June 22nd, 2009

Continental European Legislative and Judicial Trends: Sweden

Posted at 12:59 AM ET

David Lewin, Managing Director

Update: The Swedish Group Proceedings Act

The Swedish government published a report (Ds 2008:74) on experiences related to the Group Proceedings Act (2002:59), which came into force on January 1, 2003. The Swedish Group Proceedings Act provides the possibility for a group of private persons, an organization or a public authority to institute a group action in any civil matter. The group must be represented by a non-profit organization or association or ombudsman who will act as plaintiff to bring the action on behalf of those opting in to the action and appoint an attorney on their behalf. Litigation costs can be funded thanks to a “risk agreement” between the plaintiff and the attorney which allows for contingency/success fees.

To date 10 group proceedings have been initiated, with four still pending. It is still too soon to determine whether the Act will improve access to justice, though. Some minor technical changes have been suggested, but there has been no evidence suggesting that the act has been misused (e.g., by “settlement blackmail” or indications of adverse impact on business and negative effects on the “appetite” to invest in Sweden).

The first judgment in a group action was rendered in March 2009: the Swedish University of Agricultural Sciences was found guilty of gender discrimination. Male students’ chances to be accepted for veterinary education were 38 times higher than those of female students. This discrimination resulted in 44 female applicants being awarded damages of SEK35,000 (EUR 3,350) each. The judgment has been appealed.

Some progress has also been made in the pending case regarding a claim for damages due to disturbances caused by air traffic related to Stockholm Arlanda Airport. Seven thousand of 20,000 identified group members have opted in and sued The Swedish Civil Aviation Administration. The Environmental Court decided in January 2009 that the group fulfills specific conditions stipulated by the act. The decision is considered an important victory for the group although there are further procedural hurdles to overcome.

Secret Filming: How Closely Can Claimants Be Watched?

A claimant allegedly suffered a whiplash injury as a result of a road traffic accident and sought compensation from the insurance company insuring the car in which she traveled as a passenger. To establish whether the claim was genuine, the insurer arranged for covert surveillance and secret filming. The purpose was to produce evidence of the claimant’s movement pattern in order to establish whether her subjectively stated problems could be verified, as part of the claims handling process. The surveillance and filming was carried out from public areas when the claimant was outside her home. The video evidence showed that the claimant appeared to be able to perform her daily tasks — including quite heavy work in a riding stable — without visible difficulties. As a result, the claimant’s claim was denied.

The claimant sued the insurer and claimed compensation alleging that the secret surveillance and filming amounted to a criminal offence — i.e., molestation — and also violated Article 8 (the right to privacy) and Article 13 (the right to effective legal remedies) of the European Convention on Human Rights. In a judgment handed down in October 2008 the first instance Court found in favor of the insurer.

The Court stated inter alia that under Swedish law there is no general prohibition against covert surveillance and documenting observations by footage. The Court found no evidence that the claimant had perceived herself as observed and further that the insurer’s surveillance had not been unlawful and was justified for the purpose of investigating a claim for insurance indemnity.

With reference to a previous decision rendered by the Swedish Supreme Court (Högsta domstolen) the Court declared that the European Conventions on Human rights does not apply directly between the insurer and the claimant.

Although the Court found that surveillance and video footage was not unlawful in this particular case, it is of course essential in each case to ensure that covert surveillance does not amount to a disproportionate intrusion into the claimant’s privacy.

When Is a Recourse Claim between Insurance Companies Time-Barred?

The position under Swedish law on time limit issues relating to claims for insurance indemnification has been unclear for a long time and thus problematic for both claimants and insurers. Statutory limitation of the right to insurance indemnification is regulated by the Swedish Insurance Contract Act and the Traffic Injuries Act. The limitation period is three years and can be suspended by commencement of legal proceedings or arbitration.

What frequently causes problems is ascertaining when the three year limitation period begins. A series of Supreme Court judgments from 1997 to 2001 has clarified this issue based on when an insured or other entitled person claims insurance indemnity from an insurance company. All cases mentioned involve personal injuries caused in traffic accidents. According to the Traffic Injuries Act the limitation period starts running “when the claimant became aware that the claim could be made.” The requisite “awareness,” simply, is fulfilled only when the claimant has gained knowledge from a doctor’s assessment that there is a causal link between the accident and the symptoms and also when the claimant knows it is possible to get insurance indemnity and which insurance company is liable to pay, according to recent Supreme Court developments.

A recent judgment rendered by the Supreme Court in March 2009 concerned a different situation — a recourse claim pursued by one insurance company against another. Although the same limitation provision in the Traffic Injuries Act applies on an insured’s claim against an insurance company and on recourse claims between insurance companies, the requisite “when the claimant became aware that the claim could be made” was given a totally different meaning by the Supreme Court. Accordingly, for a recourse claim, the limitation period runs from the date on which the regulating/paying insurance company’s cause of action against the “responsible” insurance company has concretized (i.e., when the regulating insurer paid out insurance indemnity to the insured or otherwise entitled person).

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