In practice, insurance policies that are governed by French law always contain a dispute resolution clause for the resolution of coverage disputes, whose content depends on the type of insurance coverage the policyholder purchased.

On the one hand, when the policyholder has taken out a non-marine policy for non-business purposes, the dispute resolution clause usually contains a non-mandatory mechanism seeking an amicable solution which invites the policyholder to liaise with a specific subsidiary of the insurer that only deals with disputes. In addition, a policyholder who undertakes a non-marine policy for non-business purposes is usually regarded as a consumer. Therefore, pursuant to Articles L. 112-2 of the Insurance Code and L. 611-1 of the Consumer Code, the “[policyholder] has the right to make free use of a consumer ombudsman with a view to the amicable resolution of a dispute with [the insurer]” so the dispute resolution clause usually details a mediation proceeding with the Insurance Ombudsman (www.mediation-assurance.org), being specifying that the policyholder is in principle under no obligation to refer the dispute to the Insurance Ombudsman before bringing the claim to Courts. Otherwise, the policy contains a jurisdiction clause which merely specifies that French Courts have jurisdiction.

On the other hand, when the policyholder has taken out a policy for business purposes, the dispute resolution clause usually provides for the jurisdiction of the Commercial Court or for arbitration (which can be ad hoc, or institutional with a reference, for example, to the rules of the International Chamber of Commerce (“ICC”), ARIAS France, or the Paris Chamber of Maritime Arbitration (“CAMP”)). The dispute resolution clause may also set a prior recourse to negotiation or mediation, but this is not that common.

In England and Wales, pre-action protocols explain the conduct and set out the steps the Courts would normally expect parties to take before commencing proceedings for particular types of civil claims.

In France, the Courts do not necessarily expect parties to take specific steps before bringing a claim dealing with insurance issues. There is no pre-action protocol governing the parties’ conduct for insurance disputes.

However, the parties are expected to comply with the pre-action conduct they agreed on in the policy or in any contractual document they entered into.

In the French legal system, the Courts are classified into three different levels, and their expertise in handling complex insurance disputes may vary. There are the Courts of First Instance (3.1.), which rule on matters of fact and law. In principle, the decisions the Courts of First Instance issue can be appealed before Courts of Appeal (3.2.), which also rule on matters of fact and law.

When it is not possible to appeal a decision issued by a Court of First Instance, or when a Court of Appeal issues a decision, one can appeal the decision before the Cour de cassation (3.3.), which is the French Supreme Court having jurisdiction on civil and commercial matters and that only rules on matters of law.

Despite their specificities, the French Courts are usually adept at handling complex insurance disputes (3.4.).

3.1. Courts of First Instance

When a party, whether a policyholder or an insurer, wants to bring a claim before a French Court, they must start a proceeding before a Court of First Instance, which, in cases of insurance disputes, can be a High Court (3.1.1.) or a Commercial Court or Court for Economic Activities (3.1.2.), depending on the case’s particularities (3.1.3.).

3.1.1. High Courts

High Courts are the Courts of general jurisdiction in civil matters. They have exclusive jurisdiction to hear some specific disputes where the parties enjoy free disposal of their rights.

Otherwise, the principle is that High Courts hear all matters for which the jurisdiction is not expressly assigned to another Court because of the nature or amount of the claim, and they have final jurisdiction where the amount of the claim is less than or equal to €5,000.

Judges who sit in High Courts are professional magistrates.

3.1.2. Commercial Courts and Courts for Economic Activities

As of 1 January 2025, twelve Commercial Courts are, on an experimental basis and for a period of four years, rebranded as Courts for Economic Activities (these Courts are those of Auxerre Avignon, Le Havre, Le Mans, Limoges, Lyon, Marseille, Nancy, Nanterre, Paris, Saint-Brieuc, and Versailles).

Commercial Courts and Courts for Economic Activities are special courts having, inter alia, jurisdiction to hear the following disputes:

• those relating to commitments between traders, between artisans, between credit institutions, between finance companies or between them;
• those relating to commercial companies; and
• those relating to commercial transactions between any persons.

The importance of the Commercial Courts and the Courts for Economic Activities vary, depending on the number of judges or the volume of cases that they handle.

Judges who sit in Commercial Courts and Courts for Economic Activities are unprofessional magistrates; they are individuals who have either registered in the Companies Register in their own name for at least five years or have held the position of company director for at least five years, and who are chosen by their peers.

3.1.3. Courts of First Instance having jurisdiction to hear insurance disputes

High Courts have exclusive jurisdiction in relation to some particular insurance issues (e.g., insurance against accidents and occupational illnesses for self-employed persons in agriculture, disputes concerning the revision of certain life annuities constituted by insurance companies).

They also have exclusive jurisdiction when the parties to the disputes are not commercial companies (e.g., a dispute between a policyholder and their insurer when the insurer is a mutual insurance company).

On their end, Commercial Courts and Courts for Economic Activities have, in principle, exclusive jurisdiction to hear disputes when all the parties are commercial companies.

Finally, when the disputes oppose commercial companies and non-commercial companies, the principle is that commercial companies must bring their claims before High Courts, while non-commercial companies can elect and bring their claims either before the High Courts or the Commercial Courts or Courts for Economic Activities.

3.2. Courts of Appeal

A party can appeal a decision from a High Court, a Commercial Court, or a Court for Economic Activities issued, in whole or in part, when the amount of the claim is higher than €5,000.

The Courts of Appeal will hear any disputed issues and rule on the matters of fact and law of these issues.

Judges who sit in Courts of Appeal are experienced professional magistrates.

3.3. Cour de cassation

The Cour de cassation is the French Supreme Court in civil and commercial matters. It does not rule on the merits of the case.

It verifies whether the law has been correctly applied in the decision that is referred to the Cour de cassation. These decisions are usually made by the Courts of Appeal. However, the Cour de cassation can also consider the decisions of the High Courts, the Commercial Courts and the Courts of Economic Activities decisions when the amounts of the claim are less than or equal to €5,000.

If the Cour de cassation considers that the law has been wrongfully applied, it quashes the decision that was appealed before the Cour de cassation and refers the case to another Court, which renders a new decision on the merits.

Judges who sit in the Cour de cassation are highly experienced professional magistrates.

3.4.  Handling of complex insurance disputes by French Courts

French Courts are adept at handling complex insurance disputes.

Indeed, any insurance dispute must be brought before a Court of First Instance first. In practice, most of the complex insurance disputes are brought before major Courts for Economic Activities, such as Paris or Nanterre (insurance companies usually have their registered office in the territorial jurisdiction of these Courts) or Marseille (due to the number of shipowners and maritime traders in the territorial jurisdiction of the Marseille Court for Economic Activities) where there are specialised chambers to deal with insurance issues.

In addition, the threshold for lodging an appeal is rather low (€5,000) compared to the amounts at stake in complex insurance disputes, meaning that the parties can appeal the decision the court of First Instance issued. Again, most of the Courts of Appeal have specialised chambers to deal with insurance issues, and those chambers are composed of experienced professional magistrates.

Further, for the most complex insurance issues, the parties can, in any event, bring their claim before the Cour de cassation, where the matters are ruled on by the highly experienced professional magistrates who sit in either the second civil chamber (which, in principle, rules on non-marine insurance issues) or the Commercial Chamber (which, in principle, rules on marine and aviation insurance issues).

Alternative dispute resolution can be mandatory in France depending on the amount claimed (4.1.), the disputed subject matter (4.2.) and the clauses the parties agreed on (4.3.).

4.1. Alternative dispute resolution is mandatory for claims that do not exceed €5,000

Pursuant to Article 750-1 para. 1 of the Code of Civil Procedure, in principle, when the sum claimed does not exceed €5,000, the claim must be preceded, at the choice of the parties, by an attempt at conciliation conducted by a Court conciliator, an attempt at mediation or an attempt at a participatory procedure.

There are, however, circumstances in which the parties are exempted from alternative dispute resolution even if the sum claimed does not exceed €5,000, when there are legitimate reasons relating to manifest urgency or to the circumstances of the case making such an attempt impossible or requiring that a decision be rendered without the presence of both parties.

Otherwise, alternative dispute resolution is not mandatory when one claims the payment of a sum exceeding €5,000.

4.2. Alternative dispute resolution is mandatory when dealing with certain subject matters

There are a few subject matters where alternative dispute resolution is mandatory prior to commencing proceedings, but this does not concern insurance claims.

For instance, alternative dispute resolution is mandatory when dealing with, inter alia, neighbourhood disturbances, land demarcations, some decisions concerning individuals France Travail (a public administrative body responsible for employment in France) can make, etc.

4.3. Alternative dispute resolution is mandatory when the parties decide so

The parties can agree on some alternative dispute resolution mechanisms in the policy or in any contractual document they entered into.

When the policyholder has taken out a non-marine policy for non-business purposes, he is usually regarded as a consumer. In that case, pursuant to Article R. 212-2 of the Consumer Code, the clauses having the object or effect of eliminating or impeding the exercise of legal action or remedies by the consumer, in particular by obliging the consumer to exclusively refer to an arbitration court not covered by legal provisions or to exclusively use an alternative method of dispute resolution are presumed unfair, unless the insurer can provide evidence to the contrary. As a result, the alternative dispute resolution mechanisms set forth in the policy, if any, are, in principle, not binding on the policyholder who has taken out a policy for non-business purposes.

Otherwise, the clauses that oblige the parties to a contract to use an alternative method of dispute resolution prior to going to Courts or to arbitration are binding on them, provided that the terms of the clause are precise enough.

Therefore, if there is an alternative dispute resolution clause in a policy, the policyholder and/or the insurer must ensure they comply with the conditions set forth in the clause. Should one of the parties fail to observe the alternative dispute resolution mechanisms, any action brought before the relevant Courts could be declared inadmissible.

Similarly, it can be requested the parties comply with any dispute resolution mechanisms they otherwise agreed on. For instance, almost all the insurers that are acting in France (99% of the market) are members of France Assureurs, an employer organization ensuring the professional representation of insurance companies in France. As members of France Assureurs, almost all the insurers that are acting in France are bound by a specific convention, the CORAL Convention, which establishes a mandatory escalation procedure. The matter must first be discussed between the companies. If a company that is a member of France Assureurs does not exhaust all avenues of redress under the escalation procedure, its claim will be dismissed. The CORAL Convention also provides for conciliation and arbitration proceedings, which are compulsory only when the amount at stake is €50,000 or less.

The recovery of the costs of insurance disputes from insurers can be governed by the policy and spontaneously paid by the insurers. It can also be ordered by the Courts.

When the insurers cover the policyholders’ loss, the policy might provide coverage for the policyholders’ defence costs. In that case, the policyholders will recover the costs of the disputes from their insurers up to the limit they agreed on.

When the limit the policyholders and the insurers agreed on is exceeded, and when the dispute opposes a policyholder and its insurer, the Code of Civil Procedure distinguishes between some specific costs (les “dépens”) and any other costs.

On the one hand, the “dépens” are listed under Article 695 of the Code of Civil Procedure. The “dépens” cover all costs that are regulated and/or that are necessarily due, such as the Courts’ registration fees, the fiscal stamps, the sworn translators’ fees when translation is mandatory, the Court-appointed experts’ fees, the bailiffs’ costs for the service of documents, costs related to the service of documents abroad, etc.

The Courts usually order the defeated party to pay all the “dépens”; these sums used to be very reasonable.

However, by bill No. 2023-1059 dated 20 November 2023 and by a governmental decision dated 5 July 2024, twelve Commercial Courts are, on an experimental basis as of 1 January 2025 and for a period of four years, rebranded Courts for Economic Activities (see answer 3.1.2. to question 3). Amongst the measures that apply to proceedings before the Courts for Economic Activities, the party bringing a claim can be required to pay a fee when two conditions are met:

• the first condition is that the party (a natural person or a legal one governed by private law) employs 250 staff members or more; and
• the second condition takes the incomes of the party bringing the claim:
  • natural persons whose tax reference income is more than €250,000 must pay a fee that is between 1% and 3% of the total value of the initial claims up to a maximum amount of €50,000; and
  • legal persons governed by private law whose average annual turnover over the last three years is more than €50 million must pay a fee that is between 3% and 5% of the total value of the initial claims up to a maximum amount of €100,000.

The fee to bring a claim before a Court for Economic Activities is reimbursed to the claimant in case of an amicable settlement resulting in the termination of the proceeding or in the event of withdrawal of the claim.

Consequently, the “dépens” can now be rather substantial, although it is reminded that the Courts usually order the defeated party to pay all the “dépens” to the successful party.

On the other hand, regarding all the other costs that are not regarded as “dépens” (e.g., lawyers’ fees, technical experts’ costs, translators’ fees when translation is not mandatory, etc.), Article 700 of the Code of Civil Procedure allows the Courts to order the party that must pay the “dépens” to also pay to the other party any sum the Courts can discretionarily determine “taking into account equity or the economic situation of the defeated party”.

In practice, Courts sometimes rule that each party bears its own legal costs. Otherwise, in the vast majority of cases, the sums recovered under Article 700 of the Code of Civil Procedure by the successful party do not cover the costs of disputes.

The appeal process differs for Court decisions (6.1.) and arbitral awards (6.2.).

6.1. The appeal process for Court decisions

A claim must first be brought before the Courts of First Instance, which rule on matters of fact and law (see answer to question 3.).

Once the Courts of First Instance have ruled on a matter, the parties can appeal, in whole or in part, the first instance decision before the Courts of Appeal, provided that the amount of the claim is higher than €5,000.

If an appeal is filed, the Courts of Appeal hear any disputed issues and rule on the matters of fact and law of these issues.

The decisions of the Courts of First Instance which cannot be appealed before the Courts of Appeal and the decisions of the Courts of Appeal can be appealed before the Cour de cassation, which is the French Supreme Court having jurisdiction to rule on civil and commercial matters.

The Cour de cassation does not rule on the merits of the cases; it verifies whether the Courts that ruled on the merits have correctly applied the law. If the Cour de cassation considers a Court did not properly apply a point of law, it quashes the decision that was appealed before it and refers the case to another Court, which renders a new decision on the merits.

6.2. The appeal process for arbitral awards

There are two different regimes when dealing with arbitration, which distinguish between domestic and international arbitration. Pursuant to Article 1504 of the Code of Civil Procedure, an arbitration is international when “it involves international trade interests”. The domestic or international nature of arbitration does not depend on the applicable law in terms of substance or procedure but on the nature of the economic transaction at the origin of the dispute.

As French arbitration law distinguishes between domestic and international arbitration, the appeal process for arbitral awards differs in domestic arbitration (6.2.1.) from international arbitration (6.2.2.). To some extent, the appeal process also depends on the arbitration rules (6.2.3.).

6.2.1. The appeal process for arbitral awards in domestic arbitration

In domestic arbitration, the parties cannot appeal the award unless otherwise agreed by the parties.

If the parties agree that they can appeal the award before a Court of Appeal, Article 1490 of the Code of Civil Procedure specifies that: “The appeal aims to reform or annul the award. The Court rules in law or by amicable composition within the limits of the mission of the arbitral tribunal”.

Otherwise, an arbitral award can be subject to an action for annulment in the conditions set out under Article 1492 of the Code of Civil Procedure, which states that “An action for annulment is only possible if:

1° the arbitral tribunal has wrongly declared it has, or it does not have jurisdiction; or

2° the arbitral tribunal has been irregularly constituted; or

3° the arbitral tribunal has ruled without complying with the mission entrusted to it; or

4° the principle of adversarial proceedings has not been complied with; or

5° the award is contrary to public policy; or

6° the award does not state the reasons on which it is based or does not indicate the date on which it was made or the name of the arbitrator(s) who issued it, or does not include the required signature(s), or was not rendered by a majority of votes”.

6.2.2. The appeal process for arbitral awards in international arbitration

In international arbitration, it is not possible to appeal the award; it is only possible to apply for the annulment of the award, provided that the parties have not waived the right to do so.

Pursuant to Article 1520 of the Code of Civil Procedure, an action for annulment is only possible if:

“1° the arbitral tribunal has wrongly declared it has, or it does not have jurisdiction; or

2° the arbitral tribunal has been irregularly constituted; or

3° the arbitral tribunal has ruled without complying with the mission entrusted to it; or

4° the principle of adversarial proceedings has not been complied with; or

5° the recognition or enforcement of the award is contrary to international public policy”.

If the parties have expressly waived the right to apply for the award to be annulled, they may, in any case, appeal against the order enforcing the award on any of the grounds provided for in Article 1520 of the Code of Civil Procedure listed above.

6.2.3. The appeal process under some arbitration rules

Whether in a case of domestic or international arbitration, the provisions laid down in the Code of Civil Procedure must be read in conjunction with the arbitration rules that may be binding on the parties, provided that these rules do not conflict with the provisions of the Code of Civil Procedure.

For instance, pursuant to Article 35.6 of the ICC rules of arbitration entered into force on 1 January 2021, “Every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made”.

Article 36.3 of the rules of ARIAS France, which entered into force on 26 July 2024, provides that “By agreeing to submit their dispute to the Rules, the parties undertake to execute the forthcoming Award without delay and are deemed, unless otherwise agreed by the parties, to have waived all rights to appeal that they may validly waive”.

Pursuant to the CAMP rules entered into force on 16 June 2022:

• Article XVII.1: “When the principal claim referred to the Chamber of Maritime Arbitration at the request of the claimant is for more than €30,000, each of the parties to the award, including the defaulting party at First Instance, may request a review of the case at second instance, if the award has put an end to the proceeding. The award that has been the subject of a request for review at second instance then takes on the character of a draft, which is not subject to exequatur or provisional enforcement”.
• Article XIX: “Arbitral awards issued in accordance with these rules may not be appealed without distinction as to whether or not the arbitrators have been granted powers of amicable composition.

They may be subject to an action for annulment in the cases provided for in Articles 1492 and 1520 of the Code of Civil Procedure. The action for annulment does not confer on the court seised of the action the power to rule on the merits.

In the event of the award being annulled, the dispute shall be brought before the Chamber of Maritime Arbitration again at the request of either party. The new proceedings shall be initiated and pursued in accordance with the rules of the Chambre”.

Regarding the United Nations Commission on International Trail Law (“UNCITRAL”) Arbitration Rules as revised in 2010, they do not contain any rule dealing with the appeal process against an award. However, the annex of the UNCITRAL Arbitration Rules, as revised in 2010, suggest the following drafting for parties that wish to exclude recourse against the arbitral award that may be available under the applicable law: “Waiver The parties hereby waive their right to any form of recourse against an award to any court or other competent authority, insofar as such waiver can validly be made under the applicable law”.

The level of information that policyholders are required to disclose to insurers prior to the inception of the policy depends on whether the policyholders are taking out a non-marine (7.1.) or a marine or aviation (7.2.) insurance policy.

7.1. Information that policyholders are required to disclose to insurers prior to the inception of a non-marine insurance policy

In non-marine insurance, the policyholders are regarded as laymen who are not expected to know all the circumstances that would enable the insurers to assess the risks they are taking. As a result, insurers ask questions to policyholders prior to the inception of a non-marine policy via a risk declaration form, and pursuant to Article L. 113-2, 2° of the Insurance Code, “The policyholder must […] answer exactly the questions asked by the insurer, particularly in the risk declaration form used by the insurer to ask questions when the contract is concluded, about the circumstances that are likely to be assessed by the insurer in relation to the risks he is taking on”.

The insurers are expected to ask clear and specific questions. In that respect, Article L. 112-3 para. 4 of the Insurance Code states that “Where, before the conclusion of the contract, the insurer has put questions in writing to the policyholder, in particular by means of a risk declaration form or by any other means, he may not rely on the fact that a question expressed in general terms has received only an imprecise answer”.

The policyholders are only required to answer the questions that the insurers raised. If the insurers have omitted a question on an element of the risk, even if it is an important one, the policyholders are not required to spontaneously provide information that may be of interest to the insurers in assessing the risk.

In addition, French law increasingly limits the questions that the insurers can ask the policyholders about their health.

7.2. Information that policyholders are required to disclose to insurers prior to the inception of a marine or an aviation insurance policy

The premise in marine and aviation insurance is that the parties to the policy are knowledgeable professionals, especially since the policyholders generally entered the insurance contracts through insurance brokers. Hence, the policyholders are not regarded as laymen; they know, or ought to have known, the circumstances that would enable the insurers to assess the risks they are taking.

Consequently, Articles L. 172-13, 3° and L. 175-14 of the Insurance Code impose on policyholders to “disclose exactly”, when concluding the contract, all circumstances known to them that are likely to cause the insurer to assess the risk they are taking on.

Regarding cargo insurance, policyholders must, for instance, spontaneously provide details as to the goods to be insured (e.g., their value, nature, condition, specificities, the method of packaging, etc.). Additionally, policyholders must provide information on the carriage, such as, inter alia, the vessel’s name and the route of the voyage.

Regarding hull insurance, policyholders must provide information as to the assets: their identification details, their state of seaworthiness or airworthiness, etc.

In addition, some standard policies also require policyholders to declare certain circumstances, such as the existence of a mortgage, because, if there is a mortgage, the insurer must pay the mortgagee first; if the insurer pays the policyholder first, such a payment will be unenforceable against the mortgagee, and the insurer could have to pay out.

The policyholders’ duty of disclosure is an ongoing obligation, which does not end at the inception of the policy. Therefore, the policyholder must report to the insurer any new increases in the risks that the insurer covers (9.1.) and any covered loss (9.2.).

9.1. The policyholder’s duty to disclose any increases to the risks that occur during the course of the contract

In non-marine insurance, Article L. 113-2, 3° of the Insurance Code specifies that: “The policyholder must […] declare, during the course of the contract, any new circumstances that result in either aggravating the risks or creating new ones and thereby render the answers given to the insurer inaccurate or null and void, particularly in the form mentioned in 2° above [see answer 7.1. to question 7.].

The policyholder shall declare these circumstances to the insurer by registered letter or by registered electronic mail within fifteen days of becoming aware of them”.

Then, depending on to which extent there is an aggravation of risks, in particular in cases where the new circumstances had been declared when the contract was concluded or renewed, the insurer would not have taken out the contract or would have done so only for a higher premium, the insurer has the option of either terminating the contract or proposing a new premium rate, as specified in detail in Article L. 113-4 of the Insurance Code.

These provisions do not apply to life insurance (Articles L. 113-2 and L. 113-4 of the Insurance Code).

The regime in marine and aviation insurance is similar to the one in non-marine insurance, although the rules are a little more stringent for the policyholders. For instance, policyholders must declare any increases to the risks that occur during the course of the contract insofar as they are aware of them without any reference to the risk declaration form (Article L. 172-19, 4° of the Insurance Code for marine insurance and Article L. 175-15 of the Insurance Code for aviation insurance). Further, policyholders must disclose any increases to the risks that occur during the course of the contract within a specific period of time starting from the moment they became aware of it. Such a declaration must be done within a period of fifteen days in non-marine insurance, five days in aviation insurance and three days only in marine insurance (see respectively Articles L. 113-4, L. 175-15 and L. 172-3 of the Insurance Code).

If the policyholders fail to report new circumstances that result in aggravating the risks or creating new ones:

• in non-marine insurance, the policyholders may only be deprived of cover for a late declaration if the insurers establish that the delay in reporting the aggravation to the risks caused them harm and that the policyholders did not report the aggravation in bad faith (Articles L. 113-2, L. 113-8 and L. 113-9 of the Insurance Code); and
• in marine and aviation insurance, the insurers can refuse coverage except if the policyholders can prove their good faith (see respectively Articles L. 172-3 and L. 175-15 of the Insurance Code).

9.2. The policyholder’s duty to disclose any loss

When there is a loss, i.e., the occurrence of a risk covered by a valid insurance contract, the policyholders must disclose it to their insurers under certain conditions, especially with regard to time.

In non-marine insurance, except for life insurance, Article L. 113-2, 4° of the Insurance Code specifies that: “The policyholder must […] notify the insurer, as soon as he becomes aware of it and at the latest within the period specified in the contract, of any loss likely to trigger the insurer’s cover. This period may not be less than five working days.

This minimum period is reduced to two working days in the case of theft and twenty-four hours in the case of cattle deaths”.

The policyholders and the insurers may, however, decide to extend these deadlines by mutual agreement.

In the event of a natural disaster, the policyholders must notify the loss as soon as they are aware of it, and at the latest no later than thirty days after the publication of the interministerial order declaring the state of natural disaster (Article D. 125-6 of the Insurance Code).

There is no prescribed form to notify the loss, which can be done by writing or orally (but for probative reasons, it is advised to disclose the loss by email or via a registered letter). Depending on the contract, the declaration can be made either to the insurer itself, or to the insurer’s agent. Further, as the broker is the policyholder’s agent, the disclosure made to him is, in principle, not binding on the insurer, even if the broker may incur his own professional liability towards the policyholder if he has given incorrect advice or if he has been late in sending his declaration.

Pursuant to Article L. 113-2 of the Insurance Code, when the policyholders notify the loss late, the insurers are entitled to refuse to pay compensation only if:

• such a right is provided in the insurance contract by a specific, clear and precise clause, which is stated in very clear print in the contract (Article L. 112-4 of the Insurance Code);
• the late notification is not the result of a force majeure or a fortuitous event; and
• the insurers prove that they suffered a loss due to the late notification (e.g., they could not exercise a proper defence against a third party).

In the case of liability insurance, if the above conditions are met and the insurers are released from their obligation to provide cover to the policyholders, the insurers must nevertheless compensate the third-party victims and/or their beneficiaries (Article R. 124-1 of the Insurance Code).

In aviation insurance, Article L. 175-18 of the Insurance Code provides that: “The policyholder must report any loss of which he is aware of within the time limits specified in the insurance contract.

The insurer may include a total or partial deprivation clause in the event that the policyholder has made an inaccurate statement relating to the loss in bad faith or has reported the loss late. In the latter case, the insurer must prove that he has suffered a loss as a result of this delay”.

And in non-marine insurance, there is no provision in the Insurance Code dealing with the timeframe for the policyholder to disclose any loss. In the silence of the Insurance Code, general contract law applies, and this matter is usually governed by the policy. Hence, in practice, in cargo insurance, policies usually set a three-day deadline for the policyholder to disclose losses to the insurers while, in hull insurance, the French standard policies usually require the policyholders to disclose losses to the insurers “immediately” or “as soon as they are aware of them” and, in any event, no later than 90 days after they have had knowledge of the loss.

In non-marine, marine and aviation insurance, the remedies that are available in case of breach of the duty of disclosure will mainly depend on the policyholder’s state of mind at the time of providing the relevant information: misrepresentation is grounds for nullity of the policy (8.1.). However, if the policyholder breached, in good faith, the duty of disclosure, there is only a readjustment of the parties’ rights (8.2.).

8.1. The policy is void when the policyholders acted in bad faith

In non-marine insurance, Article L. 113-8 of the Insurance Code reads as follows: “[…] the insurance contract is void in the event of intentional non-disclosure or misrepresentation on the part of the policyholder, when this non-disclosure or misrepresentation changes the object of the risk or diminishes the insurer’s opinion of it, even though the risk omitted or misrepresented by the policyholder had no influence on the loss.

The premiums paid shall then be retained by the insurer, who shall be entitled to payment of all premiums due as damages.

The provisions of the second paragraph of this article shall not apply to life insurance”.

And Article L. 113-9 para. 1 of the Insurance Code specifies that “The non-disclosure or misrepresentation on the part of the policyholder whose bad faith is not established does not result in the insurance becoming null and void”.

In aviation insurance, the rule is more or less similar, Article L. 175-14 of the Insurance Code providing that “Any omission or inaccurate statement made in bad faith by the policyholder that is likely to significantly reduce the insurer’s opinion of the risk, whether or not it has influenced the damage or the loss of the insured object, cancels the insurance at the insurer’s request.

The burden of proving the policyholder’s bad faith lies with the insurer. This rule may be departed from by mutual agreement between the contracting parties”.

In marine insurance, the rule is slightly different since Article L. 172-2 para. 1 of the Insurance Code reads that “Any omission or inaccurate statement by the policyholder that is likely to significantly reduce the insurer’s opinion of the risk, whether or not it has influenced the damage or the loss of the insured object, cancels the insurance at the insurer’s request”. Then, Article L. 172-2 para. 2 of the Insurance Code starts with the following words: “However, if the policyholder provides proof of good faith, the insurer […]”.

Consequently, in non-marine, marine and aviation insurance, the principle is that the policy is void when the policyholder, acting in bad faith, breached the duty of disclosure, even if the non-disclosure or misrepresentation did not have any influence on the damage or the loss.

Nonetheless, there is a major difference in these regimes as to the burden of proof. In non-marine and aviation insurance, the policyholders are presumed to be acting in good faith. It is up to the insurers to prove the policyholders’ non-disclosure or misrepresentation was “intentional” so as to establish the policyholders’ bad faith (albeit the parties can agree otherwise in aviation insurance). On the contrary, in marine insurance, there is a shift in the burden of proof: the principle is that the policyholders must prove they acted in good faith to escape the sanction of nullity.

When a policy is null and void, the nullity is opposable against the policyholders but also against the victims who would introduce direct action against the insurer. That said, as an exception, the nullity of a motor insurance contract is not opposable to the victims or the beneficiaries of the victims of damages arising from a traffic accident (Article L. 211-7-1 of the Insurance Code).

8.2. There is a readjustment of the parties’ rights when the policyholders acted in good faith

If the policyholders acted in good faith, there is a readjustment of the parties’ rights, depending on whether a loss occurred.

When the policyholders breached, in good faith, the duty of disclosure, and the insurers are aware of the policyholders’ breach prior to any loss, the insurers are entitled to amend the value of the premium the policyholders must pay or terminate the contract.

However, when the insurers understand after the loss occurs that the policyholders breached, in good faith, the duty of disclosure, the insurers are entitled to a pro-rata bonus rule.

Hence, the regimes are rather similar in non-marine, marine and aviation insurance, with an exception: in marine insurance, even if the policyholder proves they acted in good faith, the insurer can refuse to pay a claim pro rata the premiums that should have been paid if the insurer can establish that if they have had all the information prior to the loss and would have known about the risks, they would not have covered them.

Indeed, in non-marine insurance, Article L. 113-9 of the Insurance Code states the following:

“The non-disclosure or misrepresentation on the part of the policyholder whose bad faith is not established does not invalidate the insurance.

If it is established before any loss, the insurer has the right either to maintain the contract, subject to an increase in premium accepted by the policyholder or to terminate the contract ten days after notification sent to the policyholder by registered letter, refunding the portion of the premium paid for the time when the insurance is no longer in force.

In the event that it is only established after a loss, the compensation is reduced in proportion to the ratio of the premiums paid to the premiums that would have been due if the risks had been fully and accurately declared”.

And in marine insurance, Article L. 172-2 para. 2 of the Insurance Code provides that: “[…] if the policyholder provides proof of good faith, the insurer shall, unless more favourable provisions are stipulated for the policyholder, be liable for the risk in proportion to the premium received in relation to the premium that should have been received, except in cases where the insurer establishes that it would not have covered the risks if it had been aware of them”. The same principle applies to aviation insurance (Article L. 175-14 para. 5 of the Insurance Code).

There are provisions that are prohibited in insurance contracts, more often in non-marine policies than in marine and aviation policies, as in non-marine insurance, policyholders are regarded as laymen. Therefore, many provisions are mandatory to protect the policyholders’ interests. On the contrary, in marine and aviation insurance, policyholders are regarded as knowledgeable professionals. As a result, many provisions are subsidiary to the will of the parties: they apply to the extent the parties have not agreed otherwise.

That said, there are, nonetheless, many mandatory provisions so that any provisions stating otherwise are deemed null and void. As examples:

• exclusions clauses are valid only if the exclusion is formal and limited (in non-marine insurance only; Article L. 113-1 of the Insurance Code);
• the event excluded under the exclusion clause must be the sole cause of the loss (established case-law, in non-marine insurance only);
• the policy clauses that provide for nullities, losses of rights or exclusions are only valid if they are mentioned in very clear print (in non-marine, marine and aviation insurance; Article L. 112-4 of the Insurance Code);
• the statute of limitations cannot be reduced to less than two years (in non-marine, marine and aviation insurance; see respectively Articles L. 114-1, L. 172-31 and L. 175-13 of the Insurance Code); and
• the policy must indicate that there is a two-year statute of limitations in insurance law and detail the causes for interruption of the limitation period under penalty of the statute of limitations not applying so the policyholder’s claims are imprescriptible (in non-marine insurance only, Articles L. 114-1 et seq. of the Insurance Code).

In common law, implied terms are contractual terms that have not been expressly agreed upon between the parties but have been implied into the contract either by common law or by statute. Hence, the common law duty of utmost good faith is an implied term which requires the policyholder and the insurer to act in good faith towards each other in the performance of the contract. Hence, both parties to the contract must disclose all material facts prior to entering into the contract and have limited post-contractual duties of fair dealing.

Under French law, there is a basic rule in contract law according to which “Contracts must be negotiated, formed and performed in good faith. This provision is a matter of public policy” (Article 1104 of the Civil Code). This basic rule applies to insurance contracts even if the policies do not provide so.

In addition, the Insurance Code insists on the parties’ good faith prior to entering into the contract and once the contract has been concluded. Thus, insurance contracts have even been described as contracts of “utmost good faith” (see M. Picard and A. Besson, Traité général des assurances terrestres, vol. 1, LGDJ, 1938, p. 214, No. 110).

As insurance contracts are contracts of utmost good faith, policyholders are required to disclose information to their insurers prior to the inception of the policies as well as in the course of the contracts. If the policyholders breach their duty of non-disclosure, the sanctions would be different depending on whether the policyholders acted in good faith or not, the policyholders’ bad faith being grounds for nullity (see answers to questions 7., 8. and 9. for more details).

In that respect, in principle, a void contract is deemed never to have existed and the goods or services that had been provided must be returned to their counterparties (Article 1178 of the Civil Code).

However, in insurance law, nullity aims to punish the policyholder’s bad faith. As a result:

• the nullity of the contract implies the retroactive disappearance of the guarantee due by the insurers, who may request the policyholders to reimburse all the indemnities paid to cover previous losses; and
• if the policyholders are in bad faith, the insurers can retain the premium already paid even if the policy is void.

In common law, implied terms are contractual terms that have not been expressly agreed between the parties. They are nonetheless implied in the contract either by common law or by statute.

Under French law, there are numerous obligations that are binding on the parties when one of them is a consumer, even if the parties have not expressly agreed on these terms and even if the parties have agreed otherwise.

Some of these implied terms are detailed in the present guide dealing with insurance disputes in France, such as:

• the prohibition of clauses having the object or effect of eliminating or impeding the exercise of legal action or remedies by the consumer, in particular by obliging the consumer to exclusively refer to an arbitration court not covered by legal provisions or to exclusively use an alternative method of dispute resolution (see answer 3. to question 4.);
• the policyholder’s right to make free use of a consumer ombudsman with a view to the amicable resolution of a dispute with the insurer (see answer to question );
• the policyholder’s duty to only answer precisely the questions the insurer asked, provided that the questions are not expressed in general terms and, to some extent, that the questions are not on the policyholder’s health (see answer 1. to question 7.);
• the nullity of a motor insurance contract is not opposable to the victims or the beneficiaries of the victims of damage arising from a traffic accident (see answer 1. to question 8.); and
• the insurer’s duty to detail the causes for interruption of the limitation period under penalty of the statute of limitations not applying so the policyholder’s claims are imprescriptible (see answer to question ).

In addition, there are also implied terms in the Consumer Code that apply to insurance contracts, provided that the issue at stake is not the subject of a provision of the Insurance Code. Indeed, if a specific issue could be regulated by both the Consumer and the Insurance Codes, the Insurance Code will prevail based on the principle according to which special laws derogate from general laws.

Amongst the Consumer Code’s provisions that apply to consumer insurance contracts, there are Article L. 611-1 (by reference made to it in Article L. 112-2 of the Insurance Code), which specifies that policyholders can refer their claims to the Insurance Ombudsman, and Article R. 212-2, which prohibits clauses having the object or effect of eliminating or impeding the exercise of legal action or remedies by the consumer (see answer to question 1. and answer 4.3. to question 4.).

Article L. 212-1 para. 1 of the Consumer Code, which reads as follows: “In contracts concluded between professionals and consumers, clauses that have the object or effect of creating, to the detriment of the consumer, a significant imbalance between the rights and obligations of the parties to the contract are considered unfair” could also be of relevance. However, this article is not often relied on by Courts as non-marine insurance contracts are strictly regulated in a way that is generally favourable to the policyholders.

One of the basic principles of non-marine insurance contracts, which is laid down in Article L. 112-6 of the Insurance Code, is that “The insurer can raise against the policyholder or a third party who invokes the policy the exceptions that can be raised against the original policyholder”.

However, this is not a mandatory principle; it is subsidiary to the will of the parties and only applies to the extent the parties have not agreed otherwise.

In addition, there are some circumstances where the insurers’ right to rely on defences is limited. This is particularly true in matters where insurance is compulsory. For instance, in motor insurance, the insurer cannot oppose the victims or the beneficiaries of the victims of damages arising from a traffic accident (i) the nullity of the policy, (ii) the deductible, (iii) the loss of rights, (iv) the exclusion clauses (Articles L. 211-7-1 and R. 211-13 of the Insurance Code). Similarly, in construction insurance, there are cases where insurers cannot oppose the deductible and the loss of rights to the beneficiaries of the coverage (Article A. 243-1 of the Insurance Code, Annexes I and III).

The trigger for cover under insurance policies is limited to the cause of damage or the liability claim in non-marine insurance (14.1.). However, there are no such limitations in marine and aviation insurance (14.2.).

14.1. The cover under non-marine insurance policies is triggered by the cause of damage or the liability claim

Pursuant to Article L. 124-5 of the Insurance Code, the cover under insurance policies is triggered, at the parties’ discretion, either by the cause of damage or the liability claim.

On the one hand, the cover triggered by the cause of damage covers the policyholder against the financial consequences of the claims, provided that the harmful event occurs between the initial effective date of the cover and its cancellation or expiry date, regardless of the date of the other elements constituting the claim.

On the other hand, the cover triggered by the liability claim covers the policyholder against the financial consequences of the claims, provided that the harmful event occurred prior to the date of cancellation or expiry of the cover and that the first claim is addressed to the policyholder or their insurer between the initial effective date of the cover and the expiry of a subsequent period to its date of cancellation or expiry mentioned in the contract, regardless of the date of the other elements constituting the losses. The subsequent period during which the cover can be triggered by the claim cannot be less than five years (Article L. 124-5 para. 5 of the Insurance Code).

That said, if the parties can opt between the cause of damage or the liability claim to trigger the cover, the Cour de cassation (i.e., the French Supreme Court in civil and commercial matters) recently held that the parties cannot mix the two conditions and refer to both to trigger the cover (Cass. 2^nd civ, 21 Sept. 2023, No. 21-16.796, F-B).

14.2. The parties are free to choose the criterion that triggers the coverage in marine and aviation insurance

As Article L. 124-5 of the Insurance Code does not apply to marine insurance contracts, the parties are free to choose the criterion that triggers the cover: the cause of damage, the liability claim, or any other.

Turning to aviation insurance, Article L. 175-10 of the Insurance Code specifies that “the conditions for applying the guarantee over time are determined by the insurance contract”.

Consequently, “occurrence basis” clauses—which cover losses that occur during the policy period even if the policy is no longer in force for a long time—are valid in marine and aviation insurance.

Some types of loss are typically excluded in insurance contracts due to legal exclusions.

Therefore, unless agreed otherwise, “loss and damage caused by foreign war, civil war, riots or popular movements” are excluded in non-marine insurance, according to Article L. 121-8 of the Insurance Code.

In marine insurance, the types of loss that are typically excluded are broader. Pursuant to Article L. 172-16 of the Insurance Code, “Unless otherwise agreed, the insurer does not cover damage to or loss of the insured goods resulting from:

1° Civil or foreign war, mines and all war devices [nota bene: when it is not possible to determine whether the loss is due to war risk, it is deemed to result from an incident at sea];

2° Piracy;

3° Capture, seizure or detention by any government or authority whatsoever;

4° Riots, popular movements, strikes and lockouts, acts of sabotage or terrorism;

5° Losses due to the direct or indirect effects of explosion, release of heat, irradiation from transmutation of atomic nuclei or radioactivity, as well as losses due to the effects of radiation caused by the artificial acceleration of particles”.

In aviation insurance, there are no clear legal exclusions in the Insurance Code. In particular, there is no general exclusion of war and similar risks. Indeed, Regulation (EC) No. 785/2004 of 21 April 2004 on insurance requirements for air carriers and aircraft operators, adopted shortly after the 11/9 attacks, requires air carriers and aircraft operators flying within, into, out of, or over the territory of a Member State, to be insured as regards their aviation-specific liability in respect of passengers, baggage, cargo and third parties. “The insured risks shall include acts of war, terrorism, hijacking, acts of sabotage, unlawful seizure of aircraft and civil commotion” (Article 4.1 of Regulation No. 785/2004). Nonetheless, the Insurance Code specifies obiter dictum that, when dealing with the policyholders’ duty to disclose any increases to the risks that occur during the course of the contract, “If the policyholder is not responsible for the aggravation, except in the case of war and similar risks, the insurance will continue, subject to an increase in the premium accepted by the policyholder and corresponding to the aggravation that has occurred” (Article L. 175-15 of the Insurance Code). Therefore, although war and similar risks are not, in principle, excluded from aviation insurance coverage, they are no longer automatically covered in the event of an aggravation of such risks.

Otherwise, there are types of loss that are usually excluded in insurance contracts, such as the policyholders’ failure to make reasonable efforts to limit the loss. Indeed, although there is, in principle, no duty to mitigate under French civil law, insurers usually impose such a duty on policyholders.

Further, exclusions vary depending on the coverage that is purchased. Hence, civil liability insurance will exclude coverage for property and vice versa. In addition, there are standard exclusions for each category of insurance contracts. For instance, the following losses are typically excluded:

• in motor insurance, the loss caused by the policyholder taking drugs or alcohol;
• in construction insurance, the policyholders’ rework; and
• in marine hull insurance, damages suffered by the vessel as a result of a cargo carried in breach of the regulations in force.

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The “but for” test is used to determine whether there is causation. The test asks, “but for the existence of X, would Y have occurred?”. In France, the “but for” test is similar to the “equivalence of conditions” test, according to which all the facts that contributed to the production of the damage must be retained in an equivalent manner, as the legal causes of the said damage, without there being any need to distinguish them or prioritise them.

Turning to the “proximate” test of causation, an event is deemed to be the cause of a loss when that event is sufficiently related to the loss. In France, the “proximate” test is similar to the “adequate cause” test, according to which all the circumstances are not appreciated equally, insofar as each has a different degree of causation in the occurrence of the loss. Therefore, only the predominant cause should be considered as the event giving rise to liability.

In insurance disputes, in principle, case law has not really opted for one approach over another. Courts, which have the sole power to access the facts, usually proceed on a case-by-case basis in order to take account of the very wide range of situations in which the question of causality may arise.

However, when ruling on insurance for bodily injury disputes, Courts usually opt for the “proximate” test of causation. For a bodily injury to be covered, the sudden and violent external event that is reported must be the main, if not the sole, cause of the injury.

There are two main theories under French law to determine the causation between events and the occurrence of the loss, and Courts, which have the sole discretion of the facts, usually assess, on a case-by-case basis, the causes of the loss (see answer to question 16.).

Therefore, if a loss results from multiple causes, with some causes that are covered and others that are not, Courts will usually apply the “proximate” test of causation and will only consider the main cause of the loss.

However, there are specific topics where the “but for” test applies, such as damage to the environment.

There are also topics where there are legal assumptions when the cause of the loss is unknown. For instance, in marine insurance, losses resulting from a war risk are typically excluded in insurance contracts as a result of legal exclusions and standard policies. However, Article L. 172-17 of the Insurance Code specifies that “When it is not possible to determine whether the loss is due to a war risk or a sea risk, it is deemed to result from an incident at sea”.

Otherwise, when a loss results from multiple causes, which are all insured events under a policy, there is usually a clause that specifies the applicable deductible and limit of coverage.

The insurers have a few remedies available to them when the policyholders breach the policy conditions, which are those provided for by the Insurance Code (e.g., pay the premium, disclose the risks and declare any aggravation to them in the course of the contract, notify the loss to the insurer) or by the policy.

Hence, if the policyholders fail to pay the premium or part thereof, the insurers can put the policyholders on notice to pay. In non-marine and aviation insurance, if the policyholders fail to pay thirty days after being given formal notice, the insurers can suspend or terminate the policy (see respectively Articles L. 113-3 and L. 175-16 of the Insurance Code). In marine insurance, the suspension or cancellation of the policy can take effect only eight days after the policyholders receive the formal notice to pay (Article L. 172-20 of the Insurance Code).

If the policyholders breach their duty to disclose the information that is relevant to the insurers to appreciate the risks or to declare any aggravation to the risks in the course of the contract, insurers can either consider a readjustment of the parties’ rights, such as amending the value of the premium the policyholders must pay or terminate the contract if no loss has occurred. If a loss has occurred, insurers can be liable only in proportion to the premium received in relation to the premium that should have been received if the policyholders had not breached their duty to disclose. However, the insurance contract is void in the event of intentional misrepresentation or bad faith on the part of the policyholders (see answers to questions 7., 8. and 9.).

In addition to the policy conditions that are specified in the Insurance Code, the insurers can also include additional conditions in the insurance contract.

That said, clauses that stipulate nullities, deprivations or exclusions in non-marine, marine and aviation insurance are only valid if they are mentioned in very clear print (Article L. 112-4 of the Insurance Code).

Insurance contracts being contracts of utmost good faith (see answer to question 11.), there are situations where insurers are prevented from avoiding liability for minor or unintentional breaches of policy terms.

Therefore, if the policyholders, in good faith, did not disclose all the relevant information for the insurers to assess the risks or did not report new circumstances that resulted in aggravating the risks, the insurers are not necessarily prevented from avoiding liability (see answer 8.2. to question 8. and 9.1. to question 9.).

In addition, in cases where the policy provides for deprivation clauses, such clauses only apply to the extent that the insurers suffer damage because the policyholders breach the policy terms. The insurers are, in principle, not prevented from avoiding liability where there is no causal link between the policyholders’ breach of contract and the loss.

In non-marine insurance, Article L. 112-6 of the Insurance Code specifies that “The insurer may raise against the policyholder or a third party who invokes the policy the defences available to the original policyholder”. This article does not apply to marine and aviation insurance. In addition, this article is not mandatory, meaning that the parties to a non-marine insurance contract may agree otherwise.

Hence, in non-marine, marine and aviation insurance, where a policy provides coverage for more than one party, a breach of the policy terms by one party may invalidate coverage for all the policyholders, depending on the policy terms.

If the insurers decline cover for claims, policyholders are nonetheless required to comply with the policy conditions. Otherwise, policyholders take the risk that the insurers invoke nullities, deprivations or exclusions in the future to deny coverage of a loss that would have otherwise been covered.

If a loss is covered under a policy, the method to assess the quantum will depend on the matter’s complexity.

When there is no complexity, the way the quantum is assessed is usually straightforward. The policyholders usually provide supporting documents, such as invoices, to assess the quantum.

In more complex cases, the policy can provide guidelines to assess the quantum of the loss and/or the insurers can instruct a technical expert to issue a report on the quantum.

Otherwise, if it is not disputed that a policy covers a loss but the insurers and the policyholders disagree on the quantum, the policyholders can file a claim before the Courts, which will instruct a court-appointed expert.

Insurance aims to put policyholders back into the position they would have been if the insured peril had not occurred. Hence, reinstatement of damaged property may be achieved by replacing or repairing the damaged property or by paying the market value reduction.

The solution and the level of indemnity will depend on the circumstances and on the provision of the policy.

Subrogation is the operation by which the insurers pay the policyholders, who, in turn, transfer their rights to the insurers. Hence, after paying claims, insurers are able to pursue subrogated recoveries against third parties responsible for the loss. To benefit from legal subrogation (24.1.), the insurers must prove that the payments made to the policyholders were due as per the policy. If the insurers pay the policyholders on a commercial basis, the principles governing legal subrogation do not apply and insurers can only rely on contractual subrogation (24.2.).

24.1. Principles governing legal subrogation

In non-marine insurance, Article L. 121-12 of the Insurance Code specifies that once the insurers have paid the insurance indemnity, they are subrogated, up to the amount of this indemnity, in the rights and actions of the policyholders against third parties who, through their actions, caused the damage giving rise to the liability of the insurers. However, by exception, insurers have no recourse against the children, descendants, ascendants, relatives by direct line, agents, employees, workers or servants, and generally any person usually living in the home of the policyholders, except in the case of malicious intent committed by one of these persons.

That said, pursuant to Article L. 121-12 para 2 of the Insurance Code, “The insurer may be relieved, in whole or in part, of its liability towards the policyholder when the subrogation can no longer, through the fault of the policyholder, operate in favour of the insurer”.

When the insurance contract provides for a deductible, or in the case of partial coverage, the insurer and the policyholder are both claiming against the liable third party. If the latter is insolvent and cannot fully pay off the policyholder and the insurer, then the policyholder must be paid first.

Regarding marine and aviation insurance, the Insurance Code does not contain any provisions dealing with subrogation, which is governed by Article 1346 et seq. of the Civil Code in terms that are more or less identical to those of Article L. 121-12 of the Insurance Code.

24.2. Principles governing contractual subrogation

Pursuant to Article 1346-1 of the Civil Code: “Conventional subrogation occurs at the initiative of the creditor when the latter, receiving payment from a third party, subrogates that party in his rights against the debtor.

This subrogation must be explicit.

It must be agreed at the same time as the payment, unless, in a previous act, the subrogating party has expressed the desire that his co-contractor be subrogated to him at the time of payment. The concurrence of subrogation and payment can be proven by any means”.

Conventional subrogation must be agreed upon at the same time as the payment as, in principle, an obligation does not survive after a payment. After the payment, an obligation no longer exists and, therefore, cannot be transferred.

In practice, policyholders fill out a form acknowledging that they transfer their rights to their insurers up to a specified amount upon payment.

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Yes, claims can be made against insurance policies taken out by companies which have since become insolvent, whatever the stage of the insolvency procedure.

In principle, the creditor of a debtor subject to insolvency proceedings may only claim a payment if two conditions are met. First, the creditor must submit their claim throughout the verification procedure, which verifies that the sum claimed is, in principle, well-founded. Second, the claim must be ranked sufficiently high to be paid off.

However, Articles L. 124-3, L. 173-23 and L. 175-11 of the Insurance Code, dealing respectively with non-marine, marine and aviation insurance, provide in similar terms that third parties have a direct right of action against the insurer covering the liability of the party at fault.

Hence, since the direct right of action is directed against the insurer, the third parties are not considered creditors of policyholders who have become insolvent; they are only considered creditors of their insurer.

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Very recently, some significant trends in insurance disputes in France have concerned the application of private international law to insurance matters with a redefinition of the concepts of mandatory provisions and international public policy (26.1.).

Otherwise, there have been some developments regarding cyberattacks (26.2.).

Turning to maritime law, the notion that distinguishes non-marine from marine risks was recently specified (26.3.). The obligation imposed on shipowners to take insurance to cover in the event of damage arising from the carriage of hazardous and noxious substances by sea could also be noted (26.4.).

26.1. The application of private international law to insurance matters with a redefinition of the concepts of mandatory provisions and international public policy

In a landmark decision of 15 June 2023 (Cass. 2^nd civ., 15 June 2023, No. 21-20.528, F-B), the Cour de cassation ruled on the scope of an exclusion clause contained in a non-marine insurance contract governed by a foreign law. The facts of the case were as follows: a French company (the “Client”) had photovoltaic panels manufactured in the Netherlands installed by a French contractor. Following a defect in a component of the photovoltaic panels—manufactured by another Dutch company—the Client requested the French contractor to replace all the panels and sued the companies involved in the installation, supply and manufacture of the photovoltaic panels before French Courts, including the manufacturer of the photovoltaic panels, the manufacturer of the defective component, and their insurers.

The insurers of the Dutch companies denied coverage based on exclusion clauses contained in the insurance contracts, which were governed by Dutch law.

In its decision dated 6 April 2021, the Poitiers Court of Appeal approved the insurers of the Dutch companies’ argumentation, holding that the exclusion clauses were valid under Dutch law.

Then, the insurers of the French companies lodged an appeal before the Cour de cassation, asking it to overturn the Poitiers Court of Appeal’s ruling because the exclusion clauses were not formal and limited, in violation of Article L. 113-1 of French Insurance Code (see answer to question 10.).

In a decision dated 15 June 2023, the Cour de cassation ruled that: “It follows from the combination [of Articles L. 112-4 and L. 113-1 of the Insurance Code] that in the case of non-compulsory damage insurance, the public policy provisions of Articles L. 112-4 and L. 113-1 of the Insurance Code are applicable regardless of the law governing the contract”.

In other words, French Courts must ensure that exclusion clauses “appear in bold characters” and that the exclusion is “formal and limited” even if French law does not govern the insurance contract.

From a semantic point of view, this solution is questionable. Indeed, in French private international law, there is a distinction between mandatory provisions (i.e., “lois de police”) and international public policy (i.e., “ordre public international”).

On the one hand, mandatory provisions are one country’s law, which is applicable regardless of the law governing the situation. There is, therefore, no need to determine the applicable law according to the general conflict-of-laws rules.

On the other hand, international public policy is a corrective mechanism that is applicable once the conflict-of-laws rule has been applied and the final solution based on the foreign law is deemed to be shocking pursuant to the lex fori. Hence, this mechanism allows, on a case-by-case basis, to preserve the superior interests of the for.

Thus, from a theoretical point of view, the solution adopted by the Cour de cassation was closer to a mandatory provision, despite the terminology used.

Thereafter, in another decision of 19 December 2024 (Cass. 2^nd civ., Dec. 19, 2024, No. 22-17.119), the Cour de cassation ruled that “Article L. 124-3 of the Insurance Code [which gives the injured third party a direct right of action against the insurer covering the civil liability of the person responsible], as interpreted by the Cour de cassation, in that it does not allow the period of cover to be shorter than the duration of the policyholder’s liability, is not a law the observance of which, in matters of optional insurance, is necessary for the protection of the political, social and economic organisation of the country so as to regulate the situation imperatively, whatever the applicable law, and consequently does not constitute a mandatory provision”.

The decision dated 19 December 2024, could, therefore, mark a turning point in the Cour de cassation’s jurisprudence on the application of private international law to insurance matters with a redefinition of the concepts of mandatory provisions and international public policy. That could be a departure from precedent as the Cour de cassation states that, in matters of insurance, mandatory provisions are only those that are necessary for the protection of the political, social and economic organisation of the country so as to regulate the situation imperatively, whatever the applicable law. It could, hence, be inferred from the above that the Cour de cassation recalls the basic principles of private international law with a view to departing from precedent.

The 19 December 2024 decision’s scope could also be much narrower and be limited to Article L. 124-3 of the Insurance Code without calling into question the scope of the decision dated 15 June 2023.

Until the Cour de cassation explicitly clarifies the issue, it can only be recommended to insurers whose non-marine policies are generally subject to French Courts to ensure that their exclusion clauses appear in bold characters and that the exclusions are formal and limited.

26.2. The legal regime applicable to insurers’ compensation for damage caused to policyholders by a cyberattack was laid out in the Insurance Code in 2023

Article L. 12-10-1 of the Insurance Code, which has been in force since 24 April 2023, deals with insurance against the risks of cyberattacks. It reads as follows:

“The payment of a sum pursuant to the clause in an insurance contract intended to compensate a policyholder for the loss and damage caused by a breach of an automated data processing system referred to in Articles 323-1 to 323-3-1 of the Criminal Code must be subject to the filing of a complaint by the victim with the competent authorities no later than seventy-two hours after the victim becomes aware of the breach.

This article applies only to legal persons and to natural persons in connection with their professional activity”.

The scope of this article is broader than the Minister of Interior’s draft bill, which was solely aimed at regulating the cyber ransoms reimbursement clauses. Indeed, Article L. 12-10-1 of the Insurance Code regulates any reimbursement that compensates for the loss and damage caused by a cyberattack (e.g., the ransom, expert fees, loss of business, etc.). However, for legal and natural persons in connection with their professional activity, the insurance indemnity payment is conditional upon filing a complaint within a maximum of 72 hours of the victim’s discovery of the cyberattack.

This provision had been the subject of significant debate before each House of Parliament. In particular, some senators and MPs suggested deleting the said provision, arguing that the best way to thwart ransomware attacks would be to prevent insurers from compensating policyholders who have paid a ransom pursuant to a cyberattack. Both the Senate and the National Assembly rejected this suggested deletion.

By defining the rules applicable to the compensation of damages caused by cyberattacks, the legislator has brought legal clarity to this topic that remained a grey zone for insurers. Due to such doubts as to lawfulness in this domain, some insurers on the market had withdrawn their products in relation to ransomware attacks.

Moreover, by recognising the possibility for policyholders to be compensated after a ransomware attack, even under stringent conditions, France will be bringing its legislation in line with other European jurisdictions, limiting the distortion of competition with other European insurers.

However, there are still some debates as to the legal regime applicable in case the policyholders would not file a complaint within 72 hours of becoming aware of the cyberattack. Would that be a condition of the guarantee or a cause of deprivation of coverage? Insurers should ensure that their fraud and cyber policies detail this issue.

26.3. The Cour de cassation recently specified that “a maritime risk is any risk that may occur in the course of maritime navigation, whatever the cause”

Although the distinction between non-marine and marine insurance generally seems clear, there are cases where it can be controversial. The Piano Barge case, in which the Cour de Cassation held in a landmark decision of 22 November 2023 that “a maritime risk is any risk that may occur in the course of maritime navigation, whatever the cause” (Cass. Com., 22 Nov. 2023, No. 22-14.253) is an example of such a case.

In this case, a restaurant barge—the Piano Barge—was insured under a marine hull policy with an extension to cover shipbuilding risks. During conversion work on the barge, an employee working on-site was injured. His employer sued the barge’s owner, who turned to his insurer to provide cover. The insurer argued that the claim was time-barred because of the two-year limitation period applicable to marine insurance, even if this statute of limitation was not specified in the policy.

The barge owner, on the other hand, argued that the statute of limitation must be specified in the policy wording, as per Article R. 112-1 of the Insurance Code. As the limitation period had not been stated in the policy, the barge owner claimed it was unenforceable against him because of the non-marine nature of the insurance (see answer to question 10.).

In a judgment of 1 February 2022, the Paris Court of Appeal held that the two-year limitation period for marine insurance was applicable, although the policy was silent on this subject, because “the common intention of the parties was to conclude a marine insurance policy”.

In its judgment of 22 November 2023, the Cour de cassation overturned this ruling, stating that the Court of Appeal had failed to identify the circumstances that would allow the insured risk to be classified as maritime and thus escape the public policy provisions of Article R. 112-1 of the Insurance Code.

It is the authors’ view that the ruling of the Cour de cassation is a fortunate solution since, unlike the rules governing non-marine insurance, most of the regulations governing marine insurance are optional, depending on the will of the parties. Therefore, if the parties’ common intention could be sufficient for an insurance contract to be regarded as marine, this would leave open the potential for abuse on the part of insurers willing to exclude the public policy provisions governing non-marine insurance.

In addition, it is worth noting that the Cour de cassation specified, for the first time since the marine insurance reform undertaken in 2011, that “a maritime risk is any risk that may occur in the course of maritime navigation, whatever the cause”. The 22 November 2023 decision could hence materialise a departure from precedent because a maritime risk would no longer be a risk relating to a maritime operation but merely one that may occur in the course of maritime navigation.

26.4. Shipowners carrying hazardous and noxious substances could soon be required to take out compulsory insurance to cover their liability in the event of damage arising from the carriage of such substances by sea

There is an international legal regime that was set under the aegis of the International Maritime Organization (“IMO”) aiming at ensuring adequate, prompt and effective compensation for damage to persons and property, costs of clean-up and reinstatement measures and economic losses resulting from the maritime transport of oil.

This legal regime, which is based on the Polluter Pays principle, binds France.

However, there is not yet such an international legal regime in force when similar damages result from the maritime transport of hazardous and noxious substances (“HNS”), such as chemicals, liquefied natural gas, liquefied petroleum gas, etc.

Indeed, although there is the International Convention on Liability and Compensation for Damage in Connection with the Carriage of HNS by Sea, 1996 (the “1996 HNS Convention”), certain issues—that are beyond the scope of this paper—were identified as inhibiting the entry into force of the 1996 HNS Convention and, consequently, the implementation of the international regime contained therein.

Therefore, the IMO issued the Protocol of 2010 to the 1996 HNS Convention (the “2010 HNS Protocol”) to resolve the issues of the 1996 HNS Convention. The 1996 HNS Convention and the 2010 HNS Protocol are to be read and interpreted together as one single instrument (the “2010 HNS Convention”).

Nonetheless, the 2010 HNS Convention will only enter into force eighteen months after, amongst other things, at least twelve States have expressed their consent to be bound by this Convention.

However, in 2022, only a few States ratified the 2010 HNS Protocol: Canada, Denmark, Estonia, Greece, Norway, South Africa and Turkey. It is in these circumstances that on 22 December 2022, the French Minister for Europe and Foreign Affairs laid upon the French Senate’s table a draft bill aiming at authorising France to ratify the 2010 HNS Protocol, which was adopted by the French Senate on 24 May 2023 and by the French National Assembly on 19 July 2023.

Since then, Slovakia acceded to the 2010 HNS Protocol in November 2023. It is, therefore, possible that the cumulative conditions for the 2010 HNS Protocol to enter into force could be met in the coming years.

The 2010 HNS Convention will establish a two-tier system for compensation to be paid in the event of accidents at sea involving HNS.

Tier one will be covered by compulsory insurance taken out by shipowners, who would be able to limit their liability to an amount between 10 million and 115 million Special Drawing Rights (“SDR”) of the International Monetary Fund (approximately €12 million and €145 million), depending on the ship gross tonnage and whether damage will be caused by HNS in bulk of packaged HNS.

Then, where the insurance will not cover an incident or will be insufficient to satisfy the claim, a second tier of compensation will be paid from a Fund made up of contributions from the receivers of HNS (calculated according to the amount of HNS received in each Member State in the preceding calendar year) up to a maximum of 250 million SDR (approximately €312 million), including any amount paid by the shipowner and their insurer.

France Assureurs, which is an employer organization ensuring the professional representation of insurance companies in France representing about 99% of the market, issued on 4 February 2025 a risk mapping after having interviewed 232 risk experts (https://www.franceassureurs.fr/actualites/cartographie-prospective-2025-risques-profession-assurance-reassurance/).

According to France Assureurs’ risk mapping, the biggest growth areas within the insurance sector are the following ones in order of importance based on an analysis of their frequency and severity:

• cyberattacks;
• climate change;
• economic environment;
• political environment; and
• exceptional natural event.

In addition, the growing development of artificial intelligence is leading to an increased risk in terms of IT process compliance.