Max-Planck-Institut für ausländisches und internationales Privatrecht
Recent developments in EC Instruments in Conflict of
Law Rules
Riga, 1/2 March 2010
Insurance Contracts in European
Private International Law
Dr. Christian Heinze, LL.M. (Cantab.)
Max Planck Institute for Comparative and International Private Law
Hamburg (Germany)
Max-Planck-Institut für ausländisches und internationales Privatrecht
Outline
• Jurisdiction in insurance matters (Art 8 seq. BR)
• Insurance contracts under the Rome I Regulation
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Large risks (Art 7(2) Rome I)
Mass risks in the Member States (Art 7(3) Rome I)
Mass risks in third States (Art 3, 4, 6 Rome I)
Compulsory insurance (Art 7(4) Rome I)
Group insurance
Reinsurance (Art 3, 4 Rome I)
Overriding mandatory provisions
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Jurisdiction in insurance matters
• Point of departure: Art 8 Brussels Regulation:
„In matters relating to insurance, jurisdiction shall be
determined by this Section, without prejudice to Article 4
and point 5 of Article 5 “
• Fundamental distinctions
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When are Art 8 seq. Brussels Regulation applicable?
Where can the insurer be sued?
Where can the policyholder/insured/beneficiary be sued?
Jurisdiction agreements
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Jurisdiction: Applicability of Art 8 seq BR (I)
• Not applicable for actions against third state insurers: Art 8,
4 Brussels Regulation (BR)
• Weaker party protection purpose of Art 8 seq Brussels
Regulation:
Recital (13) Brussels I: In relation to insurance (…) the
weaker party should be protected by rules of jurisdiction
more favourable to his interests than the general rules
provide for.
Max-Planck-Institut für ausländisches und internationales Privatrecht
Jurisdiction: Applicability of Art 8 seq BR (II)
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Thus not applicable where such protection is not justified, in particular not
applicable to reinsurance (ECJ Case C-412/98 paras. 66-67) or an
indemnification action by one insurer against another (ECJ Case C-77/04
paras. 18-20):
That role of protecting the party deemed to be economically weaker and
less experienced in legal matters implies, however, that the application of
the rules of special jurisdiction laid down to that end by the Convention
should not be extended to persons for whom such protection is not
justified .
In this case, the insurers sought to bring Zurich before the Tribunal de
Perpignan on the basis of Article L. 121-4, which permits an insurer
defendant in proceedings brought by an insured to join other insurers as
third parties where there is a situation of multiple insurance, in order to
obtain their contribution to indemnifying the insured.
In those circumstances no special protection is justified since the parties
concerned are professionals in the insurance sector, none of whom may be
presumed to be in a weaker position than the others“.
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Instead: General provisions (Art 2 seq BR), in particular Art 6 No 2 BR
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Jurisdiction: Where can the insurer be sued (I)?
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General Answer: Art 9 BR
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1. An insurer domiciled in a Member State may be sued:
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(a) in the courts of the Member State where he is domiciled, or
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(b) in another Member State, in the case of actions brought by the
policyholder, the insured or a beneficiary, in the courts for the place
where the plaintiff is domiciled,
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(c) if he is a co-insurer, in the courts of a Member State in which
proceedings are brought against the leading insurer.
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2. An insurer who is not domiciled in a Member State but has a
branch, agency or other establishment in one of the Member States
shall, in disputes arising out of the operations of the branch, agency
or establishment, be deemed to be domiciled in that Member State.
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Jurisdiction: Where can the insurer be sued (II)?
• Liability Insurance (Art 10, 11(1) BR)
• In respect of liability insurance or insurance of
immovable property, the insurer may in addition be
sued in the courts for the place where the harmful
event occurred. The same applies if movable and
immovable property are covered by the same
insurance policy and both are adversely affected by the
same contingency.
• Art 11(1) BR: In respect of liability insurance, the
insurer may also, if the law of the court permits it, be
joined in proceedings which the injured party has
brought against the insured (cp. Art 6 Nr. 2 BR).
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Jurisdiction: Where can the insurer be sued (III)?
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Direct Action (Art. 11(1), (2) BR)
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Art 11(2) BR: Articles 8, 9 and 10 shall apply to actions brought by
the injured party directly against the insurer, where such direct
actions are permitted.
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ECJ Case C-463/06, para. 31: „the reference in Article 11(2) of
Regulation No 44/2001 to Article 9(1)(b) of that regulation is to be
interpreted as meaning that the injured party may bring an action
directly against the insurer before the courts for the place in a
Member State where that injured party is domiciled, provided that a
direct action is permitted and the insurer is domiciled in a Member
State“.
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ECJ Case C-347/08, para. 43: „A social security institution, acting as
statutory assignee of the rights of the directly injured party in a
motor accident, cannot rely on the combined provisions of Articles
9(1)(b) and 11(2) in order to bring an action directly before the
courts of its Member State of establishment against the insurer of
the person allegedly responsible for the accident, where that insurer
is established in another Member State“.
Max-Planck-Institut für ausländisches und internationales Privatrecht
Jurisdiction: Where can the insurer be sued (III)?
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Direct Action (Art. 11(1), (2) BR), continued
• Art 18 Rome II Reg: The person having suffered damage
may bring his or her claim directly against the insurer of the
person liable to provide compensation if the law applicable to
the non-contractual obligation or the law applicable to the
insurance contract so provides.
• Art 18 Dir 2009/103: Member States shall ensure that any
party injured as a result of an accident caused by a vehicle
covered by insurance as referred to in Article 3 enjoys a
direct right of action against the insurance undertaking
covering the person responsible against civil liability.
• Art 11(3) BR: If the law governing such direct actions
provides that the policyholder or the insured may be joined
as a party to the action, the same court shall have
jurisdiction.
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Jurisdiction: Where can the
policyholder/insured/beneficiary be sued?
• Article 12 Brussels Regulation
• 1. Without prejudice to Article 11(3), an insurer may
bring proceedings only in the courts of the Member
State in which the defendant is domiciled, irrespective
of whether he is the policyholder, the insured or a
beneficiary.
• 2. The provisions of this Section shall not affect the
right to bring a counter-claim in the court in which, in
accordance with this Section, the original claim is
pending.
Max-Planck-Institut für ausländisches und internationales Privatrecht
Jurisdiction Agreements
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Article 13 Brussels Regulation
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The provisions of this Section may be departed from only by an
agreement:
1. which is entered into after the dispute has arisen, or
2. which allows the policyholder, the insured or a beneficiary to bring
proceedings in courts other than those indicated in this Section, or
3. which is concluded between a policyholder and an insurer, both of
whom are at the time of conclusion of the contract domiciled or
habitually resident in the same Member State, and which has the
effect of conferring jurisdiction on the courts of that State even if the
harmful event were to occur abroad, provided that such an
agreement is not contrary to the law of that State, or
4. which is concluded with a policyholder who is not domiciled in a
Member State, except in so far as the insurance is compulsory or
relates to immovable property in a Member State, or
5. which relates to a contract of insurance in so far as it covers one
or more of the risks set out in Article 14 [special and large risks].
Insured benefits from jurisdiction clause with policyholder (ECJ Case
201/82)
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Applicable Law: Insurance contracts under Rome I
• Substantive scope of Rome I: Insurance no longer excluded,
consolidation of special conflict rules (Art 23 Rome I). Minor
exceptions: Art 1(2)(f), (i), (j) Rome I; Art 18, 19 Rome II.
• Point of departure: Art 7(1) Rome I:
„1. This Article shall apply to contracts referred to in paragraph 2
[i.e. large risks], whether or not the risk covered is situated in a
Member State, and to all other insurance contracts [i.e. small
risks] covering risks situated inside the territory of the Member
States. It shall not apply to reinsurance contracts. “
• Fundamental distinctions
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Large risks: Art 7(2) Rome I
Small risks situated in the EU: Art 7(3) Rome I,
Small risks situated outside the EU: Art 3, 4, 6 Rome I
Special rules for compulsory insurance: Art 7(4) Rome I
Reinsurance: Art 3, 4 Rome I
Max-Planck-Institut für ausländisches und internationales Privatrecht
Applicable Law: Definition of large risks (I)
• Art 5(d) Dir 73/239: "large risks'' means:
• (i) risks classified under classes 4, 5, 6, 7, 11 and 12 of point
A of the Annex;
• (ii) risks classified under classes 14 and 15 of point A of the
Annex, where the policy-holder is engaged professionally in
an industrial or commercial activity or in one of the liberal
professions, and the risks relate to such activity;
• (iii) risks classified under classes 8, 9, 13 and 16 of point A
of the Annex in so far as the policy-holder exceeds the limits
of at least two of the following three criteria:
- balance-sheet total: 6,2 million ECU,
- net turnover: 12,8 million ECU,
- average number of employees during the financial year:
250.
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Applicable Law: Definition of large risks (II)
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Definition of large risk (Art 5(d) Dir 73/239) depends on either
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The risk insured (railway rolling stock, aircraft, ships, goods in transit,
liability for ships or aircraft)
The professional activity of the policy holder (credit or suretyship)
Certain limits concerning the balance-sheet total (6,2 Mio Euro), the net
turnover (12,8 Mio Euro) or the average number of employees (250) of
the policy holder
If contract covers both large and non-large risks, different rules applicable
to different parts of the contract.
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Applicable law: primarily that chosen by the parties: „An insurance
contract covering a large risk (…) shall be governed by the law
chosen by the parties in accordance with Article 3 of this Regulation.“
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If no choice was made, the contract is governed
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primarily by the law of the insurer‘s habitual residence, unless
„it is clear from all the circumstances of the case that the contract is
manifestly more closely connected with another country, the law of that
other country shall apply“.
Possible example for exception clause: both insured and insured risk are
situated in the same country which is different from the insurer‘s residence
Max-Planck-Institut für ausländisches und internationales Privatrecht
Applicable Law: Non-large risks (I)
• Applicable law depends on the location of the risk, Art 7(1)
Rome I:
„1. This Article shall apply to contracts referred to in paragraph 2
[i.e. large risks], whether or not the risk covered is situated in a
Member State, and to all other insurance contracts [i.e. small
risks] covering risks situated inside the territory of the Member
States“.
• Localisation of the risk, Art 7(6) Rome I: definition from Art
2(d) Dir 88/357 (non-life) or Art 1(1)(g) Dir 2002/83 (life).
• Where insurance contracts covers more than one risk, the
special rules on insurance contracts in this Regulation should
apply only to the risks situated in the Member States (recital
33). Problem for consequences (avoidance, non-disclosure).
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Applicable Law: Non-large risks (II) – Location of
the risk
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Where the insurance relates either to buildings or to buildings and
their contents, the Member State in which the property is situated, in
so far as the contents are covered by the same insurance policy,
where the insurance relates to vehicles of any type, the Member
State of registration, unless (Art 4 No 4 Dir 2005/14) a vehicle is
dispatched from one Member State to another, the Member State
where the risk is situated shall be considered to be the Member State
of destination, immediately upon acceptance of delivery by the
purchaser for a period of thirty days, even though the vehicle has
not formally been registered in the Member State of destination.
in the case of policies of a duration of four months or less covering
travel or holiday risks, the Member State where the policy-holder
took out the policy [Problem: distance contracts]
In all other cases, the Member State where the policy-holder has his
habitual residence or, if the policy-holder is a legal person, the
Member State where the latter's establishment, to which the contract
relates, is situated.
In life insurance, Member State where the policy holder has his/her
habitual residence or, if the policy holder is a legal person, the
Member State where the latter's establishment, to which the contract
relates, is situated.
Max-Planck-Institut für ausländisches und internationales Privatrecht
Applicable Law: Non-large risks (III) – Risks
situated in the Member States (I)
• If risk is situated in the Member States, special consumer
provisions do not apply, recital 32 Rome I:
„(32) Owing to the particular nature of contracts of carriage and
insurance contracts, specific provisions should ensure an
adequate level of protection of passengers and policyholders.
Therefore, Article 6 should not apply in thecontext of those
particular contracts”.
• Instead: Applicable law determined by Art 7(3) Rome I
• If no choice of law is made, contracts governed by law of the
country where risk is situated at time of conclusion (mostly:
habitual residence of policyholder), Art 7(3) third sentence
Rome I.
• If risk situated in more than one Member State, insurance
contract considered to constitute several contracts (Art 7(5)
Rome I)
Max-Planck-Institut für ausländisches und internationales Privatrecht
Applicable Law: Non-large risks (III) – Risks
situated in the Member States (II)
• In addition: limited choice of law options (Art 7(3) Rome I):
– Law of Member State where the risk is situated (Art 7(3)(a))
– Law of policyholder‘s habitual residence (Art 7(3)(b))
– In life insurance, law of the Member State of which policyholder
is a national (Art 7(3)(c) Rome I)
– For insurance contracts covering risks limited to events occurring
in a Member State other than the Member State where the risk is
situated, the law of that Member State (Art 7(3)(d) Rome I)
– For insurance contracts covering two or more risks situated in
different Member States and related to the commercial activity of
the policy holder, the law of any Member State concerned or the
law of country of habitual residence of the policy holder (Art
7(3)(e) Rome I)
• Choice of law options have limited immediate relevance
• But important for “secondary“ choice of law: in cases
(a), (b) and (e), the Member State referred to may
grant greater (potentially unlimited) freedom of choice
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Applicable Law: Non-large risks (IV) – Risks
situated outside the Member States (I)
• If non-large risk is situated outside the Member States, Art 7
does not apply:
Art 7(1): “This Article shall apply to contracts referred to in
paragraph 2 [= large risk], … and to all other insurance contracts
[= non-large risk] covering risks situated inside the territory of
the Member States”.
• Instead: Applicable law determined by general provisions
(Art 3, 4, 6 Rome I).
• Key question: Are consumer protection rules (Art 6 Rome I)
applicable?
• Recital 25 Rome I: Only if insurer actively sought to market
insurance to „passive consumers“ in another country, not if
„active consumer“ seeks cover from foreign insurer at his
own initiative.
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Applicable Law: Non-large risks (IV) – Risks
situated outside the Member States (II)
• If Art 6 Rome I applies, a choice of law may not deprive the
consumer of protection afforded to him by the (internally)
mandatory provisions of the law of his habitual residence.
• Given the numerous mandatory provisions in insurance law,
choice of law – if Art 6 Rome I applies – effectively worthless
• If Art 6 does not apply, free choice of law (Art 3 Rome I).
• If no choice was made, the law of the insurer‘s residence will
normally be applicable as characteristic performance is the
provision of insurance (Art 4(1)(b), 4(2) Rome I).
• In exceptional circumstances, application of exception clause
possible (Art 4(3) Rome I)
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Applicable Law: Compulsory insurance (I)
• For compulsory insurance, again distinction between Member
States and third states compulsory insurance:
Art 7(4) Rome I: “The following additional rules shall apply to
insurance contracts covering risks for which a Member State
imposes an obligation to take out insurance”.
• The law of a third state imposing an obligation to take out
insurance may possibly be applied either via the exception
clause in Art 4(3), Art 7(2) Rome I or be given effect as
mandatory provisions (Art 9 Rome I).
Max-Planck-Institut für ausländisches und internationales Privatrecht
Applicable Law: Compulsory insurance (II)
• For Member States‘ rules on compulsory insurance, Art 7(4)
Rome I presents a mandatory and an optional solution.
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Mandatory solution: Art 7(4)(a) Rome I: „the insurance
contract shall not satisfy the obligation to take out insurance
unless it complies with the specific provisions relating to that
insurance laid down by the Member State that imposes the
obligation“.
• In effect, Art 7(4)(a) Rome I preserves the application of the
provisions on compulsory insurance over the law governing
the contract in general (result: law-mix).
• Such law-mix may be avoided if the Member States take
advantage of the option in Art 7(4)(b) Rome I and provide
that the whole contract shall be governed by the law of the
Member State imposing obligation to insure (Problem: what
happens to global policies, e.g. employer‘s liability).
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Applicable Law: Group insurance
• The conflict rules of Art 7 Rome I focus on the individual
situation or commercial activity of the policy holder, not of
the insured or beneficiary.
• This may create problems for group insurance where policy
holder and insured are different.
• Particularly surprising as on the level of jurisdiction, the
European legislator extended the protection to the insured
and the beneficiary.
• Possible solutions: purposive interpretation of the term
„policy holder“ in group insurance, but may be problematic
because no single law applicable to group insurance contract.
Max-Planck-Institut für ausländisches und internationales Privatrecht
Applicable Law: Reinsurance
• Regime of Art 7 Rome I does not apply to reinsurance:
Art 7(1) Rome I: “This article… . It shall not apply to reinsurance
contracts”.
• Justification: Protection not necessary if professional insurers
and reinsurers interact.
• Result: General rules of Art 3, 4 Rome I applicable:
• In most cases, reinsurance contracts will include choice of
law (Art 3 Rome I).
• If no choice of law is made, Art 4(1)(b)/Art 4(2) will point to
the law of the reinsurer, but it may be argued that the
exception clause of Art 4(3) should apply as the reinsurance
contract has „a very close relationship“ (recital 20 RomeI) to
the direct insurance contract(s), at least where these are
governed by a single law and this is known to the reinsurer.
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Final word: Overriding mandatory provisions
• In principle, Art 9 Rome I allows to give effect to overriding
mandatory provisions of the forum (Art 9(2) Rome I) or
where the obligations have to be performed (Art 9(3) Rome
I).
• As Art 7 Rome I already aims at „an adequate level of
protection of … policy holders“ (recital 32 Rome I), Art 9
Rome I should only be applied with caution.
• In particular, the protection of the policy holder in situations
covered by Art 7(3) Rome I should not be sufficient to apply
Art 9 Rome I, as Art 7(3) Rome I should normally be
regarded as lex specialis.