In short. This module separates the law applicable to the insurance contract, jurisdiction and the analysis of the claim transferred to the insurer.
Learning outcomes
After completing this module you will be able to:
- distinguish choice of law from jurisdiction;
- find the special rules for insurance matters;
- map the basis of and defences to the claim transferred to the insurer.
Key points
Language decides neither law nor court
A policy in English does not mean English law or an English court. The law applicable to the insurance contract is determined by Article 7 of Rome I, jurisdiction by the insurance section of Brussels I bis (Arts 10–16).
Special rules protecting the weaker party
The Brussels I bis insurance section protects the policyholder, the insured and the beneficiary: the insurer may generally sue only in the courts of the member state of the defendant's domicile (Art 14(1)), and jurisdiction agreements are allowed only in the cases listed in Art 15. Rome I Art 7 distinguishes large risks, for which the choice of law is free, from other risks, for which the choice is restricted.
Transfer of the claim
To the extent of the loss it has compensated, the insurer acquires the claim of the policyholder or insured person against a third party (VÕS § 492(1)). The transferred claim keeps its content: the third party may raise the defences it had against the original claim, and the insurer cannot claim more than the policyholder could. Whether and to what extent the claim passes is determined by the law governing the insurer's obligation (Rome II Art 19, Rome I Art 15).
Read before the quiz
Articles on this site:
- Choice of law and jurisdiction for insurance contracts in Estonia
- Subrogation under Estonian insurance law (VÕS § 492)
- Subrogation and recovery in Estonia: a guide for insurers
- Cross-border payments, crypto-assets and jurisdiction
Legal sources:
- Rome I Regulation (EC) No 593/2008, Arts 7 and 15
- Brussels I bis Regulation (EU) No 1215/2012, Arts 10–16
- Rome II Regulation (EC) No 864/2007, Art 19
- VÕS § 492
Practical case
Write down your own answer before opening the suggested approach.
A German insurer has paid for a fire at an Estonian factory and brings a recovery claim against an Estonian maintenance company whose employee carried out hot work. The insurance contract contains a German jurisdiction clause. Distinguish the three analyses.
Suggested approach
1) Transfer of the claim: whether and to what extent the claim passed is determined by the law governing the insurer's obligation (Rome II Art 19, Rome I Art 15); under Estonian law VÕS § 492. 2) The maintenance company's liability: the basis of the original claim (contract with the factory or non-contractual liability), the law applicable to it and the defences (for example a contractual limitation of liability, a waiver of claims, limitation). 3) Jurisdiction over the recovery claim: the German clause in the insurance contract does not bind the maintenance company, which is not a party to it; jurisdiction is determined under the general rules of Brussels I bis (for example the defendant's seat in Estonia) or under a jurisdiction clause in the contract between the maintenance company and the factory, if it binds the transferred claim.
Self-check quiz
Answer the three questions and press "Check answers". An explanation is shown for each question.