In order to slow the spread of the Covid-19 virus on French territory and after being administratively closed for the first time in spring, bars, cafes and restaurants have been forced to close their doors again since October 30, 2020, weakening the sector a little more.
Indeed, the administrative closure of cafes, bars and restaurants causes colossal operating losses for professionals in the sector. The support measures proposed (partial unemployment, compensation fund, PGE, etc.) will not be enough to compensate professionals in the sector for loss of activity for several months.
And, best of all, in the vast majority of cases, insurers for hotel and restaurant professionals refused to compensate for operating losses related to the pandemic.
However, beyond the position of principle put forward by insurers, the question of whether insurers should take care of operating losses must be addressed.
To this end, an overview of the main decisions handed down in this field since the beginning of the year is interesting and thus makes it possible to assess the chances of success of professionals in this field.
1°/ A first decision on the matter was rendered in an order dated May 22, 2020 by the interim relief judge of the Paris Commercial Court, at the end of which the company AXA France IARD was ordered to compensate a Parisian restaurant owner as compensation for operating losses suffered during its closure during the first lockdown.
Thus, the Parisian restaurateur was paid by the company AXA France IARD, a provision in the amount of 45,000 euros under penalty of 1,000 euros per day of delay, the court noting that the insurance contract did not provide for an exclusion of coverage linked to a pandemic.
As a reminder, orders issued in summary proceedings impose two conditions on the restaurant owner: justify an emergency and especially the absence of a serious challenge. For the Paris Commercial Court, there is therefore no doubt that AXA should guarantee its insured against the pandemic.
2°/ In the context of 5 judgments, in essence, of September 17, 2020, the Paris Commercial Court maintained its position by considering that the warranty exclusion clause opposed by AXA France IARD to avoid its warranty obligation is deemed unwritten, as it is likely to void the warranty of any substance.
The logic followed by the Tribunal is as follows: AXA cannot, through an unclear and overly general warranty exclusion clause, exclude guarantees for which the insured has taken out a contract.
In one of the cases in question, the company AXA France IARD was ordered by the Paris Commercial Court to pay a provision of 60,000 euros as a guarantee to a Parisian restaurant owner.
3°/Another decision in favor of a restaurateur was rendered on the merits on September 24, 2020 by the Rennes Commercial Court.
Indeed, in the present case, a restaurant owner from Rennes had brought an action before the Rennes Commercial Court following the refusal of compensation for operating losses suffered during the first lockdown, by his insurer, the company AXA France IARD. Again, the restaurant owner won his case.
The judgment of the Rennes Commercial Court thus condemned the company AXA France IARD to indemnify the restaurant owner up to 60,000 euros in compensation for operating losses.
In this sense, the court considered that the wording of the contract was not sufficiently clear as to the scope of the exclusions of coverage and therefore considered that the doubt should benefit the insured.
In this case, the restaurant owner sued the insurer, the latter refusing to compensate for the operating losses suffered during the closure of his establishment imposed by the administrative authorities during lockdown. A dispute in which the Rennes Commercial Court finally ruled in favor of the insured.
4°/ In parallel, an abundant litigation has developed before numerous commercial courts, with, for the time being, mainly decisions rendered in summary proceedings, without any real trend emerging. The court deadlines being what they are, the judgments on the merits will follow in the coming weeks or even months.
On the other hand, on December 3, 2020, the Aix en Provence Court of Appeal, more promptly, annulled an order issued on July 23, 2020 by the Marseille Commercial Court, considering that the summary court did not have jurisdiction to rule out the validity of AXA's warranty exclusion clause.
AXA has also communicated extensively on this decision in order to discourage potential insurers from taking action against it (https://axalive.fr/article/axa-pertes-exploitation-decision-cour-appel)
Should we deduce from this that litigation related to the loss of compensation has no chance of succeeding?
Definitely not.
It should first be recalled that the judgment delivered by the Court of Appeal of Aix en Provence concerns a decision rendered by a summary judge, whose jurisdiction is necessarily limited to cases of urgency and the absence of a serious challenge.
On the other hand, it will be necessary to await the position of other Courts of Appeal, and, probably, of the Court of Cassation, to hear the end of the story.
What is certain is that the declaration of claim cannot await the outcome of this judicial epilogue and that it is imperative, for prescription issues, to file claims within the time limit set by your insurance contract and, depending on the terms of the clause, to contest your insurer's refusal of compensation before the competent courts.
5°/ In this context, it will first be necessary to carefully check the clauses provided for in your multi-risk insurance contract in order to determine whether the pandemic risk is covered or, failing that, whether the warranty exclusions are sufficiently precise and clear to exclude coverage by the insurer.
Once the contract has been analyzed, it will be appropriate, if necessary, to contest the insurer's refusal to indemnify before the competent Commercial Court.
EVERGREEN LAWYERS is committed to analyzing your insurance contracts in order to verify whether or not you are insured for business losses related to the COVID-19 pandemic.
