Jan Sneller is fired and wants to bring an action against his former employer. He asks his legal expenses insurer DAS Rechtsbijstand for assistance. DAS wants to provide Sneller with one of its own employees. After all, legal representation is not compulsory in such a procedure (“kantonprocedure”).
Sneller disagrees. According to him, DAS should enable him to hire an external lawyer (attorney) instead. After all, Article 4:67 of the Law on financial supervision (Wft) states that ‘where recourse is had to a lawyer (…) to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer’. However, DAS argues that the provision does not make clear who decides that hiring an attorney is necessary. As a result, the company would be free to determine this issue in its insurance conditions.
Little sparks kindle great fires. The answer to this interpretative question could have a serious impact on the way legal expenses insurance is organised in the Netherlands. Roughly 400,000 companies and 3,000,000 citizens have an insurance policy like the one at stake. Prices are low, at least in part due to the fact that insurers provide assistance through their own employees – and not through more expensive attorneys. This practice seems to be unique in Europe.
For almost 30 years, it is questioned whether this practice is in accordance with the Directive on which Article 4:67 Wft is based. Moreover, the European Court of Justice (ECJ) supports a broad interpretation, not permitting any restriction on the freedom to choose a lawyer other than those limited restrictions expressly set out in the Directive itself (see Eschig and Stark).
The argument between Jan Sneller and DAS continues in court. DAS manages to win in first and second instance, after which Sneller brings the case before the Dutch Supreme Court (“Hoge Raad”). This provides an opportunity for DAS to show the negative impact of this interpretation on the Dutch insurance practice. Before the Supreme Court, the company submits that awarding a free choice to insured persons such as Sneller would lead to an increase of the premiums with a factor five. Sadly, no scientific evidence is submitted.
Although Advocate-General Spier shows some sympathy for the company’s pleas, he concludes that without such evidence, asking the ‘overburdened’ ECJ another interpretative question would be ‘asking for the sake of asking’. Nonetheless, the Supreme Court places its bets and refers the matter to the ECJ. The Supreme Court considers it ‘justifiable’ to allow legal insurers like DAS this freedom of contract, to prevent an increase in premiums of a ‘considerable amount’.
The ECJ is not impressed, neither by the interpretative question (the Court does not appoint an Advocate-General), nor by the submitted increase in premiums (this argument is not taken into consideration). Instead, the Court holds that the Directive is not subject to national rules on legal representation and decides that a restrictive interpretation of the Directive cannot be accepted. As a result, insurers will have to adapt their insurance conditions in order to grant their policyholders the possibility to choose an attorney, which may lead to higher premiums.
One may question this judgment by the ECJ, which passed over serious concerns by the Dutch Supreme Court without batting an eyelid. But the victory of Jan Sneller seems to be a lesson in pleading for DAS as well. To have a chance of success before the ECJ, the company should have submitted scientific evidence to substantiate the increase in costs for Dutch companies and citizens. Sometimes, there is more to winning a case than pleading blackletter law.