UPDATE: OGH on the problem of interest on remuneration after withdrawal from contract and cases of "substantial" reduction of the claim due to the three-year limitation period

Oct 16, 2020 Benn-Ibler Rechtsanwälte

In a number of proceedings, the courts have dealt with the withdrawal from insurance contracts due to failure to provide information about the right of withdrawal. In particular, the question of the interest on remuneration to which the policyholder is entitled for the premium payments ultimately made without legal grounds is problematic.

In recent decisions, the Austrian Supreme Court (OGH) and the European Court of Justice (ECJ) had decided on the one hand that a right of withdrawal is granted for an unlimited period of time - and beyond the date of performance of the contract - if information about the right of withdrawal from insurance contracts is not provided.

On the other hand, case-law had established the basic rule that the (short) three-year limitation period of Sec. 1480 ABGB (Allgemeines Bürgerliches Gesetzbuch, ABGB) applies to interest on remuneration. The application of the three-year limitation period may not, however, lead to an impairment of the effectiveness of the right of withdrawal granted to the policyholder under EU law.

In the present case, the plaintiff policyholder claimed that her entitlement to interest on remuneration would be reduced by more than 10% as a result of the three-year limitation period. In her opinion, such a “significant” reduction must prevent the application of the three-year limitation period. In this context, the OGH referred to ECJ case-law, according to which the policyholder should not derive any benefits from the late withdrawal. Thus, the exercise of the right of withdrawal, which is unlimited in time, must not result in the policyholder being able to speculate on a certain minimal return (namely the statutory interest on remuneration).

From this, the OGH concluded, contrary to the opinion of the plaintiff, that the extent of the compensation for use does not represent a “relevant reference value”, as the argument of the plaintiff amounts to the policyholder deriving benefit from the late withdrawal, which is frowned upon by the ECJ. The OGH added that even the finding that no claim could exist (at all) after the limitation period had become effective was not in and of itself a reason to modify the rules on limitation periods.

OGH 7 Ob 14/20i (27 May 2020)