ECJ needs to protect consumer access to justice, say legal expenses insurers
Brussels, 14 May 2009: In today’s report to the European Court of Justice (ECJ), Advocate-General Verica Trstenjak found that the Austrian legal expenses insurers practice of selecting the lawyers to represent their clients in collective redress proceedings is an inadmissible limitation of the rights of the insured.
“Should the subsequent ECJ ruling concur with the Advocate-General’s opinion, this case could have a detrimental impact on access to law and could potentially undermine EU consumer policy,” warned Antje Fedderke, Secretary-General of the International Association of Legal Expenses Insurance (RIAD).
The case (C-199/08 Eschig) concerns the so-called, ‘mass claims clause’ used by Austrian legal protection insurers. In Austria as in other EU countries, legal protection insurers seek to combine the legal representation of their clients’ interests. The mass claims clause allows the legal expenses insurer to select the legal team should several insured parties in similar situations wish to pursue claims against the same opposing party.
“For our clients no disadvantages arise out of the mass claims clause,” explains Ingo Kaufmann, Director of D.A.S. Austria, which is a member of RIAD. “On the contrary, by selecting specialised lawyers, we optimise the professional competence to best defend the clients’ interest. In many cases insurance coverage only becomes possible in this way as it allows us to avoid unnecessary duplication in legal expenses, which ultimately benefits policyholders.”
Putting the case in a European context, Antje Fedderke notes that, “the prime concern of the Legal Expenses Directive* is to prevent conflicts of interest between the insured party and their insurance company. It allows the insured party to choose its own representation, but it does not grant an absolute entitlement to the free choice of lawyer. The use of the mass claims clause consequently limits consumer choice in an admissible way, as it is done in the interest of the individual insured party.”
EU consumer policy strongly favours initiatives to make damages claims by victims more efficient, whilst ensuring respect for European legal systems and traditions. The European Commission has identified collective redress mechanisms as a preferred method by which consumer rights and access to law, for consumers and SMEs in particular, can be balanced appropriately.
“Advocates of the inviolable right to the free choice of lawyer should examine the interests and needs of the users of legal services very closely,” advises Antje Fedderke, adding that “if a balanced approach is not found there is a real risk that the cost-effective management of such types of legal proceedings will be hindered in a dogmatic and misguided attempt to protect the consumer interest.”
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* 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
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