Rome I Regulation — Applicable (Insurance) Law
Regulation (EC) n° 593/28 of June 17, 2008 comes into force on December 17, 2009, making “Rome I” contractual obligations law. Rome I contains specific insurance-related private international law provisions (in Article 7) to ensure an adequate level of protection for policyholders — a change from its predecessor, the 1980 Convention. Notwithstanding the integrated European market, insurance law still differs among the EC member states. Private international law therefore remains of the utmost importance. But, a question of complexity remains: do Rome I’s provisions for insurance actually help, or do they only make things more complicated?
Parties to an insurance contract covering so-called “large risks” as defined in article 5 (d) of the first counsel directive 73/239/EEC of 24 July 1973 (with reference to article 7 § 2 in Rome I), are free to choose the law applicable to an insurance contract in accordance with article 3 of Rome I1 — for instance, risks connected to a carrier’s liability qualify as “large risk.”
The following can be chosen only in case of insurance contracts not covering large risks:
- The law of any member state where the risk is situated at the time of conclusion of the contract
- The law of the country where the policyholder has his habitual residence
- The law of the member state of which the policyholder is a national (in the case of life insurance)
- The law of that member state, 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 any of the member states concerned or the law of the country of habitual residence of the policyholder, where the policyholder of a contract falling under this paragraph pursues 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
There is one exception to this rule. In the cases set out under the points a), b), or e) above, if the relevant member state grants greater freedom of choice of law applicable to the insurance contract, the parties thereto may take advantage of that freedom. If no applicable law has been chosen along the above lines, the non-large risk insurance contract shall be governed by the law of the member state in which the risk is situated at the time of the conclusion of the insurance contract.2 If the insurance contract covers risks situated in more than one member state, the contract shall be considered as constituting several contracts, each relating to only one member state. Article 7 § 4 contains additional rules regarding insurance contracts covering risks for which a member state imposes an obligation to take out insurance.
Rome II Regulation — Subrogation
Rome II contains a provision on legal subrogation in regards to non-contractual claims - like Rome I, which includes a provision for contractual claims in Article 15. With Rome II is meant directive (EC) n° 864/2007 of July 11, 2007 on the law applicable to non-contractual obligations, in force as of January 11, 2009. Basically, when a person (the creditor) has a non-contractual claim against another (the debtor) and a third party (the insurer of course) has the duty to satisfy the creditor — or, the third party has in fact satisfied the creditor in discharge of this duty — the law governing the third person’s (the insurer’s) duty to satisfy the creditor determines whether and to what extent the third party (the insurer) is entitled to exercise against the debtor the rights which the creditor had against the debtor under the law governing their relationship.
The Principles of European Contract Law (PEICL)
The easiest way to solve often complicated private international law issues- of course — is through a uniform European insurance law. A common frame of reference (CFR) for insurance contracts is currently being drafted by the project group “reinstatement of European contract law” as a first step to — perhaps agree upon — one European uniform insurance law. The project group delivered a clear message to the commission on December 17, 2007 with parts I and II of their paper. The remaining parts (III and IV) are expected to follow before 2010. The CFR shall apply to private insurance in general, but not to reinsurance. It is meant to be a model for the European legislator and an optional instrument for parties to the insurance contract to choose for the CFR instead of the law of one of the member states (including mandatory provisions). For more information on PEICL and the CFR and what is coming, see www.copecl.org or www.restatement.info.
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- Official journal L228, 16.8.1973, p. 3, directive as last amended by directive 2005/68/EC.
Official journal L323, 9.12.2005, p. 1.
- The country in which the risk is situated is to be determined in accordance with article 2 (d) of Directive 88/357/EEC of June 22, 1988 as regards direct insurance other than life insurance and in case of life insurance the country of commitment within the meaning of article 1 (1) of Directive 2002/83/EC is leading.
See official journal L172, 4.7.1988, p. 1 and official journal L149, 11.6.2005, p. 14.