On 18 December 2019, the French Supreme Court on private and criminal matters (Cour de cassation) ruled on the scope of the law governing the direct action against the insurer of the person liable under article 18 of the Rome II Regulation.
A French company had installed solar panels on the roof of a house in France. A part of a panel set fire to the entire house. The owner sued the French company and its insurer, which brought in the proceedings the Dutch manufacturers of various parts of the panels and their insurers.
The insurance policies of the Dutch manufacturers were governed by Dutch law. Under Dutch law, the coverage of insurers for serial claims was limited for losses above € 1.25 million, as it had to be imputed to the different injured persons in proportion of their damage. I understand that the relevant provision of Dutch law was Art 7:954 (5) of the Dutch Civil Code, which reads:
Article 7:954 Direct rights of the injured person towards the insurer in case of an insurance against liability
5. Insofar the insurance benefit which the insurer has to pay under the insurance agreement to the insured person does not cover all the damage for which the insured person is liable towards two or more injured persons, the indebted insurance benefit will be imputed to each of the injured person in proportion to the damage suffered by each of them and, as far as the injured persons have suffered damage caused by death or injury as well as other damage, in proportion to these different types of damage. Nevertheless, the insurer who was unknown of the existence of debt-claims of other injured persons and, therefore, has paid in good faith a larger amount to an injured person or the insured person than the amount to which this person would have been entitled according to the previous imputation rule, is only obliged towards the other injured persons to pay the remaining part of the indebted insurance benefit, provided that such a part is still available in view of the maximum coverage of the insurance. The payment to the injured persons may be postponed as far as there are reasonable grounds to doubt about the amount that has to be paid pursuant to the provision in the first sentence of this paragraph.
Under Article 18 of the Rome II Regulation, the victim could bring a direct claim against the Dutch insurers if the law governing the non-contractual claim or the law governing the insurance contract provided so. The damage had occurred in France and French law provided that the victim had a direct action. The issue, however, was whether the insurers of the Dutch manufacturers could raise arguments of Dutch law to limit their coverage.
The Cour de cassation ruled that, while the existence of the direct action was governed by the law of the place of the damage, the legal regime of the insurance was governed by the law applicable to the insurance contract. The Dutch insurers were thus entitled to raise the limit of their coverage as provided by Dutch law.
The court, however, qualified its conclusion by underlining that it had not been argued before the court of appeal (as opposed to before the Cour de cassation) that the applicable Dutch rules resulted in emptying the direct action of its substance.
I know nothing about Dutch insurance law, but it is interesting to note that the relevant Dutch provision is concerned with direct actions. On the face of it, there was therefore an argument that the provision should be characterized as falling within the scope of Article 18 rather than the Rome I Regulation (law governing the insurance contract).