20/09/2014
The judgment of the Court of Justice of the EU in Sneller v DAS (C-442/12) considers whether a person with legal expenses insurance has the right to choose their own lawyer. The right of such a person to choose a lawyer is enshrined in EU law, and the court ruled that insurance companies could not decide when that right applied, albeit allowing insurers to impose limitations on their liability in certain circumstances.
Facts
Mr Sneller had a contract with DAS, a Dutch insurance company, to cover his legal expenses. He then brought a claim for unfair dismissal against his former employer. However, DAS would only cover his legal expenses if he were represented by one of their employees. DAS would allow him to choose his own lawyer in certain cases, but a claim for unfair dismissal was not one of them. Incidentally, just as in the UK, legal assistance is not compulsory for such claims in the Netherlands.
Issues
The legal issue was how to interpret a particular part of EU legislation. Article 4 of Council Directive 87/344/EEC (“the directive”) provides that any contract for legal expenses insurance must recognise that, “where recourse is had to a lawyer,” the insured person shall be free to choose that lawyer. The questions for the court were: (1) does Article 4 allow an insurance company to decide when the right to choose a lawyer applies, and (2) is the answer affected by whether legal assistance is compulsory?
Judgment
DAS argued that Article 4 could be interpreted as saying “where the insurer decides that it is necessary to have recourse to a lawyer,” the insured person shall be free to choose such a lawyer.
The court rejected DAS’s interpretation, stating that, when interpreting EU law, “it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it is part”. In this case, the court found that the context made clear that the right under Article 4 could not be restricted in this way, regardless of whether legal assistance is compulsory. However, the court did find that, in certain cases, limitations may be imposed on the costs to be borne by the insurer.
Significance
Sneller continues the court’s robust defence of the right to choose a lawyer. Insurance companies have already tried to restrict that right in cases concerning a large number of claims, where the company stood to lose a significant sum if their clients lost. However, the court ruled against this in Eschig (C-199/08), preventing insurance companies from inserting such “mass torts clauses” into their agreements.
Moreover, although the court ruled in Stark (C-293/10) that national governments could require those insured to choose lawyers based in the same region as the court, in order to avoid travel expenses escalating, this is only permitted on the condition that the freedom to choose a lawyer “is not rendered meaningless”.
In Sneller, the court upheld the view expressed in Eschig that the right to choose a lawyer was “of general application and is obligatory in nature”. This does not mean that insurers cannot prevent their clients from choosing unnecessarily expensive lawyers by inserting a threshold clause into their contracts. However, the court will not tolerate such clauses if - borrowing a phrase from Stark - they render the right to choose a lawyer meaningless.
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