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9.2.2016

New case law in private international law: Admissibility of direct actions in matters of contractual liability

A new rule based on the Rome II Regulation (Cass. Civ. 1ère, 9 September 2015, N°14-22794)

A direct action of the victim of a damage against the insurer of the liable party has given rise to extensive case law as to the admissibility of this action in cases with an international component, regardless of whether or not there is a contractual link between the victim and the liable party.

The hitherto established case law of the French Court of Cassation poses the following principle: “In matters of contractual liability as well as in matters of quasi-delict liability, the direct action of the victim against the insurer of the liable party is governed by the law of the place where the damage was sustained.” Civ. 1ère, 20 December 2000, n°98-15.546.

The principle established by the Court of Cassation imposed a two-stage reasoning process: first, identifying the place of the damage to determine the applicable law, then examining the admissibility of the direct action of the victim under this law.

This reasoning provoked surprise, given that the reference to the place of the damage is usually reserved for cases of delict liability.

The regulation n°864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) provided a textual specification for this practice established by case law, albeit only in matters of delict, its scope of application. Article 18 of the regulation stipulates that « the person having suffered damage may bring his or her claim directly against the insurer of the person liable to provide compensation if the law applicable to the non-contractual obligation or the law applicable to the insurance contract so provides ».

The case law of the Court of Cassation has now also been specified with respect to contractual liability.

Indeed, the stipulations of the Rome II regulation are not applicable to contractual relationships, whereas the regulation n°593/2008 of 17 June 2008 on the law applicable to contractual obligations, known as Rome I, does not contain any specific provisions with respect to the direct action brought by the victim against the insurer of the liable party.

It is thus the Court of Cassation which rules on this question by judgment of 9 September 2015, rendered by the First Civil Chamber.

The Court of Cassation relies on articles 9, 10 and 11 of the regulation CE n°44/2001 of 22 December 2000, as well as on article 3 of the French Civil Code, to formulate a grounds taking up word for word article 18 of the Rome II regulation and applying it to contractual obligations:

« The person having suffered damage may bring his or her claim directly against the insurer of the person liable to provide compensation if the law applicable to the non-contractual obligation or the law applicable to the insurance contract so provides ».

One can only welcome this turning away from the reference to the law of the place of the damage with respect to contractual liability, which appeared incongruous within this context.

However, the reference to the law applicable to the contract between the insured and the person having suffered damage, although more coherent with the liability incurred, exposes the insurer to potential direct actions in cases where this type of action is authorized by the law of the contract between the insured and the person having suffered damage. Future judgments will show whether this new principle has led to an increase of direct actions before French courts.

Jessika DA PONTE

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