Insurance and jurisdiction clauses : How insurers can validly choose to litigate outside imposed forums ?

November 26, 2019

Insurers are often imposed by local procedural regulation to litigate in certain forum. This is in particular the case when the insurance is contracted by consumers : in order to protect the consumer, the judge of the place of his residence most often has exclusive jurisdiction This is also the case in specific insurances bearing risks on buildings (construction, lease, etc.).

How then can an insurer derogate to such imposed forums and insert in his contracts a jurisdiction clause to another forum, in particular if he wants to bring the case to the the Courts of his place ?

The answer lies in UE Regulation 1215/2012 Brussels I bis on jurisdiction. This regulation applies when the defendant has its seat or residence on the territory of one contracting State. Considering that the insurer most often takes the position of the defendant rather than of the claimant (except of subrogation after payment, since the jurisdiction clause does not apply towards third parties (on this topic see our blog in Legalmondo), the Regulation applies to all insurers having their seat in the UE.

Article 15 of the Regulation states a series of derogations to imposed forums, and allows jurisdiction clauses in those cases.

This is typically the case for certains types of risks, such as transportation (except for contracts with passengers), « big risks » (according to Directive 2009/138 of 25 November 2009, Solvability II – https://eur-lex.europa.eu/legal-content/FR/ALL/?uri=celex%3A32009L0138), insurance on vessels or aircrafts.

This is also the case when a jurisdiction clause is negotiated after the accident or event which gives rise to the claim, or when the jurisdiction clause offers an option to the insured.

The clause is also valid when the risk is located outside the UE, and both insurer and insured are based in the UE.

If the insured has no domicile within the UE, the insurer can also choose to derogate, whithout consideration to the quality of the the insured and the kind of risk contracted, except for 2 kind of risks : i) insurance on buildings and ii) compulsory insurances (for instance car accident). This leaves open lots of other situations : consumer travel insurance, insurance linked to financial products, product liability, third party liability, etc.

In a judgment of 3 October 2019, the French Supreme Court (Cour de cassation) admitted that a jurisdiction clause in favour of local Courts of Andorre (i.e not in the UE) was valid since the insured party was an Andoran company and the insurer a Paris based company (Cass. 1ere civ. 3 oct. 2019, n°18-20286). For any reason the insured preferred the Court of Paris and initiated a claim against the insurer before the Paris commercial Court. The Supreme Court confirmed that French Courts had no jurisdiction to hear the case since the clause was valid.

In this case, the insurer had chosen to litigate outside its own jurisdiction. However, the clause will also be valid if the insurer imposes its own local Courts to non-UE insured parties for the insurance of non compulsory risks, as stated by article 15.

Interesting situations may arise, in particular when the insured is a consumer domiciled outside the UE. This can easily happen for certain type of insurance like travel insurance sold on the internet (which often is the case when the insurance is sold together with flight tickets or tour operators). The insurance is not compulsory, the risk is not on a building, and the consumer is outside the UE. The jurisdiction clause should therefore be considered as perfectly valid, although the consumer has a right to protection.