Belgium - Europe | legal aid insurance and the right of free choice of lawyer, a European norm to be respected.

On April 7th 2016, The European Court of Justice has held in two preliminary rulings that the term "administrative procedure" within the meaning of Article 4, paragraph 1 a) of Directive 87/344 – stipulating the right of free choice of lawyer in legal aid insurance- is not limited to judicial proceedings.

 Article 2(1) of the EU directive stipulates:

‘This Directive shall apply to legal expenses insurance. Such consists in undertaking, against the payment of a premium, to bear the costs of legal proceedings and to provide other services directly linked to insurance cover, in particular with a view to:

–        securing compensation for the loss, damage or injury suffered by the insured person, by settlement out of court or through civil or criminal proceedings,

–        defending or representing the insured person in civil, criminal, administrative or other proceedings or in respect of any claim made against him.

I. Obligation of the insurers to stipulate in the insurance contract that the insured has the right of free choice of lawyer.

Firstly, the Court points out that under Article 4, paragraph 1 a) of Directive 87/344  any insurance contract covering the legal expenses should expressly stipulate the right that the insured is free to choose his representative, if a representative is requested to defend, to represent and serve the interests of the insured in court or administrative proceedings as well as in case of conflict of interests.

II. General scope : the right exists for any administrative procedure, not only court or judicial proceedings

From the wording, the Court concludes that the term "administrative procedure" should be read as opposed to the notion of "judicial proceedings".

When the concept of "administrative procedure" should be interpreted as limited to litigation in administrative matters (it being the procedures before a court in the proper sense) this would deprive the meaning of the phrase "administrative procedure".

III. The interpretation of EU Community law should take into account the wording, context and purpose of the provision.

Furthermore, the Court points out that not only the wording needs to be taken into account, but also the context and the objectives pursued by the provisions. This in accordance with the established case law on the interpretation of provisions of European Community law.

Article 4 of Directive 87/344 (on the free choice of lawyer) aims to protect the interests of the insured.

The general scope and the obligation to respect the right to choose his lawyer, does not allow a restrictive interpretation of Article 4, paragraph 1 a) of Directive 87/344.

IV. Possible limitation to the amount of legal costs to be reimbursed.

Member States may raise limitations to the costs that are reimbursed by insurers.

Since Directive 87/344 does not seek full harmonization within the EU, Member States may in some cases restrict the costs that are reimbursed by insurers.

Also in case of limitation of costs, the free choice of lawyer remains valid in its entirety.

 

To remember

The free choice of the policyholder to appoint his/her lawyer in case of an insurance covering legal expenses is based on european legislation.

It applies to any administrative procedure.

Check your insurance policies covering your liability risks and legal aid.  

Make use of your right of free choice of lawyer to defend your interests in the most optimal way.

Legal aid coverage is often included in insurance policies covering different forms of liabilities.

For instance as road user (traffic law), road carrier or operator, director or manager, parental liability, liability for damage/loss occured during the the operation of your business or activity and so on

As the amount of reimbursement of legal expenses may be limited, assess the applicable legislation of the EU member state in which you are active.

It might be advisable to model your European insurance and legal aid coverage in order to reach full protection and reimbursement of the legal expenses in case your liability is witheld.

In case of doubt, contact our insurance law expert lawyers for further information concerning the relevant legislation including the higher European and international legal framework .

Request a fee quote to audit your liability insurance policies and coverage of legal aid in the EU and, where possible, adapt same according to the applicable laws of the EU country in which you invest or trade with.