OGH: Benefits Claim Takes Priority over Declaratory Relief

Jul 12, 2024 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) as clarified that a claim for declaratory relief regarding a different agreement in a unit-linked life insurance policy is not permissible if the repayment of premiums could already have been achieved with a claim for benefits.

The plaintiff signed an application for a unit-linked life insurance policy with an insurance agent of the defendant insurance company. The agent explained the financial product to the plaintiff verbally rather than reading over the application together with him. The plaintiff was not interested in an 18-year term and told the agent that he would only take out the policy if he received at least the full amount of the premium paid back in the event of early termination. The insurance agent explained that the policyholder could cancel the life insurance after a minimum period of 10 years and would receive the premiums paid back less an administration fee of EUR 500.00.

In the written explanation form for the unit-linked life insurance policy, on the other hand, it was stipulated that the plaintiff would receive the surrender value.

The plaintiff requested the court to declare that, in the event of the cancellation of the insurance contract, he was entitled to a payment from the defendant of at least the amount of the premiums paid, less the processing fee of EUR 500.

The defendant contended that the claim should be dismissed. There had been no promise and the plaintiff should not have had any reliance on the promise. In addition, there was no discernible interest in obtaining a declaratory judgment.

The court of first instance upheld the claim.

The court of appeal and the OGH dismissed the action for the following reason:

According to Section 228 of the Austrian Code of Civil Procedure (Zivilprozessordnung), an action for declaratory relief requires a legal interest in the immediate judicial determination of a legal relationship or right. This is usually not the case if the plaintiff can assert their claim in full by way of an action for performance.

The plaintiff had the legal right to terminate the life insurance contract after 10 years, after which he was legally entitled to the surrender value. The plaintiff, however, claimed a different contractual agreement. Yet the plaintiff could have earlier on asserted this claim by means of an action for performance. For this reason, he lacked the legal interest to bring the declaratory action.

OGH 7 Ob 34/24m (22 May 2024)