Pan-Baltic coverage for insurers: Estonia, Latvia, Lithuania

Insurers and brokers often treat Estonia, Latvia and Lithuania as one market, and many programmes and losses involve all three. Legally they are three jurisdictions, each with its own insurance contract law, courts and procedure. What a cross-border insurer needs is one engagement: one point of contact, one reporting format and one budget, with each country's law advised on by lawyers qualified in that country.

1. How the engagement works

• Estonian law. I advise on Estonian law and act in Estonian courts and arbitration.
• Latvian and Lithuanian law. Advice on Latvian and Lithuanian law comes from WIDEN's teams in Riga and Vilnius, from lawyers qualified in those countries. I do not advise on Latvian or Lithuanian law myself.
• Coordination. I coordinate the matter as one engagement: one conflict check request, reporting in English to the insurer's format, a joint budget and consistent positions across the three countries on reservations of rights, deadlines and settlement.

WIDEN has offices in Tallinn (Rävala pst 4), Riga (Kr. Valdemāra iela 33-1) and Vilnius (Konstitucijos ave. 7); the addresses are on WIDEN's contact page. WIDEN is the Baltic joint name and trademark of the former Estonian law firm LEXTAL, the Latvian law firm RER LEXTAL and the Lithuanian law firm ILAW LEXTAL. For fraud and asset recovery beyond the Baltics, WIDEN's Estonian office is a member of the International Fraud Group (IFG).

2. Why a Baltic loss raises three sets of legal questions

Applicable law. For risks other than large risks, the Rome I Regulation limits the choice of law, and where no permitted choice has been made the contract is governed by the law of the Member State in which the risk is situated at the time of conclusion (art 7(3)). A contract covering risks in more than one Member State is treated for this purpose as several contracts, each relating to one Member State (art 7(5)).¹ A Baltic property programme for mid-market insureds may therefore be governed by three different laws for its Estonian, Latvian and Lithuanian risks, unless the risks are large risks, for which the parties may choose the law freely (art 7(2)).

Mandatory rules. The three laws differ on points that decide claims: the consequences of non-disclosure, limitation and notification periods, and the injured party's direct claim against a liability insurer. The Baltic comparison gives an overview; in Estonia, for example, a written refusal starts a one-year period for bringing an action only if the insurer states that consequence in the refusal (Law of Obligations Act (võlaõigusseadus, VÕS) § 475 lg 3).²

Jurisdiction. Under the Brussels I bis Regulation, a policyholder, insured or beneficiary may sue an EU insurer in the courts of its own domicile, while the insurer may sue them only in the courts of their domicile (arts 11(1)(b), 14(1)).³ Disputes arising from one Baltic loss can therefore run in parallel in Tallinn, Riga and Vilnius.

Evidence and language. Contracts, claim files and the reports of the authorities are in three languages, and each court applies its own rules of evidence. Consistent instructions to adjusters and experts across the three countries avoid contradictions that the other side will use.

3. Typical pan-Baltic matters

• Property and business interruption losses at sites in more than one Baltic state under one programme.
• D&O claims against directors of a Baltic group's subsidiaries in different states.
• Payment fraud where the funds pass through banks in several Baltic states, requiring tracing and freezing orders in each.
• Cyber incidents affecting a group's Baltic subsidiaries, each with its own notification duties.
• Liability claims brought by claimants in several states arising from the same event.
• War and geopolitical incidents affecting infrastructure in the region; see war and geopolitical risks.

4. Comparative background

My doctoral thesis (University of Tartu, 2016) compared the Principles of European Insurance Contract Law with Estonian, Latvian and Lithuanian insurance contract law from the policyholder's perspective. That research helps to frame the comparative questions in a Baltic matter; the advice on Latvian and Lithuanian law itself comes from WIDEN's lawyers qualified there.

5. Starting a pan-Baltic matter

Every new matter starts with WIDEN's conflict check. In the first message, please give only the names of the parties, the line of insurance, the countries involved and any urgent deadline; documents follow after the conflict check. Contact: olavi@widen.legal, +372 509 7543.

Related pages

• Insurance contract law in Estonia, Latvia and Lithuania compared
• Local and panel counsel in Estonia
• Choice of law and jurisdiction
• D&O, cyber, crime, liability and war-risk claims
• Contact

References