France: French insurance update

This is a selection of recent interesting rulings and decisions in the field of non-marine insurance in France.

Nullity of policy for lack of fortuity

Cass. Civ. 2, 15 avr. 2010, n° 08-20.378, F.D.

Pursuant to article 1964 of the French Civil Code, all contracts of insurance must have a fortuitous character ("caractère aléatoire"). Indeed, if a contract lacks fortuity, it will be found null and void.

This was what happened in the instant dispute where a policy was taken out by the Bar Association of Bastia (Corsica) for its liability in relation to the management of client accounts. A client sued the Bar Association for misappropriation of his funds by a member of the Bastia Bar. The insurance policy was held to lack fortuity since the Bar Association knew, well before the policy had been taken out, that this Bar member was not properly operating the sub-accounts of his clients.

Need for stipulation on time-limitation in direct insurance

Cass. Civ. 2, 14 janv. 2010, n° 09-12.590, D

Under French law, the limitation period applicable to non-marine insurance is two years (article L.114-1 French Insurance Code) which is shorter than the general limitation period of five years for contractual claims. The French Insurance Code requires the insurer to insert a clause reminding the insured of this two-year period and of the ways of interrupting it (article R.112-1). In this case, the insurer was deprived of its right to invoke a limitation defence since it had failed to insert such a clause.

Conditions of liability of an insurer for the acts of a broker

Cass. Civ. 2, 14 janv. 2010, n° 09-10.220, F –D, Sté MMA vie assurances mutuelles et a. v. Epx M.

The insured under a life insurance contract had asked its broker to obtain a minimum rate of 6%, whereas the insurer applied a rate of 4.25% and then 4.1%. In fact, the broker had negligently failed to properly inform the insured on the rate that would effectively apply. The insured brought a claim in liability against the broker and the insurer. The Court of Appeal had found the insurer liable and the French Supreme Court quashed the appeal on the ground that there was no proof that the broker was acting under a power of attorney given by the insurer. www.clydeco.com 1 May 2010 www.clydeco.com 2

Subrogation in credit insurance

Cass. Com., 1er déc. 2009, n° 08-20.656, FS-P+B+R, SA Direct Océan v. SARL L'espadon et a.

In credit insurance, subrogation is governed by a separate provision, namely article 22 of statute No. 72-650 of 11th July 1972. The French Supreme Court confirmed that once the insured has received compensation from the insurer, subrogation occurs and, subsequently, the insured cannot bring a claim against a third party unless there is an agreement specifically authorising otherwise. In other words, the rule is the same as for ordinary subrogation under the Insurance Code.

Criteria for fraudulent misrepresentation

Cass. Civ. 2, 10 déc. 2009, n° 09-10.053, F-D, SARL Omnimets c/. Sté AXA IARD.

In this case, the insured shopkeeper had represented its activity as selling sandwiches and salads but had failed to indicate that it was also selling hot meals. A fire broke out in the shop and the insurer argued that the policy should be annulled for fraudulent misrepresentation. The Court of Appeal upheld the arguments of the insurer. However, the French Supreme Court quashed the appeal on the ground that the Court of Appeal failed to examine whether, or not, the misrepresentation was made in bad faith with an intent to mislead the insurer on the nature of the risk. The case was then sent to a new Court of Appeal to answer this question of fact.

Waiver of time-limitation

Cass. Civ. 3, 1er déc. 2009, n° 08-20.993, F-D, Mutuelle des architectes français c/. OPAC de l'Oise et a.

The mere fact of participating to court survey proceedings and of joining other parties to these proceedings was not sufficient to constitute an unequivocal waiver by the insurer of its right to invoke a limitation defence against the insured.

The limitation period of two years applicable to direct insurance contracts is very short and insureds often try to argue that the insurer has waived its right by conduct. However, waiver by conduct requires a high standard of proof and the French Supreme Court considered that it was not satisfied in this case.

Non-payment of premium and insolvency of insured

Cass. Com., 17 nov. 2009, F-P+B, SA MMA IARD c/ Rafoni

The insured failed to pay its premiums. Insolvency proceedings had commenced when the insurer sent a formal notice for the payment of outstanding premiums (being the first step to take in case of default). The liquidator paid the amounts owed after the commencement of insolvency proceedings and rejected the formal notice for the amounts owed before the insolvency proceedings. The Supreme Court confirmed that the formal notification was ineffective for the amounts owed before the commencement of insolvency proceedings. In other words, the premium payable before that date had to be declared as any other unsecured debts, in accordance with the formalities and time limits applicable thereto. www.clydeco.com 3

Notion of "claim" in liability insurance

Cass. Civ. 2, 10 nov. 2009, n° 08-20.311, F-D, Llahi c/. SMABTP et a.

The policy applied to claims made against the insured and which had been notified to the insurer between inception and termination of the policy. A third party had started proceedings to obtain the appointment of a court surveyor in a dispute against the insured on 4 June 2003. The policy expired on 30 June 2003 and the insurer was notified after expiry.

The third party brought a direct claim against the insurer. The insurer argued that the claim was not covered by the policy which had expired on 30 June 2003.

The French Supreme Court held that (i) proceedings for the appointment of a court surveyor to assess the existence and the extent of a damage constitute a claim and that (ii) the requirement of the date of notification to the insurer should be disregarded. In other words, for the purpose of the policy, the claim was made on 4 June 2003.

Interestingly, claims-made clauses were illegal at that time (this was reformed in 2003) but the Supreme Court solved the case without addressing this issue. Unenforceable exclusion clause

Cass. Civ. 2, 8 oct. 2009, n° 08-19.646, F-P+B, SARL Le Cercle c/. Les souscripteurs du Lloyd's de Londres

After two unsuccessful attempts, a dancing club had been eventually destroyed by arson. Underwriters denied coverage on the basis of the following exclusion clause: "This policy always excludes damages resulting from insufficient repairs or modifications on the premises or installations owned or occupied by the insured or more generally on belongings of the insured which repairs or modifications became necessary notably following a prior occurrence, save in case of force majeure". Underwriters argued that additional safety measures should have been taken following the two attempts.

The Supreme Court held that the exclusion clause was invalid and unenforceable since its application required an interpretation contrary to the rule according to which exclusions should be "formal and limited" (article L.113-1 French Insurance Code).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions