In Sneller v Das (C442/12) the Court of Justice of the European Union (CJEU) held that a legal expenses insurer cannot stipulate that the costs of using a lawyer chosen by its insured will only be covered if the insurer decides that the case must be handled by external counsel.
Mr Sneller was the holder of a legal expenses policy, under which DAS was the provider of legal assistance. The contract provided that cases were to be dealt with by DAS’ employees unless, in DAS’ opinion, the “case must be delegated to external counsel”. Only in the latter situation would Mr Sneller have been free to instruct a lawyer of his own choosing.
Mr Sneller planned to bring a case of unfair dismissal against his former employer, using a lawyer of his choice as opposed to the lay employee offered by DAS. DAS agreed to the proceedings being brought, but refused to cover the legal cost of the external lawyer, stating the legal expenses policy did not cover the fees as they had not decided it was appropriate to delegate the case. DAS highlighted that in the Netherlands, legal representation was not compulsory for bringing an unfair dismissal claim.
Mr Sneller took the issue to the Supreme Court of the Netherlands after failing at 1st instance and in the Court of Appeal to overcome DAS’ argument. The Supreme Court stayed proceedings and referred the issue to the CJEU for a preliminary ruling on two issues:
- “Does Article 4(1) of [the Legal Expenses Insurance] Directive [87/344] allow a legal expenses insurer … to stipulate that the costs of legal assistance provided by a lawyer … freely chosen by the insured person will be covered only if the insurer takes the view that the handling of the case must be subcontracted to an external lawyer?“
- “Will the answer … differ depending on whether … legal assistance is compulsory under national law for the … proceedings concerned?“
Article 4(1) of the Legal Expenses Insurance Directive provides that “Any contract of legal expenses insurance shall expressly recognise that … where recourse is had to a lawyer … in order to defend, represent or serve the interests of the insured person … that insured person shall be free to choose such lawyer …”
The CJEU held that:
- A “restrictive interpretation of Article 4(1) … cannot be accepted”;
- An “insured person must have the freedom to choose his own lawyer … for the purpose of any judicial or administrative proceedings”, and that “right cannot be restricted to situations in which the insurer decides that recourse should be had to an external lawyer”;
- The “right to freely choose a representative is of general application” and not affected by whether legal representation is compulsory under national law;
- The insured’s right to choose does not prevent the insurer limiting the costs it will pay – provided those limits are not so restrictive that they render the freedom to choose effectively meaningless. The “contracting parties remain free to agree cover for a higher level of legal assistance costs, … against payment of a higher premium…”