OGH on Insurance Interest: Watch What You Claim!

Jun 28, 2024 Benn-Ibler Rechtsanwälte

Subsequent invalidity of contractual clauses is precluded by withdrawal from a contract. This was clarified by the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) in connection with a consumer’s late withdrawal from a life insurance policy.

In the original case, the plaintiff had taken out a unit-linked life insurance policy with the defendant insurance company, which he terminated in 2013. The defendant paid the surrender value (around EUR 45,000) to the plaintiff, who had invested a total of around EUR 50,000 in premiums.

In 2018, the plaintiff withdrew from the contract and the defendant company was ordered to repay the premiums, less the surrender value already paid, due to a lack of information about the policyholder’s right of withdrawal under Section 165a of the Austrian Insurance Contract Act (Versicherungsvertragsgesetz, VersVG). The claim for the payment of interest on the surrender value for the period from August 1997 to June 2013 was rejected on the grounds of the statute of limitations.

However, the plaintiff did not want to leave it at that and again demanded to get the interest paid. This time, he based his claim on the fact that a number of clauses in the terms and conditions of insurance were unfair and lacked transparency. These clauses, he claimed, were essential and were supposed to be omitted and not replaced. This would lead to rescission of the contract under unjust enrichment law, including payment of interest on the refund. According to the plaintiff, rescinding the insurance contract based on Directive 90/619/EEC and voiding the entire life insurance contract by deleting the clauses are different legal grounds. Under EU law, a limitation of compensation interest irrespective of knowledge is excluded within the scope of application of the Unfair Consumer Contract Terms Directive.

However, the plaintiff was unsuccessful at any level of jurisdiction. The OGH’s reasoning also contained the following reminder of the fundamentals of Austrian contract law as well as procedural law:

The plaintiff’s claim is barred by the principle of res judicata. The reason for this is that the claim now under consideration is identical to the claim which was previously under consideration (and which the plaintiff lost). The plaintiff’s claim that the improper contractual clauses would have led to the entire contract being null and void (with interest on the remuneration not yet time-barred) is related to the subject matter of the previous proceedings and is therefore precluded.

Furthermore, the plaintiff’s letter of rescission terminated the contract with immediate effect. Therefore, any clauses in the life insurance contract were not effective and did not create any obligations for the plaintiff, which meant that the policyholder was no longer affected by the unfairness of the clauses.

OGH 7 Ob 67/24i (22 May 2024)