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Insurance Companies Wrangle Over Train Crash Liabilities

Few industries are more international than insurance and disputes inevitably arise as to the country where disagreements should be resolved. However, one case concerning a catastrophic train crash in America revealed that, at least within Europe, clear rules apply.

Twenty-four people died and many more were injured in a collision between freight and passenger trains in California. A French insurance company, and another domiciled in Britain, were co-insurers for the passenger train’s operator. The British insurer paid $65 million into a fund set up to compensate victims, but the French insurer refused to make any contribution on the basis that it was a case of double insurance and that, under the terms of its policy, no liability arose.

The British insurer, which had to pay more into the fund than it would otherwise have done, launched proceedings in London, seeking a $7.8 million contribution from its French counterpart. However, the latter argued that the High Court had no power to consider the matter, which should be tried in France.

In upholding that argument, the Court noted the general rule contained within Article 4 of the Brussels Regulation 1215/2012 that those who are domiciled in an EU member state should be sued in the courts of that member state, whatever their nationality. In declining jurisdiction, the Court found that the British insurer had failed to establish that any of the exceptions to that rule applied.