The European Court of Justice this week decided a case relating to the free choice of lawyers (Case C-199/08, Eschig). The Court overrode a condition in an insurance policy and decided that a European directive granting free choice of lawyers had to be respected regardless of the insurance condition.Mr Eschig, an Austrian citizen, had taken out legal expenses insurance with UNIQA. Together with several thousand other investors, some of whom had taken out the same UNIQA insurance, he subsequently invested money with investment undertakings which became insolvent. He instructed a law firm to represent him in several proceedings, including bankruptcy proceedings against the investment companies, criminal proceedings against their executive organs, and proceedings against the Republic of Austria for failures in the supervision of the financial markets. He sought an assurance from UNIQA that it would cover legal expenses for action already taken by lawyers chosen by him and for action to be taken by those lawyers in the future. UNIQA refused, relying on the provisions of an article in the conditions of the insurance that permitted them to select the lawyer themselves in the case of a mass claim. Mr Eschig brought an action for a declaration, first, that UNIQA was liable to bear the expenses incurred as a result of his lawyers’ activity in the past and future proceedings and, secondly, that the insurance condition was invalid and so did not form part of the legal expenses insurance policy.

The problem for UNIQA was that Article 3 of Directive 87/344 (the legal expenses insurance directive) expressly gives ‘the insured person the right to entrust the defence of his interests, from the moment that he has the right to claim from his insurer under the policy, to a lawyer of his choice or, to the extent that national law so permits, any other appropriately qualified person’. The court went through the various interpretations of the directive, and came to the conclusion that UNIQA was not permitted to use the insurance condition on which it relied, and so Mr Eschig could appoint a lawyer of his choice.

The Council of Bars and Law Societies of Europe would have liked to intervene in the case. But, because we did not do so at national level – we could not, since we did not know anything about it until it was referred to the European Court of Justice, and in any case Austrian law has strict rules on third-party interventions – we were not allowed to intervene at European level, under the rules of the court. We find ourselves frequently frustrated in this way by cases that affect lawyers, which come to our attention only once they go beyond the national level. Nevertheless, the outcome in this particular case is what we wanted.

On the other hand, RIAD, the International Association of Legal Expenses Insurance, has expressed its disappointment at the outcome. They believe that it is against the interests and needs of users of legal expenses insurance: ‘… it makes no sense to prohibit measures that are clearly in the interest of individuals who all have a common cause of action and for whom the use of a single legal team has the effect of improving the management of their legal action, to the benefit of both, claimant, defendant and society in general’. As legal expenses insurers in Austria prepare to meet the court’s requirements, a spokesperson said that: ‘In many cases, such insurance coverage has only become possible as it has allowed us to avoid unnecessary duplication of legal expenses … the question is to what extent does the judgment forces us to limit our coverage and how we will strike the right balance between efficient claims management and consumer interests.’

We should not feel too sorry for RIAD. They are the same organisation that, last year, held a conference around the theme that ‘high regulation is not necessary to achieve sufficient access to law and that a different kind of regulation which gives consumers more choice could have positive effects’ – without inviting any bar representative to speak (despite our asking them) and with only one practising lawyer on a panel. This case can be seen as the revenge of the lawyers.

Jonathan Goldsmith is the Secretary General of the Council of Bars and Law Societies of Europe (CCBE), which represents over 700,000 European lawyers through its member bars and law societies