D&O, cyber, crime, liability and war-risk claims in Estonia

Directors' and officers' liability (D&O), general and professional liability, crime and fidelity, cyber, and war and geopolitical risks are lines in which foreign insurers often write Estonian and other Baltic risks cross-border: on a freedom-of-services basis, through a branch, through Lloyd's coverholders and MGAs, or as local policies under a global or Nordic programme. When a claim arrives, the wording is usually drafted under English or German law, while the insured, the evidence, the claimants and often the court are Estonian. This page explains how I support insurers, reinsurers, MGAs and claims handlers in these lines and in major fire losses, in three ways: investigations, representation and expert opinions.

Why Estonian counsel matters in these lines

• Mandatory rules follow the risk. For a risk situated in Estonia that is not a large risk, the Rome I Regulation limits the choice of law, and without a permitted choice Estonian law applies (art 7(3)).¹ The semi-mandatory rules of the Law of Obligations Act (võlaõigusseadus, VÕS) § 427 lg 1 then restrict notification, release and limitation clauses, except for the risks and policyholders described in § 427 lg 2–3.²
• The defence has to be classified correctly. Estonian law distinguishes the absence of cover, release from the obligation to perform for breach of an obligation, reduction of the indemnity, withdrawal for non-disclosure and avoidance. Each has its own conditions and deadlines: for example, an insurer that does not cancel within one month of learning of a material breach loses the right to rely on a release clause for that breach (§ 470), and a written refusal starts the one-year period for an action only if it states that consequence (§ 475 lg 3). See coverage opinions.
• Third parties have their own rights. In compulsory liability insurance the injured party has a direct claim against the insurer, which the insurer may not refuse on the ground that it has been released towards the policyholder (§ 521 lg 1, 5); in voluntary liability insurance the injured party is protected in other ways (§§ 517–518). See direct action against liability insurers.
• The facts are local. Board minutes, payment records, server logs and fire scenes are in Estonia, in Estonian, and in the hands of Estonian companies, banks and authorities. Getting to them quickly, and in a form an Estonian court will accept, decides many of these claims.

Three ways I work

Investigations

Fact-finding for the insurer in fraud and fidelity losses, cyber incidents, D&O claims, major fires and war-related incidents: reconstructing payment flows, coordinating forensic and fire investigators, reviewing board decisions and the company's solvency, and reporting in English with a confidence level. See investigations and expert opinions.

Representation

Coverage and recovery disputes in all three instances of the Estonian courts and in arbitration; defence of direct claims against liability insurers; subrogation against tortfeasors, contractors and their liability insurers (VÕS § 492). See litigation and arbitration and subrogation and recovery.

Expert opinions

Coverage opinions under Estonian law, and expert opinions on Estonian law for foreign courts and arbitral tribunals, for example where a London-market dispute turns on an Estonian mandatory rule. An Estonian court may itself request an expert opinion on foreign law (Code of Civil Procedure (tsiviilkohtumenetluse seadustik, TsMS) § 293 lg 1);³ foreign courts often need the same for Estonian law.

The lines

For cyber, crime and D&O, the English risk and claims handbook covers integrated programmes, coverage gaps, incident response, notification, claims and disputes in more detail.

Major fire losses

In recent years I have advised and acted in many of the largest fire losses in Estonia. Those matters combine cause-and-origin evidence, safety obligations, business interruption, mortgagees and recovery against contractors; see major fire and property losses. A publicly reported example is the Pae 25 fire insurance dispute.

Working with communications and forensic firms

In these lines I work with established crisis-communications agencies and IT forensic and incident-response firms. Depending on the policy and the insurer's panel, they are instructed by the insurer, by the insured or through counsel; I coordinate the legal side, including the timing of notifications and public statements and the use of their reports as evidence. The choice of firm stays with the insurer or the insured, within the policy's consent requirements.

Pan-Baltic coverage

I advise on Estonian law. Latvian and Lithuanian law is handled by WIDEN's teams in Riga and Vilnius, and I coordinate the matter as one engagement with one point of contact and one reporting line. See pan-Baltic coverage.

How to start

Every new matter starts with WIDEN's conflict check. Please send only the names of the parties, the line of insurance and any urgent deadline first; documents follow after the conflict check. Not acting against current insurer clients is my own practice policy, not a requirement of the professional rules; see the conflict policy. Contact: olavi@widen.legal, +372 509 7543.

Related pages

• Services for insurers
• Investigations and expert opinions
• Pan-Baltic coverage
• Guides for foreign insurers
• Contact

References