The Court of Justice of the EU passes judgement about civil liability in tort actions

In reference to a suit brought against a German insurer represented by Dobrev and Lyutzkanov Attorneys-at-Law, seeking compensation for non-material damages from death of a loved one which occurred in a road traffic accident on German territory, on December 15th, 2022 the Court of Justice of the EU passed a judgement on a reference for a preliminary ruling filed by the Sofia City Court (Case С-577/21). The judgement is of great practical significance inasmuch as it provides an answer to a number of questions regarding the interrelation between the principles of EU law and the national legislation concerning civil liability in tort actions.
In that particular case, the Bulgarian court has established that a close relative of the claimants has died in a road traffic accident on the territory of Germany. In that context, the court has assumed that, pursuant to article 4(1) of Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations, the law of the country where the direct damages have occurred, i.e., Germany, should apply, inasmuch as the direct damage from the road traffic accident is death. This resolution is in line with the consistent practice of the CJEU, as manifested, e.g., in its judgements in cases С-409/09, С-484/09, С-300/10, and 277/12. The question arising in this case is what compensation for non-material damages would be determined and subject to what preconditions, if German law is to be applied. To determine the content of the applicable law, the court allowed an expert analysis which stated that compensation for non-material damages is due solely if there is evidence that the claimants have suffered mental health impairment in the sense of an actual illness as a result of the death of their loved one.
Those provisions of the applicable law differ substantially from the Bulgarian Obligations and Contracts Act, which provides that any and all non-material damages must be compensated as a matter of justice. Of course, since its adoption that latter provision has been significantly curtailed by interpretative rulings of the Supreme Court, restricting the grounds on which non-material damages can be claimed, as well as the persons who may claim and receive such compensation; nonetheless, the case in point fits into one of the scenarios where the Bulgarian law does provide for compensation. The discrepancies between the Bulgarian and the German law have prompted the Sofia City Court to file another reference for a preliminary ruling with the CJEU containing two questions that can be summarized as follows:
– whether German law comes in conflict with the provisions of EU directives determining the scope of liability of an insurer who sold a civil liability insurance policy in the event of a road traffic accident;
– whether a Bulgarian court of law may interpret the applicable German law in connection with the principles of EU law.
By its judgement dated December 15th, 2022, the Court of Justice of the EU assumes that the purpose of EU law is not to harmonize national legislations regarding civil liability in tort actions, but rather, to guarantee that the insurer must cover any and all damages attributable to the delinquent, in keeping with the applicable limits of insurance liability. CJEU explicitly states that the German law provides an objective criterion determining whether, and to what extent, compensation is due, without in any way restricting the right of claimants to receive compensation for damages attributable to the delinquent.
The conclusions formulated in the judgement clearly show that the principles of EU law do not restrict the possibilities for member states to adopt their own, national legislation concerning civil liability in tort claims. The member states are entirely free to determine the preconditions for applying the right to compensation, the standards for determining it, as well as the grounds for excluding the liability of the delinquent. The caveat, however, is not to allow a discrepancy between the scope of liability of the delinquent and the obligation of the insurer in a civil liability case.
In that sense, the judgement of the Court of Justice of the EU supports the definite conclusion that in this specific case, no principles of EU law would allow a national court to refuse to apply another country’s law, even when the outcome of its application would differ from the outcome of the national substantive law being applied by the same court. In this context, it should be borne in mind that it is exactly with a view to the need to synchronize the application of the law in private relations with an international element that the EU has adopted regulations that provide guidance as to how the applicable substantive law is to be determined. Therefore, the principle of international private law that norms are to be formulated to resolve conflicts between national legal systems has been kept in place.
The Court’s judgement on the reference for a preliminary ruling is, in this case, a success for Dobrev and Lyutzkanov Attorneys-at-Law, which is a party to the proceedings and has presented arguments exactly to the effect that EU law does not restrict the freedom of the national legislator to to create rules concerning civil liability in tort actions.