November 15th, 2011

Continental European Legislative and Judicial Trends: Swedish Supreme Court Makes Final Ruling: Motor Insurance, Not Taxpayers, to Settle Road Tanker Accident Repair Bill

Posted at 1:00 AM ET

David Lewin, Managing Director

Facts of the Case

As reported in the April 2010 issue of this series, a tanker-truck was involved in a traffic accident in November 2005 on one of two parallel bridges in Sweden. The cab and the tank trailer overturned, landing between the bridges. About 55,000 liters (14,529 U.S. 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 (Vägverket), the government body responsible for maintenance of roads, arranged and paid for the repairs of the damage. Repair costs amounted to SEK 23.8 million (approximately USD 169.9 million). The cab and tank trailer were covered by the mandatory motor third-party insurance (Trafikförsäkringen) issued by a Swedish insurer.

The Court of Appeal’s Decision

The Court of Appeal found that the Swedish National Road Administration was entitled to indemnity in accordance with the Traffic Damage Act (Trafikskadelagen), on the grounds that the character of the measures taken deviated from what is normal in connection with a traffic accident, the measures were not of a protective nature and the measures did not pertain to what could be considered normal maintenance of the road.

The Supreme Court’s Ruling

The Supreme Court’s judgment was rendered on June 9, 2011. The common ground was that the Swedish National Road Administration had a legal obligation under the Swedish Road Act (Väglagen) to carry out the measures for which indemnity was claimed.

The Supreme Court emphasized that a bearing principle behind the Traffic Damage Act is that the economic consequences of property damage or personal injury caused by traffic with motor vehicles in Sweden shall essentially and finally be borne by the owners of motor vehicles. This shall occur through the specific system for indemnification laid down in the Act.

The key question for the Supreme Court to decide was whether the actual property damage was compensable under the Traffic Damage Act, or if the right to such indemnity, as maintained by the insurer, was ruled out due to the fact that the Administration had a legal obligation to repair the damage.

The Supreme Court referred to a range of its previous judgments:

  • According to a judgment rendered in 1950 (NJA 1950 s. 610), the government was not entitled to compensation for firefighting costs. The reason given for this conclusion was that the responsibilities of the government and municipalities for fire fighting are such that costs could not be reclaimed from the person who caused the fire, absent specific statutory support.
  • In a judgment handed down in 2001 (NJA 2001 s. 627) that referred to the 1950 decision, the Supreme Court took the position that extra costs for example, overtime pay to policemen and expenses for a bomb protection force directly attributable to, and caused by a false alarm were not compensable without specific statutory support because the costs concerned measures that the authorities had legal obligation to take.

Both judgments concern basic public responsibility to provide service to protect society and its members. It was therefore considered appropriate to let the community (det aIlmänna) carry the costs for such measures.

A judgment rendered in 2004 (NJA 2004 s. 566) concerned costs for decontamination work and road closing arrangements in connection with a traffic accident where the measures taken were necessary for traffic safety and environmental reasons. The obligations of the body responsible for road maintenance were such that there was no right to compensation for the labor costs incurred. It was stated that there is no reason to distinguish between situations where the claim for compensation concerns damages and situations where compensation is sought under the Traffic Damage Act.

The Supreme Court found that the previous judgments follow a general principle. Costs generated within the frame of tax financed protective establishments of society, for measures that the community has a legal obligation to take, shall be carried by the community, unless there is specific statutory support for entitlement to compensation.

Accordingly, the Administration’s right to indemnity should be limited where the measures taken are protective. The purpose of the measures would be to mitigate direct consequences of a traffic accident or to prevent new accidents that might be caused by a heightened risk resulting from a traffic accident. Examples that were provided were decontamination of oil spill, clearance at traffic accident scenes of items that may cause damage if struck, road closures, traffic redirection or placement of temporary road signs.

Costs for the repair or replacement of damaged property, not directly caused by protective measures for which the community had a legal obligation, should normally be considered property damage compensable under the Traffic Damage Act. In general, the Swedish National Road Administration should be entitled to compensation for costs of repairs of damaged or destroyed underpasses, traffic signs, wire railings, lamp posts, traffic lights, roadways, safety isles, bridges and other arrangements needed permanently for the keeping, operation or usage of the road.

The Supreme Court’s Conclusion

The Supreme Court affirmed the Court of Appeal’s decision. It reasoned that the Swedish National Road Administration claimed compensation for the costs of bridge repair and not for the protective measures taken in connection with the accident. Therefore, the Administration was entitled to traffic damage compensation with respect to the property damage incurred.

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