Procedural Fairness and Cross-Border Litigation: Insights from Alton v Powszechny Zaklad Ubezpieczen.

Published: 22/01/2025 | News


In Alton v Powszechny Zaklad Ubezpieczen [2024] EWCA Civ 1435, the Court of Appeal provided valuable guidance on pleading amendments, limitation, pleading foreign law, and the proportionality of striking out claims.

The judgment arose from an appeal against the decision to reinstate a claim previously struck out by Powszechny Zaklad Ubezpieczen (“PZU”), the Defendant and a Polish insurance company.

 

Case Background

The Claimant, Ms Elysa Alton, was involved in a two-vehicle road traffic accident on the M20 motorway on 12 September 2017. The second vehicle was a lorry driven by Mr Ratajski. The lorry was registered in Poland, and PZU was Mr Ratajski’s third-party liability insurer.

The Claimant’s solicitors, MJW Law, sent a letter to InterEurope AG (“InterEurope”), acting as claims handlers for PZU, on 16 September 2019 to advance her personal injury claim and seek the insurer’s name. InterEurope did not provide the insurer’s name but indicated that liability was not an issue. To protect the three-year limitation period, the Claimant filed a claim form on 12 September 2020 with InterEurope as the Defendant.

The Particulars of Claim served on 5 January 2021 erroneously alleged that InterEurope was a United Kingdom (“UK”) insurer. The Particulars of Claim also erred by identifying the Third Party (Rights Against Insurers) Act 2010 and the European Communities (Rights Against Insurers) Regulations 2002 in the cause of action. These provisions were inapplicable because they only pertain to vehicles based in the UK.

Attempts to amend the claim to substitute PZU as the Defendant led to prolonged procedural disputes, including applications to strike out the claim for defective pleadings and to amend the pleadings to assert a direct cause of action under Polish law.

The strike-out application came before Deputy District Judge Pithouse (the “DDJ”) on 10 March 2022 for a hearing estimated at half an hour. The claim was struck out. However, Ms. Alton successfully obtained permission to appeal the DDJ’s order to strike out her claim.

While the appeal was pending, her solicitors submitted a reamended Particulars of Claim on 2 November 2022. The revised pleading corrected the legal basis of her claim, invoking Article 822(4) of the Polish Civil Code, which grants individuals the right to bring claims directly against insurers for liabilities covered by insurance policies.

Article 18 of Rome II (which has survived Brexit) supported this new legal basis, which governs the law applicable to non-contractual obligations. Mark Winton, a legal executive at MJW Law, confirmed in his witness statement that the earlier reliance on the incorrect legal provisions resulted from an oversight. He acknowledged that his initial pleadings failed to reflect the available direct action rights under Polish law, as specified in the reamended claim – this clarification aimed to rectify procedural defects while maintaining the substantive merits of the case.

 

The Court of Appeal Reinstates the Claim

The Court of Appeal upheld Judge Parker’s decision to reinstate the claim, offering guidance as follows:

The DDJ’s decision to strike out the claim was flawed due to:

1. incorrectly doubting the Claimant’s options to cure the pleading against PZU through amendments;

2. failing to consider alternative remedies, such as an “unless order” to compel amendment within a set time; and

3. neglecting the balance of prejudice, which disproportionately harmed the Claimant while imposing no significant prejudice on PZU.

 

Providing Practical Pointers on Pleadings for Practitioners

Cross-border Disputes

The judgment reflects an evolving approach to foreign law in English courts post-Brexit, where procedural fairness and proportionality influence the treatment of such issues. Foreign law must be pleaded and proven as a fact, often requiring expert evidence (for guidance in this respect see Nile Plaza) LLC v Brownlie [2022] AC 995 often referred to as Brownlie II).

However, where the opposing party’s knowledge of the law is evident, courts may accept inferential arguments to allow amendments. The courts will likely be increasingly pragmatic in considering parties’ access to resources and knowledge. Therefore, defendants, especially foreign insurers, may bear a higher burden to clarify their stance on foreign law to avoid unnecessary litigation costs and procedural delays.

 

A New Legal Basis and Limitation

The Court provided provisional guidance on limitation issues under section 35 of the Limitation Act 1980 and Rule 17.4(2) of the Civil Procedure Rules. Amendments introducing a new legal basis under foreign law could still relate to the “same or substantially the same facts” as the original pleading.

The need to plead foreign law as a fact was emphasised. However, the failure to initially identify specifically Article 822(4) of the Polish Civil Code did not justify striking out the claim. The insurer’s familiarity with Polish law mitigated concerns about surprise or prejudice.

 

Drafting Pleadings

The Court of Appeal considered and affirmed Park v Kim [2011] EWHC 1781 (QB), where Tugendhat J observed that courts should generally allow parties an opportunity to amend defective pleadings unless there is no realistic prospect of rectification.

However, its criticism of the Claimant’s legal advisers underscores the importance of diligence and precision. Procedural missteps, such as failing to amend pleadings promptly or adequately articulating the legal basis for claims, can jeopardise a case and lead to judicial censure.

Practitioners must ensure that pleadings accurately identify the applicable legal framework, especially when dealing with foreign law. Errors in identifying the defendant or the legal basis for the claim can lead to significant procedural complications.

 

Proportionality and Fairness

The Court reinforced the Overriding Objective, which mandates that cases be handled justly and efficiently, and the need for proportionality. The Court discouraged striking out as a punitive measure and favoured remedies short of striking out.

Practitioners acting for defendants seeking to strike out claims should be prepared to address whether defects are truly irremediable and why amendments would not suffice.  The Court also emphasised the need for fairness, noting that claimants should not be unduly penalised for their representatives’ errors when defects can be rectified without prejudice to the opposing party.

This balanced approach promotes fairness and encourages constructive resolution of procedural disputes. The Court of Appeal was clear that courts must weigh the potential harm to claimants from losing their claims against any inconvenience to defendants from addressing amendments.

By carefully weighing the prejudice to both parties, the Court demonstrated how this factor shapes procedural outcomes. For claimants, the potential loss of a valid claim due to technical defects carries substantial prejudice. Conversely, defendants must show tangible harm beyond procedural inconvenience to justify draconian remedies.

 

Conclusion

Amendment has long been seen as a means of rescuing a case that would otherwise be struck out, and the Court of Appeal has reinforced the point in the context of cross-border litigation.

This is of particular importance post-Brexit (from 1.1.21) where the procedural convenience of Brussels I and the Motor Vehicles (Compulsory Insurance etc.) Regulations 2003 have ceased to apply.

From a practical standpoint, this authority is significant as post-Brexit non-co-operation from foreign insurers, their agents and solicitors has been a common feature of the litigation scene.

 

Analysis and review produced by Daniel Holt who is a Probationary Tenant at Farrar’s Building. Daniel accepts instructions in all of Chambers’ practice areas.  For further information, please contact his Clerking Team.