Draft Common Frame of Reference (CFR): "Insurance Contract" published
25.01.2008
Non-binding compilations of black letter law serving as a foundation for future legislation are a well established aspect of U.S. legal methodology. The most prominent example in this regard is the American Law Institute's „Restatements of the Law“. As with the Restatements, the PEICL contain rule formulations - drafted in the fashion of statutes – that are accompanied by commentary and examples as well as explanatory notes which present the positive law of the member states in respect of each individual rule. At present, only the rules have been published; the commentaries and explanatory notes are to be completed by the end of 2008(http://www.restatement.info).
The Common Frame of Reference of European Contract Law has been conceptualised by the European Commission as a non-binding instrument that, above all, shall serve the internal aims of European institutions, particularly in terms of achieving simplification and avoiding contradictions within European legislation. Insurance contract law, however, is at present almost completely non-existent in Community law such that these aims cannot, a priori, be achieved. Other possible applications of the Common Frame of Reference also fail in insurance contract law since applicable national law frequently contains compulsory provisions not allowing recourse to a Community law configuration. Thus, from the very start the European Insurance Contract Law project group conceived the PEICL as an optional instrument that could be adopted by contractual parties in place of the otherwise applicable national law. To the degree that this in fact occurs, the PEICL could represent a harmonised foundation in contract law allowing the creation of Europe-wide risk-pools. To date, such pools have only existed in the area of large-scale risks where, pursuant to choice of law, all risks can be subject to a uniform jurisdiction (that of the insurer).
The Principles of European Insurance Contract Law are divided into three parts, whereby the general regulations precede the specialised. The first part addresses general insurance contract law. This part encompasses the pre-contractual duties of the parties, the conclusion of the contract, retroactive and preliminary cover, duration and termination of the contract, over- and underinsurance, post-contractual duties, the powers of insurance agents, individual questions as to the insured risk, payment of premiums and prescription. The second and third parts cover particular questions concerning the sum insured and indemnity insurance. A not yet published part will conclude with special provisions for specific branches of insurance. All of the provisions of the PEICL are in principle compulsory where favouring the insured. Otherwise, the parties may design their contract as desired. National law is excluded. Gaps in the PEICL are to be filled from the Principles of European Contract Law (PECL) created by the Lando Commission.
The significance of harmonised insurance contract law becomes apparent upon consideration of the European domestic market. Approximately one third of global premium revenues are generated in the European Community. Enhanced cross-border engagement for small and medium sized risks, however, is hindered by the private internationa law that was until now contained in Directives from 1988 and 1992 and will in the future be integrated into the Rome I regulation. Thereafter, insurance firms party to a cross-border contract will have to submit to the law of the insured. In the mass market of insurance, providers have consistently rejected this approach. The PEICL will offer a platform for such cross-border contracts. It will also allow a more clearly configured insurance contract law to be fashioned and thus enable a consolidation of the European insurance market.
Further information:
Under the guidance of Prof. Dr. Dr. Basedow, LL.M
Participants:
Karsten Behn, LL.M.
Dr. Anatol Dutta, M.Jur.
Dr. Christian Heinze, LL.M.
Dr. Giesela Rühl, LL.M.