Overview of Russian Insurance Contract Law

Russian insurance law contains all the key features one might expect, including rules relating to disclosure, contract formation, liability, indemnity and subrogation. Most of the relevant rules are to be found in article 48 of the Civil Code. We summarise here some of its basic features.

Only Licensed Insurers

Only licensed insurers may insure risks situated within the Russian Federation. The effect of this rule is to prevent the direct insurance of risk with foreign domiciled insurers. Foreign domiciled insurers therefore participate in Russian risks by way of reinsurance. There is a limited exception in that foreign insurers may directly insure vessels registered on the Russian International Ship Register.

Several foreign insurers have become controlling shareholders of Russian domiciled and licensed insurers and therefore participate in the market in that way.

General Rules of the Civil Code

Insurance contracts must contain certain essential terms that define:

the subject matter of the insurance; the peril to which the insurance responds; the insured amount; and the duration of the contract. Choice of Law, Jurisdiction, Arbitration

The Civil Code does not prescribe rules as to choice of law and jurisdiction. Given that only Russian insurers can write direct insurance of Russian risks, the natural choice is for Russian law to govern such insurance. In cases of reinsurance with overseas insurers, the parties are free to select the applicable law and jurisdiction.

Private arbitration can be selected for insurance disputes. Provision can be made for arbitration to be in a foreign language and foreign citizens can sit as arbitrators in Russia. International reinsurers would be well advised to use an arbitration clause, not a non- Russian court jurisdiction clause. This is because Russian courts are under no automatic obligation to enforce foreign court judgments (except those of some former Soviet bloc states); on the other hand Russian courts are obliged to enforce foreign arbitral awards, since Russia is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Non-Disclosure / Misrepresentation

It is the responsibility of the insured to provide the insurer with all the material information necessary for an assessment of the probability and value of a potential loss. The circumstances specified by the insurer in its policy or questionnaire shall be considered material in any event. If the insured...