Is alternative dispute resolution well established in the jurisdiction?

Insurance & Reinsurance

Ireland Small Flag Ireland

Yes.

Mediation
Mediation is the most common form of ADR for insurance disputes in Ireland. The courts cannot compel the parties to mediate disputes; however, in the High Court and Circuit Court, a judge may adjourn legal proceedings on application by either party to the action, or of its own initiative, to allow the parties to engage in an ADR process. When the parties decide to use the ADR process, the rules provide that the courts may extend the time for compliance with any provision of the rules. A party failing to mediate following a direction of the court can be penalised as to costs.

Arbitration
If an insurance contract contains an arbitration clause, the dispute must be referred to arbitration. However, there is an exception for consumers, who are not bound by an arbitration clause in an insurance policy if the claim is less than €5,000 and the relevant policy has not been individually negotiated.

Since 8 June 2010 the Arbitration Act 2010 (2010 Act) has applied the United Nations Commission on International Trade Law (UNCITRAL) Model Law to all Irish arbitrations. The 2010 Act brought increased finality to the arbitral process by reducing the scope for court intervention or oversight and providing a more limited basis for appealing awards and decisions than was previously available.

The High Court has powers for granting interim measures of protection and assistance in the taking of evidence, although most interim measures may now also be granted by the arbitral tribunal under the 2010 Act. Once an arbitrator is appointed and the parties agree to refer their dispute for the arbitrator’s decision, then the jurisdiction for the dispute effectively passes from the court to the arbitrator.

A contract that does not contain a written arbitration agreement is not arbitrable and is specifically excluded from the application of the 2010 Act. The arbitration agreement must be in writing whether by way of a clause in the substantive contract or by way of separate agreement. While Section 2(2) of the 2010 Act stipulates that such clauses should be in writing, this provision has been given a broad interpretation to include an agreement concluded orally or by conduct as long as its content has been recorded in writing.

Article 34 of the 2010 Act deals with applications to the court for setting aside an award. The grounds on which a court can set aside an award are extremely limited and correspond with those contained in Article V of the New York Convention, which requires the party making the application to furnish proof that:

(a) a party to the arbitration agreement was under some incapacity or the agreement itself was invalid;

(b) the party making the application was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his or her case;

(c) the award deals with a dispute not falling within the ambit of the arbitration agreement;

(d) the arbitral tribunal was not properly constituted; or

(e) The award is in conflict with the public policy of the state.

United Kingdom Small Flag United Kingdom

London Market insurers are some of the greatest users of alternative dispute resolution. The UK is a signatory of the New York Convention. The use of both arbitration and mediation is well established. In England and Wales the relevant law governing arbitration is contained in the Arbitration Act 1996 and any arbitration must be conducted within the framework of this Act. There are limited opportunities to appeal the decision of an arbitral tribunal.

Sweden Small Flag Sweden

Both mediation and arbitration are actively used as means of settling disputes between parties.

Germany Small Flag Germany

The two important mediation organisations recognised by the German Ministry of Justice under section 214 of the German Insurance Contract Act are Ombudsmann Private Kranken und Pflegeversicherung for private health insurance disputes, and Versicherungsombudsmann eV for all other insurance types involving consumers. Versicherungsombudsmann eV is a private law association of many insurers with headquarters or branches in Germany and the German Insurance Association (Gesamtverband der Deutschen Versicherungswirtschaft eV). With the Versicherungsombudsmann eV, 20,827 complaints were filed in 2015. The Versicherungsombudsmann eV may issue binding decisions against its members in an amount up to EUR 10,000. However, decisions are not binding for policyholders and other insured persons if they prefer to continue pursuing their claims in court. Furthermore, arbitration clauses in commercial insurance agreements are enforceable under German law and well established in e.g. commercial and financial lines covers.

Norway Small Flag Norway

Yes, alternative dispute resolution is well established in Norway although most insurance and reinsurance claims and disputes are handled by the ordinary courts.

The Norwegian Financial Services Complaints Board, which is an out-of-court dispute resolution panel, may be elected to handle complaints in relation to non-life and life insurance in the first instance. The complainants in these cases are in most if not all cases the policyholder, the insured, or another beneficiary, and are typically consumers or smaller business enterprises. The panel's decision is not binding for the insurer if notice is given to the panel within 30 days that the insurer will not comply with the decision. The panel's decision is followed in most cases. If one of the parties disagrees with the panel’s decision, or if the panel refutes to decide on the matter due to a complicated evidence situation or similar reasons, the case may be tried before the ordinary courts.

Mexico Small Flag Mexico

The parties to a reinsurance contract can freely agree the terms and condition by which they will be bound.

Insurance claims may be resolved before CONDUSEF, before competent Courts or in arbitration. Other forms, such as mediation or conciliation can be used.

CONDUSEF may be appointed by the parties as mediator in disputes whose quantum does not exceed 6 million Mexican investment units (approximately 33.5 million pesos). If the parties don’t reach a settlement in the mediation and they agree to submit their dispute to arbitration, the parties may request CONDUSEF to act as arbitrator or appoint a third party as arbitrator.

Reinsurance claims can be resolved in judicial proceedings before competent courts or through arbitration. Other forms, such as mediation or conciliation can be used.

The Mexican Insurance and Bonding Law Association (Asociación Mexicana de Derecho de Seguros y Fianzas) (AMEDESEF), in its capacity as the Mexican Chapter of AIDA (Association Internationale de Droit des Assurances) established the Mexican Chapter of the Insurance and Reinsurance Arbitration Society (ARIAS Mexico), in a joint venture with CAM (Centro de Arbitraje de México), a well-known private institution specialised in the administration of arbitration proceedings. Jointly, they promote arbitration to resolve insurance and reinsurance disputes managed by CAM, with the technical assistance of AMEDESEF.

UAE Small Flag UAE

There are several well established arbitral organizations in the UAE that operate pursuant to international standards, including the Dubai International Arbitration Centre (DIAC), DIFC-LCIA, and the Abu Dhabi Commercial Conciliation and Arbitration Center (ADCCAC). Many legal practitioners thus choose to insert arbitration clauses into their contracts, referencing a preferred arbitral organization therein.

One hurdle to effective arbitration must be taken into account, however, and that is whether such an award will be enforceable. UAE Courts have in the past shown a tendency to reject enforcement of arbitration awards on the highly technical grounds that the parties to the underlying agreement did not have the requisite authority to enter into a binding arbitration document, or that the clause itself was defective or vague. While the judicial trend has been heading away from such hyper-technical analysis and rejection of otherwise valid arbitration awards, this is a factor that should be considered before proceeding to arbitration, or better, at the stage that the arbitration clause is drafted and the underlying agreement is executed.

United States Small Flag United States

Arbitration, mediation and other forms of alternative dispute resolution are generally well established across the states.

Austria Small Flag Austria

Austria has a long-standing tradition as an arbitration hub for Central and Eastern Europe. Already in 1895, Austria first enacted legislation on arbitral proceedings. In 2006, the new Austrian Arbitration Law, which is based on the UNCITRAL Model Law, entered into force. There are also specific rules in place for mediation proceedings in civil matters.

The establishment of the Vienna International Arbitral Centre (VIAC) in 1975 furthered Austria’s position as the preferred place for the settlement of east-west disputes. VIAC has administered over 1,300 proceedings since its inception and its caseload increases continuously. It administers both mediation and arbitration proceedings but is particularly renowned for its arbitration rules, the Vienna Rules. VIAC only deals with international cases involving at least one party with its place of business or normal residence outside of Austria or cases concerning disputes with an international character.

In 2016, the Austrian Branch of ARIAS (AIDA Reinsurance and Insurance Arbitration Society) was founded. However, with regards to insurance or reinsurance disputes, arbitration still lacks behind court proceedings as the preferred method for resolving disputes.

Chile Small Flag Chile

Yes. In addition to dispute resolution by arbitration or ordinary courts of law, the Insurance Regulator is authorised to act and rule as an arbitrator in claims involving compensation amounts of less than UF 120 (approximately USD 4,825). Rulings by the Insurance Regulator are binding.

Furthermore, the Insureds Defendant, or Defensor del Asegurado, an independent entity that is funded by local insurance companies, is authorised to hear out and resolve claims submitted to its authority. Proceedings before this entity are pro bono and must be brought by an insured against an insurance company. Rulings by the Insureds Defendant are binding for insurance companies but not for the insured.

Switzerland Small Flag Switzerland

In principle, ADR techniques i.e. arbitration and mediation are well established in Switzerland. Most reinsurance contracts and a considerable number of (industrial) direct insurance contracts governed by Swiss law contain arbitration clauses. However, reinsurance disputes are often settled amicably in Switzerland before arbitration even starts. Thus, the number of arbitration proceedings may be smaller than it appears to be in other industry sectors. We expect, however, that arbitration and other ADR techniques will become more important for the insurance sector within the next years.

Consumers have the possibility to assert their complaints against an insurance company – free of charge – with the Swiss Insurance Ombudsman (Versicherungsombudsmann). The Swiss Ombudsman of Insurance is a Foundation established by the Swiss Insurance Association in 1972. The main function of the Ombudsman is

  • to receive communications in respect of complaints, disputes and claims in connection with or arising out of private insurance contracts;
  • to provide guidance and advice to insurance customers;
  • to facilitate the settlement of claims and the resolution of disputes by recommendations.
    However, the Ombudsman is not entitled to make any binding settlement decisions.

Peru Small Flag Peru

Yes. The insured has the right to submit the dispute before the judicial court, without prejudice to his right to agree with the insurer, once the incident has occurred, submission to arbitration or other means of dispute settlement.

Moreover, the parties may freely agree to submit their differences arising from the insurance contract to the arbitration jurisdiction, provided that the damages or losses claimed from the company as a result of a claim are equal to or greater than 20 UIT (approximately US$ 24,545.00).

Without prejudice of the arbitration, Peruvian legislation also includes mechanisms such as mediation and conciliation.

India Small Flag India

The Indian jurisdiction recognises arbitration, mediation and conciliation as means of alternative dispute resolution. Arbitration clauses are enforceable at different stages of the dispute and most courts will enforce the arbitration clause or agreement unless it suffers from a patent illegality.

The Indian Arbitration and Conciliation Act 1996 (ACA) is based on the UNCITRAL model law. The ACA preserves party autonomy in relation to most aspects of arbitration, such as the freedom to agree upon the qualification, nationality, number of arbitrators (provided it is not an even number), the place of arbitration and the procedure to be followed by the Tribunal. The principle of party autonomy has been recently confirmed by the Constitutional Bench of the Supreme Court of India in Bharat Aluminium Co v Kaiser (2012).

An arbitration agreement, as per the ACA, needs to be in writing and should reflect the intention of the parties to submit their dispute(s) to arbitration. There is no prescribed form required for the purpose of an arbitration agreement. In fact, it is not necessary for an arbitration agreement to be incorporated into an insurance/reinsurance contract at all. An arbitration agreement can come into existence if it is contained in a subsequent exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement.

Furthermore, in relation to domestic arbitration, the ACA bars intervention from the courts except for some specific instances where the courts are allowed to intervene – for example, for interim relief, reference to arbitration when an action has been instituted before the court, and for the appointment of arbitrators, where parties have failed to nominate arbitrators within the stipulated time frame.

In relation to international commercial arbitration, the tendency of the Indian judiciary to intervene is now declining. The decision of India’s Supreme Court in Bharat Aluminium Co. v Kaiser has reversed earlier authority which endorsed an interventionist approach under certain circumstances.

Singapore Small Flag Singapore

Singapore has dedicated facilities to handle arbitrations and mediations.

The Singapore International Arbitration Centre is widely recognized as one of the leading arbitration centres. The Singapore Mediation Centre and Singapore International Mediation Centre also have proven track records. Other alternative dispute resolution options include mediation and neutral evaluation services provided at the State Courts of Singapore, and other ad-hoc private mediation centres.

Brazil Small Flag Brazil

ADR has been expanding in Brazil, and dispute resolution mechanisms are improving. The main reasons for the expansion are (a) the Judiciary is overwhelmed with work; (b) judges often lack the proper technique and means to solve complex disputes; and (c) jurisdiction is no longer the exclusive prerogative of the State, nor is the judicial process the only way to resolve disputes.

It is indisputable that arbitration is increasingly used to resolve complex cases, with an emphasis on corporate and construction disputes, and, at the same time, there is an increasing incentive for consensual forms of dispute resolution, especially conciliation and mediation. According to the survey "Arbitration in Numbers and Values," arbitration litigation has grown by 73% since 2010.

With regard to consensual means of dispute resolution, the New Code of Civil Procedure has as one of its fundamental norms the need to foster conciliation and mediation, and for the latter a legislative apparatus has been created to encourage its use.

In this context, insurance disputes, especially those involving large risks, are fertile ground for the use of ADR, notably due to the specialist nature of the matter, the efficiency of extrajudicial procedures and the need to reduce transaction costs.

Israel Small Flag Israel

Alternative dispute resolutions are well established in Israel. More so according to the procedural law, most cases are referred to A.D.R. at their first stage, and only if the A.D.R process fails, they will be reverted to the court.

Belgium Small Flag Belgium

Yes it is. Reference can be made to the Belgian Centre for Arbitration and Mediation (CEPANI), which takes care of the active support of arbitration and mediation proceedings, and which places at the disposal of the parties a set of rules for arbitration, mediation and other forms of ADR. Ad hoc arbitration is also very often chosen in insurance policies. Additionally, many Belgian law firms and Belgian undertakings frequently rely on alternative dispute resolution when it comes to solving insurance law disputes.

France Small Flag France

Specific to the insurance sector, potential disputes or claims may be brought before the Ombudsmen of the French Federation of Insurance (“Fédération Française de l’Assurance” – FFA), called the Insurance Ombudsman (“Médiateur de l’Assurance”). In practice, the Insurance Ombudsman’s jurisdiction is not really promoted (otherwise than through contractual provisions included in the policy documentation), although this may be of assistance in the context of retail insurance claims.

Industry-wide, the insurance actors promote as much as possible alternative dispute resolution in France in the context of complex claims. The use of both arbitration and mediation is well developed in such context.

The French Reinsurance and Insurance Arbitration Centre ("Centre Français d’Arbitrage de Réassurance et d’Assurance”) and the Paris Mediation and Arbitration Centre ("Centre de Médiation et d’Arbitrage de Paris”) recently combined their expertise to offer, at a reasonable cost, quick and confidential mediation and arbitration solutions while avoiding the delays and uncertainties associated with court proceedings.

Canada Small Flag Canada

Alternative dispute resolution is well established in Canada, with mediation mandatory in civil actions in some jurisdictions (notably, for any actions commenced in Toronto).

Updated: March 16, 2017