Insurance litigation and arbitration in Estonia

I conduct insurance disputes in all three instances of the Estonian courts and in arbitration, primarily for insurers, reinsurers, MGAs, brokers and claims handlers. Policyholder mandates are accepted only exceptionally and never against an insurer or reinsurer that is a client of mine or of WIDEN. The matters include coverage disputes, recovery and subrogation actions, defence of insured liability claims, reinsurance disputes and disputes with intermediaries. This page outlines how insurance cases are litigated in Estonia and what a foreign insurer should expect. The procedural rules are described in more detail in the guides on civil procedure and evidence and arbitration of insurance disputes.

1. The Estonian court system

• County courts (maakohus) hear civil cases at first instance. Harju County Court in Tallinn handles the largest share of commercial and insurance disputes.
• Circuit courts (ringkonnakohus) hear appeals. An appeal must be lodged within 30 days of service of the judgment, and in any event within five months of its public announcement (Code of Civil Procedure (tsiviilkohtumenetluse seadustik, TsMS) § 632 lg 1).¹
• The Supreme Court (Riigikohus) is the court of cassation. A cassation appeal must be lodged within 30 days of service of the circuit court's judgment and in any event within five months of its public announcement (TsMS § 670 lg 1).¹ The Supreme Court accepts only a limited share of appeals for hearing; its decisions are important precedents, and its insurance case law is summarised on this site.

Proceedings are conducted in Estonian. Documents in other languages may be submitted with translations; the court may accept documents in English without translation if the other party does not object, but this should not be assumed.

2. Forum strategy

Questions to decide early:

• Jurisdiction under Brussels I bis. In insurance matters, the policyholder, insured or beneficiary may sue the insurer in the courts of their domicile, and the insurer may in principle sue them only in the courts of their domicile (arts 11, 14). Jurisdiction agreements are limited except for large risks and certain marine and aviation risks (arts 15–16).² In recovery actions against tortfeasors, the general rules apply (domicile of defendant; place of the harmful event).
• Arbitration. An arbitration agreement must be in a form reproducible in writing, but a party that participates in arbitration without objection cures the defect (TsMS § 719).¹ Arbitrability is limited to proprietary claims and to non-proprietary claims on which the parties could settle (TsMS § 718 lg 1). With a consumer, stricter rules apply: the agreement may not be concluded before the claim has fallen due, the consumer must first receive information on the differences between court and arbitral proceedings in a form reproducible in writing, the seat must be agreed at the consumer's place of residence or work, and the agreement must be in a document signed by hand or digitally; an agreement concluded in breach of these rules is void, although a breach of the seat or signature rule does not prevent the consumer from relying on it (TsMS § 718¹).¹ See the arbitration guide.
• Direct action. Where the injured party has a direct claim against the insurer (compulsory liability insurance, or under foreign law via Rome II art 18), the insurer may be sued directly in Estonia. See the direct action guide.

3. Burden of proof and evidence

Each party must prove the facts on which its claims and objections are based (TsMS § 230 lg 1).¹ In insurance disputes this means in particular:

• the policyholder proves the insured event and the loss;
• the insurer proves exclusions, breaches of obligations, non-disclosure and the timeliness of its declarations;
• the policyholder may have to prove absence of fault for breaches of obligations, but the Supreme Court has allocated to the insurer the burden of proving whether, and to what extent, a breach affected the occurrence of the insured event, whether the insurer claims full release or a reduction, balanced by the policyholder's duty to cooperate in clarifying the facts.³

Expert evidence is important in property, construction, motor and medical cases. The court may order an expert assessment (TsMS §§ 293–297); party-appointed expert reports are documentary evidence.¹ Witness evidence is taken orally at the hearing; written witness statements are used to a limited extent.

4. Interim relief

The court may grant interim measures to secure a claim (for example freezing assets) where there is reason to believe that enforcement would otherwise be impeded. In insurance disputes, the Supreme Court has accepted that an insurer can be ordered by way of interim relief to pay the amount that is clearly payable at a minimum, but the threshold is high (see Supreme Court: procedure).

5. Costs

The losing party bears the procedural costs, including the other party's reasonable legal fees, subject to the court's discretion to reduce them. State fees are charged on filing and depend on the value of the claim. A realistic budget for a coverage dispute through first instance and appeal should be agreed at the outset; I provide budgets by phase.

6. Settlement and conciliation

Courts actively encourage settlement and may propose a compromise. A settlement approved by the court ends the proceedings and is enforceable. Conciliation proceedings under the Conciliation Act (lepitusseadus, LepS) may also be used; the Supreme Court has held that when a conciliation agreement in an insurance dispute is declared enforceable, the court does not decide the insurance dispute on its merits.⁴ A conditional conciliation agreement, under which payment depends for example on an expert's opinion, cannot be declared enforceable at all; such agreements should therefore be drafted as unconditional obligations.⁴ Consumers can also turn to out-of-court dispute resolution bodies.

7. Arbitration

Commercial insurance and reinsurance disputes are frequently arbitrated, either before the Arbitration Court of the Estonian Chamber of Commerce and Industry or under the ICC Rules or ad hoc rules. Awards of the Arbitration Court of the Estonian Chamber of Commerce and Industry (and of the Notaries' Chamber arbitration) are recognised and enforced without a separate court recognition procedure, while other domestic awards require recognition by a court (TsMS § 753 lg 1–1¹).¹ An award may be set aside only on limited grounds, including invalidity of the arbitration agreement, lack of due process, excess of mandate, irregular composition of the tribunal, non-arbitrability and violation of public policy (TsMS § 751); the application must be filed within 30 days of service of the award (§ 752).¹

8. Enforcement

Estonian judgments and awards are enforced by bailiffs. Judgments from other Member States are enforceable without a declaration of enforceability (art 39 Brussels I bis); foreign arbitral awards are recognised under the New York Convention. See enforcement of judgments.

9. What I do in insurance litigation

• Case assessment and litigation budget.
• Pleadings in Estonian with English summaries for the client.
• Instruction and preparation of experts and witnesses.
• Hearings at all instances, including the Supreme Court.
• Arbitration as counsel; acting as arbitrator in insurance disputes where no conflict exists.
• Coordination with reinsurers and the client's coverage counsel abroad.

Related pages

• Civil procedure and evidence in Estonia
• Arbitration of insurance disputes
• Enforcement of judgments and recovery
• Supreme Court: procedure in insurance disputes
• Local and panel counsel
• Kindlustusvaidlused: related Estonian-language overview of insurance disputes (declinations, the one-year period, conciliation, courts and arbitration), not a translation of this page

References