Extinctive prescription in the matter of the insurance contract in the light of the new civil code

Author:Elena-Cristina Savu
Position:Lawyer, managing partner Savu and Associates
Pages:218-222
SUMMARY

The new Civil Code in force since 1 October 2011 introduces novelty provisions both in the field of extinctive prescription and in the matter of the insurance contract. This article deals specifically with the aspects of the insurance contract relating to the prescriptive nature of the rights resulting from the insurance relationships, prescription term applicable to the matter, the particularities of the prescription course.

 
CONTENT
218 ELENA-CRISTINA SAVU
EXTINCTIVE PRESCRIPTION IN THE MATTER
OF THE INSURANCE CONTRACT IN THE LIGHT
OF THE NEW CIVIL CODE
Elena-Cristina SAVU
Lawyer, managing partner Savu and Associates
Abstract
The new Civil Code in force since 1 October 2011 introduces novelty provisions both in the field
of extinctive prescription and in the matter of the insurance contract. This article deals specifically
with the aspects of the insurance contract relating to the prescriptive nature of the rights resulting
from the insurance relationships, prescription term applicable to the matter, the particularities of the
prescription course.
Keywords: Private Law, Insurance Law
De lege lata, the regulation of extinctive prescription is contained in the
provisions of the Civil Code (Law 287/2009 in force since 1 October 2011), Book VI,
Title I, Art. 2500-2538, which replaces the previous stipulations in the matter of
Decree 167/1958 on Extinctive Prescription.
The extinctive prescription consists in extinguishing the material right to
action by not exercising it within the time limit set by the law.
The insurance contract is a contract whereby one of the parties - the insurance
contractor or the insured - undertakes to pay a premium to the other party - the
insurer - in return for which the last one undertakes to pay an indemnity, in case of
the insured risk, to the insured or to a third party, beneficiary or injured.
The insurance contract is a named contract, regulated mainly by art. 2199-2241
Civil Code in Chapter XVI of Title IX - Various Special Contracts - of the Book of the
5th - About Obligations, which contains common provisions to all categories of
insurance contracts as well as provisions regarding the different categories of more
common insurances, respectively insurance of goods, credit, collateral and
financial loss, civil liability insurance, insurance of persons as well as provisions on
co-insurance, reinsurance and retrocession. Particular provisions are found in the
legislation on compulsory insurances (when the insurance contract is binding),
respectively in Law 132/2017 on the compulsory insurance against civil liability for
the damage to third parties caused by vehicle and tram accidents (RCA), Law
260/2008 on compulsory home insurance against earthquakes, landslides and
floods (PAD), etc.
Law Review vol. VII, special issue, December 2017, p. 218-222
Extinctive prescription in the matter of the insurance contract in the light... 219
In the matter of insurance contract, by right to action is understood, from the
perspective of the insurer, the right to pursue the collection of insurance premiums
as well as the right to regress if it subrogates to the rights of its insured person and,
from the perspective of the insured or the beneficiary or the third injured party, the
right to action is the right to pursue the receipt of the indemnity or compensation.
All these debt rights arising from insurance, having a patrimonial object, are
subject to extinctive prescription, with the only exception provided for by law in
Art. 2237 Civil Code concerning the policyholders' right to technical provisions in
the case of life insurance for future payables that are imprescriptible1. The right to
technical reserves arises in the situation when the insured denounces the insurance
contract and requests the restitution of the established reserve. This legal provision
is also contained in the previous regulation2 and represents a true exception to the
principle of the prescription of debt rights.
However, those actions that seek to establish the absolute nullity of the
insurance contract as well as those actions in the determination of the existence or
non-existence of a right born out of the insurance relationships remain
imprescriptible under the conditions of Art. 2502 Cod Civil3. In the field of insurance,
the absolute nullity of the contract can be invoked in those cases where, at the
conclusion of the legal act, the elements related to the nature and essence of the
insurance are not observed: the risk ensured that it is impossible to achieve /
produced / undetermined, the hazard element (alea) is not configured, lack of
interest in the insured asset, etc. Regarding the risk, we mention that when it appears
later, during the execution of the contract, impossible to achieve, the sanction that
may intervene will not be the nullity, but the termination of the contract.
On the other hand, the insurance contract being a contract with a professional
(the insurer) may also be incident those grounds for nullity arising from the found
abusive clauses in the sense of Law 193/2000 on unfair terms in contracts
concluded between professionals and consumers.
At the same time, we have a specific case of express nullity in the matter of the
insurance contract which is found in the case of the inaccurate or reluctant
statement made in bad faith by the insured or the insurance contractor about the
1 Article 2237 Civil Code - Prescriptions
The policyholders' rights to the amounts resulting from the technical reserves for life assurance
for future payment obligations are not subject to prescription.
2 Article 40 of Law 136/1995 on Insurance and Reinsurance in Romania
3 Art. 2502 Civil Code- Imprescriptibility of the right to action. Cases
(1) The right to action is imprescriptible in the cases provided for by law, and whenever, by
nature or object of the subjective right protected, its exercise cannot be limited in time.
(2) Except as provided in paragraph (1), the rights are imprescriptible in respect of:
1 ...
2. action to establish the existence or non-existence of a right;
3. the act of finding the absolute nullity of a legal act;
4....
220 ELENA-CRISTINA SAVU
circumstances which, if known by the insurer, would have determined not to give
the consent or not to give it in the same conditions, regardless of their influence on
the occurrence of the insured risk4. Thus, the finding of bad faith in these
circumstances is not subject to any limitation period.
The material right to action on the debt rights of accessories that may arise
from insurance relationships, namely contractual/statutory or legal interest,
expires with the right to action on the principal right.
In the current regulation, the prescription does not operate de iure5, and the
competent jurisdiction body cannot apply the prescription ex officio6. As the
previous regulation (Decree 167/1958 on extinctive prescription) had a
diametrically opposed approach - the court may invoke the exception of the
limitation period of its own motion - at present, the party having an interest in
invoking it has to take due care by invoking it under the procedural conditions
prescribed by the Civil Code7.
In the field of insurance, we have a special 2-year limitation period, derogating
from the 3-year general limitation period, applicable to the right of action based on
an insurance or reinsurance report8, which was also stipulated in the old art. 3 al. 2
of Decree no. 167/1958. With regard to this special limitation period, we
emphasize that this is an imperative term on which the parties to the insurance
contract cannot derogate, in the sense that they cannot increase or decrease it or
modify the way this period runs (the prescription course) in the sense that they
cannot fix another moment of beginning of the term than that prescribed by the
law nor modify the causes of suspension or interruption of prescription, any clause
in this regard being affected by absolute express nullity9.
4 See Art. 2204 Civil Code: Inaccurate statements or risk reluctance
5 Art. 2506 Civil Code: The effects of prescription fulfilled
(1) The prescription does not operate fully.
6 Art. 2512 Civil Code: Invoking the prescription by the interested party
(1) The prescription may be opposed only by the person for whom it flows, either personally or
through a representative, and without having to produce any contrary title or be in good faith.
2. The competent jurisdiction body may not impose the limitation period of its own motion.
3. The provisions of this Article shall apply even if the invocation of the limitation period would
be in the interest of the State or its administrative-territorial units.
7 Article 2513 Civil Code: The time at which the prescription can be invoked
The prescription may be opposed only in the first instance, by way of a pleading, or, failing that,
at the latest at the earliest possible period of time to which the parties are legally cited.
8 See Art. 2519 Civil Code. 2-year limitation period
9 Art. 2515 Civil Code: Extinctive prescription rules
(1) Extinctive prescription is regulated by law.
(2) Any clause by which either a direct or indirect action would be declared imprecise, although
it is prescriptive according to the law, or vice versa, an action declared by an imprecise law would be
considered prescriptive.
(3) However, within the limits and under the conditions laid down by law, parties with full
exercise capacity may, by express agreement, modify the length of limitation periods or alter the
Extinctive prescription in the matter of the insurance contract in the light... 221
We highlight that the special 2-year limitation term applies only to contractual
legal relationships, respectively between the insured/contractor and the insurer,
whether we are in the presence of a voluntary or compulsory insurance contract.
We consider that this term also applies to the relationships created with the
beneficiary of the insurance who, although not a party to the contract, acquires the
right to indemnity directly from the contract concluded between the insured and
the insurer, unlike the injured third party whose right to compensation derives
from the unlawful action of the insured person. As regards the injured third party,
being outside the contractual insurance relationships, the 3-year general limitation
period applicable to the debt rights will be the case. The same solution is also
required in the case of the insurer's regress against the person responsible for
causing the damage or his RCA insurer or in the situation of the insured against
the third party guilty of damages in addition to the indemnity received when the
amount insured was less than the value of the damage. In the latter cases, we are in
the presence of non-contractual juridical relations, based on civil liability for
damages, which attract the incidence of the general limitation period, in the
absence of any other special provisions.
Regarding prescription course, in the field of insurance, prescription begins to
run from the expiry of the statutory terms or set by the parties for the payment of
the insurance premium, or for the payment of the indemnity or, as the case may be,
for the compensation owed by the insurer10.
The expiration of the terms - as the starting point of the prescription course -
although it is regulated as a particular case of the starting point of the prescription,
is merely an application of the general rule in fulfilling the obligations to give and to
do affected by a term when the limitation period starts to run from the date when
the obligation became due or when the deadline was reached. However, fixing this
moment is a novelty in the matter, until the entry into force of the New Civil Code,
the beginning of the prescription course was generally considered to be the date of
producing the insured risk11.
limitation period by setting the beginning of the limitation period or by modifying the legal grounds
for suspension or its interruption, as the case may be.
(4) The limitation periods may be reduced or increased, by express agreement of the parties, but
without their new duration being less than one year and not more than 10 years, with the exception of
the prescription periods of 10 years or more long, which can be extended up to 20 years.
(5) The provisions of paragraph Paragraphs 3 and 4 shall not apply to rights of action which the
parties may not have, nor to shares deriving from the adhesion, insurance and consumer protection
legislation.
(6) Any convention or clause contrary to the provisions of this Article shall be punished by
absolute nullity
10 See Art. 2527 Civil Code
11 M.Tbraş, M.Constantin, Insurance and Reinsurance Legislation in Romania, Remarks and
Explanations, p.105
222 ELENA-CRISTINA SAVU
In the case of successive benefits, such as insurance premiums payable in
tranches, we appreciate that, in relation to art. 2526 final sentence Civil Code, the
right to action begins to run from the date on which the last benefit becomes due,
given the unique nature of the insurance premium. If the payment of the insurance
premium is not made on time, the insurer may either pursue the receipt of the
premium or request the termination of the contract in order not to take
responsibility for it.
With regard to the insurer's regression against the person causing the damage
or against his RCA insurer, the limitation period will begin to run from the date of
payment of the indemnity to his own insured, this being the moment of
subrogation in the rights of his insured, the moment of the material right to action,
till then being blocked from acting - contra non valentem agere non currit prescriptio12.
Regarding the suspension13 of the prescription course in the field of insurance,
given the specificity of the long-term "orchestration" of the settlement of the claims
files, we consider that the case of suspending the prescription may be common in
the case of the negotiations conducted for the amicable settlement of the
misunderstandings of the parties but only if they have been held in the last 6
months before the expiry of the limitation period.
Cases of interruption of prescription are expressly provided for by law14 and can
also be found in the case of insurance.
It is worth mentioning that the present regulation expressly introduces the
interruption caused by the existence of a criminal trial. Thus, the prescription
course is interrupted by being constituted in the criminal proceedings as a civil
party until the commencement of the judicial investigation, and if the
compensation is granted ex officio, regardless of whether there is constitution as a
civil party concerned. This regulation put an end to the unfair judicial practice
created by those courts which sanctioned a state of fact imputable to any party by
imposing the prescription of the right to a right of regress/the right to
compensation.
Finally, the parties to the contract may give up the prescription, expressly and
tacitly, but through unambiguous manifestations in this respect, but only after the
prescription has started to run. Upon this, a new prescription will run, according to
the provisions on interruption of prescription by the recognition of the law.
The person who, for good reason, has not exercised the right to an action
subject to prescription within the time limit, may request the competent
jurisdiction body to restrict the limitation period and to hear the case.
12 Latin adage which translates as follows: against the impeded to act, the prescription does not
flow
13 See Art 2532 Civil Code: General cases of prescription suspension
14 See Art 2537 Civil Code: Cases of interruption of prescription