The Insurance and Reinsurance Law Review

Transcription

1 The Insurance and Reinsurance Law Review Second Edition Editor Peter Rogan Law Business Research

2 The Insurance and Reinsurance Law Review Reproduced with permission from Law Business Research Ltd. This article was first published in The Insurance and Reinsurance Review, 2nd edition (published in April 2014 editor Peter Rogan). For further information please

3 The Insurance and Reinsurance Law Review Second Edition Editor Peter Rogan Law Business Research Ltd

4 THE LAW REVIEWS THE MERGERS AND ACQUISITIONS REVIEW THE RESTRUCTURING REVIEW THE PRIVATE COMPETITION ENFORCEMENT REVIEW THE DISPUTE RESOLUTION REVIEW THE EMPLOYMENT LAW REVIEW THE PUBLIC COMPETITION ENFORCEMENT REVIEW THE BANKING REGULATION REVIEW THE INTERNATIONAL ARBITRATION REVIEW THE MERGER CONTROL REVIEW THE TECHNOLOGY, MEDIA AND TELECOMMUNICATIONS REVIEW THE INWARD INVESTMENT AND INTERNATIONAL TAXATION REVIEW THE CORPORATE GOVERNANCE REVIEW THE CORPORATE IMMIGRATION REVIEW THE INTERNATIONAL INVESTIGATIONS REVIEW THE PROJECTS AND CONSTRUCTION REVIEW THE INTERNATIONAL CAPITAL MARKETS REVIEW THE REAL ESTATE LAW REVIEW THE PRIVATE EQUITY REVIEW THE ENERGY REGULATION AND MARKETS REVIEW THE INTELLECTUAL PROPERTY REVIEW

5 THE ASSET MANAGEMENT REVIEW THE PRIVATE WEALTH AND PRIVATE CLIENT REVIEW THE MINING LAW REVIEW THE EXECUTIVE REMUNERATION REVIEW THE ANTI-BRIBERY AND ANTI-CORRUPTION REVIEW THE CARTELS AND LENIENCY REVIEW THE TAX DISPUTES AND LITIGATION REVIEW THE LIFE SCIENCES LAW REVIEW THE INSURANCE AND REINSURANCE LAW REVIEW THE GOVERNMENT PROCUREMENT REVIEW THE DOMINANCE AND MONOPOLIES REVIEW THE AVIATION LAW REVIEW THE FOREIGN INVESTMENT REGULATION REVIEW THE ASSET TRACING AND RECOVERY REVIEW THE INTERNATIONAL INSOLVENCY REVIEW THE OIL AND GAS LAW REVIEW THE FRANCHISE LAW REVIEW THE PRODUCT REGULATION AND LIABILITY REVIEW

6 PUBLISHER Gideon Roberton BUSINESS DEVELOPMENT MANAGERS Adam Sargent, Nick Barette ACCOUNT MANAGERS Katherine Jablonowska, Thomas Lee, James Spearing, Felicity Bown PUBLISHING ASSISTANT Lucy Brewer MARKETING ASSISTANT Chloe Mclauchlan EDITORIAL ASSISTANT Shani Bans HEAD OF PRODUCTION Adam Myers PRODUCTION EDITOR Timothy Beaver SUBEDITOR Janina Godowska MANAGING DIRECTOR Richard Davey Published in the United Kingdom by Law Business Research Ltd, London 87 Lancaster Road, London, W11 1QQ, UK 2014 Law Business Research Ltd No photocopying: copyright licences do not apply. The information provided in this publication is general and may not apply in a specific situation, nor does it necessarily represent the views of authors firms or their clients. Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of April 2014, be advised that this is a developing area. Enquiries concerning reproduction should be sent to Law Business Research, at the address above. Enquiries concerning editorial content should be directed to the Publisher gideon.roberton@lbresearch.com ISBN Printed in Great Britain by Encompass Print Solutions, Derbyshire Tel:

7 ACKNOWLEDGEMENTS The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book: BECH-BRUUN CHALFIN, GOLDBERG, VAINBOIM & FICHTNER ADVOGADOS ASSOCIADOS CLYDE & CO LLP CONYERS DILL & PEARMAN LIMITED CROWELL & MORING LLP ELVINGER, HOSS & PRUSSEN FENXUN PARTNERS GBF ATTORNEYS-AT-LAW GROSS ORAD SCHLIMOFF & CO INCE & CO ISOLAS JORQUIERA & ROZAS ABOGADOS KIM & CHANG LC RODRIGO ABOGADOS LEE AND LI, ATTORNEYS-AT-LAW MANZANO, LÓPEZ SAAVEDRA & RAMÍREZ CALVO (MLSRC) MAPLES AND CALDER MEHMET GÜN & PARTNERS LAW FIRM i

8 Acknowledgements NADER, HAYAUX & GOEBEL NISHIMURA & ASAHI ROSE-MARIE LUNDSTRÖM ADVOKAT AB STEPTOE & JOHNSON LLP STIKEMAN ELLIOTT LLP STUDIO LEGALE GIORGETTI TULI & CO ii

9 CONTENTS Editor s Preface...vii Peter Rogan Chapter 1 ARGENTINA...1 Martín Manzano and Ignacio Shaw Chapter 2 BELGIUM...13 Philip Woolfson Chapter 3 BERMUDA...25 Christian Luthi and Michael Frith Chapter 4 BRAZIL...45 Ilan Goldberg and Priscila Mathias de Morais Fichtner Chapter 5 CANADA...60 Stuart S Carruthers, Peter J Cullen, Ellen M Snow and Matthew Angelus Chapter 6 CAYMAN ISLANDS...74 Tim Frawley and John Dykstra Chapter 7 CHILE...86 Ricardo Rozas Chapter 8 CHINA...98 Jianzhao Wang Chapter 9 COLOMBIA Neil Beresford and Raquel Rubio iii

10 Contents Chapter 10 DENMARK Anne Buhl Bjelke Chapter 11 ENGLAND AND WALES Simon Cooper and David Grantham Chapter 12 EUROPEAN UNION Philip Woolfson and Daniella Terruso Chapter 13 GERMANY Markus Eichhorst Chapter 14 GIBRALTAR Peter Albert Isola and Christian James Caetano Chapter 15 GREECE Dimitris Kapsis and Dimitris Giomelakis Chapter 16 INDIA Neeraj Tuli and Celia Jenkins Chapter 17 ISRAEL Harry Orad and Rena Egulsky Chapter 18 ITALY Alessandro P Giorgetti Chapter 19 JAPAN Shinichi Takahashi, Kenichiro Toda and Saki Sahara Chapter 20 KOREA Jay Ahn, Jae Ho Baek, Joon Young Kim and Brandon Bae Chapter 21 LUXEMBOURG Michel Marques Pereira and André Hoffmann iv

11 Contents Chapter 22 MEXICO Yves Hayaux-du-Tilly Chapter 23 SPAIN Jorge Angell Chapter 24 SWEDEN Rose-Marie Lundström Chapter 25 SWITZERLAND Lars Gerspacher and Roger Thalmann Chapter 26 TAIWAN C T Chang, Trisha Chang and Jessica Wang Chapter 27 TURKEY Pelin Baysal and Nilsu Hazardağlı Chapter 28 UNITED STATES Michael T Carolan, Paul W Kalish, William C O Neill and Rachel P Raphael Appendix 1 ABOUT THE AUTHORS Appendix 2 CONTRIBUTING LAW FIRMS' CONTACT DETAILS v

12 EDITOR S PREFACE It is hard to overstate the importance of insurance in personal and commercial life. It is the key means by which individuals and businesses are able to reduce the financial impact of a risk occurring. Reinsurance is equally significant; it protects insurers against very large claims and helps to obtain an international spread of risk. Insurance and reinsurance play an important role in the world economy. It is an increasingly global industry, with the emerging markets of Brazil, Russia, India and China developing apace. Given the expanding reach of the industry, there is a need for a source of reference that analyses recent developments in the key jurisdictions on a comparative basis. This volume, to which leading insurance and reinsurance practitioners around the world have made valuable contributions, seeks to fulfil that need. I would like to thank all of the contributors for their work in compiling this volume. Looking back on 2013, we are fortunate that the year did not bring natural catastrophes on the scale of the previous two years. However, we should not forget the tragedy of Typhoon Haiyan, which claimed more than 7,000 lives in the Philippines. Flooding caused extensive damage across all continents, with the June flooding in central and Eastern Europe ranking as the second-most expensive freshwater flood event ever. In the same month, rain-induced flooding hit Alberta, Canada, causing insured losses of nearly US$2 billion, the highest ever recorded in the country for any disaster (all statistics from Swiss Re s Sigma database). There were also heavy rains and floods in Australia, India, China, Indonesia, southern Africa and Argentina and 2014 has seen extensive flooding in the UK. Events such as these test not only insurers and reinsurers but also the rigour of the law. Insurance and reinsurance disputes provide a never-ending array of complex legal issues and new points for the courts and arbitral tribunals to consider. I hope that you find this second edition of The Insurance and Reinsurance Law Review of use in seeking to understand them and I would like once again to thank all the contributors. Peter Rogan Ince & Co London April 2014 vii

13 Chapter 10 DENMARK Anne Buhl Bjelke 1 I INTRODUCTION According to the most recent figures, dating from 2012, 85 non-life and 27 life insurance companies were registered in Denmark. 2 During that year, the non-life companies collected about 60 billion kroner in premiums and had a combined balance sheet total of 177 billion kroner. 3 The total profit before tax for non-life insurance companies was 12.1 billion kroner. 4 Only 14 non-life insurance companies could claim to have a balance sheet in excess of 1 billion kroner, which for the largest company was 54.8 billion kroner. The same year, the combined balance sheet for the life insurance companies exceeded 1.68 trillion kroner with the life insurance companies collecting 103 billion kroner in premiums and generating a return on investments of 140 billion kroner. 5 It is worth noting that approximately 80 per cent of all pension savings in Denmark are 1 Anne Buhl Bjelke is a partner at Bech-Bruun. 2 The Danish Insurance Association, statistics available at: Statistik_og_Analyse/statistik/forsikring/branchetal/Documents/Selskaber%20i%20den%20 finansielle%20sektor%20-%20antal.pdf. 3 The Danish Insurance Association, statistics available at: Statistik_og_Analyse/statistik/forsikring/praemier/Documents/Bruttopræmierindtægter%20 fordelt%20på%20dansk%20og%20udenlandsk%20forretning%20efter%20 forsikringsområde.pdf. 4 The DFSA: 5 The DFSA: 134

14 Denmark placed in life insurance contracts. Profit before tax for Danish life insurance companies was 7.1 billion kroner in The Danish Insurance Association is the trade organisation for the insurance as well as the pensions industry in Denmark. 7 The majority of insurance companies in Denmark are members of the Danish Insurance Association and foreign insurance companies doing insurance business in Denmark may become info-members. Some standard terms and conditions, such as legal expenses insurance, have been drafted by the Danish Insurance Association in cooperation with the Danish Consumer Council 8 to form agreed terms in the insurance industry. II REGULATION Insurance business and insurance mediation are regulated activities, and insurance contracts are subject to numerous mandatory rules, especially with regard to consumer protection. The authorised supervisory body is the Danish Financial Supervisory Authority (DFSA). The DFSA is responsible for supervising the financial sector including insurance companies and insurance intermediaries doing business in Denmark. According to Section 11 of the Danish Financial Business Act, undertakings that carry out insurance activities, including reinsurance activities and captive (re-)insurance companies, are required to obtain a licence from the DFSA. The DFSA considers its most important supervisory task to be ensuring that financial undertakings have sufficient funds to cover their own risks, also referred to as the DFSA s supervision of solvency. 9 The DFSA also carries out prudential supervision in promoting the safety, soundness and stability of the financial sector in Denmark. Among the sanctions available to the DFSA are reprimands and decisions. In extreme cases, the DFSA may revoke the licence to carry out financial business in Denmark. i Foreign insurers and reinsurers within the EEA As insurance business activity is a regulated activity, insurance or reinsurance companies are required to have a licence or another legal basis for carrying out insurance activities in Denmark. Insurance companies from other EEA countries may do insurance business in Denmark on either an establishment or a freedom-of-services (FOS) basis. 10 For foreign EEA insurance companies, the company will be considered established in Denmark if the company sets up a Danish branch or if the company appoints a Danish insurance 6 The DFSA: The DFSA: 10 See Sections of the Financial Business Act, Consolidated Act No. 705 of 25 June

15 Denmark agent with a permanent authority to enter into insurance contracts on behalf of the insurance company, in which case the insurance company must appoint a general agent. Insurance companies incorporated in EEA states conducting insurance activities in Denmark are required to comply with the Freedom-of-Services Regulation as implemented in Chapter 5 of the Danish Financial Business Act. In order for foreign EEA insurance companies to do insurance business activities in Denmark, the insurance company has to request its home regulator to notify the DFSA of the company s licence ( passporting the existing licence with the home regulator). The insurer is entitled to begin doing insurance business in Denmark when its home regulator has informed the DFSA that the business intended to be carried out in Denmark is covered by the licence in the home state of the company. As a prerequisite, the DFSA will request and obtain a certificate of solvency of the insurance company as well as a list of the insurance classes the insurance company intends to underwrite from the home regulator of the company. For establishment a two-month standstill period applies. Foreign EEA insurance companies doing insurance business in Denmark are subject to the supervision of the home regulator of the insurance company. However, the insurance company is required to observe Danish good business practice rules, consumer protection regulations and certain insurance contract requirements that are contained in, for example, the Danish Insurance Contract Act. See Section III, infra. Insurance companies underwriting motor liability insurance are required to appoint a representative, domiciled or established in Denmark, with the authority to collect and receive information in relation to claims and to represent the insurance company in relation to injured parties. ii Foreign insurers and reinsurers from outside the EEA Insurance and reinsurance companies from non-eea countries are in general unable to carry out insurance business in Denmark on an FOS basis and are unable to passport any licence with the company s home regulator. In this situation, the insurance or reinsurance company is required to set up an insurance company or a branch in Denmark and apply for a licence with the DFSA to be admitted as insurer in Denmark. There are limited possibilities for non-admitted insurers to cover Danish risks, but it is not illegal under Danish law to procure insurance cover for Danish risks from a non-admitted insurer. Insurance intermediaries are, however, not allowed to facilitate or assist in such procurement 11 and non-admitted insurers are not allowed to actively market their insurance services in Denmark. iii Insurance intermediaries Insurance intermediaries can generally be qualified under Danish law as insurance brokers, reinsurance brokers, insurance agents or subagents. 11 See Section 44 of the Danish Financial Business Act. 136

16 Denmark Educational requirements apply to both brokers and insurance agents 12 and brokers, agents and intermediaries are obliged to observe good business practice 13 as well as certain pre-contractual information obligations for brokers and insurance agents. 14 Insurance and reinsurance brokers An insurance broker offers customers (prospective insureds) advice on the basis of the insurance solutions available on the market without having an agreement with any insurance company. Doing business in Denmark as an insurance broker requires a licence, which is issued by the DFSA. Brokers established in another EEA country may passport their licence through their own home regulator. A reinsurance broker offers advice to insurance companies on the basis of the reinsurance solutions available on the market. Reinsurance brokers do not have an agreement with the reinsurance companies. Similar to insurance brokers, reinsurance brokers are required to obtain a licence with the DFSA. Reinsurance brokers established in another EEA country may passport their existing licence to Denmark through their own home regulator. Insurance agents and subagents Insurance agents mediate insurance contracts on behalf of the insurance company. Insurance agents are required to register with either the Danish Insurance Association or the DFSA. There are different registers in Denmark, and which of these the individual agent has to register with depends on the status of the insurance agent and the insurance company the agents act on behalf of. Agents established in Denmark acting on behalf of a Danish insurance company or a Danish branch of an EEA insurance company are required to register with the Danish Insurance Agent Register, which is maintained by the Danish Insurance Association. Agents established in Denmark acting on behalf of an EEA insurance company that operates in Denmark on a freedom-of-services basis has to register with the DFSA. Subagents are engaged by insurance agents to act on their behalf in respect of mediating insurance contracts to customers and are required to register with the Insurance Mediation Register maintained by the DFSA. In order to register, the relevant insurance agent must declare to the DFSA that the subagent acting on its behalf is covered by a professional liability insurance or is covered by an otherwise applicable guarantee against any claims directed against the subagent as a result of the subagent s business on behalf of the agent. As of 15 November 2013, it is no longer possible to register sub-subagents (agents to an insurance subagent). 12 Executive Order No. 825 of 3 July Executive Order No of 24 October 2007 and Executive Order No. 928 of 28 June Executive Order No of 14 November

17 Denmark III INSURANCE AND REINSURANCE LAW i Sources of law The main body of insurance contract law is the Danish Insurance Contracts Act. 15 The Act contains provisions on the duties of the company and the insured at the conclusion of the insurance contract, the payment of premium, the 14-day free look cancellation period for consumers, agreements on the renewal of the insurance contract, the insurable interest, under-insurance and double insurance. Apart from the mandatory provisions of the Insurance Contract Act and other applicable regulations, the parties to an insurance contract generally operate under a freedom of contract. Reinsurance contracts are not subject to similar requirements or restrictions, and are generally considered regular commercial contracts where the parties enjoy the freedom of contract. ii Making the contract Formation The Danish Insurance Contract Act does not contain any provisions concerning the formation of an insurance contract. Instead, the ordinary principles of Danish contract law apply, namely, the Danish Contracts Act, 16 which is the general statute governing the formation of contracts. Contracts are formed under Danish contract law on the basis of an offer and an acceptance. The exchange of a concurrent offer and acceptance results in the contract being formed. A standard formation of insurance contracts consists of the customer placing an application (the offer) for insurance with the insurance company. If the insurance company choses to accept the application, it will issue a policy and send it along with the relevant terms and conditions. The application, the policy and the terms and conditions will constitute the insurance contract. Disclosure, good faith and misrepresentation Historically, the parties to an insurance contract were required to demonstrate the utmost good faith when entering into the contract, what is known as the principle of uberrimae fidei. The applicable rules of the Insurance Contract Act have deviated somewhat from this principle, which was considered a substantial burden placed on the insured. The applicable rules today generally require that the parties disclose material circumstances, but in the case of the insured withholding or providing inaccurate information, the company is generally bound under the insurance contract unless it can demonstrate that the particular information was material or that the company would not have entered into 15 Consolidated Act No. 999 of 5 October Consolidated Act No. 781 of 26 August

18 Denmark the insurance contract had accurate information been disclosed at the point in time of contracting. 17 According to Section 5 of the Insurance Contracts Act, in case of the insured provides false information in good faith when entering into the insurance contract, the insurance company is liable to the extent that such information were never disclosed. The insured is deemed to be in good faith if the insured neither knew nor ought to have known of the information being false. In case of fraudulent misrepresentation, the insurance company is not liable, according to Section 4 of the Insurance Contracts Act. iii Interpreting the contract General rules of interpretation Similar to the formation of insurance contracts, the interpretation of such are similar to the ordinary principles of interpretation that applies for other contracts. 18 A standard method of interpretation is to look at the ordinary understanding of the wording of the insurance contract terms. Further, case law generally puts emphasis on the insurance market practice and established customs in the interpretation of the insurance terms. It is not unusual that case law refers to practice established by the Insurance Complaint Board. As the terms and conditions are usually drafted solely by the insurance company, any doubts as to the contents will usually be interpreted against the insurance company (contra proferentem). Further onus in terms of clarity of terms is put on the insurance company in case of the insured being a consumer. Incorporation of terms Whether a term may be considered incorporated into an insurance contract depends on an interpretation of the application for insurance from the prospective insured and the policy and terms and conditions issued by the insurance company in reply. The ordinary rules of construction and contract formation in Danish contract law apply to this situation, while bearing in mind that insurance contracts are a special type of contract. In general, terms are deemed incorporated into the insurance contract by reference and does not need explicit acceptance by the insured. In case of unusual or burdensome terms such terms may be set aside or construed restrictively. iv Intermediaries and the role of the broker Insurance intermediaries are required to disclose certain critical information to customers concerning the insurance products being mediated, including: a any rights under the Danish Sales of Goods Act; b other possible insurance coverages; c the extent of coverage of the insurance contract; d the term of the insurance contract; 17 See Sections 4-10 of the Danish Insurance Contract Act. 18 See generally Hening Jønsson & Lisbeth Kjærgaard, Dansk Forsikringsret, 9th ed

19 Denmark e f any conditions for a termination of the insurance contract; and any conditions with regard to claims handling. Regardless of the status of the individual intermediary, the customer has to be provided with certain information at the latest when entering into an insurance contract. The insurance intermediary has to provide the customer with relevant information on paper or another durable medium at the point of sale. For consumers, the information includes e.g. the name of the insurance company, the main characteristics of the insurance coverage, the total costs for the insurance, any terms on payment, the free-look cancellation period and any choice-of-law or jurisdiction clauses. All of this information has to be presented to the consumer in a clear and understandable fashion. Common for all sales channels, the insurance intermediary is required to observe the Executive Order No 1114 of 14 November 2004 on the duty of the insurance intermediaries to inform customers. The provisions of the Executive Order include a duty for the intermediary to provide a consumer with a document containing the main characteristics of the insurance product prior to the parties entering into the insurance contract. v Claims Usually, the insurance policy along with the terms and conditions will prescribe the process for filing a claim with the insurance company. Upon the occurrence of an insured event, the insured is required to notify the insurance company without undue delay. 19 The insured has to provide the insurance company with all information necessary for the company in order to assess the claim, namely the insured event and determining the economic compensation. 20 If the insured does not notify the insurance company without undue delay, the insurance company is not liable to a further extent than had timely notice been given. These rules on the insured filing a claim with the insurance company may not be deviated from by agreement to the end that claims are precluded from coverage due to late notification in itself. The insurance company has to substantiate that the late notification has prejudiced the insurance company in order to deny or reduce the claim. However, if the terms are stipulating a specific notification period after expiry of the insurance policy period such term may be relied upon by the insurance company. Interests on a claim against the insurance company will begin to accrue no later than 14 days after the insurance company has been able to retrieve the information necessary to assess the insurance event and determine the size of the insurance monies. 21 In case of a dispute between the insured and the insurance company, it is possible to file a complaint with the Insurance Complaint Board instead of proceeding directly to litigation. The Insurance Complaints Board is a government-authorised private 19 Section 21 of the Danish Insurance Contract Act. 20 Section 22 of the Danish Insurance Contract Act. 21 Section 24 of the Danish Insurance Contract Act. The applicable interest rate as of 14 February 2014 was 8.2 per cent. 140

20 Denmark complaints board that handles complaints on issues pertaining to the law of property and obligations in the relationship between the insurance company and the insured, primarily consumers. 22 Issues that fall outside this scope, such as regulatory matters or good business practice, are not subject to review. It is not a requirement that the insurance company to the dispute is a member of the Insurance Complaints Board, although the majority of insurance companies doing business in Denmark are members. The insurance company is not per se bound by any decision of the Insurance Complaints Board, but the insurance company in question has to inform the Insurance Complaints Board within 30 days from the date of the decision if it does not intend to be bound by the decision. vi Direct action and subrogation According to Section 95 of the Insurance Contract Act, the third party suffering damage or loss can make a direct claim against the liability insurer of the insured tortfeasor, if the liability of the insured has been established and the size of the economic compensation has been determined. Pursuant to the same provision, the third party suffering damage or loss is able to make a direct claim against the liability insurance company of the insured, in case of the bankruptcy of the insured. In cases where the insurance company has compensated the insured, the insurance company subrogates by statute into the legal status of the insured in the legal relationship with the tortfeasor. 23 In order to claim recourse for the amount paid to the aggrieved party from the tortfeasor, the insurance company is required to substantiate that the tortfeasor is liable for the damage or loss according to the general standards of Danish law, namely, tort law or any contractual obligation the tortfeasor may have towards the aggrieved party. IV DISPUTE RESOLUTION i Litigation Generally, there are three levels of courts in Denmark. The majority of cases begin at the district court level. There are 24 district courts in Denmark. The second level consists of the two High Courts: The Eastern High Court and the Western High Court. The final level is the Danish Supreme Court. 24 The Maritime and Commercial Court is a court of first instance that is independent from the district courts and is specialised to hear, inter alia, cases concerning trademark law, matters of international trade and maritime law and general marketing practices law. As of 1 February 2014, appeals from the Maritime and Commercial Court are divided 22 Further information available on the Insurance Complains Board website: dk/the%20insurance%20complaints%20board.aspx 23 Section 22 of the Danish Liability for Damages Act, Consolidated Act No. 885 of 20 September See further information on the website of the Danish courts: otherlanguages/english/thedanishjudicialsystem/pages/thedanishjudicialsystem.aspx. 141

21 Denmark between the Eastern High Court and the Supreme Court based on the substantive issues of the particular case. As a general rule, all cases with an economic value in excess of 50,000 kroner may be appealed to one higher level. For district courts the appeal lies with the High Courts. For appeals cases before the High Courts, a special leave from the Appeals Permission Board is required in order to appeal (a second appeal) to the Supreme Court. Evidence As a general rule, the burden of proof is on the party presenting a claim. Generally, parties to a litigated dispute are free to submit the evidence they consider necessary for the court to reach a final decision. How to assess the presented information and evidence remains at the discretion of the court. It is possible to request a court-appointed expert as part of the preparation of the case. Usually, the court will rely heavily on the opinion of the court-appointed expert as opposed to experts brought in by the parties, as the court-appointed expert is presumed by the court to be neutral and unbiased. Once the litigation has been initiated it is no longer possible to bring in an expert unilaterally to give his or her opinion on the subject matter. In this case a party has to rely on the court to appoint an expert. The Danish rules on civil procedure do not recognise the common-law concept of discovery. The parties may request the opposing party to produce certain documents or information, but the only effect from failure to do so is that the court may consider nonproduced documents as containing unfavourable information for the non-producing party. Either party may also request that the court demands that a party or third party produce documents of relevance to the case. Failure by the third party to comply may be sanctioned with a fine, under Section 178 of the Danish Administration of Justice Act. Costs The costs associated with a lawsuit in Denmark are court fees, costs in relation to the litigation and legal fees. With regard to court fees, the plaintiff is required to pay an initial court fee upon filing of the statement of claim and a similar fee when the date for the final oral hearing is set. The size of the two fees are identical and are calculated on the basis of the economic value of the case, the highest possible amount being 75,000 kroner for both the initial fee and the subsequent fee due when the date for the oral hearing is set, in total 150,000 kroner for the first instance. Costs in relation to the litigation may include preserving evidence, expert opinions, witness fees and translation costs. Concerning legal costs, the parties have to bear all costs associated with the lawsuit, at least until the case has been closed. As part of the judgment, the court awards costs to the successful party. As a general rule, the unsuccessful party has to reimburse the other party for all costs connected with the lawsuit. This includes paying the successful parties all court fees and costs in relation to the litigation in full. However, reimbursement for the successful party s costs for legal fees are awarded at the court s discretion based on guiding tariffs that depend on the 142

22 Denmark amount in dispute. Rarely do the awarded costs for attorney s fees correspond to the actually incurred costs in this regard. ii Arbitration The Danish Arbitration Act is modelled on the UNCITRAL Model Law. In case of the parties having validly concluded an agreement to arbitrate disputes, the Danish courts are excluded from review. The Danish Institute of Arbitration offers conventional institutional arbitration as well as simplified arbitration and mediation. 25 Denmark has ratified the 1958 New York Convention (NYC) on recognition and enforcement of foreign arbitral awards. Due to this, foreign awards are enforced unless the Danish court finds that one of the very limited grounds in the NYC for refusing to recognise or enforce an award is present. Institutionalised expert arbitration is common in several industries. For instance, the standard Danish terms for construction contain a clause referring disputes to the Danish Arbitration Board for the Construction Industry (VBA). The VBA does also decide on insurance matters related to construction disputes, such as construction allrisk insurance and professional liability insurance for technical advisers. iii Mediation Out-of-court mediation is recognised in the Danish legal scene and as a form of dispute resolution is slowly making its way into ordinary Danish business life. In addition to out-of-court mediation, usually carried out under the auspices of a certified mediator, all Danish courts (except for the Supreme Court) offer in-court mediation as an alternative to litigation. The in-court mediator is a judge who has undergone a special education in mediation. V YEAR IN REVIEW On the regulatory side, 2013 has not introduced major changes in the Danish insurance industry. The DFSA has focused on consumer protection and cooperation with the Danish Consumer Ombudsman. 26 A major Danish life insurer received an order from the DFSA that a massproduced information letter to its insureds as regards alternative options should not pretend to be an individual recommendation. The decision further stated that any lapse of certain elements of coverage if the insured chose the alternative option was to be highlighted in the information letters Further details, including recommended arbitration clauses and costs of arbitration, available on the Institute s webiste: forbrugertilsyn_med-finansielle_virksomheder.aspx. 27 DFSA decision of 21 May

23 Denmark It was previously possible to register sub-subagents to an insurer. However, as of 15 November 2013, the DFSA has changed its practice so that this is no longer possible. Already registered sub-subagents will remain registered with the DFSA. 28 In respect of case law the Supreme Court has rendered some interesting decisions in 2013, including one decision on the legal effect of the Danish Insurance Contracts Act, Section 54 on insured third parties. 29 In this decision the Supreme Court ruled that a bank holding a reservation to the right of ownership of a car was deemed to be insured under the hull insurance contract for the car without any contractual relationship between the bank and the insurance company. The insurance contract excluded coverage for damage caused with gross negligence. The Supreme Court further ruled that the bank as an insured was entitled to claim compensation under the hull insurance contract for the total loss of the car, regardless that the policyholder (and owner of the car) displayed gross negligence in wrecking the car. The exclusion was construed only to apply to the individual insured acting with gross negligence. Another decision from the Supreme Court 30 established that an insurer seeking recourse against a tortfeasor is also entitled to claim compensation on behalf of the insured for the insured s retention in addition to the insurer s recourse claim. VI OUTLOOK AND CONCLUSIONS In early 2014, the Danish parliament amended the rules on appeal to the Danish Supreme Court. Previously, direct and almost unrestricted appeal had been possible for cases being tried before the Maritime and Commercial Court, which is a court of first instance for certain types of cases. The new changes seek to limit the volume of cases with the Supreme Court so that it is able to focus on matters of general public importance and areas of law that are unsettled. Further, as Denmark is a member of the EU, the revision of the Insurance Mediation Directive and the Directive on Packaged Retail Investment Products is awaited, as well as the revision of the Data Protection Directive is expected to be of importance to the insurance industry. The implementation of the Alternative Investment Fund Managers Directive (AIFMD) came into force on 22 July 2013 and has been of interest to the insurance industry. All entities covered by the Danish implementation of the AIFMD (Act No. 598 of 12 June 2013) must be in compliance with the said Act by 22 July ophoer_af_registrering_af_forsikringsunderunderagenter.ashx. 29 Supreme Court decision of 22 November Supreme Court decision of 5 April

24 Appendix 1 ABOUT THE AUTHORS ANNE BUHL BJELKE Bech-Bruun Anne Buhl Bjelke advises Danish and foreign insurance companies on insurance mediation and insurance activities. Her advice encompasses regulatory insurance law and life and pension insurance. Moreover, Anne has a thorough knowledge of the regulation of the financial sector, including good-practice rules and disclosure obligations. She also assists in cases and legal proceedings concerning insurance cover and liability for damages, such as professional, directors and product liability. Anne has a right of audience to the Danish Supreme Court. Anne was nominated as one of 100 young talents in the Danish business sector in Berlingske Nyhedsmagasin s Talent She has, furthermore, international experience from Blank Rome LLP in New York. BECH-BRUUN Langelinie Allé Copenhagen Denmark Tel: Fax: abb@bechbruun.com 401