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The impact of Covid-19 on the global insurance industry – France

Monday 11 July 2022

Alexis Valençon
Kennedys Law, France
alexis.valencon@kennedyslaw.com

Jean-Baptiste Baudoin
Kennedys Law, France
jean-baptiste.baudoin@kennedyslaw.com

France

General questions

Yes/ No/

N/A

Additional comments, if any.

1

Does the country that you are reporting on follow common law jurisprudence?

No

France is a civil-law country, as opposed to common law.

In particular, Article 5 of the French Civil Code (FCC) prohibits judges to ‘pronounce judgment by way of general and regulatory provisions’. As such, the decision of a judge is only meant to have legal force in the context of the case it was pronounced in.

Accordingly, Article 1355 of the FCC provides that ‘The authority of res judicata applies only to what was the object of a judgment.’ On this basis, a decision can only have legal force outside the procedure it was rendered if a triple identity is demonstrated: ‘it is necessary that the thing claimed be the same; that the claim be based on the same cause; that the claim be between the same parties and brought by them and against them acting in the same capacities’ (Art 1355 of the FCC).

Notwithstanding the above, a concept of ‘jurisprudence constante’ (established case-law in English) is recognised in France in order to refer to the constant interpretation of a given rule of law by the courts. However, this concept does not give any right to individuals to see their claim ruled according to said ‘jurisprudence constante’. Indeed, France’s Supreme Court (Cour de cassation) has ruled that claimants do not have a right to a ‘fixed jurisprudence’ (Cass Civ 1, 9 October 2001, No 00-14.564) and that the interpretation of a given rule of law can evolve.

2

If the answer to the above question is no, does the country you are reporting on follow a civil code? Please describe the judicial system in short.

Yes

The judicial system in France is divided in two orders: the judicial (civil) order and the administrative order. We will not describe the administrative order.

The judicial order is further divided in two between the criminal courts and the civil courts. We will only describe the latter, which is composed of first degree courts, second degree courts, and the Supreme Court.

First degree courts

Od the first degree courts: Tribunal judiciaire is competent to hear of general civil cases; Conseil de Prud’hommes competent to hear of employment cases; and Tribunal de commerce competent to hear of cases between professionals qualified as merchants. In France there are 164 Tribunaux judiciaire, 210 Conseil de Prud’hommes and 227 Tribunaux de Commerce.

Court of appeals

These courts are competent to hear of all appeals brought against first-degree courts decisions. There are 36 courts of appeal in France.

Supreme Court

The Cour de cassation has several chambers and hears all appeals (on a point of law) brought against second degree courts decisions. The Cour de cassation rules in law, that is, it does not rule on the merits but only determiners whether the rule of law has been correctly applied by the second-degree judges. The Cour de cassation is unique in France.

3

Please provide a brief description of the legal framework applicable to insurance coverage disputes in the country you are reporting on. In so doing, please consider the following questions:

N/A

Insurance coverage disputes in France are subject to the rules of the FCC, and the French Insurance Code (FIC). In some cases, insurance coverage disputes are also subject to the dispositions of the French Consumer Code.

Regarding the applicability of the FCC and the FIC, it should be noted that the principle speciala generalibus derogant according to which special provisions prevail over general rules is largely applied and directly sanctioned by the FCC (Art 1105 of the FCC). As such, the dispositions of the FCC are only meant to apply when the FIC does not provide for specific rules on a given matter.

Finally, in cases where the insurance contract was entered into with a ‘consumer’, the provisions of the French Consumer Code are susceptible to apply, in particular regarding issues of contract interpretation and abusive clauses. It should be noted, however, that a ‘consumer’, under French law, can only be a natural person acting outside of its professional activity (Introductory Article French Consumer Code). Nevertheless, ‘non-professionals’ can sometimes benefit from provisions of the French Consumer Code. The notion of ‘non-professional’ refers to any legal person, that is, including juridical persons, who is not acting in the scope of its professional activity.

It should be emphasised, however, that specific rules are applicable when: the insurance contract has been entered into with the administration; or the insurance contract covers risks located in the departments of Haut-Rhin, Bas-Rhin and Moselle.

4

Does the insured bear the burden of establishing coverage of a claim, or does the insurer bear the burden of establishing no coverage? Please give a short description of the legal basis in your country.

N/A

Under Article L 113-2 of the FIC, the insured must notify the loss. Nevertheless, and apart from this specific obligation, the FIC does not contain rules on the burden of establishing coverage and whether it falls on the insured or the insurer. In this respect the general rule from the FCC, under which the burden of proof weights on the claimant (the actori incumbit probatio principle) must apply (Art 1353 of the FCC). However, court decisions in France have shown that in the context of insurance coverage dispute, depending on whether the dispute concerns the application of an exclusion clause or of whether the loss is covered by the insurance contract (application of a scope of coverage clause), the burden of proof weights on: the insured if the dispute is on whether or not the claim is covered by the insurance contract in relation to a scope of coverage clause (Cass Civ 1, 14 February 1989, No 87-11.752; Cass Civ 2, 30 May 2007, No 06-14.410); the insurer if the dispute is on whether or not the claim is subject or not to an exclusion clause in the contract (Cass Civ 1, 15 October 1980, No 79-17.075).

5

Are coverage provisions in policies interpreted broadly or is there a presumption in favour of coverage? Please give a short description of the legal basis in your country

N/A

Under French Law, contracts provisions are only interpreted when they are unclear and ambiguous (Art 1192 of the FCC). As such, the preliminary assessment to be performed in relation to coverage disputes is whether or not the relevant coverage provision is clear.

If the clause is unclear, various methods of interpretation are singled out by the FCC. However, these methods of interpretation are not mandatory, and a judge trying a case on the merits is not bound by them (Cass Civ 1, 6 March 1979: Bull Civ I, No 81).

In the course of the interpretation of a contract, a judge can consider the common intentions of the parties (Art 1188 of the FCC). If said common intention is not possible to detect, the ‘contract is to be interpreted in the sense which a reasonable person placed in the same situation would give to it.’ (Art 1188 of the FCC).

It should however be noted that in relation with coverage provisions, three tendencies can be singled out:

  • Article 1190 of the FCC provides that in relation with a standard-form contract, that is, a contract not negotiated by the parties, the provisions of the contract must be interpreted against the party who put it forward. As such, and considering that insurance policies, in particular general conditions, are usually standard form agreements, a judge might benefit from a legal basis in order to interpret it against the insurer.
  • Article 1191 of the FCC provides that ‘where a contract term is capable of bearing two meanings, the one which gives it some effect is to be preferred to the one which makes it produce no effect’. This method is known as the ‘utilitarian’ one and is used by judges, in particular, to neutralise coverage provisions which appear to be too restrictive and depriving the insurance contract of its useful effect.
  • The contract interpretation method known as the ‘extensive’ method, which seems to be generally applied by judges in relation to scope of coverage contract provisions. This method was traditionally based on former Article 1164 of the FCC which was repealed by the Ordinance of 10 February 2016 reforming contract law, the general rules on obligations and on the proof of obligations and which provided that when in a ‘contract a case was mentioned to give an explanation of the obligation, it shall not be deemed that the parties thereby intended to restrict the scope of their contract which, as a matter of right, shall apply to the cases not expressed”.

6

Are exclusions interpreted narrowly or is there a presumption against finding that an exclusion to coverage applies? Please give a short description of the legal basis in your country

N/A

Under French law, the validity and enforceability of exclusion clauses are conditioned by several requirements. In particular, pursuant to Article L 1131-1 of the FIC, exclusions clauses must be clear and have a limited scope (formelle et limitée).

On this basis, the French Supreme Court (Cour de cassation) considers that when an exclusion clause must be interpreted, it follows that it does not meet the above-mentioned requirements and must be judged unenforceable (Cass Civ 3, 27 October 2016, No 15-23.481; Cass Civ 2, 26 November 2020, No 19-16.435). In other words, unclear exclusion clauses are not valid under French law and the judge does not interpret them.

7

Are there universally accepted definitions for:

  • event
  • occurrence
  • damage
  • cause
  • originating cause
  • natural peril
  • force majeure
  • loss
  • consequential loss

If the answer is yes, please give a short description of each definition and the legal basis for that definition (i.e. a rule of law, case law etc).

In general, these terms are defined in the insurance policies and their meaning is different depending on what is provided.

event

The notion of event (évènement) is not defined by statutory law.

However, the Court of Appeal of Paris has ruled that the notion of event designates a ‘specific and determinable moment’ (Court of Appeal of Paris, 19 February 2008, no 06/00357). In its decision, the Court had to interpret the notion of event in order to determine the starting point of the time limit. Indeed, Article L114-1 of the FIC provides that all legal actions resulting from an insurance contract must be pursued within two years from the event which gave rise to it.

occurrence

There is no equivalent word in French legal terminology.

Nevertheless, we understand that the notion of ‘occurrence’ could be seen as a synonymous with ‘event’ in English law, particularly concerning aggregation.

Furthermore, the notion of ‘occurrence’ (occurrence) refers to an event.

damage

In French legal terminology, the words ‘damage’ (dommage) and ‘harm’ or ‘injury’ (prejudice) are generally considered synonymous.

The concept of damage refers to the harm or loss that the plaintiff suffers.

cause

First, the notion of cause has been used to refer to one of the four essential conditions for the validity of a contract. However, the Ordinance of 10 February 2016 reforming contract law, the general rules on obligations and on the proof of obligation has eliminated this concept.

Second, the notion of cause may refer to the doctrine of proximate cause (causalité directe et immediate), that is, the loss should be the ‘immediate and direct’ consequence of the ‘peril’.

The proximate cause may be isolated by referring to either one of the two following theories: (1) the theory of adequate causality (théorie de la causalité adéquate) – a hierarchy between the different ‘perils’ having contributed to the losses shall be established so as to isolate the adequate ‘peril’ that could be said to have effectively caused the losses; (2) the theory of the equivalence of the conditions (théorie de l’équivalence des conditions) – by contrast, all the ‘perils’ having contributed to the losses could be deemed as having equally caused the losses.

However, in practice, French courts rarely refer to either one of these principles and prefer to operate an in concreto analysis based on the factual circumstances of a given case.

Finally, the notion of cause may refer to the damaging event. Indeed, Article L.124-1-1 of the FIC provides that the ‘damaging event is the one which constitute the cause of the damage’. It seems that the meaning of this concept, related to liability insurance, may apply to other insurance products, such as property insurance.

originating cause

There is no definition of ‘originating cause’.

The notion of ‘technical cause’ is mentioned in Article L 124-1-1 of the FIC. The ‘technical cause’ is established as a condition for the aggregation of several claims on liability insurance. Such aggregation is possible when several losses have the same ‘technical cause’.

Nevertheless, no details are given by statutory law as to its content.

The Cour de cassation has recently judged that this concept could not apply to duty to advise but rather, for instance, to product liability (Cass Civ 2e, 24 September 2020, nos 18-12.593 and 18-13.726).

natural peril

The notion of ‘natural agent’ used in the French regime for natural catastrophe (French Cat Nat Regime) might seem similar to ‘natural peril’.

The Law No 82-600 of 13 July 1982 on the compensation of victims of ‘natural catastrophes’, which is codified within the FIC, provides for a mandatory coverage of damage resulting from a ‘natural catastrophe’ (catastrophe naturelle) or a ‘natural disaster’, that is, resulting from the ‘abnormal intensity of a natural agent’ (l’intensité anormale d’un agent naturel). The ‘natural disaster’ guarantee requires an inter-ministerial order (arrêté interministériel) which recognises the state of natural disaster.

French official sources generally refer to climatic and/or environmental geophysical natural phenomenon as ‘natural agent’ (ie, geophysical, meteorological, climatological or hydrological phenomenon).

force majeure

Contractual force majeure is defined in Article 1218 of the FCC, which provides that an event stopping a party from performing its obligations under a contract must meet three conditions to qualify as force majeure.

The event must be:

  • beyond the control of the obligor who can no longer perform its obligations;
  • reasonably unforeseeable at the time the contract was entered into; and
  • irresistible during the performance of the contract, that is, performance of the contract must be rendered impossible and not just more expensive or complicated. As such, the possibility to ensure performance of the obligations under the contract by implementing appropriate measures is directly opposed to the qualification of a force majeure event.

Under Article 1218 of the FCC, if the inability to perform is temporary, the performance of the obligations by the affected party is suspended unless the delay is such that it justifies the termination of the contract. If the prevention is permanent, the contract is terminated by operation of law, that is, without prior notice or any intervention of a judge. The parties are then deemed to have discharged their obligations under the conditions in articles 1351 and 1351-1 of the FCC.

It should be noted that the statutory regime of force majeure is not mandatory and as such it is possible for the parties to vary from it by inserting a clause in the contract providing for more restrictive or broader conditions than the ones set out by Article 1218 of the FCC.

loss

The concept of loss may refer to the notion of ‘sinistre’, ‘perte’ or ‘dommage’ in French.

The notion of ‘financial loss’ (pertes pécuniaires) is not defined by statutory law and case law. This concept covers operating losses.

The word ‘sinistre’, which is not defined by statutory law (except for liability insurance policies) and case law, refers to the occurrence of the insured risk, that is, the materialisation of the event insured against. Therefore, for the coverage of property damage, the ‘sinistre’ refers to the occurrence of this damage.

consequential loss

The notion of ‘consequential loss’ (perte consécutive) is not defined by statutory law and case law. However, this notion is frequently used by insurers in their policies.

In this regard, several policy coverage disputes relating to Covid-19 have been brought before French courts. Some of the policies provide coverage for business interruption loss which directly result from physical damage to the property.

Loss causation

Yes/ No/ N/A

Additional comments, if any.

8

Did the country that you are reporting about issue lockdown, stay-at-home, or no-travel restrictions in response to Covid-19?

Yes

The French authorities issued various types of orders in response to Covid-19, in particular:

  • Administrative closures orders.
  • Lockdown orders, which restricted individuals’ freedom of movement by requiring them to stay at home. In between lockdown decisions, curfew orders and orders restricting movements beyond a certain area were also enacted. The first lockdown measure was imposed from 16 March to 11 May 2020 (it was extended several times since the original term of this order was 31 March). A second lockdown was imposed from 29 October to 15 December 2020.
  • Prohibition of gatherings orders both in private and public places, the first of which was enacted on 29 February 2020.
  • Travel restrictions orders were also made. In particular, French borders were closed to non-European Economic Area (EEA) nationals as early as 17 March 2020 and travel to countries outside of the European Union and other named countries was banned, apart from travels motivated by compelling reasons listed in a restrictive manner over the period of the ban. Travel restrictions orders prohibiting travel from certain countries to France were also enacted throughout the pandemic (eg, the United Kingdom on 20 December 2020, and Brazil). It should be highlighted the travel restrictions changed throughout the pandemic. As of today, restrictions remain in force relating to international travel and the possibility of travelling to/from France from/to other countries, depending on different conditions.

9

If the answer to the question above is yes, were such orders issued nationally, by state/region or by local city/town. Please give a short description of the issuing authority and the orders issued.

N/A

To our knowledge, the majority of orders taken to handle the spread of the Covid-19 pandemic were issued nationally.

However, some decisions were adopted on a more local level depending on the extent of the spread (inter alia, on 18 March 2021, the French Prime Minister addressed the implementation of local measures such as lockdowns applied at weekends in the north and south of France).

10

If the answer to the above question is yes, were the lockdown, stay-at-home or no-travel restrictions mandatory or recommended?

N/A

The various orders issued in response to Covid-19 were mandatory. In this regard, we note that the violation of orders and administrative decisions taken to manage the spread of Covid-19 was criminally sanctioned.

11

If the country that you are reporting about did issue lockdown, stay-at-home or no-travel restrictions, were those orders suspended or revoked at any point in time? If the answer is yes, please give a short description of the timeline.

Yes

In relation with lockdown measures, it should be noted that the first lockdown was enacted on 17 March 2020 until 31 March 2020 and was further extended until 11 May 2020. The second lockdown measure was then enacted on 30 October 2020 until 15 December 2020. A general lockdown was also imposed from 3 April 2021 to 3 May 2021. It should be highlighted that in between these lockdowns, various progressive measures such as curfews or restriction of movements beyond a specified perimeter were imposed.

In relation with administrative closures, the timeline of the relevant orders varies in function of the type of businesses:

  • nightclubs for example were closed from 15 and 16 March to 9 July 2021. However, nightclubs have recently been closed as of 10 December 2021 until at least 7 January 2022;
  • restaurants and bars were closed from 15 and 16 March to 31 May 2020 and were closed again from 30 October 2020 to May/June 2021. Regarding non-essential business, closures were imposed from 15/16 March to 12 May 2020, and imposed again from 30 October to 28 November 2020. Further administrative closures where subsequently enacted in 2021. For example, some business, had to close as of 18 March 2021 in some departments and as of 1 February 2021 for non-food-related businesses of more than 20,000 square metres;
  • for other business, the applicability of the above-mentioned order varied from time-to-time.

Regarding the ban on gatherings in France, indoors gatherings of more than 5,000 persons were prohibited as of 5 March 2020. Outdoors and indoors gatherings of more than 1,000 persons were then prohibited as of 10 March 2020, following outdoors and indoors gatherings of more than 100 persons were prohibited as of 14 March until 30 October 2020. It should be highlighted that gatherings of more than ten persons in public places were banned from 12 May to 17 October 2020 when the ban was tightened and gatherings of more than six persons in public places were prohibited. Restrictions on gatherings in public place were finally lifted on 30 June 2021. Other rules implementing the progressive lifting of restrictions were implemented later in 2021.

12

If the answer to the above question is yes, were subsequent lockdown, stay-at-home or no-travel restrictions issued at any point in time? Please give a short description of the timeline.

Yes

See the response to Question 11.

13

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss?

No

14

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance.

No

15

If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance.

No

16

If the answer to the above question is no, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lockdown or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance.

No

17

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance.

No

18

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss, have other courts in the country issued such opinions?

No

It appears from the available court decisions rendered in relation to coverage disputes on Covid-19 related losses that the vast majority of relevant insurance policies did not contain ‘disease clauses’ but instead covered the consequences of administrative decisions.

As such, the legal issue of analysing whether losses have been directly caused by Covid-19 does not yet seem to have been addressed since the arguments focused on whether the business interruption loses incurred following the pandemic-related administrative decisions were covered.

At the very least, and as detailed below, in situations where the insurance policy did not cover losses incurred in relation to administrative decisions, that is, did not provide coverage against non-physical damage business interruption (NDBI) losses in particular following administrative decisions, some courts have been faced with the legal issue of determining whether or not Covid-19 had caused material damage.

19

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a “cause” of insured loss? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

As indicated above, to our knowledge, this legal issue has not been directly addressed by courts in France. Insurance policies analysed by the courts decisions rendered so far in the context of Covid-19 coverage disputes provided coverage for losses caused by administrative decisions.

20

If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance.

No

21

If the answer to the above question is no, do courts in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lockdown or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance.

Yes

It appears that the vast majority of court decisions rendered in France on this matter considered that the losses were caused by the administrative decisions taken in relation to the Covid-19 pandemic.

However, this assertion must be considered in the light of the fact that insurance policies in France somewhat refer to administrative decisions to determine the scope of their coverage. This is likely, in our view, to have shifted the debate and led judges and parties to focus on administrative decisions rather than the pandemic itself

22

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss?

No

23

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss, have other courts in the country issued such opinions? If yes, please give a short description of the conclusions in such judicial opinions or guidance.

No

To our knowledge, this question has not been directly addressed by courts decisions in France.

24

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’?

No

25

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in the judicial opinions or guidance.

No

26

If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance.

No

27

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’, have other courts in the country issued such opinions?

Yes

28

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

It stems from the available decisions rendered in relation to Covid-19 insurance coverage disputes that the determination of whether Covid-19 could be considered a covered event varied in the function of the provisions of the insurance policies at hand in each case.

For instance, relating to:

  • an insurance contract covering damage to insured goods following an event not excluded, ie, a covered event, the Judicial Tribunal of Le Mans (first degree court) ruled that the Covid-19 pandemic had not caused damage to the insured goods and that the losses should thus not be covered (Mans Judicial Tribunal, 1 December 2020);
  • insurance policies covering business interruption losses, two decisions from the Court of Appeal of Aix-en-Provence ruled that the Covid-19 pandemic did not qualify as a covered event for the purpose of the policy. However, we emphasise that these decisions were based on the provisions of the policy which defined the notion of covered event (Court of Appeal of Aix-en-Provence, 4 November 2021, nos 21/04098, 21/03791);
  • an all-risks insurance policy providing covering NDBI losses, the Court of Appeal of Anger ruled that the Covid-19 pandemic was an insured event, as pandemics were not specifically excluded (Court of Appeal of Angers, 28 September 2021, no 21/00643).

29

If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 are covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

As indicated above, the determination of whether Covid-19 constitutes a covered event depends on the wording of the insurance policy.

30

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of loss causation.

According to legal literature, the interpretation of Covid-19 in the context of loss causation depends on the disposition of the policy, in particular in function of whether the insurance contract aims at the cause of the insured losses (which could be the pandemic) or if it distinguishes between the cause and the event that caused the losses (J Bigot, RGDA Feb 2021, no 118f0, p 6).

Aggregation of claims

Yes/ No/ N/A

Additional comments, if any.

31

Does the country you are reporting on permit aggregation of claims arising out of a single originating cause? Please give a short description of the legal basis.

Yes

The aggregation of claims arising out of a ‘technical cause’ is specifically provided for in relation to claims in the field of liability insurance. Actually, pursuant to Article L.124-1-1 of the FIC, losses having the same ‘technical cause’ are considered as a single loss.

However, there is no specific statutory regime for the aggregation of claims for property insurance.

Aggregation therefore depends on the provisions of the policy at stake. Indeed, the right to determine the content of the contract is enshrined in Article 1102 of the FCC. This right is limited by the law and by public order. Therefore, parties are free to include a clause in a property insurance contract in order to aggregate claims arising out of a single (originating) cause. The conditions of the contractual regime are left to the common intent of the parties and are enforced in courts (Cass Civ 1, 6 December 1988, no 87-13.441, Cass Civ 1, 4 November 1992, no 90-21.212).

As such, France permits aggregation of losses both in liability and property insurance, under statutory law for the former and under freedom of contract for the latter.

32

Does the country you are reporting on permit aggregation of claims arising out of a single cause? Please give a short description of the legal basis.

Yes

See above.

33

Does the country you are reporting on permit aggregation of claims arising out of a single event? Please give a short description of the legal basis.

Yes

See above.

34

Does the country you are reporting on use an accepted test for determining whether claims can be aggregated? For example, does the country you are reporting on apply to four unities test to determine whether aggregation is appropriate? Please give a short description of the legal basis.

No

35

Have courts in the country you are reporting on issued jurisprudence concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the legal basis.

No

French courts have not yet ruled on this issue.

36

Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

No

37

If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

38

If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether insureds may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

No

39

If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

40

Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple properties or business locations arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

No

French courts have not yet ruled on this issue.

41

Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple lockdown or stay-at-home orders arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

No

To our knowledge, one decision has ruled on this matter and considered that each administrative closure decision separated by a reopening of the business should be considered a separate loss (Court of Appeal, Aix-en-Provence, 20 May 2021, no 2021/153, SARL Beraha).

Accordingly, it appears that courts would be unlikely to permit an insured to aggregate claims related to multiple lockdowns or administrative decision arising from Covid-19. However, we emphasise that the above-mentioned decision did not specifically rule on this matter.

42

Have courts in the country you are reporting on issued jurisprudence concerning whether cedents can aggregate claims arising out of Covid-19? Please give a short description of the legal basis.

No

French courts have not yet ruled on this issue.

43

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether cedents may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

44

If the answer to the above question is yes, do courts in the country you are reporting about permit cedents to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

45

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 and aggregating claims.

Yes

Some scholars have suggested the possibility of aggregating claims, depending on the provisions of the aggregation clause. In the absence of any such clause, a scholar tends to consider that Covid-19 should not allow the aggregating of claims related to business interruption losses (L Mayaux, ‘Renouvellement annuel des contrats d’assurance et “clauses Covid”’, Le Club des Juristes, 26 November 2020).

Property damage

Yes/ No/ N/A

Additional comments, if any.

46

Have courts in the country you are reporting on issued jurisprudence concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the legal basis.

Yes

The coverage of losses arising from Covid-19 will depend on the provisions of the insurance contracts at stake. However, several court decisions have considered that losses arising from Covid-19 could not be qualified as property damage.

47

Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance.

No

48

If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

49

If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether losses arising from Covid-19 constitute property damage? Please give a short description of the conclusions in such judicial opinions or guidance.

Yes

As indicated above, coverage of losses related to Covid-19 will depend on the wording of the insurance contract at stake.

The Paris Commercial Court has ruled that the impossibility to access premises due to the administrative closure could not be considered property damage losses absent of any physical and material consequences on the premises and their contents as required by the insurance policy (Paris Commercial Court, 28 October 2021, no 2021013657).

The Perpignan Commercial Court has ruled that the Covid-19 epidemic did not constitute a material damage to the insured goods as required by the insurance policy (Perpignan Commercial Court, 26 October 2021, no 2020J201).

50

If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

No

51

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 and property damage.

No

Exclusions

Yes/ No/ N/A

Additional comments, if any.

52

Has Covid-19 been deemed a ‘natural peril’ in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

No

At this stage, the issue of the possible qualification of the Covid-19 pandemic as a ‘natural peril’ remains outstanding.

While the French government decided that the French Cat Nat Regime should not apply to the Covid-19 pandemic, it did not, however, take position on whether the virus could be deemed as a ‘natural agent’ (or ‘natural peril’).

In a recent case, the Rennes Judicial Tribunal found that the Covid-19 pandemic qualified as a ‘natural event’ (or ‘peril’) for insurance coverage purposes (Rennes Judicial Tribunal, 4 January 2021, no 20/05863). In this matter, the pandemic was deemed a ‘natural event’ (or ‘peril’) but not a ‘natural catastrophe’ because the insurance contract at issue provided specific coverage for both ‘natural events’ (or ‘perils’) and ‘natural catastrophes’. Accordingly, the court took the stand that the coverage of both types of events necessarily widened the scope of what should be deemed a ‘natural event’ (or ‘peril’).

53

Has Covid-19 been deemed force majeure in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

Yes

French case law shows that these conditions are studied on a case-by-case basis and that crises cannot be considered in themselves as force majeure events.

When questioning whether the Covid-19 pandemic could qualify as force majeure under French law, it appears that if the evolution of this pandemic is most certainly beyond the control of the parties, the conditions of foreseeability and irresistibility vastly depend on the date of conclusion of the contract as well as the date on which the force majeure is examined.

If a contract has been concluded mid-March 2020, it might be difficult to consider that the consequences of the Covid-19 pandemic were not reasonably foreseeable.

Regarding the condition of irresistibility, it should be highlighted that the operational consequences of the pandemic varied significantly between the first administrative measures and the ensuing ones, and between the sectors of activity.

With regards to the date on which the condition of irresistibility must be assessed, it was ruled in one of the few decisions rendered on the qualification of the Covid-19 pandemic as force majeure, that it should be assessed on the date on which the obligor prevailed itself of it (Commercial Court of Evry, 1 July 2020, no 2020R0092). In this last case, relating to construction works to be conducted in application of a contract entered into in 2017, the Court dismissed the obligee’s argument that the performance was only rendered more onerous and found that the Covid-19 pandemic constituted a force majeure event in consideration of the lethal nature of the virus, the administrative measures, the sanitary requirements and the low availability of employees due to the lockdown measures.

It is possible for parties to insert a clause in the contract providing for more restrictive or broader conditions than the ones set out by statutory law. For example, alternative suppliers of electricity invoked the extended force majeure clause in their contract with EDF concerning the impossibility of performance under reasonable economic conditions due to the Covid-19 crisis in order to obtain the suspension of their obligations. The Court of Appeal of Paris has ruled in their favour (Court of Appeal of Paris, 28 July 2020, no 20/06689).

However, unless the parties have agreed otherwise, monetary obligations cannot be affected by a force majeure event since those obligations are never entirely impossible to perform (Cass com, 16 September 2014, no 13-20.306). Consequently, a tenant could not invoke force majeure based on Covid-19 in order to avoid payment of rent (Court of Appeal of Caen, 21 October 2021, no 21/00882).

54

Is Covid-19 acknowledged as a notifiable disease in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

No

Under French law, the regime of notifiable diseases is set by Article L.3113-1 of the French Code of Public Health (FCPH). This article provides that health professionals must notify the authorities of any cases of listed diseases. These diseases are specifically targeted and specified by decree. As such, Article D.3113-6 of the FCPH lists notifiable diseases under this regime. Covid-19 does not appear on the list.

Nevertheless, it appears that a specific regime for the notification of Covid-19 cases was put in place by Article 11 VI of the 11 May 2020 Law, which stated that: ‘Individual data relating to covid-19 shall be conveyed to the health authority provided for in Article L.3113-1 of the Public Health Code. This communication is carried out by doctors, the managers of public and private medical biology services and laboratories and the other health professionals mentioned in no 1 of II of this article, by means of the information systems mentioned in this article.’ (Law No.2020-546, 11 May 2020, art 11-VI.).

As such, it appears that, although not being listed as a notifiable disease, a specific regime was put in place to create a requirement to notify the authorities of Covid-19 cases.

55

Is it common for insurance policies issued in the country you are reporting on to include a pandemic or virus exclusion? Please give a short description of the legal basis and common insurance practice.

Yes

According to Article L.113-1 of the FIC, parties may include an exclusion clause in their insurance policy.

On 6 May 2020, the French Prudential Supervision and Resolution Authority (Autorité de contrôle prudentiel et de resolution) (ACPR) issued a press release stating that it will undertake an investigation into the coverage of business interruption losses relating to the high exposure of such insurance products due to the pandemic.

The ACPR has published its investigation on 23 June 2020. The analysis showed that:

  • the implementation of the business interruption coverage is excluded for 93 per cent of the policies because either the guarantee is subject to the occurrence of a material damage to the insured property or, more rarely, an explicit exclusion of the effects of the pandemics has been provided for in the policy which covered administrative closures;
  • it appears that three per cent of the policies do cover business interruptions related to Covid-19, which is particularly the case if the contract covers operating losses whatever the cause and does not provide any exclusion of the pandemic risk;
  • coverage is uncertain for four per cent of the analysed policies, for which it will be up to a judge to interpret their provisions and rule on the coverage.

For example, a number of insurance contracts concluded with AXA cover operating losses suffered by the insureds due to an administrative closure as a result of a ‘contagious disease, murder, suicide, epidemic or intoxication’. However, these insurance contracts also provide an exclusion clause. Indeed, these losses are not covered if, on the date of the closure decision, at least one other establishment, whatever its nature and activity, is subject to an administrative closure measure in the same departmental territory, for an identical reason.

56

Have any courts in the country you are reporting on determined that a pandemic or virus exclusion is void as against public policy in the context of Covid-19? Please give a short description of the legal basis and relevant jurisprudence.

No

57

Have any courts in the country you are reporting on otherwise determined that a pandemic or virus exclusion is unenforceable in response to Covid-19? Please give a short description of the legal basis and relevant jurisprudence.

Yes

Article L.112-4 of the FIC provides that those exclusions must be specifically displayed in prominent and legible characters.

Moreover, Article L.113-1 of the FIC indicates that the validity of an exclusion clause is subject to the condition that it is clear and has a limited scope: first by requiring that the exclusion be clear, the legislator wants the clause to be clearly expressed, so that there is no doubt about the party’s intention to restrict the scope of the guarantee; and second, the limited scope condition imposes on the parties a duty of precision that the exclusion must have perfectly determined content and not deprive the guarantee of its substance.

Consequently, the exclusion must be worded in such a way that the insured is able to know exactly under which circumstances they will not be covered.

According to the Cour of cassation, an exclusion clause cannot be formal and limited if it must be interpreted (Cass Civ 1, 22 May 2001, no 99-10.849).

The Court of Appeal of Aix-en-Provence has ruled that the exclusion clause, which makes the application of the cover conditional on the existence of an epidemic confined to a single establishment in a departmental territory, was not limited and deprived the insurer of the substance of its obligation to cover business interruption losses resulting from an epidemic as provided in the insurance policy. Therefore, the judges have considered that the exclusion clause shall be deemed unwritten (réputée non écrite) (Court of Appeal of Aix-en-Provence, 20 May 2021, no 20/10358).

The Court of Appeal of Rennes has ruled that a similar exclusion clause shall be deemed unwritten because the guarantee was not established and unrealistic (Court of Appeal of Rennes, 16 June 2021, no 20/04816).

On the other hand, the Court of Appeal of Bordeaux has ruled that a similar exclusion clause was valid because the guaranteed risk was not ‘derisory’ (Court of Appeal of Bordeaux, 7 June 2021, no 20/04363).

58

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of exclusions.

Yes

According to a document of the General Conference of Consular Judges of France (Conférence Générale des juges consulaires de France) dated 18 December 2020, the representative organisation of the judges of French commercial courts, the exclusion clause which is provided in several insurance contracts of AXA (see Question 55) is not valid and shall be deemed unwritten.

Please note that the conclusions contained in this document are not mandatory for commercial court judges.

Regulatory oversight

Yes/ No/ N/A

Additional comments, if any.

59

Have insurance regulators in the country you are reporting on issued directives concerning coverage for claims arising out of Covid-19? Please describe the regulations that have been implemented.

No

In its report published on 23 June 2020 (see Question 55), the ACPR considered that four per cent of insurance policies examined during its investigation were unclear with regards to Covid-19 coverage. The ACPR stated that where contractual provisions are unclear, only the interpretation of the provision by a judge would resolve the uncertainties.

The ACPR also invited insurers to be of good-faith with respect to Covid-19-related claims and to reply to such claims in a timely manner.

The above statements should not however be considered regulations strictly speaking.

60

Are regulators requiring or encouraging insurers to provide grace periods to insureds to make payments on premiums? If yes, please give a short description of the legal basis and relevant guidance.

No

To our knowledge, the ACPR itself has not encouraged insurers to provide grace periods to insureds to make payments on premiums.

However, it appears that insurers in France which are part of the French Federation of Insurers (FFA) have decided to take several collective pandemic-related support measures, in particular by maintaining the coverage of the non-payment of premiums by professionals and by reimbursing parts of motor insurance premiums in consideration of the low loss ratio in this insurance sector due to the consequences of the pandemic.

More specifically, on 7 December 2020, in reaction with demands from the French Ministry of the Economy, insurance companies have, although on request, collectively committed to freeze insurance premiums for small and medium companies of less than 250 employees in the restaurant and hotel sectors, as well as companies in culture, events, sport and tourism.

It should be noted, however, that the above commitment to freeze premiums to benefit some of the insureds results from voluntary commitments of insurance companies in the course of their negotiation with the French Ministry of the Economy.

Government action

Yes/ No/ N/A

Additional comments, if any.

61

Has the government in the country you are reporting on implemented relief measures for losses sustained as a result of Covid-19?

Yes

French state and local authorities have implemented relief measures for losses sustained as a result of Covid-19.

The Committee for the monitoring and evaluation of financial support measures for businesses (Comité de suivi et d’évaluation des mesures de soutien financier aux entreprises) published a report on 20 April 2021. According to which, €206bn had been mobilised by the end of March 2021 to support businesses during the Covid-19 crisis (nine per cent of France’s GDP).

62

If the answer to the above question is yes, are the relief measures available to both individuals and businesses?

Yes

The relief measures implemented by French authorities are available to both natural and legal persons engaged in an economic activity that is particularly affected by the economic, financial and social consequences of Covid-19 and the measures taken to limit its spread.

63

Briefly describe the types of relief measures available to individuals and businesses.

French authorities have implemented inter alia the following measures:

  • extra time for payment of tax and social security charges;
  • direct tax rebate except for VAT;
  • a tax credit for landlords to encourage them to cancel part of the rent owed by tenants who are administratively closed or particularly affected by pandemic-related restrictions;
  • solidarity fund to prevent bankruptcy of businesses affected by economic consequences of Covid-19;
  • subsidy to cover fixed costs;
  • state-guaranteed loan;
  • rescheduling of bank loans;
  • referral to the company’s mediator (médiateur des entreprises) if a dispute arises;
  • support plan for French exporting companies.

Please note that the applicability of these measures may be different depending on: the territory where the applicant is established (the measures applicable to overseas territories may differ from metropolitan France); the applicant’s business sector; and when the request was made as available relief measure may change over time.