The Insurance and Reinsurance Law Review: France


The French insurance and reinsurance industry is doing well. In 2018, the insurance sector's turnover grew by 3.7 per cent, mainly led by life and health insurance (+4 per cent), with property and liability insurance growing at a slightly more modest pace (+2.8 per cent). Profitability, for its part, increased more significantly, having reached €12.8 billion in 2018, compared to €10.6 billion in 2017.2


i The insurance regulator

An independent administrative authority, the French Prudential Supervision and Resolution Authority (ACPR), was created by Ordinance No. 2010-76 of 21 January 2010 and modified by Law No. 2013-672 of 26 July 2013. It licenses and supervises banking, insurance and reinsurance activities, with the aim of providing more effective regulation of these sectors. The ACPR combines two roles, namely:

  1. overseeing insurance policies written by insurers; and
  2. issuing general rules and guidelines (by way of circulars, decrees, etc.) regarding banking, insurance and reinsurance activities.

ii Position of non-admitted insurers

According to Articles L310-2 and L310-10 of the Insurance Code (IC), non-admitted insurers cannot do business in France. Any breach results in sanctions set out in Article L310-6 et seq. of the IC, which include fines (from €4,500 to €375,000) and may go as far as having the offending company wound up. Exceptions exist for maritime and aviation risk coverage.3

iii Requirements for authorisation

In order for a new insurance or reinsurance company to be authorised to write insurance or reinsurance, it must comply with the licensing procedure prescribed in Articles L321-1 to L321-3 and R321-1 to R321-5 of the IC. A licence may be granted conditionally or unconditionally, or be refused, by the ACPR, which bases its decision on the following criteria:

  1. the extent and suitability of the technical and financial means that the applicant plans to implement;
  2. the integrity, expertise and experience of the applicant's managers; and
  3. the applicant's shareholding structure and shareholder status.4

In addition, the vast majority of insurance companies operating in France are subject to the EU Solvency II Directive (Solvency II)5 and must therefore comply with minimum capital requirements,6 have a governance system that ensures sound and prudent management, organise regular internal reviews and have an adequate risk management system.7

In the event that the ACPR refuses to grant the licence sought by an applicant, the latter can challenge the decision before the highest administrative court, the Council of State. Licences are granted to insurance companies for specific categories of business. Applicants must choose among the 26 categories listed in Article R321-1 of the IC. Insurance companies, unlike reinsurance companies, may not be licensed for both life and non-life insurance business.8

iv Regulation of individuals employed by insurers, position of brokers and the distribution of products

Articles A512-6 and A512-7 of the IC lay down the requirement that insurance company employees and general agents and brokers must hold a master's or bachelor's degree or professional certificate in finance, banking or insurance.

The European Union's legal framework for insurance distribution was thoroughly reformed by Directive (EU) No. 2016/97 of 20 January 2016 on insurance distribution (the Insurance Distribution Directive). Article L511-1 et seq. and Article R511-1 et seq. of the IC, which regulate the activity of distributing insurance products, were amended accordingly. In this context, the definition of the distribution of insurance products was broadened to include distribution over the internet and over the telephone. Also, whereas formerly only intermediaries who undertook distribution as a principal activity fell under the scope of former Article L511-1 of the IC, its recast version now also applies to insurance companies and includes the majority of distributors who undertake the activity on a secondary basis.9

v Compulsory insurance

There are more than 200 instances of compulsory insurance (e.g., employers' liability), which concern a vast array of sectors and activities: automobile; transport; health; housing; real estate; construction; environment; sports; recreational activities; culture; education; training; employment; industrial, agricultural, economic and financial activities; certain regulated professions; property insurance; and life insurance.

vi Compensation and dispute resolution systems

In principle, any natural or legal person may bring a claim before the ordinary courts or, in certain cases, an arbitral tribunal.

By way of exception, since 2014, some authorised consumer associations are allowed to file specific group or class actions against insurers. These types of group or class actions were initially limited to non-bodily injuries; however, since 2016, they include claims for bodily injuries and their scope has been extended to other fields, such as health products, personal data and discrimination.

The ACPR regulates banks and insurers and, more generally, the distribution of financial products. Although it does not have jurisdiction to hear individual claims, it does have the power to impose fines on insurers that breach statutory provisions or engage in conduct likely to jeopardise the interests of policyholders or the market.

In addition, the Financial Markets Authority (AMF) was established by the Financial Security Act of 1 August 2003 to prevent any malfunction in the financial markets. For this purpose, it is empowered to conduct investigations into professionals operating in these markets and may impose fines or sanctions for breaches of the AMF General Regulations or professional obligations. It may also organise mediations between individuals and entities through its ombudsman, whose role is to facilitate compensation for losses but does not include the power to impose penalties or award damages.

On 16 December 2005, the French Federation of Insurance Companies (FFSA), a professional insurance federation of which the majority of French insurers are members, adopted an arbitration convention that is binding on all its members and provides that any disputes between insurers (that are members of the FFSA) regarding the indemnification of a given loss must be brought before an FFSA arbitral tribunal, rather than state courts. The FFSA became the FFA by merging with another professional body, the Group of Mutual Insurance Companies (see Section IV.iv).

vii Taxation of premiums

French insurance premium tax (IPT) is regulated under Article 991 et seq. of the General Tax Code and applies to all insurance policies covering risks situated in France.

Insurance companies that are not established in France must be registered with the French tax authorities and appoint a representative responsible for paying IPT.

The rate of IPT varies from 7 per cent to 33 per cent, depending on the insured risk.

viii Proposed changes to the regulatory system and other notable regulated aspects of the industry

EU Directive 2019/2177 amending the Solvency II Directive 2009/138/EC, MiFID II Directive 2014/65/EU and EU Directive 2015/849 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing was published in the Official Journal of the European Union (27 December).

The Directive aims to improve the supervision of financial markets by strengthening the coordinating role of the European Supervisory Authorities (ESAs) and to promote the exchange of information and cooperation between national supervisory authorities and the European Insurance and Occupational Pensions Authority (EIOPA), in particular by setting up a notification system.

In this respect, Article 2 of the amending directive provides for notification obligations in the case of significant cross-border insurance activities or in crisis situations. It also sets out the conditions for setting up cooperation platforms, at the initiative of the EIOPA or at the request of one or more of the supervisory authorities concerned, where an insurance or reinsurance undertaking carries on or intends to carry on business that is based on the freedom to provide services or the freedom of establishment and there are justified concerns about adverse effects on policyholders.

The deadline for transposition of that Directive shall be 30 June 2020 for the amendments to be made to Directive 2009/138/EC and 30 June 2021 for other amendments.

In addition, the new Delegated Regulation 2019/981 was published on 18 June 2019 in the Official Journal of the European Union. It amends Delegated Regulation 2015/35 and entered into force on 8 July 2019. It simplifies the calculation of Solvency Capital Requirements (SCRs), corrects technical inconsistencies and removes possible constraints on the financing of the economy.

Insurance and reinsurance law

i Sources of law

The statutory framework for insurance mainly consists of the IC, the Mutual Code, the Social Security Code, and the Financial and Monetary Code. Provisions of other codes, such as the Civil Code (CC), may also apply. French insurance regulation is widely influenced by EU legislation. In addition, French case law clarifying insurers' and policyholders' duties can also be considered a source of law.

ii Making the contract

The IC lays down specific obligations for insurers to provide information and documents both during the pre-contractual phase and during the life of the insurance contract itself. Pursuant to Article L112-2 of the IC, prior to the conclusion of the contract, the insurer must provide the policyholder with an information sheet that sets out the particulars regarding the premiums owed and the policy limits, the functioning over time of occurrence-based or claims-based coverage and the consequences of a succession of contracts with different bases for triggering coverage.

The insurer must also provide the insured with a copy of the draft contract and the attachments thereto, or a brochure on the contract precisely describing the coverage and exclusions and the insured's obligations. The draft will not be binding on the insured or the insurer, as only the policy or the cover note will prove their agreement.

The Insurance Distribution Directive modified Article L112-2 of the IC imposing a new obligation on insurance distributors to provide their clients with a standardised document detailing essential information regarding the contract (e.g., coverage type and summary, main exclusions, duration). The requirements of this document are provided by Article A112 of the IC.

These obligations do not apply to insurance contracts covering large risks as defined by Articles L111-6 and R112-2 of the IC. As regards the information to be supplied by the policyholder to the insurer, Law No. 89-1014 introduced a system based on the completion of a questionnaire drawn up by the insurer. The duty to disclose is not, however, confined to the questionnaire and can include any question submitted by the insurer by fax, letter, etc., provided that the insurer can prove that it clearly phrased the question. As a consequence, the policyholder only has a duty to answer the insurer's questions and is under no obligation to spontaneously disclose information that might be relevant to the insured risk. The policyholder can, however, make spontaneous statements upon taking out the policy, regardless of the absence of any legal duty forcing him or her to do so. In such a case, the policyholder's spontaneous statements must be truthful and accurate, as otherwise the contract could be avoided for fraudulent misrepresentation.10 The information given in relation to a risk at the time of the insurance contract's inception will also determine the scope of the policyholder's continuous duty to disclose all new relevant information to the insurer, pursuant to Article L113-2 Section 3 of the IC.

Regarding the truthfulness of the information provided by the policyholder (whether upon inception of the insurance contract or during its lifespan), the law makes a distinction between erroneous answers (or absence of disclosure) that are made in good faith or bad faith (i.e., deliberately).11

If the misleading information was provided in good faith, the possible indemnity owed will be reduced according to a pro rata calculation based on the premium the insurer would have requested, had it been informed of the true nature of the risk. If, on the other hand, the misleading information was provided deliberately and had an impact on the insurer's choice to cover the risk or the price of the premium requested for said cover, then the insurance contract can be deemed to be null and void.

None of these provisions apply to reinsurance contracts.12

iii Interpreting the contract

General rules of interpretation

The CC provides general rules of interpretation in Article 1188 et seq., but these are only guidelines and the courts may interpret contracts as they deem fit.

However, judges should only interpret contracts when their terms are unclear or ambiguous,13 otherwise they risk being overturned upon appeal;14 this principle also applies to the pre-contractual questionnaire submitted by the insurer to the policyholder (and the policyholder's answers thereto).15

When interpreting contractual provisions, the overarching principle is that it should be interpreted according to the parties' common intention.16 In case of doubt, a private agreement shall be interpreted against the creditor and in favour of the debtor, and standardised pre-drafted contracts (such as those habitually offered to consumers) shall be interpreted against the party who offered the agreement.17

In the event of a contradiction between a clause contained in the general terms and conditions of a contract and a clause contained in the special terms and conditions of the contract, the latter will prevail.18

Furthermore, contracts are to be interpreted in their entirety, and clauses are not to be read independently from one another; similarly, contracts that concern the same operation should not be interpreted independently from one another, but together.19

Regarding the case of exclusion clauses, Article L113-1 of the IC provides that these must be 'express and limited', failing which the insurer would be unable to enforce the clause and would have to cover the loss.20 They must also appear very clearly in the policy, as per Article L112-4 of the IC.21 Any exclusion clause that requires interpretation is necessarily found not to comply with Article L113-1 of the IC22 and will, therefore, be deemed unenforceable.

Finally, with respect to the specific case of insurance offered to consumers or non-professionals, Article L211-1 of the Consumer Code provides that the terms of the contract 'must be set out and written in a clear and comprehensible manner'. Moreover, 'in case of doubt, they are to be interpreted in the sense which is most favourable to the consumer or non-professional'.23

Incorporation of terms and types of terms in insurance contracts

Insurance contracts must be written in French and in clear print. They must also comply with the requirements of Articles L112-4, L113-15 et seq. and R112-1 of the IC, which respectively provide that the policy must indicate:

  1. the nature of the insured risks, the starting point and period of coverage and the policy limit;
  2. the duration of the contract and the terms applicable to termination; and
  3. the duration of the mutual undertakings made by the parties, the terms of tacit renewal of the policy, the policyholder's duty to disclose, and the two-year limitation period for insurance claims and the causes of interruption of that period.24

Warranties, conditions precedent and conditions

The policy may stipulate that the contract will only enter into force once certain conditions precedent are satisfied by the insured, such as, for instance, the payment of the first premium.25

The policy may also contain coverage conditions, which should be distinguished from conditions precedent. If these conditions are not satisfied during a certain period of the insurance contract's life, coverage will not be owed for that particular period. Conversely, as soon as the condition in question is satisfied again, coverage would be available from that date onwards. These types of conditions are common, for instance, in relation to coverage for breaking and entering or theft,26 where policies will often provide that coverage may only be owed under the contract if certain security measures are maintained at all times (such as the presence of a working alarm system). Though they may sometimes lead to the same results, coverage conditions are distinct from exclusion clauses and are not, therefore, subject to the obligations of being written in bold characters or drafted in an 'express and limited fashion'.27

iv Intermediaries and the role of the broker

Conduct rules

Insurance intermediaries that distribute insurance or reinsurance coverage on a principal or secondary basis must meet the integrity and professional qualification requirements set out in Articles L512-4 and L512-5 of the IC. For instance, insurance intermediaries must not have been convicted of certain offences. As far as professional qualifications are concerned, brokers need to meet certain requirements pursuant to Article R512-9 of the IC (i.e., two to four years of professional experience devoted to the production or management of insurance contracts, or a specified minimum level of higher education) or receive 150 hours of training.28 In any event, brokers must have at least 15 hours of training per year.29 They must also carry professional-liability and financial-bond insurance.30 They can incur various sanctions, ranging from fines to imprisonment, for breach of statutory requirements, such as not being registered.31

Brokers and insurance companies are also bound by brokerage customs and industry practice. Legal commentators are, however, divided and cautious about their qualification as a rule of law and their possible enforcement by or against a third party.

Agency and contracting

Insurance intermediaries must be registered with the organisation in charge of the French Register of Insurance Intermediaries. Registration must be renewed annually and is subject to the payment of a fixed fee.32

The Insurance Distribution Directive reinforced the freedom to provide services and the freedom of establishment of insurance intermediaries within the European Union by providing that the registration with their home Member State should allow them to operate in other Member States.33

How brokers operate in practice

Traditionally, brokers provide clients with pre-contractual advice on coverage and premiums, and consequently fall under the category of insurance distributors. As such, they have certain obligations regarding pre-contractual information and advice.34 These obligations have been reinforced by a decision of the Court of Justice of the European Union in May 2018, which found that even if the pre-contractual advice is given without a real intention to enter into a contract from the intermediary's part, its actions nonetheless fall under the scope of intermediation, as does the financial advice given by an intermediary.35

Brokers are, however, increasingly involved in claims handling. They may, for instance, strive to defend their clients' interests by guiding policyholders from the time of occurrence of a loss, and assisting them during the investigation and adjustment of the loss. Brokers may also guide insurers on the choice of party-appointed adjusters

The extent of a broker's involvement in the handling of a claim mainly depends on the size of the loss. For instance, a claim liable to have a major financial impact will be handled directly by the insurer, but the broker may keep it under close review.

Brokers may also act on behalf of the insurer, for example by collecting insurance premiums.

v Claims

The insured must give the insurance company notice of any claim that falls within the policy limits and scope of coverage, and provide the company with all the documents enabling it to appreciate the circumstances of the loss.

Insurance policies cannot impose a specific method of notifying claims; any clause imposing a special method is therefore invalid. The insured should notify the claim as soon as he or she is aware of it and within the time limit, if any, specified in the policy.

Pursuant to Article L113-2 of the IC, where a policy clause stipulates a specific time limit for the notifications of claims, the insurer may deny coverage of any claim reported outside the time limit in question, provided that:

  1. the delay in reporting has caused the insurer prejudice, inter alia, by increasing the cost of the claim;
  2. the specified time limit for reporting claims is not less than five days; and
  3. the policy's relevant sections appear in bold print and clearly state that late reporting results in forfeiture of coverage.

Generally speaking, there is no duty on the insured to mitigate damage (except in marine insurance); nevertheless, the courts have occasionally found this duty on the basis of a breach of contract.36 Legal commentators have, however, remained rather cautious on this point, as the duty has neither been clearly defined nor confirmed by further court decisions. However, the project for the reform of tort law (which has not yet been adopted), inter alia, envisages, in its Article 1263, imposing this obligation in matters other than bodily injury.37

Finally, where the policy so provides in very clear print, fraudulent overstatement of losses can result in forfeiture of coverage, even if the overstatement caused no prejudice to the insurer.


The liability insurer cannot set-off the unpaid premiums upon the indemnity it may be obligated to pay to the third-party victim.38

However, the insurer has a right to assert set-off, including in an insolvency context, but only if the right is asserted before the judgment opening insolvency proceedings, and under certain conditions. Accordingly, an insurer can set-off premiums owed to it by a policyholder against insurance proceeds owed by it to the policyholder.


For annual policies, the policy limit is automatically reinstated in full on the first day of the next year of insurance. Moreover, the insured or policyholder can request reinstatement of mandatory coverage. If the policy limit has not been exhausted, the remaining portion is not carried over to the next year.

In addition, insurance contracts can provide for reinstatement of the policy limit depending on changes in the risks. Such a provision is subject to a higher premium and is drafted on a case-by-case basis.

Dispute resolution clauses

Generally speaking, insurers can stipulate mediation and conciliation clauses in their policies. Article L112-2 of the IC provides that the insurance contract must indicate how the insured can initiate a mediation. Insurance contracts relating to large risks39 can also contain mediation and conciliation clauses, but they do not, however, need to indicate the exact means of initiating mediation, as would have been the case with a consumer.

According to case law, if an insurance contract contains a conciliation clause or a mediation clause, the parties have to go through these processes before taking legal action.40

Dispute resolution

i Jurisdiction, choice of law and arbitration clauses

There are two types of first instance courts in France: civil courts and commercial courts. Commercial courts differ from civil courts in that they are staffed by non-professional judges, who are usually experienced business people. There are no trials by jury in either the civil or the commercial courts.

If neither one of the parties is a commercial entity, the district court or high court has jurisdiction (depending on the amount of the claim) to rule on any disputes in first instance. Alternatively, the regional commercial court has exclusive jurisdiction if all the parties to the dispute are commercial entities (unless the contract at issue contains a jurisdiction clause that explicitly stipulates that civil courts have jurisdiction). Finally, if a claimant is a non-commercial entity but the defendant is, for its part, a commercial entity, the former can choose before which court, commercial or civil, he or she brings his or her action.

It follows from the above that insurers are accustomed to appearing before both civil and commercial courts (though mutual insurance companies must necessarily initiate proceedings or be sued before civil courts, as they are non-commercial entities).

Taking property and casualty insurance as a representative example,41 the principles that govern applicable law or choice of law may be summarised as follows:

  1. compulsory insurance contracts that correspond to a legal obligation (such as motoring insurance) are necessarily governed by French law;42
  2. insurance contracts entered into with a French resident in relation to a risk that is deemed to be located in France (according to the criteria set out in Article L310-4 of the IC) will necessarily be governed by French law;43 and
  3. insurance contracts entered into with a consumer will also necessarily be governed by French law, provided the consumer has his or her habitual residence in France and the insurer carries out his or her usual business in France.44

There are, however, certain conditions where the parties can elect for the insurance contract to be governed by a foreign law, namely:

  1. if the risk is located in France, but the insured resides or has its registered office abroad, the insurance contract can either be governed by French law or the law of the country the insured resides in;45
  2. if the risk is not located in France, but the insured resides or has its registered office in France, the insurance contract can be governed by French law or by the law of the state where the risk is located;46 and
  3. if the risk qualifies as a large risk, as defined by Article L111-6 of the IC, the contract can be governed by any law the parties elect (rather than merely the law of the state associated with the residence of the insured and the location of the risk)47 – however, in this instance, if the main elements of the insurance contract are located in France, then the overriding mandatory provisions of French insurance law will apply, regardless of the governing law elected by the parties.

In the three instances listed above where the insured and the insurer elect a governing law other than French law, the governing law retained by the parties must either be identified explicitly or be self-evident in light of the other clauses of the contract or the facts of the case. If this is not the case, the governing law will be that of the state that has the closest ties with the insurance contract, which is presumed to be the law of the state where the risk is located.48

Insurance contracts can contain arbitration clauses, which will, therefore, be binding on the parties in the event of a dispute regarding the application of the policy (provided, of course, the legal conditions applicable to the validity of any arbitration clause are satisfied). The identity of the insured will, however, have a significant impact on whether the arbitration clause at issue is enforceable; specifically, whether the insured is a professional or a consumer. If the insured is a professional, and the insurance contract was taken out in connection with its professional activity, the arbitration clause will be binding on both the insurer and the insured alike. If, however, the insured is a consumer, then the insurer will not be able to invoke the clause against it, as Article R212-2-1 of the Consumer Code provides that arbitration clauses are presumed unfair and should be set aside when they are entered into with a consumer and Article 2061 of the CC additionally provides that arbitration clauses entered into with non-professionals cannot be invoked against them (but the said non-professionals remain free to invoke their application, should they so wish).

ii Litigation

Litigation stages

Generally speaking, first instance proceedings in a commercial case usually take about a year and a possible appeal will usually add another year. A possible, ultimate appeal before the French Supreme Court, the Court of Cassation (which can only be made on a point of law, rather than an issue of fact), would add another 18 months. These periods can vary depending, inter alia, on the complexity of the case, the number of parties or whether investigative measures are ordered by the court.

Urgent proceedings, such as summary proceedings for interim relief and fixed-date proceedings, also exist. These proceedings can take several weeks to several months depending on the complexity of the case and the parties' diligence.


Proceedings before French courts do not include discovery, in a marked difference to the way evidence is produced before common law jurisdictions.

According to Article 132 of the Code of Civil Procedure (CCP), each party must produce the documents relied upon in its submissions and communicate copies thereof to the other parties. In the event that a party does not comply with this obligation, its opponents could apply to the court for a disclosure order.49 The court would then indicate the time limit for disclosure, if necessary on penalty of a daily fine, and, where appropriate, the method of disclosure.50 The judge on the merits could also choose to exclude whatever documents have not been served in due time.51 If a party wishes to rely on a document evidencing a transaction to which it was not itself a party, or any other document held by a third party, the court may order the production of the original or a certified copy of the said document.52

Pursuant to Article 199 of the CCP, if testimonial evidence is admissible, the court shall admit statements from third parties whose first-hand knowledge can help clarify the facts at issue. Such statements can be made in writing or brought by means of an inquiry or investigation, depending on whether they are written or oral.


According to Article 695 of the CCP, costs include:

  1. the fees, taxes, fees or emoluments charged by the court registry offices or by the tax administration, except any fees, taxes and penalties payable in respect of documents or title deeds produced in support of the parties' claims;
  2. the cost of translating documents, where translation is required by law or by an international commitment;
  3. allowances paid to witnesses;
  4. experts' fees;
  5. fixed disbursements;
  6. emoluments of public officers;
  7. counsel's fees insofar as they are regulated, including fees for counsel's addresses; and
  8. expenses incurred for service of process in a foreign country.

These costs, which do not, however, include the other parties' legal costs, are born by the losing party, once the judgment on the merits is handed down – though the court can, in its judgment (provided its decision is motivated), order that part of these costs also be borne by another party.53

While the losing party will habitually be ordered to pay part of the successful party's legal expenses,54 the amount usually corresponds to only a fraction of the successful party's entire legal costs.

iii Arbitration

Format of insurance arbitrations

The parties to arbitration have wide autonomy, especially as regards the procedural rules to be followed by the arbitration proceedings, which can be agreed upon in the arbitration agreement. Arbitral proceedings must, however, comply with the mandatory guiding principles set out in the first section of the CCP. Additionally, arbitration agreements are not enforceable against all individuals, in particular non-professionals having entered into the agreement on a private basis.55 However, non-professionals may choose between arbitration and state courts to have their case heard.

There is a legal distinction between domestic and international arbitration; though some provisions apply to both,56 there are also specific provisions for each.57 The distinctive criterion is that of the domestic or international nature of the trade interests at stake in the dispute.58 In matters of reinsurance, some authors argue that the inherently complex and transborder nature of reinsurance schemes implies that arbitration on reinsurance matters is necessarily international.59

Arbitration clauses can be included in contracts, before any disputes have arisen. To be valid in domestic arbitration, they must be in writing, designate the arbitrator or arbitrators, or indicate the manner in which they are to be appointed, and determine the subject matter of the dispute.60 In international arbitration, there are no formal requirements regarding the arbitration agreement.61 It is, however, recommended to specify the place and language of arbitration, the rules of arbitration to be applied and, where necessary, the governing law.

The forms of procedure (e.g., the content of the request for arbitration or the valid means of communication) should be detailed. Moreover, it is important to state: whether the arbitral tribunal may disregard strict rules of law and decide on an equitable basis; and which remedies, if any, are available against the award.

If a dispute has arisen and no arbitration clause can be identified, the parties can decide to enter into an arbitration agreement whereby they agree to submit the dispute to arbitration. In domestic arbitration, an arbitration agreement, like an arbitration clause, should designate the arbitrators or specify the manner in which they are to be appointed.62 In addition, arbitration agreements must, in order to be valid, indicate the subject matter of the dispute.63

During the pre-arbitration phase, French courts can intervene, at the request of one of the parties, if and when a difficulty arises regarding the appointment of the arbitrators.64 Moreover, if the arbitral tribunal has not yet been constituted, parties to the arbitration may file a claim for urgent proceedings before a state court for temporary or protective measures.65 If, however, the arbitral tribunal has been constituted, only the arbitral tribunal has jurisdiction to order such measures.

French courts may have jurisdiction to hand down a judgment on the validity of arbitration clauses, provided the arbitral tribunal has not yet been constituted and the clause at issue is obviously void or unenforceable.66

As a general rule, awards cannot be appealed or opposed.67 However, in domestic arbitration, parties have the possibility to provide in their arbitration agreement that an appeal will be possible.68 In that event, the appeal will aim either to obtain the reversal or the setting aside of the award,69 however the court of appeal can only rule in accordance with and within the limits of the arbitral tribunal's mandate.70

In the absence of any agreement on a possible appeal of the award, and in any event in international arbitration, the only possible recourse against an arbitral award is an action to have the award set aside.71 Contrary to an appeal, the action to set aside an arbitral award can only be brought on a limited number of grounds, some of which are shared between domestic and international arbitrations, while others are specific:72

  1. the arbitral tribunal wrongly upheld or declined jurisdiction;
  2. the arbitral tribunal was not properly constituted;
  3. the arbitral tribunal ruled without complying with its mandate;
  4. due process was violated;
  5. the award is contrary to public policy (applies only to domestic arbitration);
  6. the award failed to state the reasons upon which it is based, the date on which it was made, the names or signatures of the arbitrators having made the award, or where the award was not made by majority decision (applies only to domestic arbitration); or
  7. recognition or enforcement of the award is contrary to international public policy (applies only to international arbitration).

These actions are, however, rarely successful as French procedural law and French courts are particularly respectful of the autonomy of arbitration.

Finally, in domestic arbitration, arbitral awards may be challenged by a third party whose interests are adversely affected by the award73 and may also be subject to a special remedy before the arbitral tribunal itself, called revision, but only on certain limited grounds, including fraud. In such a case, the award is re-examined by the arbitral tribunal.74


Arbitral tribunals are granted wide-ranging powers and discretion when it comes to evidence. They may hear all relevant persons or order any party to communicate all relevant documents.75

Arbitral tribunals may order parties to perform any temporary or protective measures they deem appropriate.76


There is no French statutory provision regulating arbitrators' fees. Consequently, the arbitrators' fees are set by the arbitrators themselves or by the arbitration institution to which the dispute is referred. Fees are mainly based on the number of hours worked and/or the amount involved in the dispute, and factors such as the complexity of the case, the reputation of the arbitrators, etc. are also taken into account.

The allocation of arbitration costs between the parties is usually decided by the arbitrators and clearly indicated in the award. Arbitration costs include the arbitrators' fees, as well as the parties' legal costs.

iv Alternative dispute resolution

French jurisdictions and French procedural law are generally in favour of alternative dispute resolution (ADR), which they have increasingly tended to promote.

Up until quite recently, parties to a dispute could only initiate judicial proceedings provided they had previously attempted to solve the dispute amicably. In practice, however, this obligation had little impact, because the relevant sections of the CCP did not provide sanctions in case of non-compliance and compliance could, in any case, be achieved by including a simple declaration, in the writ, that efforts to resolve the dispute amicably had been undertaken and failed. This changed with Law No. 2019-222 of 23 March 2019 (and the ensuing decree regarding its application), which has both limited the scope of the disputes concerned (i.e., essentially disputes relating to less than €5,000) but strengthened the parties' obligation to attempt to find an amicable solution. Parties will now need to take certain active steps (such as go before a mediator), and be in a position to prove that they have done so, before they can initiate proceedings, and non-compliance will render writs before the courts inadmissible.77 However, as the financial threshold that determines the application of this new regime is quite low, the said regime should, in practice, only apply to a small fraction of insurance disputes.

Moreover, parties are always free to resort to ADR methods, such as conciliation and mediation.

Conciliation aims to bring the parties closer in order to lead them to reach an agreement. Although the ombudsman issues an opinion on the dispute, he or she is not an arbitrator and the opinion is therefore not binding in any way. Mediation, on the other hand, requires the third party to be neutral and to refrain from opining.

Conciliation and mediation may be either judicial78 or contractual.79 When the proceedings are contract-based, parties choose the third party that conducts them. In both instances, parties have to agree to the proceedings: there cannot be an injunction to participate.

Judicial conciliation may be conducted by the judge or by a judicial conciliator appointed by the judge.80 Like conciliation, mediation may be either contractual or judicial. Within the framework of a judicial mediation, subject to the agreement of the parties, the mediation procedure is conducted by a judicial ombudsman. The judicial ombudsman is independent, must possess certain skills and meet specific professional requirements.81 The judge sets the duration of the mediation, the remuneration of the ombudsman and may end the mediation at the request of the parties, or the ombudsman, or if the normal conduct of the mediation is compromised.82 When parties have reached an agreement, the judge ratifies it.83

Regarding contractual mediation in insurance matters, since 2016, proceedings are handled by the insurance ombudsman. This mediation system is compulsory for insurance companies that are members of the FFA (i.e., the overwhelming majority of the French market). Insurance companies that are not members of the FFA but operate in France can participate in FFA mediation proceedings on a voluntary basis. The insurance ombudsman is independent and may intervene in relation to disputes that arise between insurers, insurance intermediaries and even consumers. Subject to the agreement of the insurer member of the FFA, the insurance ombudsman may also intervene in relation to disputes regarding professional insurance (but excluding large risks). This form of mediation is free and confidential. Parties are not bound by the decision of the ombudsman; however, if the insurer does not intend to comply with the decision, the ombudsman must be informed by letter from the general director of the insurer. Limitation periods are suspended during the mediation proceedings.

Year in review

French insurance law has not been affected by any significant changes in 2019. However, several decisions related to time limitation are worth noting.

According to French insurance law, insurers must indicate the provisions of the French Insurance Code that specify the two-year time limitation and the means to suspend or interrupt such limitation. Moreover, insurers can successfully claim the limitation period only if the policy at issue duplicates the sections of the French Insurance Code regulating the time limitation period and explains the means to interrupt it.

A Court of Cassation decision handed down on 18 April 2019 added that the insured does not have to prove the policy did not quote all the relevant provisions in full; on the contrary, it is the insurer who must prove the compliance of the above obligations in the policy.84

On 21 March 2018, the Court of Cassation had already stressed insurers' obligations to refer to all the necessary provisions regarding time limitation in their policies. It specified that, if the insurer had failed to do so, it could not claim the standard five-year time limitation period provided by the CC as some form of fallback regime.85

These decisions are relevant, because they could mean that when the insurer does not reproduce the relevant provisions in its policies, it finds itself in a situation where no limitation period of any kind could successfully be invoked against the insured. The insurer in question could therefore be exposed to possible claims from the insured indefinitely or until the end of the absolute cut-off period ('délai butoir', i.e., 20 years) – that is, in any case, a position the Paris Court of Appeal seems to have adopted in a recent decision86 (it should, however, be borne in mind that this is an isolated decision, which has, moreover, been criticised by a significant number of legal commentators).


Outlook and conclusions

The main issue, in terms of horizon-scanning, is the effective impact of Brexit, now that the United Kingdom ceased to be a member of the political institutions of the European Union (the European Parliament, the Council of the European Union and the European Commission) on 31 January 2020.

During the transitional period, which is currently scheduled to end on 31 December 2020, the United Kingdom will:

  1. remain a member of the economic institutions and security cooperation agreements;
  2. continue to be treated as a member of the single market and the customs union; and
  3. continue to apply European Union law and the decisions of the Court of Justice of the European Union.

Therefore, insurance undertakings that have their head office in the United Kingdom should be able to carry on insurance operations on the French territory during this transitional period, pursuant to Article L310-2, I, 2° of the French Insurance Code.

However, we do not know yet what solution will be adopted at the end of this transition period regarding insurance operations. Indeed, it will depend on the terms of the commercial agreement that will be adopted between the United Kingdom and the European Union (or, indeed, individual Member States).

In view of the uncertainties surrounding the possibility of a 'hard Brexit', ongoing negotiations have, inter alia, envisaged the possibility of the loss of the 'European passport' regime. In practice, for the time being, the following measures have been adopted:

  1. for European insurers operating in the United Kingdom, the British regulator has set up a system of temporary permissions that should enable them to continue to operate in the UK for a period of three years after Brexit; and
  2. as regards British insurers operating in France, measures were adopted in February 2019 to ensure the continuity of current insurance contracts concluded before Brexit. These measures provided that such contracts could nevertheless not be renewed or give rise to the issue of new premiums.

However, the implementation of these arrangements seems compromised by the final adoption of the agreement of 17 October 2019 since, on the one hand, the UK permission regime is subject to the absence of a transition period and to the loss of the European passport upon withdrawal from the United Kingdom and, on the other hand, the French arrangements would apply only in the event of and as from the date of withdrawal 'without agreement'.

Insurers have nevertheless largely anticipated these uncertainties as well as the loss of the European passport by establishing themselves on the European continent. Thus, a British insurer establishing a subsidiary in the territory of a continental European country or a European company will be able to benefit from the European passport via its subsidiary once it has received approval from the host country. This process is accompanied by a portfolio transfer of insurance contracts, thus ensuring the continuity of current contracts.

Similarly, 'Brexit clauses' have been included in insurance contracts stipulating that Brexit cannot terminate the contract, setting out the terms and conditions for the transfer of the contract or, failing this, organising the terms and conditions for terminating the contract. The interest of these clauses remains intact although the principle is that of the continuity of contracts in force during the transitional period (the United Kingdom being considered as a Member State).

Beyond Brexit, and turning specifically to foreseeable trends within the insurance and reinsurance industry, we expect the trend towards more corporate concentration, which we have witnessed over the past several years, to remain vigorous (by way of illustration, Covea, who has recently tried and failed to acquire SCOR, is now in talks to possibly acquire PartnerRe). Although it is partly encouraged by other factors, it should be noted that this trend is also the result of the current international legal and regulatory frameworks (i.e., compliance with Solvency II requirements, for instance, or with international regulations and the associated risks of significant sanctions and fines), which are becoming increasingly complex, require more staff and heightened internal due diligence obligations and are, therefore, more difficult to navigate for smaller, independent players.


1 Alexis Valençon and Nicolas Bouckaert are partners at Kennedys.

2 Information provided in the Tableau de bord de l'assurance report (year in review), produced by the French Federation of Insurance for the 2018 calendar year.

3 Article L310-27, IC.

4 Article L321-10-1, IC.

5 Article L310-3-1, IC.

6 Article L352-5 et seq., IC.

7 Article L354-1 et seq., IC.

8 Article L321-1 Section 3, IC.

9 Article R511-1, IC.

10 Article L113-8 of the IC.

11 Articles L113-8 and L113-9, IC.

12 Article L111-1, IC.

13 Article 1192, CC.

14 Court of Cassation, 2nd civil division, 28 October 2017, appeal No 16-22.564; 13 September 2018, appeal No 17-24871.

15 Court of Cassation, 2nd civil division, 3 March 2016, appeal No. 15-12464.

16 Article 1188, CC.

17 Article 1190, CC.

18 Court of Cassation,1st civil division, 9 February 1999, appeal No 96-19538; 4 October 2018,
appeal No. 17-20624.

19 Article 1189, CC.

20 Court of Cassation, 2nd civil division, 26 October 2017, appeal No. 16-23696.

21 Court of Cassation, 2nd civil division, 24 May 2018, appeal No. 17-16431.

22 Court of Cassation, 2nd civil division, 12 April 2012, appeal No. 10-20831.

23 Court of Cassation, 2nd civil division, 20 December 2012, appeal No. 11-27225; 26 October 2017, appeal No. 16-22.564.

24 Court of Cassation, 3rd civil division, 16 November 2011, appeal No. 10-25246.

25 Court of Cassation, criminal division, 17 January 1996, appeal No. 95-80847.

26 Court of Cassation, 2nd civil division, 30 June 2011, appeal No. 10-23309.

27 Court of Cassation,1st civil division, 18 December 2002, appeal No. 00-21991.

28 Article R512-9, IC.

29 Article R512-13-1, IC.

30 Articles L512-6 and L512-7, IC.

31 Articles L514-1 to L. 514-4, IC.

32 Article L512-1, IC.

33 Directive (EU) No. 2016/97, Recital 20.

34 Articles L112-2 et seq. and L521-1 et seq., IC.

35 Court of Justice of the European Union, 31 May 2018, C-542/16 QPC.

36 Court of Cassation, 2nd civil division, 24 November 2011, appeal No. 10-25635.

38 Court of Cassation,1st civil division, 31 March 1993, appeal No. 91-13637.

39 Article R112-2, IC.

40 Court of Cassation, mixed divisions, 12 December 2014, appeal No. 13-19684; Court of Appeal of Dijon, 19 September 2017, appeal No. 15/00277; Court of Appeal of Versailles, 7 February 2017, appeal No. 15/00896.

41 Other rules may apply to more specialised areas of French insurance law, such as in marine insurance or life insurance.

42 Article L182-1, IC.

43 Article L181-1-1, IC.

44 Rome I Regulation, Article 6.

45 Article L181-1 Section 2, IC.

46 ibid.

47 Article L181-1-5, IC.

48 Article L181-2, IC.

49 Article 133, CCP.

50 Article 134, CCP.

51 Article 135, CCP.

52 Article 138, CCP.

53 Article 696, CCP.

54 Article 700, CCP.

55 Article 2061, CC.

56 Article 1506, CCP.

57 Articles 1442 to 1503 for domestic arbitration and Articles 1504 to 1527 for international arbitration, CCP.

58 Article 1504, CCP.

59 M Hagopian and M Laparra, Theoretical and Practical Aspects of Reinsurance, L'Argus, 1991, p. 74.

60 Articles 1443 to 1445, CCP.

61 Article 1507, CCP.

62 Article 1444, CCP.

63 Article 1445, CCP.

64 Article 1454, CCP.

65 Court of Cassation, 2nd civil division, 7 March 2002, appeal No. 00-11526.

66 Article 1448, CCP.

67 Articles 1489, 1503 and 1518, CCP. 'Opposition' is a form of recourse under French law, available when a judgment is rendered by default because a defendant was not properly notified of a hearing. The defendant can, in such circumstances, 'oppose' the judgment in question.

68 Article 1489, CCP.

69 Article 1490, CCP.

70 Article 1490, CCP.

71 Articles 1491 and 1518, CCP.

72 Articles 1492 and 1520, CCP.

73 Article 1501, CCP.

74 Article 1502, CCP.

75 Article 1467, CCP.

76 Article 1468, CCP.

77 Article 750-1, CCP.

78 Article 127 et seq., CCP.

79 Article 1528 et seq., CCP.

80 Article 128, CCP.

81 Articles 131-4 and 131-5, CCP.

82 Articles 131-10 and 131-13, CCP.

83 Article 131-12, CCP.

84 Court of Cassation, 2nd Civil division, 18 April 2019, Appeal No. 18-13.938.

85 Court of Cassation, 3rd Civil division, 21 March 2019, Appeal No. 17-28.021.

86 CA Paris, 16 May 2017, No. 16/09576.

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