Preparing for Brussels I recast—insurance

With Brussels I (recast) set to apply from 10 January 2015, we continue our series considering what lawyers need to be aware of and prepare for when dealing with matters under the new regulation.

In our 7th installment, Christelle Coslin, a member of the litigation practice of the Paris office of Hogan Lovells, advises that that the protection of the ‘weaker party’ remains the main objective in insurance matters.

Previously, the provisions were intended to protect the ‘weaker party’ in an insurance contract—will this happen in practice?

Since the Brussels Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters signed on 27 September 1968, the main purpose of the special jurisdictions rules established in insurance matters have aimed at protecting the so-called ‘weaker party’. This objective was further affirmed and progressively developed in the successive versions of the Brussels Convention and the subsequent Regulation (EC) 44/2001 of 22 December 2000 (Brussels I Regulation), as well as in the few rulings handed down by the Court of Justice of the European Union (CJEU) construing the provisions of chapter 2, section 3 of the Brussels I Regulation, which governs insurance matters.

As a main principle, this protection consists of allowing the insured (or the policy holder or the beneficiary of the insurance contract) to bring proceedings against an insurer before the courts of the member state where the former is domiciled (or alternatively in a few other places depending on the choice of the insured), while the insurer has no other option than bringing proceedings before the courts of the member state of the domicile of the insured. In addition, the resort to jurisdiction clauses which would give jurisdiction to other courts is strictly limited in order to avoid circumvention of the protective jurisdiction rules.

These provisions have not raised any ‘major problems’ according to the report regarding the concrete application of the Brussels I Regulation prepared by Professors Hess, Pfeiffer and Schlosser, after having heard, among others, insurance associations. The CJEU ruled explicitly that reinsurance contracts are excluded from the scope of application of these jurisdiction rules because there is no ‘weaker party’ in this context (Universal General Insurance Co v Societe Group Josi Reinsurance Co SA: C-412/98 [2001] QB 68, [2000] 2 All ER (Comm) 467). In addition, art 14 of the Brussels I Regulation allows parties to agree to depart from these jurisdiction rules for insurance contracts where the contract covers certain types of risk, notably, in ‘large-risks’ contracts (as defined in the European Directives on insurance contracts).

As a result, the provisions related to insurance matters have undergone limited changes in the recast of the Brussels I Regulation (formally known as Regulation (EU) 1215/2012 of 12 December 2012). In this respect, Recital 18 of Brussels I (recast) confirms (in a wording close to the one of Recital 13 of the Brussels I Regulation) that the protection of the ‘weaker party’ remains the main objective in insurance matters.

During the recast process, it was contemplated to extend the scope of application of section 3 to insurers not domiciled (or not having an establishment) in a member state as a way to increase the protection of the insured party. Contrary to what was done with sections 4 (consumer contracts) and 5 (labour contracts), it was eventually decided not to proceed with such an extension to non-European-based insurers.

This being said, the most significant amendment in Brussels I (recast) in relation to insurance matters is actually not found in section 3, but concerns prorogation of jurisdiction.

What is the effect of the provisions in art 26 dealing with a defendant entering an appearance which is also amended to seek to protect the weaker party?

Article 24 of the Brussels I Regulation (now Brussels I (recast), art 26) has been amended to address the conditions under which the appearance of the ‘weaker party’ as a defendant entails the prorogation of the jurisdiction of the court seised. Such modification stems from the Bilas ruling where the CJEU underlined that, in the absence of any specific rule concerning prorogation of jurisdiction in the presence of a ‘weaker party’, art 24 of the Brussels I Regulation should not be construed differently than in other cases (Ceska podnikatelska pojistovna as, Vienna Insurance Group v Bilas: C-111/09 [2010] All ER (D) 203 (May)).

In order to amend this situation, it is now required from the court seised that, before assuming its jurisdiction, it ensures that the ‘weaker party’, when defendant, ‘is informed of his right to contest the jurisdiction of the court and of the consequences of entering or not entering an appearance’.

This new provision is likely to give rise to new questions in practice:

  • Who will inform the defendant (the court versus the claimant)? What format should this information take (and what evidence of such notice of information should be available—e.g. would a standard notice in the writ of summons be deemed sufficient)?
  • When should such information be provided, bearing in mind that in some member states a plea for lack of jurisdiction should be raised in limine litis (ie if the defendant appears to contest the substance of the claims but not the jurisdiction, he/she/it could be inadmissible to do so at a later stage)?
  • What would be the sanction if the court does not ensure that the ‘weaker party’ has received adequate information, in particular would this block the recognition of the judgment as to the substance in other member states (even though Brussels I (recast), art 45.1 does not include a breach of art 26.2 among the grounds for non-recognition)?

One may have to wait for the CJEU to interpret Brussels I (recast), art 26.2 in order to receive concrete guidance on the practical impact of this new provision. Needless to say, it will also mean that the defendant is very likely to challenge the jurisdiction of the court seised after receiving such information.

What should lawyers be aware of and prepare for in advance?

In light of the importance given to the protection of the ‘weaker party’, the main consideration is to determine whether the special protective jurisdiction rules set in insurance matters do apply or not in one concrete matter. This impacts not only litigation strategy, but also the drafting of insurance contracts since a jurisdiction clause which does not comply with those rules, where applicable, should be deemed invalid.

Christelle Coslin regularly advises clients on jurisdiction, choice-of-law and international litigation issues. She has broad experience in commercial litigation and product liability issues, in particular in the energy and TMT industries. She has developed a specific expertise in white-collar crime issues and assists clients in the scope of internal investigations.

Interviewed by Kate Beaumont.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

Don’t miss the rest of the series:

Preparing for Brussels I recast—consumer contracts

Preparing for Brussels I recast—employment

Preparing for Brussels I recast—reversing Gasser

Preparing for Brussels I recast—declining jurisdiction in favour of the first court seised

Preparing for Brussels I recast—choice of court agreements

Preparing for Brussels I recast—arbitration

Filed Under: Brussels I Reform

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