A Law Lords' ruling concerning accident cases abroad could see claims costs rising in the UK

Insurers could see claims costs rise in cases involving an accident abroad following a House of Lords ruling last week, lawyers have warned.

In Harding v Wealands, the Law Lords said that calculating damages for personal injury occurring in a foreign country should be determined according to the law of the country or jurisdiction in which the case is being heard.

The case involved a road traffic accident in New South Wales, Australia, in February 2002. The claimant, Harding, who is English, was a passenger in a vehicle driven by the negligent Wealands, an Australian.

The issue of whether quantum should be assessed under the law of England or New South Wales was of considerable significance to the claimant. If New South Wales law applied, the claimant's general damages would be capped, with no award of interest on certain heads of claim and a greater discount rate applied. The overall effect would be to reduce his recoverable damages by 30%.

Overruling the Court of Appeal, the House of Lords held that the calculation of damages for personal injury is an issue of procedural law and not of substantive law. As the case was being heard in the English courts then English procedural law applies to determine the quantification of damages.

Philip Tracey, injury risk partner at law firm Beachcroft, said: "As a result of the Lords' decision, where there has been an accident abroad, we're likely to see more claimants shopping around for the best forum in which to have their damages assessed.

"We have already seen this trend over the last couple of years and it is likely to continue. Insurers may face higher awards as those dealing with claims in English courts will have difficulty in the future in importing caps on how much the claimant can recover."

Alan Jacobs, partner at law firm DLA, said: "The implication of this judgment for insurers in similar cases is that if the application of a foreign country's laws to the quantification of damages would mean that those damages would be considerably less than under English law, there is the need to be extremely careful in accepting that a claim is subject to the jurisdiction of the English courts, without first having taken detailed advice on that issue." IT

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