Geographical limitation of insurance cover in liability insurance - a new insurance dimension of the PIP silicone breast implants scandal

This article discusses the request for a preliminary ruling under Article 267 TFEU of the Higher Regional Court of Frankfurt am Main referring the question whether the liability of the French insurer Allianz France towards a German appellant for defective silicone breast implants is dependent on the interpretation of the prohibition of anti-discrimination (Article 18 TFEU).

Facts

Within a request for a preliminary ruling under Article 267 TFEU, made by decision of 11 September 2018, the Higher Regional Court of Frankfurt am Main has referred the question whether the liability of the French insurer Allianz France towards a German appellant for defective silicone breast implants is dependent on the interpretation of the prohibition of anti-discrimination (Article 18 TFEU). If so, this would be in direct contrast to several decisions of German Higher Regional Courts in which it was stated that a geographical limitation does not conflict with Article 18 TFEU. A different Senate of the Higher Regional Court of Frankfurt am Main for example has just decided in March 2018 that a geographical limitation does neither represent a direct discrimination nor an indirect discrimination and is therefore admissible.

Decision of the Higher Regional Court of Frankfurt am Main

The appellant had silicone breast implants inserted in 2006. The implants had been manufactured by Poly Implante Prothèse S.A. (PIP) and had consisted of industrial silicone instead of medical silicone (NuSil silicone). In 2012, the appellant had the implants removed after it had become known that the implants had consisted of such industrial silicone. The appellant filed a claim at Regional Court of Frankfurt am Main against her treating physician, the notified body TÜV Rheinland (Section 15 of the German Act on Medical Devices; MPG) and the French insurer of PIP, Allianz France, in order to receive (i) damages for pain and suffering (at least €45,000), (ii) reimbursement of expenses in the amount of €762,00 and (iii) a declaratory judgment that the respondents will be liable for all future damages. The Regional Court of Frankfurt am Main dismissed the claim. The appellant appealed at the Higher Regional Court of Frankfurt am Main as the claim against TÜV Rheinland and Allianz France was dismissed.

Order for reference

The Higher Court of Frankfurt am Main decided that French law is applicable due to Article 40 Introductory Act to the German Civil Code (EGBGB; EGBGB is applicable as the decisive facts of the case happened before 2009 when the Regulation (EU) 593/2008 came into force).

According to French law, there is an insurance obligation for manufacturers of medical devices; the respective French law does not contain any provisions regarding a geographical scope of an insurance. Provided that the obligated manufacturer cannot agree with any insurer on the conclusion of an insurance contract, the French competent authority Bureau Central de Tarification obliges one of the insurers to agree on an insurance contract. In the present case, France Allianz respectively the legal predecessor was obligated accordingly and provided a proposal including a geographical limitation (namely France and corresponding overseas territories) and limitations to the maximum insured amount. The Bureau Central de Tarification did not disagree with this proposal.

The Higher Regional Court of Frankfurt am Main tends to be of the opinion that the geographical limitation of the insurance contract is conflicting with the prohibition of anti-discrimination (Article 18 TFEU): such a limitation represents an inadmissible indirect discrimination regarding the nationality from which typically non-French patients are concerned. The Higher Regional Court of Frankfurt am Main also tends to apply Article 18 TFEU on the relationship between private parties. Even if an imbalance of the parties would be required for the application of Article 18 TFEU, this requirement would be fulfilled in the present case as the appellant could not influence the terms of the insurance contract. Anyhow, the Bureau Central de Tarification would have been obligated to challenge the provision regarding the geographical limitation. This was not decided yet by the ECJ.

The Higher Regional Court of Frankfurt am Main is of the opinion that there is no justification for such an indirect discrimination due to geographical limitations as the commercial interest of the contract’s parties to have small insurance sums and premiums is not sufficient to justify (contrary to other decisions, eg OLG Hamm, Resolution dated May 3, 2017 - file number I-3 U 30/17, OLG Frankfurt am Main, Decision dated March 21, 2018 - file number 4 U 269/16). The decisive measure to address the respective interest is to implement limitations to the maximum insured amount which are regardless of the nationality or the place of the damage.

With regard to limitations to the maximum insured amount - according to the Higher Regional Court of Frankfurt am Main - it seems unfaithfully to reference to the geographical limitation of the insurance and (after the inadmissibility of such limitations had been decided) then to reference to the limitation to the maximum insured amount. This would cause Article 18 TFEU to be practically ineffective (contrary to the principle of effet utile).

Conclusion

In the present case questions regarding insurance issues and European law issues arise. For example, the order for reference addresses the admissibility of insurance limitations in the context of cross-border damage, the application of Article 18 TFEU between private parties and the consequences resulting therefrom. This might be decisive (inter alia) for the drafting of terms of insurance and contracts. The decision by the ECJ will also be decisive for the further procedure at the Higher Regional Court of Frankfurt am Main. Resulting statements therefrom might also have influence on the role of the notified body. However, it is to be expected that the present case will be taken to the German Federal Civil Court (Bundesgerichtshof - BGH) as the decision has to be deemed fundamental. Among other things, the BGH would have to assess the correct implementation of the ECJ’s decision.

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