Lithuania: The Court of Justice establishes guidelines on choosing the applicable law in cases of truck and trailer insurer disputes.
bnt is representing a major German Insurance company in a dispute with a Lithuanian insurance company. bnt initiated a motion for Vilnius City District Court to apply to the Court of Justice of the European Union (ECJ) for a preliminary ruling on the main issue of the case: choice of applicable law in cases of a dispute where a truck and its trailer, insured by separate companies, cause damage.
The starting point was a truck accident in Germany causing damage. While the truck was insured by company “A”, the trailer was insured by company “B” (as is often the case). “A” paid compensation for the damage and requested half of this from “B”. “B” refused. Because of the international element in the case, a dispute over the applicable law soon developed.
The European Court of Justice determined that the applicable law in a recourse action of one insurer against another is the same law which governs the insurer-insured contractual relationship, which, in turn, constitutes the legal basis to pay compensation to the victim.
Therefore, if company “A” is the first to pay compensation, the law of the “A” insurance contract determines the applicable law for the “A”-“B” recourse claim. But if “B” is the first to pay – then the law of the “B” insurance contract applies.
The moral of the story is: insurance companies should be extra-attentive to (1) what applicable law is chosen in the truck (or trailer) insurance contract; (2) who is the first to pay compensation.
Source: ECJ judgement of 21 January 2016. Case No. C 359/14