules and the Brussels regime rules in their entirety.

"Damage" within the gateway simply referred to actionable harm, direct or indirect, caused by the wrongful act alleged. This reading reflected the ordinary and natural reading of the word and was in accordance with the purpose of the provision and with principle.

The court noted, however, that there is an important difference between a case involving physical damage, such as the present case, and a case involving the financial consequences of a tort which is wholly economic in nature. The latter can give rise to complex and difficult issues as to where the damage was suffered, calling for a careful analysis of transactions.

The court accepted that, as illustrated by such cases, the mere fact of some economic loss, however remote, felt by a claimant where they were based, would be an unsatisfactory basis for the exercise of jurisdiction, but this was not such a case.

In a case of personal injury or wrongful death, the court held, “damage” within the tort gateway extends to the actionable harm caused by the tortious act, including all the bodily and consequential financial effects which the claimant suffers. In this context it is neither necessary nor appropriate to seek to limit the scope of the provision by a restrictive reading or by attempting to distinguish between direct and indirect effects, a distinction which (the court said) can give rise to great difficulty and uncertainty.

This wider reading of "damage" would not confer on all claimants in personal injury cases a right to bring proceedings in the jurisdiction of their residence, as the requirement for England to be the appropriate forum would provide a robust and effective mechanism for preventing this.

On the facts of the case, the court considered that all the heads of claim (damages for personal injury, damages for her husband's wrongful death, and damages for bereavement and loss of dependency) related to actionable harm suffered in the jurisdiction, being part of the physical, financial and social detriment which the claimant suffered as a result of the tortious conduct of the defendant. Lady Brownlie had largely endured the pain, suffering and loss of amenity consequent on her own personal injury in this jurisdiction and the financial consequences of her husband’s death had also largely been sustained here.

Pleading and proving foreign law

Lord Leggatt gave the unanimous judgment of the court on this issue.

The court distinguished between two conceptually distinct rules, the default rule and the presumption of similarity rule.

So far as the default rule is concerned, this treats English law as applicable when foreign law is not pleaded. Parties are not obliged to plead foreign law, even where a foreign law would clearly apply, and if they do not do so, the court will apply English law. This is not contrary to the choice of law rules (under the Rome I and Rome II Regulations, including where they are incorporated into English law as retained EU law) as those rules do not apply to evidence and procedure.

In contrast, if a party pleads that a foreign law is applicable, they must show that they have a good claim or defence under that law. The presumption of similarity is engaged where the content of the foreign law isn't pleaded, but the court is prepared to apply English law on the basis that it is reasonable to expect that the applicable foreign law is materially similar to English law on that issue. That will be a question of fact in each case, although it is possible to draw some general conclusions from the authorities:

• The presumption is more likely to be applied where the applicable foreign law is another common law system rather than a system based on Roman law, although there are "great and broad" principles of law which are likely to impose an obligation in all developed legal systems.
• It is less likely to be appropriate where the relevant domestic law is contained in a statute, although that depends on the nature of the statute/particular provision, including whether it codifies general principles or introduces a local scheme of regulation.
• There is more likelihood of being able to rely on the presumption at an early stage in proceedings compared to trial.

Where evidence of foreign law is adduced (which need not necessarily be by means of evidence from an expert in that law) the scope for reliance on the presumption is reduced, but it may still apply if the evidence is incomplete in some respect.

As the claimant had pleaded that Egyptian law applied, there was no scope for applying English law under the default rule. Where there were gaps in the content of Egyptian law put forward, the judge had, however, been entitled to rely on the presumption that Egyptian law was materially similar to English law on the relevant issues when determining that she had satisfied the requirement to show her claims had a reasonable prospect of success.