Higher Regional Court Cologne strengthens policyholders in D&O insurance
Higher Regional Court Cologne strengthens policyholders in D&O insurance
In a landmark decision, the Higher Regional Court of Cologne clarifies that – in direct proceedings of the policyholder against the D&O insurer – the allocation of the burden of proof also follows the principles of directors‘ and officers’ liability.
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Dr. Fabian Herdter, LL.M. Eur.
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If a company makes a claim for damages against a manager, he must demonstrate and prove that he acted in accordance with his duties. He therefore has the burden of proof – from which the injured company benefits as plaintiff.
But who bears this burden of proof if the company does not initially take legal action against the manager but directly against the manager's D&O insurer? Does the injured company have to demonstrate and prove the breach of duty? This would make direct litigation against D&O insurers much more difficult.
At our instigation, the judges in Cologne clarified today: the burden of proof in direct proceedings against the D&O insurer follows the rules of ‘classic’ directors‘ and officers’ liability proceedings, i.e. the provisions of section 93 para. 2 sentence 2 AktG apply analogously. The insurer must therefore demonstrate and prove that the insured manager did not act in breach of duty (see Ulrich, r+s 2022, 608, 610).
The judgement (case no. 9 U 206/22) strengthens injured companies in direct disputes with their D&O insurers. It will therefore become more attractive to take legal action not against managers, but directly against their insurers. The prerequisite for this remains that the manager cedes his insurance claim to the company beforehand.
The full verdict can be found here.
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