Does the EU directive regarding 'large risks' include vessels bought for private use?

Introduction
Facts
Comment

Introduction

In two previous verdicts a district court found that prorogation of jurisdiction can be validly agreed in a yacht insurance contract, even where consumer interests are concerned and the contract requires that legal proceedings be brought in a court in the insurer's home country. In a recent decision, a high court found that the European Court of Justice (ECJ) should be asked for a preliminary ruling on the matter.

EU law protects consumers in EU countries in many ways. The EU Brussels Regulation controls whether a consumer who signs an insurance agreement renounces their option to file a lawsuit in their home country. The two rulings determine that jurisdiction agreements with consumers may comply with current EU regulations.

Facts

In one of the cases, a Danish couple purchased a yacht in the Netherlands for private use (for further details please see "Smooth sailing? Jurisdiction agreements in yacht insurance contracts"). They filed a request for insurance with a Dutch insurer, presumably due to the need for coverage during the yacht's transport to Denmark and the first six months of its storage in the Netherlands. Several years later, the yacht hit ground while sailing abroad. The damage was reported to the insurer one year after the reported accident. However, the couple was unable to settle on the amount of compensation with the insurer. The couple filed a lawsuit against the insurer with the Helsingør Court. The insurer requested that the case be dismissed as the insurance contract included an agreement providing for the Netherlands' jurisdiction over disputes.

The insurer referred to Article 15 of the Brussels Regulation, which states that parties to an insurance contract can deviate therefrom only in specific circumstances. Article 15(5) states that this can happen by agreement of jurisdiction if this covers one or more of the risks referred to in Article 16.

Article 15 states that:

The provisions of this Section may be departed from only by an agreement:

(1) which is entered into after the dispute has arisen;...

(5) which relates to a contract of insurance in so far as it covers one or more of the risks set out in Article 16.

Article 16 states that:

The following are the risks referred to in point 5 of Article 15:...

(5) notwithstanding points 1 to 4, all 'large risks' as defined in Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (1).

Article 16(5) highlights the 'large risks', as defined in Article 13(27) of the EU Solvency II Directive, which has been implemented in Denmark through Law 308 of 28 March 2015.

Article 13(27) of the EU Solvency II Directive states that "'large risks' means… risks classified under classes 4, 5, 6, 7, 11 and 12 in Part A of Annex I".

Comment

The question for the ECJ is does the EU directive regarding 'large risks' include vessels bought for private use and can prorogation of jurisdiction in a yacht insurance contract be validly agreed on? The decision could have an impact on all yacht insurance contracts in the European Union.

For further information on this topic please contact Christian Werenberg at WSCO Advokatpartnerselskab by telephone (+45 3525 3800) or email (cw@wsco.dk). The WSCO Advokatpartnerselskab website can be accessed at www.wsco.dk.