Review Rome I rules on the law applicable to

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Review Rome I rules on the law applicable to

insurance contracts

Seminar, Oslo, 3-5 May 2018 30. april 2018

JURIDISK INSTITUT

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Article 27 Review clause

1. By 17 June 2013, the Commission shall submit to the European Parliament, the

Council and the European Economic and Social Committee a report on the application of this Regulation. If appropriate, the report shall be accompanied by proposals to

amend this Regulation. The report shall include:

(a) a study on the law applicable to insurance contracts and an assessment of the impact of the provisions to be introduced, if any…

Report January 2016

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Conclusions

(Recital 1 in extract): For the progressive establishment of such an area, the Community is to adopt measures relating to judicial cooperation in civil matters with a cross-border impact to the extent necessary for the proper functioning of the internal market.

No impact: 9 MS

Impact in some areas: 6 MS Slightly contributed: 5 MS Significant impact: 7 MS

… mostly harmless

30. april 2018

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Kristina Siig 3 May 2018

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Major points (1)

Inaccessible

Actual blackletter rule very difficult to read

Makes reference to other EU-sources (directives, that are/may be implemented differently into the MS’s)

Once read, difficult to use with internally inconsistent or unclear results

• Risks that move over time

• Difficult split between mass risks inside the EU and outside / severance of contracts covering in case of global cover

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Major points (2)

But no significant problems in practice …

… they all have choice of law clauses anyway, valid or not, and the companies simply don’t offer the insurance contracts if they cannot be sure of ”own law and own

jurisdiction”…

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Major points (1)

Inaccessible

Actual blackletter rule very difficult to read

Makes reference to other EU-sources (directives, that are/may be implemented differently into the MS’s)

Once read, difficult to use with internally inconsistent or unclear results

• Risks that move over time

• Difficult split between mass risks inside the EU and outside / severance of contracts covering in case of global cover

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Large risks

1) Free choice of law

2) If no choice of law, the law of the country where the insurer has his habitual residence 3) Escape clause: Manifestly more closely connected …

No problems indicated …

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Mass risks

1) Limited freedom of choice of law – laws supposedly closely connected to the contract 2) Some possibility to use a more favourable right in the national laws of relevant

Member States

3) If no choice (or no valid choice): The Member State where the risk is situated at the time of the conclusion of contract

4) No escape clause

Many (theoretical) problems indicated …

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Mass risks

3. In the case of an insurance contract other than a contract falling within paragraph 2, only the following laws may be chosen by the parties in accordance with Article 3:

(a) the law of any Member State where the risk is situated at the time of conclusion of the contract;

(b) the law of the country where the policy holder has his habitual residence;

(c) in the case of life assurance, the law of the Member State of which the policy holder is a national;

(d) for insurance contracts covering risks limited to events occurring in one Member State other than the Member State where the risk is situated, the law of that Member State;

(e) where the policy holder of a contract falling under this paragraph pursues a commercial or

industrial activity or a liberal profession and the insurance contract covers two or more risks which relate to those activities and are situated in different Member States, the law of any of the Member States concerned or the law of the country of habitual residence of the policy holder.

Where, in the cases set out in points (a), (b) or (e), the Member States referred to grant greater

freedom of choice of the law applicable to the insurance contract, the parties may take advantage of that freedom

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Mass risks

3. In the case of an insurance contract other than a contract falling within paragraph 2, only the following laws may be chosen by the parties in accordance with Article 3:

(a) the law of any Member State where the risk is situated at the time of conclusion of the contract;

(b) the law of the country where the policy holder has his habitual residence;

(c) in the case of life assurance, the law of the Member State of which the policy holder is a national;

(d) for insurance contracts covering risks limited to events occurring in one Member State other than the Member State where the risk is situated, the law of that Member State;

(e) where the policy holder of a contract falling under this paragraph pursues a commercial or industrial activity or a liberal profession and the insurance contract covers two or more risks which relate to those activities and are situated in different Member States, the law of any of the Member States concerned or the law of the country of habitual residence of the policy holder.

Where, in the cases set out in points (a), (b) or (e), the Member States referred to grant greater freedom of choice of the law applicable to the insurance contract, the parties may take advantage of that freedom

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Recital 33:

Where an insurance contract not covering a large risk

covers more than one risk, at least one of which is situated in a Member State and at least one of which is situated in a third country, the special rules on insurance contracts in this Regulation should apply only to the risk or risks

situated in the relevant Member State or Member States.

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Mass risks

Fall back rule, Art. 7(3) in fine:

To the extent that the law applicable has not been chosen by the parties in accordance with this paragraph, such a contract shall be governed by the law of the Member State in which the risk is situated at the time of conclusion of the contract.

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Mass risks

Fall back rule, Art. 7(3) in fine:

Where is a risk situated? (Life insurance)…

One risk – two owners situated in different countries? … And…

Shariah-compliant insurance of Arabian stallions …

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Suggestions …

Art. 7(3) in fine: Where, in the cases set out in points (a), (b) or (e), the Member States referred to grant greater freedom of choice of the law applicable to the insurance

contract, the parties may take advantage of that freedom.

Include escape clause also for mass risk (manifestly more closely connected, ad modum Art. 7(2) in fine) (that may be invoked by the policy holder / insured?)

Include specific wording that allows for the use of worldwide policies without the need to split between the application of the rules in Art. 7 vis a vis the rules in Arts. 3, 4, and 6.