One of the more complex aspects of quantifying damages in cross-border personal injury claims is the treatment of welfare benefits (also referred to as social security benefits). Practitioners must grapple with the interaction between English case law and statute, foreign social security regimes, and the applicable law governing the substantive claim. Failure to accurately identify and analyse welfare benefits issues can lead to an error in the valuation of the overall claim.
In this article, Sara Palinska and Scott Rigby consider the treatment of foreign welfare benefits in English law claims and how English welfare benefits are approached if the claim is brought in another jurisdiction.
Foreign benefits in an English law claim
Where an English court is assessing damages under English law, foreign welfare benefits do not fall within the statutory recovery scheme established by the Social Security (Recovery of Benefits) Act 1997 (“SSA 1997”). The Act applies only to “listed benefits” and therefore generally does not encompass benefits paid by foreign states or foreign social security institutions.
In such circumstances, common law rules continue to apply. The starting point is the House of Lords’ decision in Hodgson v Trapp [1989] AC 807, which confirms that welfare benefits intended to compensate for the same loss as the damages claim should generally be deducted from the damages awarded at the conclusion of the personal injury litigation. Unlike the statutory scheme under the SSA 1997, there is no five-year “crystallisation” period and no special statutory mechanism governing the calculation. Instead, ordinary common law principles apply, which require a like-for-like comparison between the welfare benefit received and the loss claimed.
An important exception arises where the claimant is legally obliged to reimburse the welfare benefits provider. In Berriello v Felixstowe Dock and Railway Co Ltd [1989] 1 WLR 695, the court held that no deduction should be made where the claimant must repay the benefits to the funding body. In those circumstances, the claimant derives no net advantage from the benefits received.
From a practical perspective, parties should seek early disclosure of any foreign welfare benefits received and, where possible, obtain evidence concerning future entitlement. A foreign equivalent of a benefits statement or actuarial projection may be required in order to assess past and future losses accurately.
Recoupment claims
A separate issue is whether a foreign social security institution may seek reimbursement directly from the defendant. The answer will depend upon the relevant foreign welfare benefits legislation.
In some jurisdictions, social security providers enjoy statutory rights of subrogation or recourse against tortfeasors. A notable example is Donkers v Storm Aviation Ltd [2014] EWHC 241, in which a German social insurer pursued recovery from the defendant pursuant to German subrogation law.
Where such rights exist, the benefits payer may be joined as a co-claimant or may pursue a separate claim. The risk of parallel or additional proceedings should therefore be considered at an early stage, particularly in cases involving claimants who have received substantial foreign welfare benefits payments.
State-funded healthcare
The availability of state-funded healthcare in the claimant’s home country can also have a significant impact upon quantum. Practitioners should be mindful of the limited territorial scope of section 2(4) of the Law Reform (Personal Injuries) Act 1948, which provides:
“…there shall be disregarded, in determining the reasonableness of any expenses, the possibility of avoiding those expenses or part of them by taking advantage of facilities available under the National Health Service…”
The provision extends only to NHS facilities in England, Wales, Scotland, and Northern Ireland. It does not expressly encompass foreign public healthcare systems. Consequently, where a claimant resides abroad and has access to state-funded treatment, defendants may contend that such care is relevant to mitigation of loss. Whether that argument succeeds is likely to depend upon the particular facts and evidence regarding the quality, availability, and suitability of the foreign treatment options.
English benefits in a foreign law claim
Different considerations arise where proceedings are brought in England, but the substantive claim is governed by foreign law under Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II) or another choice of law regime. The first question may well be whether English welfare benefits should be brought into account when assessing damages under the applicable foreign law. That is ordinarily a question for the foreign law expert rather than English domestic law.
Looking through the lens of applicable foreign law
The interaction between foreign law and SSA 1997 has generated some litigation. Section 17 of SSA 1997 provides that, when assessing damages, “listed benefits” paid or likely to be paid are disregarded. There are a few examples in which parties have argued that this provision constitutes an overriding mandatory rule that must be applied regardless of the otherwise applicable law.
That argument was rejected in Syred v PZU SA [2016] 1 WLR 3211 (“Syred”). The claim was governed by Polish law, under which welfare benefits were deductible from loss of earnings claims. The claimant contended that section 17 should nonetheless apply as an overriding mandatory provision pursuant to Article 16 of Rome II. Mr Justice Soole rejected that submission and held that Polish law governed the treatment of welfare benefits. Accordingly, both past and future welfare benefits were deducted in full from the quantum calculation.
The decision in Syred demonstrates the importance of analysing welfare benefits through the lens of the applicable foreign law rather than assuming that English statutory rules will apply merely on the basis that proceedings are before the English courts.
Another key point to consider when assessing whether welfare benefits are payable is the precise nature of the benefit and the loss it is intended to address. In many cases, foreign law experts will need detailed information about English benefits to determine how they should be treated under the relevant foreign legal system. The recent decision in DHV v MIB [2025] EWHC 2002 illustrates this point. The court considered actuarial calculations that incorporated English welfare benefits when determining compensation under the Spanish Baremo system.
NHS and local authority treatment
Finally, practitioners should remember that section 2(4) of the Law Reform (Personal Injuries) Act 1948 is a rule of English substantive law and will not necessarily apply where the claim is governed by foreign law.
Accordingly, the availability of NHS treatment, local authority care, Disabled Facilities Grants, and other forms of publicly funded support may become highly relevant. Foreign law may require such services to be considered either directly or through the claimant’s duty to mitigate loss. This issue may affect decisions about rehabilitation pathways, case management strategies, and the scope of interim payment applications. In high-value catastrophic injury claims, the treatment of publicly funded services can make a substantial difference to the overall valuation of future care and medical expenses.
Conclusion
The treatment of welfare benefits in cross-border claims is rarely straightforward. Whether the issue concerns foreign benefits in an English law claim or vice versa, practitioners must identify the relevant benefit schemes, understand the applicable legal framework, and obtain appropriate expert evidence at an early stage.
The key lesson is that benefit analysis cannot be approached as a routine quantum exercise. In cross-border litigation, it frequently raises tough questions of comparative law, subrogation rights, mitigation, and statutory interpretation.
