Newsletter: Revision of Insurance Contract Law Meets Old Contracts – Swiss Federal Supreme Court Rejects Retroactive Application

In its decision BGer 4A_189/2024 of 27 January 2025, the Federal Supreme Court decided the question of whether the direct right of claim against the liability insurer pursuant to the revised Art. 60 para. 1bis Swiss Federal Act on Insurance Contracts ("ICA") also applies to circumstances that occurred before the provision came into force on 1 January 2022.

Facts and Dispute

The plaintiff A underwent hand surgery in 2014, which caused complications and severe pain in the years that followed. In 2023, A filed a claim for negligent medical treatment against the treating doctor's liability insurance. The plaintiff referred to the new direct right of claim against the liability insurer introduced on 1 January 2022 (Art. 60 para. 1bis ICA).

The liability insurer disputed the right to be sued because it had concluded the insurance contract with the treating doctor before 1 January 2022. Therefore, the key legal question was whether Art. 60 para. 1bis ICA was applicable retroactively, i.e. to insurance contracts concluded before 1 January 2022.

Plaintiff A took the view that the general transitional provisions of the Swiss Civil Code should be applied and that, therefore, a direct claim against the insurer existed. The liability insurer, on the other hand, argued that the newly inserted transitional provision (Art. 103a ICA) contained a conclusive regulation and that Art. 60 para. 1bis ICA was therefore not applicable to the insurance contract concluded with the treating doctor.

Considerations of the Swiss Federal Supreme Court

At the outset, the Federal Supreme Court noted that the interpretation of legal provisions is based on methodological pluralism and that no hierarchy exists between the different methods of interpretation. The Federal Supreme Court then examined the various methods of interpretation (wording, purpose, systematics and history)

The Federal Supreme Court came to the conclusion that the wording of Art. 103a ICA speaks in favour of a conclusive transitional provision and therefore also applies to Art. 60 para. 1bis ICA. From a systematic point of view, it concluded that only the new legal provisions expressly listed in Art. 103a ICA – where the direct claim was not mentioned – should have retroactive effect.

Further, one concern of the partial revision of the ICA was to improve the protection of the injured party. Hence, a retroactive effect making available the direct right to claim also for insurance contracts concluded before 1 January 2022 would seem a logical conclusion based on a teleological interpretation. The Federal Supreme Court rejected this argument because, apart from the exceptions expressly mentioned in Art. 103a ICA (formal requirements and right of cancellation), no (new) provisions for the protection of the policyholder are applicable to existing insurance contracts. The intended protective concept could not justify a different treatment of injured parties and policyholders under transitional law, but on the contrary argued in favour of their uniform treatment

Based on the historical interpretation the Federal Supreme Court also established that the legislator was explicitly silent in Art. 103a ICA and therefore, no retroactive effect for direct right to claim could be deduced.

As a result, all four methods of interpretation speak against the application of Art. 60 para. 1bis ICA to insurance contracts concluded before the amendments to the ICA came into force on 1 January 2022. There is no retroactive effect and direct right of claim against liability insurer only applies to insurance contract concluded after 1 January 2022.

Accordingly, the Federal Supreme Court rejected the direct right of claim of the plaintiff and denied the right to sued of the liability insurer.

Remarks

This landmark decision of the Federal Supreme Court answers one of the open questions that exist in connection with the direct right of claim (cf. the article Direct right of claim in any case? ) and created legal certainty regarding its temporal scope of application.