Is alternative dispute resolution well established in the jurisdiction?
Insurance & Reinsurance
A financial ADR system introduced in 2010 to encourage fast, simple and flexible dispute resolutions. ADR institutions have been established with the designation and supervision of the FSA. Mediators in the ADR institutions are selected from the professionals in the financial sectors. A financial ADR system obligates insurance companies to cooperate the dispute resolution, wherein insurance companies are required to appear at hearing and provide certain information requested by the mediators unless reasonable grounds. As such, a financial ADR system is advantageous to customers compared to lawsuits in the courts. The number of ADRs handled through financial ADR systems remains stable in recent years.
There is currently no comprehensive or uniform legislative framework for the operation of alternative dispute resolution (ADR) in Australia, although ADR processes are well established in the various Australian jurisdictions. Many different laws govern the operation of ADR in the different Australian jurisdictions and the laws generally require parties to litigation take 'genuine' or 'reasonable' steps to resolve disputes.
For example, the Civil Dispute Resolution Act 2011 (Cth) applies to proceedings in the Federal Court of Australia and requires an applicant to file a genuine steps statement at the time of filing the application.
Section 43 of the ICA renders any clause attempting to enforce an arbitration clause void, and under this legislation, parties cannot be compelled to arbitrate their dispute. However, where the insured and insurer agree that the dispute will be resolved through arbitration after the dispute has arisen, that agreement will be enforceable under section 43(2) of the ICA.
Additionally almost all Courts will order mediation before a matter can proceed to trial.
The use of arbitration is well established in Denmark as an alternative to litigation, and due to a frequent use of arbitration clauses in commercial insurance policies, many coverage disputes are referred to arbitration rather than to the courts.
Mediation is not used to a significant extent in Denmark, and it is rare that insurance disputes are mediated in Denmark.
Alternative dispute resolution in Poland has developed quite well in recent years. In the case of a dispute with an insurer the customer may seek assistance out of court in a number of ways.
Firstly, the customer may submit a complaint directly to the insurer with respect to a service it provides or a product it offers. The insurer is obliged to reply to the complaint without undue delay but not later than within 30 days from the receipt of the complaint or, in particularly complicated cases, within a deadline not exceeding 60 days from the receipt of the complaint.
Secondly, advice on disputes with a financial service provider such as an insurer can be obtained from the Financial Ombudsman and municipal or district consumer ombudsmen or non-governmental consumer organisations such as the Consumer Federation and the Polish Consumer Association. They provide advice free of charge, offer legal information on consumer protection, intervene on behalf of consumers and/or help them take legal action.
The Financial Ombudsman handles complaints and individual submissions in the case of complaints dismissed by a financial service provider, and may take legal action on behalf of a consumer.
There is also an Arbitration Court at the KNF to which the parties (if both agree to this) may submit their dispute regarding an insurance service or product for resolution.
Disputes arising from insurance claims might be resolved through mediation or arbitration.
Court mediation is also established and the courts are required to encourage the parties to try mediation.
Institutional arbitration in insurance disputes with the Insurance Arbitration Commission has a well-established system based on membership of the insurance companies. If the insurer is a member, than the dispute can be brought before the arbitrators under specific rules and the award is appealable where the amount in dispute exceeds TRY 40.000,00.
Mediation is the most common form of dispute resolution in Ireland and since the introduction of the Mediation Act 2017 on 1 January 2018, solicitors are required to advise their clients of the merits of mediation as an alternative dispute resolution method in advance of issuing court proceedings. In addition, in order to issue proceedings, the Act requires the solicitor to swear a statutory declaration confirming that such advice has been provided and this declaration must now be filed with the originating document in the relevant court office when issuing proceedings.
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 court 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.
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.
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.
Both mediation and arbitration are actively used as means of settling disputes between parties.
Arbitration clauses in insurance and reinsurance agreements are generally enforceable, and Germany has become a more and more significant venue for international arbitration proceedings. As reinsurance disputes tend to be settled in private, the majority of reinsurance contracts contain arbitration clauses. In direct insurance contracts, arbitration clauses remain the exception but are, for example, frequently used in W&I polices, sometimes in D&O policies and in a few other lines of business. While most agreements so far provide for ad hoc arbitration, parties increasingly use institutional rules. The German Arbitration Institute (DIS) is an experienced and highly respected institution which just recently published its updated 2018 Arbitration Rules.
In business reinsurance and insurance, the arbitration agreement must generally be in writing. However, the form requirements under German law are far more lenient than those under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the UNCITRAL Model Law. The arbitration agreement may not only be derived from a document signed by the parties but also from an exchange of letters, faxes or other means of telecommunication which provide a record of the agreement. Further, the form requirement is deemed to have been complied with if the arbitration agreement is contained in a document transmitted from one party to the other party or by a third party to both parties and – if no objection was raised in good time – the contents of such document are considered to be part of the contract in accordance with common usage. Moreover, reference in a contract complying with the written form requirements to a document (e.g. standard insurance terms and conditions), containing an arbitration clause also constitutes an arbitration agreement provided that the reference is such as to make that clause part of the contract.
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.
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 alternative dispute resolution mechanism, such as mediation or conciliation are available in Mexico and recognized by Mexican law.
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.
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.
Alternative dispute resolution is well-established in most states. Arbitration clauses, where permissible under state law, are frequently found in policies. As a general rule, courts favor arbitration, and any doubt as to whether a dispute is arbitrable is generally resolved by courts in favor of arbitration. Courts will rarely interfere with an ongoing arbitration proceeding, and it is very difficult in most states to overturn an arbitration award.
In addition, courts often encourage parties to mediate their disputes. Many courts have discretionary authority to compel the parties to mediate and/or have mandatory mediation programs for certain cases based on the type of case or the monetary amount. In some jurisdictions, courts will impose adverse cost sanctions on parties who unreasonably refuse to comply with mandatory mediation procedures.
However, a number of states have laws prohibiting or limiting the enforceability of mandatory arbitration clauses in certain types of insurance policies. Many, but not all courts, have upheld these laws and ordered insurers to litigate rather than arbitrate coverage disputes with their policyholders.
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 1,600 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.
Arbitration has been widely used since long ago to resolve commercial disputes, and since 2013, it is mandatory in insurance matters (with the exception noted in No. 17 above). Courts recognize and respect arbitration- They may intervene only if the parties have not waived their right to appeal to before higher courts. These courts may review and amend the arbitrator’s decision if they conclude that the decision breaches the law.
Mediation is not mandatory, but the parties may agree to mediate the dispute. Some institutional arbitration centres (such as the Santiago Chamber of Commerce, which is the most prestigious), have a panel of mediators and establish in its standard dispute resolution clause, that the parties shall mediate the dispute as a step previous to arbitration. However, courts have no power to compel the parties to mediate insurance disputes, which is entirely voluntary. Refusal to mediate entails no consequences.
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.
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.
The Indian jurisdiction recognises arbitration, mediation and conciliation as means of alternative dispute resolution. Arbitration clauses are enforceable and most courts will enforce the arbitration clause or agreement unless the existence of the arbitration clause or agreement is in itself disputed. The Supreme Court of India has also carved out 7 categories of dispute which are considered non-arbitrable. In addition, disputes involving serious allegations of fraud are also considered to be non-arbitrable. 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, the place of arbitration and the procedure to be followed by the Tribunal. The principle of party autonomy has been consistently confirmed by the Supreme Court in various decisions, including the Constitutional Bench decision in Bharat Aluminium Co v Kaiser (2012).
An arbitration agreement, as per the ACA, needs to be in writing and should be signed by the parties to 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.. An arbitration agreement can also come into existence if it is contained in a subsequent exchange of letters, telex, telegrams or other means of telecommunication, including communication through electronic means which provide a record of the agreement. An arbitration agreement can also be incorporated by reference. The ACA contemplates arbitration not only between parties who are signatories to the arbitration agreement, but also those ‘claiming through or under’ the signatories to the arbitration agreement.
Furthermore, in relation to domestic arbitration, the ACA bars intervention by 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, for the appointment of arbitrators, where parties have failed to nominate arbitrators within the stipulated time frame and providing assistance in recording of evidence before the arbitral tribunal.
As far as foreign seated arbitration is concerned, the Indian Courts subsequent to the judgment of the Constitutional Bench of the Supreme Court of India in Bharat Aluminium Co. v Kaiser have consistently declined to intervene. The ACA was amended in the year 2015 and the scope for the Indian Courts to intervene in foreign seated arbitrations stands curtailed save in cases where a party seeks interim relief or in the appointment of arbitrators.
In recent times there has been an attempt to encourage institutional arbitration and the government has proposed changes to the ACA including establishment of a corporate body being the Arbitration Council of India to promote institutional arbitration in the country.
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.
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.
Moreover, in the arbitration context, Brazilian courts and especially the Superior Court of Justice fully uphold the principle of party autonomy enshrined in Brazilian legislation, so that parties have broad freedom to choose the manner and the procedure by which their dispute is to be resolved. The position of the Superior Court of Justice on this is very clear from its rulings in applications to recognise foreign awards and on applications to set aside domestic awards.
Parties to arbitration proceedings are free to establish the procedure that best suits them, provided they comply with the requirements of due legal process and its corollaries (Law of Arbitration, article 21, paragraph 2). Brazilian courts apply the principle of kompetenz-kompetenz and, once an arbitral tribunal has been constituted, the parties can only resort to the courts after the arbitral award has been issued, other than in circumstances in which they need to enforce interim relief or another coercive measure granted by the tribunal during the course of the proceedings. Furthermore, the arbitral award is considered to be an enforceable title, on a par with a court order (Law of Arbitration, article 31), but which can only be enforced by a court.
Parties to arbitration may apply to the courts for an order to vacate (set aside) the arbitral award if the award featured serious procedural defects. Courts are not allowed to review the merits of the award. Therefore, the challenges to arbitral awards only succeed in proved cases of serious procedural defects, which are rare in practice.
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.
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.
Alternative dispute resolution is well-established in France, whether in the guise of arbitration, mediation or conciliation, and it is increasingly promoted by the French legislator and the provisions of the French Civil Procedure Code.
The world of (re)insurance moreover possesses industry-specific ADR avenues and forums, such as the Insurance Ombudsman, that was recently created by the French Federation of Insurance, who may assist the parties regarding insurance disputes, or the French Reinsurance and Insurance Arbitration Center (CEFAREA), which has significant expertise in relation to (re)insurance arbitration and mediation.
Alternative dispute resolution is well established in Canada, with mediation mandatory in civil actions in some jurisdictions (notably, for any actions commenced in Toronto).
The Mediation in Civil and Commercial Matters Act 2012 entered into force in July 2012. The
Mediation Act incorporates the European Union Directive 2008/52/EC into Spanish law and
establishes a general regulation for mediation. The Act provides that the general principle that mediation is voluntary. If there is a mediation clause in the contract, parties must attempt to mediate in good faith, but none of the parties are obliged to continue with the mediation or to reach a settlement. Meditation is recognised by the Ordination Supervision and Solvency of Insurance and Reinsurance Companies Act 2015 as one of the systems for dispute resolution, but it is not common so far.
PICL allows for any disputes on validity, interpretation, performance and breach of insurance contracts may be settled through arbitration. However, at present only consumer-oriented alternative dispute resolution is well established in Portugal. In large risks insurance it is still fairly uncommon for insurance disputes to be resolved out of the regular judicial system.
We should highlight the popularity of an alternative dispute resolution centre dedicated to the resolution of insurance related consumer disputes. Centro de Informação, Mediação, Provedoria e Arbitragem de Seguros (CIMPAS) provides for mediation and arbitration proceedings in disputes resulting from insurance contracts. The arbitration centre deals with disputes resulting from (i) motor insurance contracts, (ii) residential and commercial insurance contracts, for claims not exceeding € 50,000, (iii) certain types of civil liability insurance, for claims not exceeding € 50,000. For the any other types of insurance, CIMPAS must contact the insurer for the purposes of adhering to the centre and resolving the relevant dispute.
In Italy ADR are not generally used to resolve contentious matter, including insurance disputes. This is due to the relatively cheap cost of litigation and the professionalism of the judges.
However article 5 of the Legislative Decree No. 28 of 4 March 2010, imposes compulsory mediation for some specific and listed class of civil and commercial controversies, there including controversies related to: (i) insurance contracts; (ii) medical malpractice; (iii) directors’ and officers’ liabilities; and (iv) banking and financial disputes. Despite the fact the mediation is compulsory it is rarely successful and the parties consider it just a precondition to litigate rather than a real and serious instrument to resolve the dispute.