Civil liability insurance of PIP could validly be limited to women operated on in France
RB v TÜV Rheinland LGA Products and Allianz IARD [Case C-581/18]
This article was co-authored by Lewis St John, Litigation Assistant.
On 6 February 2020, the Advocate General’s Opinion in RB v TÜV Rheinland LGA Products and Allianz IARD was announced. The Advocate General opined that Article 18 of the TFEU (Treaty on the Functioning of the European Union) does not preclude an insurance clause limiting cover to harm caused in the territory where the policy was issued.
In 2006, a German patient received defective breast implants in Germany that were manufactured by PIP, a French company that became insolvent in 2011. PIP had liability insurance compulsory under French law for a manufacturer of healthcare products. The patient sued insurers in the German Courts. The policy contained a clause limiting cover to damage caused in France.
The Higher Regional Court of Frankfurt am Main referred four questions concerning the legal consequences if the territorial restriction infringed Article 18 TFEU, which prohibits discrimination on the ground of nationality to the Advocate General of the Court of Justice of the EU for a preliminary ruling.
The Advocate General examined first:
- Whether the case fell within the scope of EU law, i.e. whether the Court of Justice had jurisdiction.
- What provision of EU law could lead to a finding of incompatibility in relation to the territorial limitation.
On the first point, and contrary to the position of the French government and PIP’s insurers, the Advocate General held that the case fell within the scope of EU law. This was in light of the liability consequences of the cross-border free movement of goods; the freedom to receive insurance services from another Member State and the underlying subject matter, i.e. product liability and medical devices, both partially harmonised under EU law.
On the second point, however, the Advocate General noted that EU legislation does not contain specific provision for insurance against liability for harm to the end users of medical devices – there was no obligation on manufacturers to carry such insurance.
Free movement rules did not regulate the use of goods after they moved from one Member State to another and did not alter the positon that the insurance only operated in respect of the use of the goods in France. No provision of EU law was identified to preclude a territorial limitation in an insurance contract concluded by a manufacturer of medical devices in respect of harm suffered by a person in another Member State.
Art 18 could not be invoked to invalidate the territorial limitation because for it to have such operation would effectively render Art 18 a “limitless harmonising provision”, “upsetting the division of competences between the European Union and the Member States and creating problematic conflicts between legal regimes within the internal market”.
It was for the Member States to regulate insurance policies applicable to medical devices used on their territory, even where the devices were imported from other Member States. To interpret Art 18 as not permitting the territorial restriction would displace territoriality in the application of laws and introduce conflicts of regulatory regimes between Member States.
The Advocate General’s Opinion is sought in every case tried by the Court of Justice (unless there is no new point of law) but is provided in an advisory role only. It is, therefore, not binding and the Court of Justice will now answer the questions referred to it - but the Court is likely to follow the Opinion.
The immediate significance for insurers is that EU law as it stands should not prevent a medical device manufacturer’s liability insurance issued in compliance with the laws of one Member State from being limited territorially to damage caused in that Member State. Given the terms on which many policies have no doubt been written, that is likely to be welcome.
Related item: Product liability and life sciences – trends report 2020