BTE AND THE RIGHT TO CHOOSE ONE’S OWN LAWYER
the European Court of Justice on questions referred by the courts of the Netherlands provided guidance on the proper construction of “inquiry” in Article 4(1) of Council Directive 87/344/EEC on the co-ordination of laws, regulations and administrative provisions relating to legal expenses insurance.
The 11th recital of the directive states that:-
“…the interest of persons having legal expenses cover means that the insured person must be able to choose a lawyer or other person appropriately qualified according to national law in any inquiry or proceedings and whenever a conflict of interests arises”.
Article 2(1) reads:-
“This Directive shall apply to legal expenses insurance. Such consists in undertaking, against the payment of a premium, to bear the costs of legal proceedings and to provide other services directly linked to insurance cover, in particular with a view to:
– securing compensation for the loss, damage or injury suffered by the insured person, by settlement out of court or through civil or criminal proceedings,
– defending or representing the insured person in civil, criminal, administrative or other proceedings or in respect of any claim made against him.”
Article 4(1) provides:-
“1. Any contract of legal expenses insurance shall expressly recognize that:
- where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person;
- the insured person shall be free to choose a lawyer or, if he so prefers and to the extent that national law so permits, any other appropriately qualified person, to serve his interests whenever a conflict of interests arises.”
In the first case, the insured asked his insurer (DAS) to cover his lawyer’s costs relating to a procedure in which his employer sought authorization from a public body to make him redundant. DAS refused, arguing that the procedure was not an “inquiry” or “proceedings”.
The ECJ concluded that “inquiry” includes a procedure at the end of which a public body authorizes an employer to dismiss an employee.
“Inquiry” must be read in opposition to “proceedings”.
Attempting to limit the scope of “inquiry” to legal proceedings before a court would deprive the term of its meaning.
When interpreting EU law, it is necessary to consider its context and objectives. The general scope and “obligatory nature” of the insured’s right to choose his lawyer militate against a restrictive interpretation.
The ECJ also said that the Directive did not distinguish between the preparatory stage and the decision-making stage of the inquiry and the definition of “inquiry” covers both stages.
The ECJ referred to its previous decision in Sneller (C) – 442/12,EU:C:2013:717 and confirmed its decision there, that is that the exercise by the insured person of the right to choose his or her representative does not rule out the insurer restricting the costs to be paid to that representative.
Adopting the same reasoning, in the second judgment, the ECJ held that “inquiry” covered the “objection stage” before a body responsible for authorizing medical care requests, which allows unsuccessful applicants to seek a review.
It was “indisputable that the insured person has need of legal protection during a procedure that constitutes the indispensable preliminary stage for the bringing of an action before the administrative court”.
Although the decisions relate to the procedure in the Netherlands, nevertheless it is clear that the European Court of Justice has ruled that it is obligatory for a client to have the right to choose a lawyer and that the ECJ will protect the interest of the insured.
Given the facts of these cases it is now impossible for Before-the-Event insurers to argue successfully that in the United Kingdom the right to choose a lawyer only arises once proceedings are issued.
In portal cases very clearly the right arises as soon as a Claim Notification Form is lodged on the portal and that right covers all work done in “the preparatory stage” and that must include attending the client and taking instructions.
Thus in portal cases at least any person living in England and Wales with BTE insurance has an absolute and unqualified right to choose a solicitor under that BTE policy.
No ifs, no buts.
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