Question: I am a manufacturer. A month ago, my factory was exposed to a fire, which resulted in great losses. The factory was insured. However, the insurance company has refused to pay compensation under the pretext: 1) I did not inform the insurance company about the accident at the time it happened. 2) I was late in paying the last premium. My question is: Does the insurance company have the right to refrain from paying the compensation on the basis of these arguments? Is there a legal time-frame for reporting an accident as and when it occurs?
Answer: Related to the General Provisions in Article (1028) of the UAE civil transaction law, the following conditions in an insurance policy become void:
A) The condition providing for the forfeiture of the right to insurance on account of a breach of law, unless such breach constitutes a deliberate felony or misdemeanour.
B) The condition providing for the forfeiture of the insured’s right due to his delay in notifying the authorities that have to be notified, or in producing documents, if it appears that the delay was for an acceptable excuse.
C) Any printed condition relating to cases involving nullity of the contract or forfeiture of the insured’s right, which is not shown in a clear manner.
The text above states that the insured’s breach of his obligation to notify the occurrence of the accident creates contractual liability before him, the extent and effect of which may be agreed upon in the insurance contract, and then the agreed penalty must be adhered to. If the parties do not agree on the effect of the breach of this obligation, then it is necessary to refer to the general rules in the law) 223/2011 civil cassation, which stipulate that the court will take a proper decision in keeping with the proof submitted from each party.
There is no limited period by law for reporting an accident at the time of its occurrence, but it is usually indicated in the insurance contract as per the insurance company. It is valid to include in the insurance contract such a condition and the insured should adhere to it, unless it is proven that the delay in notification was for an acceptable excuse, and the burden of proof falls on his or her shoulders, and when this condition is clearly printed, the insured has no right to waive his commitment to it. (Commercial cassation 242/2011.)
As for the delay in payment, there is no article by law stating that the insurer might not bear his liability if the insured was late in paying premium. But the Obligations of the Insured as per Article (1032) is to: Pay the agreed amounts on the term fixed in the contract.
The insurance contract is a consensual contract binding on both sides. The insurer bears the liability of the insured’s risk for a certain period in exchange for the insured fulfilling his obligation to pay successive premiums throughout that period. (Cassation No 144/2006 Civil.)
As a conclusion, the court will decide whether each party had implemented his or her obligations or not as per the documents submitted.
A civil and criminal case running concurrently
Question: I am the owner of a company. A month ago, an employee of the company filed a labour complaint after he was dismissed from the company for several reasons, including moral ones. I registered a police case against him, which is currently under investigation. My question is, do I have the legal right to request the court to stop the labour case until the police report is decided upon?
Answer: Article (28) of Federal Law No (35) of 1992 about Criminal Procedural Law, as amended by Federal Law No (29) of 2005 dated 30/11/2005, says: ‘Where a civil case is brought before the civil court, it must be stopped until a decisive judgement is rendered in the criminal action filed prior to or during the examination of the civil case. Stopping of the civil action brought before the civil court shall cease when the criminal court renders an incriminating judgement in the absence of the accused, as from the day on which expired the delay allowed for the appeal to be lodged by the public prosecution or from the day of deciding the appeal.’
Article (102) of Federal Law No (11) of 1992 Concerning Issuance of the Civil Procedures Code states that ‘the court shall give order to cease the action if it sees better to suspend the decision in its merits than to arbitrate in another matter on which the decision would depend, and as soon as the reason for the cessation has extinguished, any of the litigant parties may urge for action’.
It is decided in the court that ‘If a civil lawsuit is filed before the civil court, the adjudication of it shall be suspended until a final judgement is issued in the criminal lawsuit filed before its filing or during the course of its progress, indicating what this court decided on the criteria for stopping the civil lawsuit until the criminal case is decided in order to avoid the issuance of a judgement in the civil case contradicting the ruling to be issued in the criminal case. There is, between the two lawsuits, a common issue that the civil court cannot resolve without the criminal court saying its word about committing the crime and attributing it to the accused. In applying this text, it is required that the unity of the issue in dispute in the two lawsuits be present and that this issue be outside the jurisdiction of the court to which the dispute has been presented’.
(No 2018/683 Commercial cassation)
You can request to stop the labour case from the court but it depends on its estimation to accept your request or not taking into consideration that to stop the civil lawsuit according to Article 28 of the Code of Criminal Procedure, the criminal lawsuit should be already filed in the criminal court before or during the consideration of the civil case. The civil case is not obligated to stop this lawsuit, regardless of the stage the prosecution has completed in investigating the criminal case. (Cassation No. 81/2015)