Applicable law where both parties live in England but the accident is abroad (Rome II, art 4(2))

The English court determines the law applicable to non-contractual obligations under Rome II (Regulation (EC) No 864/2007), which continues to apply in the UK as assimilated law. Article 4(1) contains the general rule: the law of the country in which the damage occurs, irrespective of where the indirect consequences are felt. That would point to Spain. However, art 4(2) displaces the general rule where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time the damage occurs; the law of that country then applies. Hannah and Priya were both habitually resident in England when the crash happened, so English law governs the claim. Article 4(3) would apply only if the tort were manifestly more closely connected with another country, for example through a pre-existing relationship between the parties themselves. The hire contract is between Hannah and a third party, so it does not have that effect.

Why A is wrong: The place-of-damage rule in art 4(1) is displaced by art 4(2) where both parties share a habitual residence.

Why B is wrong: Art 4(3) looks for a manifestly closer connection, such as a pre-existing relationship between the parties; Hannah's contract with a third party does not create one.

Why D is wrong: The court does not apply its own law automatically; it applies Rome II, which here happens to point to English law.

Why E is wrong: Art 4(1) expressly disregards the country where indirect consequences, such as continuing loss or treatment, occur.