Inner House rejects appeal by insurers of Maltese tour company after case rejected on ground of state immunity

About this case:

• Citation:
  [2022] CSIH 45
• Judgment:
  External link
• Court:
  Court of Session Inner House
• Judge:
  Lord Carloway

Pursuer Simon Morrison originally raised the action for damages against Mapfre Middlesea Insurance Plc, which convened Transport for Malta as a third party averring it was in breach of a duty to maintain the road. The Lord Ordinary sustained a plea by TFM of no jurisdiction on the grounds that it was entitled to immunity per the State Immunity Act 1978.

The appeal was heard by the Lord President, Lord Carloway, alongside Lord Malcolm and Lord Pentland. AN McKenzie, advocate, appeared for the reclaimers and Dewar KC and Hawkes KC for the respondents. Neither the original pursuer nor the second defender, City Sightseeing Malta Ltd, made an appearance.

Atomised into the granular

On 9 April 2018, the pursuer was on a tour bus in Malta when it hit the branch of a tree on the Valletta Road in Żurrieq, which caused injury to him and other passengers, including two fatalities, as it tore through the top deck of the bus. The pursuer thereafter raised a claim for £1 million against the first defender, which convened the third parties, averring that they had a duty to ensure the safety, maintenance and security of the distributor roads in Malta, including the Valletta Road.

The third parties maintained that the relevant duties were carried out under delegated authority from the state as opposed to under the terms of a commercial transaction, and therefore were entitled to state immunity. Following a proof, the Lord Ordinary held that the third parties’ duties were of a governmental nature under Maltese law and therefore the 1978 Act was applicable.

Counsel for the appellants submitted that the Lord Ordinary had approached the characterisation exercise too broadly by erroneously focusing on the overall duty incumbent on the third parties under Maltese law. This was a private law matter involving tree pruning, which could not be seen as a governmental act. Further, the unchallenged evidence of an expert witness, Dr Aquilina, had contradicted the contention that maintenance could not have been done by a private party, as it showed the third parties had previously contracted out of their road maintenance responsibilities.

The third parties responded that the Lord Ordinary’s approach was correct. The act had to be considered in the context of an overall duty to ensure the safety of distributor roads and should not be atomised into the granular. The act in this case was not the pruning of trees specifically but their statutory duty to maintain roads.

Not commercial activity

Lord Carloway, delivering the opinion of the court, observed: “The manner in which section 14(2) is to be interpreted was set out in Kuwait Airways Corpn v Iraqi Airways Co (1995). The reference to ‘a separate entity’ is not to some body which is independent of the state, but one which remains ‘an entity or separate entity of a state’. That would include a statutory corporation which is under the control of the state, including the third parties. Although the statutory provision refers to acts ‘done in the exercise of sovereign authority’, this is simply a reference to what were previously regarded as acta jure imperii as distinct from acta jure gestionis.”

He explained further: “The court must consider the whole context in which the claim is made, with a view to deciding whether the claim is within the area of trading or commercial activity, or otherwise of a private law character, or whether it is done outside that area and within the sphere of governmental or sovereign activity.”

Lord Carloway said of the nature of the third parties’ obligations: “The omission, when looked at in context, was not one which was concerned with trading or commercial activities but with a public duty to maintain the safety of distributor roads throughout Malta. That is a governmental act. In terms of section 14(2) of the 1978 Act it is in the field of an act ‘done’ by the third parties ‘in the exercise of sovereign authority’. It was not one which could be performed by a private citizen.”

He concluded: “In essence, therefore, and without repeating the detail of his analysis, the court agrees with the reasoning of the Lord Ordinary. The fact that, in terms of Dr Aquilina’s testimony, the third parties’ contract with private entities to carry out the maintenance work is not relevant to an analysis of the third parties’ duties, as delegated to them by the state. What is relevant, and was confirmed by unchallenged affidavit evidence, is that the third parties viewed themselves as carrying out the Maltese state’s obligation to maintain major public roads.”

The reclaiming motion was therefore refused.