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'Unit-linked' insurance contracts are excluded from the scope of Directive 85/577

Araceli Turmo , 7 mars 2012

In its judgment in Case González Alonso v Nationale Nederlanden, on 1 March 2012, the Court clarified the interpretation of the exclusion of insurance contracts from the scope of Directive 85/577 of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises. According to its Article 3(2), the Directive did not apply to contracts relating to the construction, sale or rental of, or rights relating to immovable property, to the supply of foodstuffs, beverages or goods intended for current consumption in the household and supplied by regular roundsmen, to insurance contracts, and to contracts for securities. The reference for a preliminary ruling had been made in the course of proceedings between a Spanish national and the said company, regarding an action seeking the cancellation of a ‘unit-linked’ insurance contract, and the refund of premiums paid on the basis of that contract.

The national court doubted whether such a contract, which includes elements that go beyond the usual characteristics of life assurance, should still fall within the exclusion of “insurance contracts”, provided for by Article 3(2)(d) of Directive 85/577. It appears that the national court’s aim was mostly policy-based, since it pointed out that if such a contract fell within the scope of the Directive, it may be declared void on the basis of the formal requirements applicable to consumer contracts negotiated away from business premises.

The Court of Justice denied that the exclusion of insurance contracts from the scope of Directive 85/577 could be interpreted in such a narrow way as to exclude life assurance contracts which are ‘unit-linked’ or ‘linked to investment funds’, such as that at issue. According to the Court, that interpretation would deprive these exclusions of their effectiveness; moreover, these contractual stipulations are quite common in insurance law. Therefore, contracts such as that at issue in the main proceedings are clearly within the notion of ‘insurance contract’, and fall outside the scope of Directive 85/577.

However, the Court of Justice tried to answer the national court’s concerns, by pointing out that this solution did not exclude the cancellation of such a contract, within the conditions laid down in the Life Assurance Directive (Directive 2002/83).

It is worth noting that the new Directive on consumer rights (Directive 2011/83, which repeals Directives 85/577 and 97/7), would probably have made such a question irrelevant, since the exclusion now explicitly applies to all contracts “for financial services” (Article 3(3)(d)), defined as meaning “any service of a banking, credit insurance, personal pension, investment or payment nature” (Article 2(12)). This new provision covers both the previous mentions of insurance contracts and contracts for securities. It is part of a more general increase of the number of areas excluded from the scope of the new Directive, most of which is simply the result of the sum of the exemptions provided for in the previous directives. Indeed, Article 3(1) of Directive 97/7 already excluded all contracts “relating to financial services”.

Article 3(3) of Directive 2011/83 excludes contracts: for social services, for healthcare, for gambling, for financial services, for the creation, acquisition or transfer of immovable property or rights in immovable property, and for the construction or substantial conversion of buildings and their rental for residential purposes; contracts which fall within the scope of the Package Travel and Timeshare Directives, which are established in accordance with the laws of Member States, by a public office-holder who has a statutory obligation to be independent and to inform the consumer; contracts for the supply of foodstuffs, beverages or other goods intended for current consumption in the household and are supplied by a trader on frequent and regular rounds to the consumer’s home or workplace; for passenger transport services (with exceptions); and contracts concluded by means of automatic vending machines or automated commercial premises, and concluded with telecommunications operators through public payphones for their use or for the use of one single connection by telephone, Interned or fax established by a consumer.

Reproduction autorisée avec l’indication: Turmo Araceli, "'Unit-linked' insurance contracts are excluded from the scope of Directive 85/577", www.ceje.ch, actualité du 7 mars 2012.