Legal protection insurers welcome the ECJ’s decision on the free choice of lawyer

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Brussels, 26 May 2011: The European Court of Justice (ECJ) today ruled that European law does not prohibit legal protection insurers to restrict the payment of costs incurred in connection with the defence of an insured person.

“We are relieved about the ECJ’s decision because it clearly shows that the insured’s interests, consumer protection and cost management measures of insurers can be attuned,” said Antje Fedderke, Secretary-General of the International Association of Legal Protection Insurance (RIAD). 

The case (C-293/10 Gebhard Stark) concerns a legal provision in Austria and contract clauses, based on this provision, to the effect that the insured person may only select as legal representative, authorised professionals who have their residences at the place of the court or administrative authority before which the proceedings at first instance are to be conducted.

“The Court’s decision confirms insurers’ proven and tested practice and its support for sensible cost management means that we can continue to offer access to law to our clients at an attractive price,” explains Ingo Kaufmann, Director of D.A.S. Austria, which is a member of RIAD. As already ruled in Case C-199/08 Eschig the Court underlines the general and obligatory nature of the insured’s right to freely choose a lawyer as provided by the European Directive[1] and, as Kaufmann emphasises, “we absolutely respect this right of our clients and offer them the possibility to select a lawyer who they deem capable of representing them and who they trust.”

While the Court upholds the Austrian law it emphasises that the restriction imposed on the costs for the defence of the insured must only relate to the extent of the cover and on condition that the eligible part of the costs is in proportion to the costs not covered. Paul Asplin, President of RIAD and CEO of D.A.S. UK Group, observes, “it is important to acknowledge that we are not only the deep pockets as which we are often perceived. I think the Court has given insurers room for manoeuvre and we now can fill our role as service providers for our clients even better“.

The European Court of Justice has commissioned the referring Austrian court to determine whether the reimbursement actually provided by the insurer is sufficient. “I am very confident that the court will come to the conclusion that we cover an adequate amount of the costs and consequently respect the free choice of our clients,” says Ingo Kaufmann. He concludes, “for legal protection insurers the judgment gives more legal certainty which is also positive for our clients.

 


[1] Directive 87/344/EEC of 22/06/1987, OJ 1987 L 185/79 on the coordination of laws, regulations and administrative provisions relating to legal expenses insurance