New Ruling on Claims Made Clause - Contradictory Case Law of the Civil Court of Appeals

Until now, two were the main cases that reflected a dual position of the Civil Court of Appeals as regards claims made clauses.  

The first of the judgments was passed by Tribunal C in re “Barral de Keller Sarmiento, Graciela v. Guevara, Juan Antonio and others”, on May 2, 2006.

In that case, Tribunal C concluded that the clause was abusive although it had been approved by the Argentine Superintendence of Insurance. Tribunal C held that, even though the insurance contract is governed by the free will of the parties, there are limits that must be respected and maintained in order to comply with the legal and economic function of the contract, which is the protection of the insured with respect to an event occurred while the contract is in force, regardless of the moment where the third party makes the claim. Tribunal C understood that the clause was illegal as it unequally widened the rights of the insurer and restricted those of the insured, breaching Articles 109 and 158 of the Insurance Law and Sections a) and b) of Article 37 of the Consumer Protection Law.

On March 13, 2007, Tribunal C modified its previous position in “Furtado, Néstor G. v. Edesur S.A.”. Tribunal C came to a different conclusion and admitted the validity of claims made clauses based on the factual and legal differences existing as regards the previous judgment, especially since it was an insurance contract taken out by an important company. Tribunal C understood that insurance contracts are subject to party autonomy, especially since the insured was an important company that could have sought proper legal advice before taking out the policy. Thus, the insured could not validly hold that it was the weak party of the contract or that the insurer should have provided more information regarding the cover that was being negotiated.

Nevertheless, in the recent ruling "F.R.C. v. Gobierno de la Ciudad de Buenos Aires and others", Tribunal F of the Civil Court of Appeals followed the arguments of “Barral de Keller Sarmiento, Graciela v. Guevara, Juan Antonio and others”, and declared the nullity of a claims made clause under a civil liability insurance contract, considering that the clause modifies obligations related to the main object of the contract, limiting protection in a manner different from that set forth in the Insurance Law.

The facts of this case were similar to those analyzed by Tribunal C when it ruled in “Barral de Keller Sarmiento, Graciela v. Guevara, Juan Antonio and others”. Both cases were lawsuits filed by individuals claiming damages derived from medical malpractice. In both cases the insurances had been taken out by the Association of Municipal Doctors (Asociación de Médicos Municipales).

New rulings should be expected as regards the validity of claims made clauses in order to ascertain which will be the final position of the Civil Court of Appeals.