Among the numerous decisions recently rendered, we review several that bring to light interesting information regarding the duty imposed by Article R.112-1 and the sanction of this duty. Since 2002, case law fluctuated before it stabilized in 2005, and decisions rendered in 2009 and in 2010 confirm the applicable rules.
– Provisions of Article R.112-1 do not mention any sanction in case provisions of Insurance Code regarding the two-year time limit are not reminded in the policy.
– Considering this, one could argue that there is no sanction to the duty imposed by Article R.112-1 and that provisions of this article do not prevent insurers from invoking the time limit. The Cour de cassation once took that view in 2002(Cass. Civ. 1ère 22/01/2002, n° 98-18892).
However, the French Supreme Court has systematically ruled since 2005 that “inobservance of provisions of Article R.112-1 is sanctioned by the impossibility to oppose the two-year time limit provided in Article L.114-1” (Cass. Civ. 2ème 02/06/2005, n° 03-11871).
– Regarding the duty for insurers to stipulate in the policy a reminder of provisions of Insurance Code applicable to the two-year limit, several interpretations were possible.
According to an interpretation favorable to insurers, it would be enough to refer to Articles L 114-1 and following, without even quoting their provisions. The Cour de cassation admitted in 2005 that the insurer complied with provisions Article R.112-1 when the policy stipulated only that “all legal actions arising from the present contract shall be barred two years as from the event that gave rise thereto according to provisions of Articles L.114-1 & L.114-2 of Insurance Code” (Cass. Civ. 2ème 10/11/2005, n° 04-15041, Bull. n° 283). However, this decision appears to be isolated.
It has now been established that insurance contracts shall, in accordance with provisions of Article R.112-1, mention the rules regarding the two-year limit, and that noncompliance with this duty is sanctioned through the inability of the insurer to allege the time bar against the insured (Cass. Civ. 2ème 07/05/2009, n° 08-16500).
In particular, insurers shall mention the causes of interruption of the delay enumerated in Article L.114-2; otherwise the delay is not opposable to the insured (Cass. Civ. 2ème 03/09/2009, n° 08-13094). Insofar as insurers did not write the policy in accordance with Article R.112-1, there is no way for them to invoke the time limit, even if it is demonstrated that the insured knew the rules applicable (e.g., the insured works in an insurance company: Cass. Civ. 2ème 25/06/2009, n° 08-14254).
A decision rendered in January of 2010 gives confirmation that insurers may not invoke the two-year delay when the rules applicable to this delay are not stipulated in the policy (Cass. Civ. 2ème 14/01/2010, n° 09-12590). Consequently, it has now been established that when they deal with insurance contracts subject to French law, insurers shall act according to the case law regarding Article R.112-1 of Insurance Code:
– When writing the policy, insurers shall ensure that provisions of the Insurance Code regarding the two-year time limit (Art. L.114-1 to L.114-3) are reminded, if not quoted in extenso;
– When dealing with a loss, it is necessary to check that the policy (which may have been issued years ago) complies with the now established case law. Otherwise insurers may not invoke the two-year limit as it is not opposable to the insured;
– Policies currently in force shall be reviewed and ideally an endorsement shall be signed with the insured in order to comply with provisions of Article R.112-1.
Recent news: the Priority Question of Constitutionality
(Question Prioritaire de Constitutionalité: QPC)
On March 1, 2010, it became possible in France to challenge application of provisions of an act of the Parliament before a court and to have these provisions referred to the Constitutional Council in order to rule on their conformity with the Constitution. Before that day, compliance of a Parliamentary act with the Constitution could be checked only prior to the promulgation of the act, at the request of the President of the Republic, the Prime Minister or Members of the Parliament (Art. 61 of French Constitution). Now the Question Prioritaire de Constitutionalité (hereafter QPC, as it is now commonly called in France) may be raised by any person subject to trial before a French court. QPC stands for Priority Question of Constitutionality because it has priority over any other question, in particular the question of the conformity of an act with international conventions.
The Constitution of the Fifth French Republic was amended by a Constitutional Act dated July 23, 2008, which created a new Article 61-1: “if, during proceedings in progress before a court of law, it is claimed that a statutory provision infringes the rights and freedoms guaranteed by the Constitution, the matter may be referred by the Conseil d’Etat or by the Cour de Cassation to the Constitutional Council, within a determined period”.
An Institutional Act (loi organique) dated December 10, 2009 has been adopted in order to determine the conditions for the application of Article 61-1 of the Constitution. In short, a QPC may be raised before any court (for which the Supreme Court is either the Conseil d’Etat or the Cour de Cassation), provided that proceedings are in progress and the question is delivered to the Constitutional Council through the filter of the competent Supreme Court (Conseil d’Etat for administrative courts and Cour de cassation for judiciary courts).
This process was instantly recognized as successful, and as early as March 1, 2010, QPCs were raised. Since then numerous questions have been brought in various areas (criminal proceedings, civil law, labor law, tax law and others), and the Constitutional Council has already rendered decisions. It appears that the QPC is mainly used by persons subject to trial who consider themselves to be in weak positions: defendants before a criminal court or taxpayers challenging tax law. Indeed,the aim of QPC is to ensure that a statutory provision does not infringe on the rights and freedoms guaranteed by the Constitution. It is an instrument designed to create a balance of the rights between two parties in proceedings.
Heretofore, to our knowledge, a QPC has not been raised relating to an insurance matter. This may be the result of the fact that the French Insurance Code often protects the insured against the insurer, who is deemed to be powerful, skilled and well advised, while the insured, as a consumer, warrants protection. In these conditions the insured is not likely to claim that provisions of the French Insurance Code infringe rights and freedom guaranteed by the Constitution. Insurers may find reasons to raise a QPC, for example, against provisions of Insurance Code restricting the freedom of contracting.
QPC appears to have the potential to be an instrument that will be well utilized in litigation. Parties to a proceeding are likely to look not only at the provisions of law applicable to the case, but also at their conformity to Constitutional rules (which rules may arise not only from the Constitution but also from other sources, such as the Preamble, the Declaration of Human Rights of 1789 and the case law of the Constitutional Council characterizing constitutional rights on the basis of these texts).
Among the decisions rendered by the Constitutional Council, one indirectly concerns insurers, especially those covering employer’s liability and directors and officers. In the case of an accident at work, the employee has a right to lump sum compensation from Social Security, and in counterpart the employer may in principle not be sought under common liability (Art. L.451 1 of Social Security Code). However, in case of faute inexcusable (inexcusable negligence) from the employer under Article L.452 1 of Social Security Code, the employee may seek employer’s liability in order to receive compensation for damages listed in Article L.452 3 which are not indemnified by Social Security. In a decision rendered on June 18, 2010, the Constitutional Council held that the list given in Article L.452 3 is not limitative: provisions of said Article shall not, without infringing disproportionately the rights of the victims, prevent these victims from claiming against the employer compensation for all the damages which are not covered by Social Security (Cons. Const. 18/06/2010, n° 2010-8 QPC). This decision increases employer’s liability and of course potential liability of their insurers.
Considering the variety of matters possibly subject to a QPC (almost every aspect of French law), this new instrument shall be integrated by those who practice litigation in the insurance area.
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