LANSFORSAKRINGAR SKARABORG v. SWEDEN
Inadmissible
The applicant, Länsförsäkringar Skaraborg, is a Swedish insurance company. It was represented before the Court by Mr S. Larsson, a lawyer practising in Eksjö. The respondent Government were represented by Ms A. Linder, Ministry for Foreign Affairs. The facts of the case, as submitted by the parties, may be summarised as follows. Falköpings missionsförsamling, a religious congregation, had taken out a fire insurance policy with the applicant company for a piece of property it owned. On 1 April 1993 H.J. commenced work development training (ALU-utbildning) at the congregation. On 5 April he set fire to the house on the property which burnt down completely. H.J. was later convicted of arson. The applicant company paid an indemnity to the congregation of about 6 million Swedish kronor (SEK) and later claimed compensation from the National Labour Market Board (Arbetsmarknadsstyrelsen; hereinafter “the AMS”), relying on the Ordinance on Compensation from Public Funds for Damage Caused by Participants in Certain Vocational Training or Vocationally-Oriented Rehabilitation (Förordningen om ersättning av allmänna medel för skada orsakad av deltagare i viss arbetsmarknads-utbildning eller yrkesinriktad rehabilitering m.m., 1980:631; hereinafter “the 1980 Ordinance”). By a decision of 7 April 1994 the AMS rejected the applicant’s claim. It found that no right of recourse for the indemnity paid could be derived from the provisions of the 1980 Ordinance. The applicant company appealed to the Government, maintaining that section 25 of the Insurance Contracts Act (Lagen om försäkringsavtal; 1927:77) and the terms of the insurance policy in question entitled it to succeed to any right of compensation of the policy-holder in relation to the perpetrator or anyone else liable to damages. In an opinion to the Government, the Chancellor of Justice (Justitie-kanslern) stated that predominant reasons spoke in favour of there not being any right of the applicant to compensation from the State under section 25 of the Insurance Contract Act or the 1980 Ordinance. On 9 October 1995 the Government upheld the decision of the AMS. It stated that the 1980 Ordinance regulated the State’s undertaking to assume responsibility, under certain conditions, for damage caused to the provider of vocational training by participants in such training. The Ordinance did not, however, regulate the general legal liability to pay compensation for damage that occurred. Section 25 of the Insurance Contracts Act was not therefore applicable in relation to the State’s undertaking under the Ordinance. Moreover, there was no other basis for granting the applicant company’s compensation claim. The applicant company then instituted proceedings for damages against the State before the District Court (tingsrätten) of Stockholm. It claimed that the State was liable for any damage caused by a participant in vocational training, either 1) pursuant to the provisions on compensation of the 1980 Ordinance, 2) according to a contractual responsibility deriving from the Ordinance and the placement of participants in vocational training, or 3) on the basis of a responsibility as employer (principalansvar) allegedly assumed by the State. The congregation had transferred its right to compensation to the applicant, according to the terms of the insurance policy. The State maintained, inter alia, that the 1980 Ordinance was of a public-law character and that, in the absence of express rules on the transfer of claims, a right of compensation could thus not be transferred until the compensation was available for disbursement. Further, the applicant company could not, on the basis of the insurance policy, claim any right of recourse from the State for the indemnity paid but only from the perpetrator of the act causing the damage. Moreover, a participant in vocational training not being comparable to an employee, there was no employer’s responsibility. By a judgment of 10 April 1997 the District Court rejected the applicant company’s claims. The court considered that the right of compensation under the 1980 Ordinance rested with the injured party – in this case the congregation – and that it could not be transferred until the compensation amount had been fixed and was available for disbursement. In so finding, the court had regard to the procedure for claiming compensation under the Ordinance, which prescribed that a public authority, upon application by the employer, determined in an administrative decision whether the conditions laid down in the Ordinance were fulfilled. The applicant appealed to the Svea Court of Appeal (Svea hovrätt). On 24 November 1998 the appellate court quashed the District Court’s judgment in so far as it had determined the applicant company’s first two grounds and rejected the applicant’s claim based on the third ground. The appellate court considered that the State, under the 1980 Ordinance, had assumed a certain economic responsibility for damage caused by participants in vocational training for which they would normally be liable themselves under general tort liability principles. This responsibility was, however, normally limited to SEK 100,000 for damage to property under section 4 of the Ordinance. Noting further that the Ordinance prescribed that compensation claims were to be examined by the AMS and, upon appeal, by the Government, the court concluded that that examination involved a comprehensive and final determination of the claims. Consequently, the District Court had had no jurisdiction to examine the applicant company’s claims in so far as they were based on the Ordinance. It made no difference that the applicant had added a contractual element to its second ground. The first two grounds for the applicant’s claim were therefore dismissed without an examination on the merits. As regards the applicant company’s third alternative ground, the Court of Appeal found that there was no basis for finding that the State had assumed an employer’s responsibility under chapter 3 of the Tort Liability Act (Skadeståndslagen, 1972:207) or any other similar responsibility. In so far as the claim was based on this ground, it was accordingly rejected. On 6 July 2000 the Supreme Court (Högsta domstolen) refused the applicant company leave to appeal. The 1980 Ordinance sets out the State’s liability for damages caused by persons in vocational training who receive benefits whilst undergoing training with a private employer. The relevant provisions, as they stood at the material time, read as follows: Section 1: “Compensation is given out of public funds in accordance with the provisions of this Ordinance to employers and other providers of rehabilitation or vocational training outside the regular school system for damage caused by a person who 1. participates in vocational training and receives an education allowance, ...” Section 2: “Compensation is awarded for personal injury or damage to property inflicted on the employer, whether or not the person causing the damage is liable for it. The same rule applies in relation to pure economic loss inflicted on the employer by way of a criminal offence. ...” Section 4: “Unless otherwise prescribed in subsection 2, compensation of no more than SEK 2,000,000 for personal injury, no more than SEK 100,000 for damage to property and no more than SEK 100,000 for pure economic loss caused by crime is awarded for one and the same incident to every injured party. Upon the Government’s approval, an agreement allowing for the award of compensation for personal injury, damage to property and pure economic loss with higher amounts than those laid down in subsection 1 may be concluded.” Section 5: “If the compensation does not exceed SEK 100,000 1. the National Labour Market Board decides on compensation for damage caused by a person referred to in section 1, subsection 1 (1) ... ... If the authority finds that compensation should be awarded in a higher amount than that mentioned in subsection 1 or if the matter involves questions of principle, it shall refer the matter, together with its opinion and the necessary investigation, to the Government for decision.” According to section 13 of the later repealed Ordinance on Work Development (Förordningen om arbetslivsutveckling, 1992:1333), section 1, subsection 1 (1) of the 1980 Ordinance was applicable to a person undergoing work development training. Section 25 of the Insurance Contracts Act regulates an insurer’s right of recourse. Subsection 1 provides: “If an insurer, as compensation for damage pursuant to a liability insurance policy, has paid an amount of money which the policy-holder had the right to claim as damages from another person, the insurer succeeds to the right against that other person, if the latter has caused the damage with intent or gross negligence or is under a statutory obligation to pay damages whether or not he has caused the damage. However, such a right of recourse does not apply against someone who, under chapter 3, sections 1 or 2 of the Tort Liability Act, is responsible for the damage solely on account of another person’s actions. Chapter 3, sections 1 and 2 of the Tort Liability Act provide that private employers as well as State and local authorities are liable for personal injuries, damage to property and pure economic loss caused in the course of their activities. According to the preparatory works of the Insurance Contracts Act (Government Bill 1972:5, pp. 491 and 634), the right of recourse in section 25 of the Act should be restricted and only apply in relation to someone who is liable to pay damages on account of culpable fault or strict liability. Any extension of the right of recourse should be prevented. The Government have decided on a few applications from insurance companies which have claimed compensation under the 1980 Ordinance on the plea of the right of recourse. In decisions of 14 March 1996 and 27 August 1998, the Government rejected two such applications where the companies had paid indemnities due to damage to property, the first one on the ground that the insurance company had no right to compensation under the Ordinance and the second one on the ground that the application was unfounded. However, by a decision of 28 May 2003, the Government granted compensation of 257,889 Swedish kronor to an insurance company which had paid an indemnity of that amount for personal injury sustained by a person in vocational rehabilitation.