Data
- Date:
- 07-09-2020
- Country:
- Colombia
- Number:
- --
- Court:
- Corte Suprema de Justicia
- Parties:
- QBE del Istmo Compañía de Reaseguros -Inc v. Seguros del Estado S.A.
Keywords
REINSURANCE CONTRACT - BETWEEN TWO COLOMBIAN INSURANCE COMPANIES - COURT EMPHASIZING THE IMPORTANCE OF THE PRINCIPLE OF GOOD FAITH IN THE REINSURANCE CONTRACT - GOOD FAITH RECOGNIZED AS A FUNDAMENTAL PRINCIPLE THAT GOVERNS ALL LEGAL RELATIONSHIPS AND IMPLIES THE DUTY TO ACT LOYALLY AND TO RESPECT WHAT HAS BEEN AGREED UPON IN THE CONTRACT - REFERENCE TO ART. 1.7 UNIDROIT PRINCIPLES
Abstract
The case concerns a claim by Q.BE del Istmo Compañía de Reaseguros - Inc. against Seguros del Estado S.A for alleged breach of a reinsurance contract. QBE requested a declaration of breach and, consequently, that Seguros del Estado S.A. be ordered to pay the sum of $ XXX, plus the corresponding default interest. The plaintiff's (also the reinsurer) main argument is that the defendant (also the reinsured) breached the reinsurance contract by assigning the credit recognized in the exercise of the action for subrogation of the beneficiary's rights for a value less than half of its actual value, which harmed the reinsurer's assets.
The Supreme Court of Colombia determined that Seguros del Estado S.A. was indeed obligated to recover the amount owed and pay it to QBE, provided it was able to collect. To this end, the Court had at its disposal the right to subrogation of the beneficiary's rights, which, the Court insists, can only be exercised by the reinsured. Once the subrogation action was exercised, the defendant was granted a claim, which it subsequently assigned behind the plaintiff's back.
To resolve the dispute, the Court emphasizes the importance of the principle of good faith in the reinsurance contract, as it stands as the most significant foundation for aligning the parties' interests. In this sense, it is essential that the parties act in good faith. The Court finds that the defendant failed to follow the aforementioned principle (among others) by assigning the claim granted in its favor for a value lower than its actual price, which, subsequently, prevented the plaintiff from recovering the amount corresponding to the risk assumed, affecting its assets.
In its consideration of good faith, the Court emphasized that this is a fundamental principle that governs all legal relationships and that, in contractual matters, it implies acting loyally and respecting what has been agreed upon. Article 1.7 of the Unidroit Principles was mentioned, which establishes that the parties must act in good faith and fair dealing in international trade, without being able to exclude or limit this duty.
Finally, the Supreme Court of Justice decided to annul (reverse) the judgment of the Superior Court of the Judicial District of Bogotá and, instead, upheld the first instance ruling that had granted QBE's claims.
Excerpts of interest:
"Good faith: It is a principle, a right, and a paradigm of the regulatory system. It regulates and governs, in a cardinal and transversal manner, all relations between individuals, and between these and the State. It even permeates private international trade agreements." Regarding the latter, the rapporteur quotes in a footnote, "Article 1.7 of the Unidroit Principles states: (I) The parties must act in good faith and fair dealing in international trade. (2) The parties cannot exclude or limit this duty."
English translation of the Spanish abstract written by Miguel Sopeña Pinilla for CISG Spain
Fulltext
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Source
Abstract and fulltext in Spanish:
- available at the University of Carlos III website, http://www.cisgspanish.com}}