Insurance companies are not always willing to implement laws that protect customers against the abuses that some big corporations tend to commit. With this in mind, they sometimes use legal tricks to avoid the consequences of these regulations, created for the benefit of the weakest part of the agreement.
An example of the above can be found in the liability policies of hotel establishments. Within these policies, some insurers include certain exclusions of coverage when the judicial claim is made outside the national territory. Thus, they try to hide a limitation of jurisdiction behind a pretended limitation of coverage. In this way, they prevent consumers from claiming in the court of their domicile, as it is in principle guaranteed by European law.
This was one of the most relevant issues at stake before a judge in the Chester County Court in the primordial case of Williams v Mapfre.
In May 2012, Barbara Williams, a resident of the United Kingdom, spent her holidays at the Hotel Pueblo in Benidorm, Spain. She was sitting on a chair that suddenly broke, causing her a serious injury to her knee. Back in England, Mrs. Williams sued Mapfre, insurer of the hotel, in the courts of her domicile. According to the Rome II Regulation, Spanish law would apply to the case as the law of the country in which the event occurred
However, the policy agreed between Mapfre and Hotel Pueblo included a clause limiting coverage to those cases submitted to Spanish jurisdiction, for events occurred in Spain related to liabilities or other type of obligations imposed in accordance with Spanish legal provisions.
Under this clause, Mapfre alleged the lack of competence of English courts to seise the case. Mapfre argued that in application of such provision, it was only obliged to cover the risk of the insured if the case was submitted in Spain.
The Judge determined that the clause could not be considered as a limitation of rights, and that it was only a provision defining the risk covered, aiming to limit the financial coverage of the policy. Therefore, the judge considered that such clause was valid and resolved denying the claimant’s right to claim against Mapfre outside Spain.
However, the legal reasoning of the judge is unclear.
Analysing the clause in Mapfre’ s insurance policy, we find a double sense. The first part of the clause states that it will only cover claims submitted to the Spanish jurisdiction, and it therefore limits consumers’ rights as it is applicable ex post and it conditions the right of insurance coverage once the incident has happened. The second part of the clause deals with the geographical delimitation of the coverage, limiting the policy to events happened in Spain; this defines the object of the contract ex ante, before the risk has happened, limiting the risk but not the rights of third parties.
Therefore, the non-application of Regulation 1215/2012 discriminates against Mrs Williams, in the sense that the Regulation is mandatory and applicable to any European citizen. The Claimant will have the right to bring a direct action for damages before the courts of the Member State of his domicile, when such a right is recognized in the State of origin of the insurer, as it is the case in Spain.
The clause in conflict is not simply a clause that limits the risk covered, but a clause that clearly limits the rights of third parties. Subsequently, it is not exercisable against third-party beneficiaries of the policy, especially against consumers.
In conclusion, we believe Judge Halbert has erred in his interpretation and application of Spanish and European regulations, possibly relying only in the limited information received from the parties.
We hope English judges can correct the damaging consequences of this decision in the very near future.