June 8th, 2010

Continental European Legislative and Judicial Trends: Road Tanker Accident Causes Millions in Repair Costs: Who Will Finally Settle the Bill - Swedish Taxpayers, or Motor Insurance?

Posted at 1:00 AM ET

2010_legislative_thumb-2David Lewin, Managing Director
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Facts

In November of 2005 four private cars and a tanker-truck were involved in a traffic
accident on one of two parallel bridges in Sweden. The cab and the tanktrailer overturned, landing between the bridges. About 55,000 liters (14,529.46 US gallons)
of an explosive and flammable liquid poured down between the bridges and ignited. The resulting fire caused extensive damage to the bridges.

The Swedish National Road Administration (Administration) (Vägverket), the government body responsible for maintenance of roads, arranged and paid for the
repairs of the damage caused. Repair costs amounted to SEK23,833,422 (approximately USD169,948,000). The cab and tanktrailer were covered by the mandatory motor third party liability insurance (Trafikförsäkringen) issued by the Swedish insurance company Länsförsäkringar.

The Dispute

The Administration claimed indemnity, as a representative of the public, through motor third party liability insurance, for the property damage caused by the cab and the tanktrailer accident.

Länsförsäkringar rejected the claim. According to Länsförsäkringar, the Administration had a legal obligation under the Swedish Road Act (Väglagen) to perform the repairs for which indemnity was claimed. The repairs were of a nature that did not give right to indemnity from motor third party liability insurers unless there was legal authority for such right. In Länsförsäkringar’s view such legal authority did not exist.

The Administration argued that the repairs done and the reconstruction undertaken
were very costly, extensive, time-consuming and complicated. The damage that occurred as a result of the traffic accident was highly unusual. The strong heat of the spill caused the concrete on the bridges to loosen. The work required new application of reinforcement, new casting of concrete, strengthening of the underside of the bridges with fiber composite, completion of trestle work and exchanging of bridge bearings. The repairs were not completed until 2008, three years after the accident. The repairs did not constitute normal protection and maintaintence of the bridge, where the costs would be borne by the government body responsible for road maintenance. 

The District Court’s Decision

The Stockholm District Court referred to a Supreme Court Judgment, NJA 2004, p.
566, which deals with the Administration’s obligations under the Swedish Road Act. These obligations must be of such a nature that the public is not entitled to indemnity from a road-user involved in a traffic accident for repairs of a protective nature. The responsibility for this work normally lies with the body charged with road maintenance. The repairs performed did not deviate from what normally would be performed in connection with a traffic accident.

The District Court found further that the extent and character of the necessary
repairs performed by the Administration in order to restore the bearing capacity
of the bridges were dependent on the traffic accident’s character and extent. The court found further that there was no demonstration that the repairs deviated from what would be considered normal in relation to a traffic accident of this kind. Since there was no legal authority for the public, through the Administration, to seek recourse in this situation, the Administration was not entitled to indemnity under the traffic insurance process.

The Court of Appeal

On appeal, the Svea Court of Appeal overturned the first judgment and found in
favor of the Swedish National Road Administration. Here is the reasoning behind
the Court of Appeal’s judgment, in summary:

The Traffic Damage Act (Trafikskadelagen) does not provide for any particular
limitation of the right to indemnity where the public suffers property damage
due to traffic with a motor vehicle.

The Swedish Supreme Court has established (NJA 2008 p.100), as a general principle,
that costs for repairs that public authorities are required to perform must be of such a nature that they cannot be reclaimed, unless there is specific supporting legal authority. The reason behind this principle is that costs for certain repairs within the frame of publicly financed protective establishments of society normally will be carried by the public.

In the Court of Appeal’s opinion, the extent as well as the character of the repairs
undertaken in this case have deviated from what is normal in relation to a traffic
accident situation. The repairs cannot be considered normal maintenance or operation of the road. The repairs are not of a protective character. Therefore, the Administration is entitled to indemnity in accordance with the Traffic Damage Act. 

The Next Step

Länsförsäkringar have appealed against the Court of Appeal’s judgment. It has
still not been decided whether the Supreme Court will grant leave to appeal. We
will follow up with an updated report on this situation after the Supreme Court
has made a final ruling. 

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