IRELAND Law and Practice Contributed by: Grainne Callanan, April McClements and Aisling Kavanagh, Matheson LLP
7. Alternative Risk Transfer (ART) 7.1 ART Transactions ART transactions are recognised as reinsurance trans- actions under the 2015 Regulations and are charac- terised by the CBI in a manner consistent with the Solvency II regime. There has been a slowdown in recent years in the number of ART deals in Ireland. The CBI has con- cerns relating to the viability of ART transactions and the potential risks for insurance carriers, particular- ly regarding basis risk. Further, it is not clear if ART transactions entered by life insurers comply with the requirements to be “fully funded”. Significant growth is not expected in the coming years. 7.2 Foreign ART Transactions No information is available for this jurisdiction. 8. Interpreting an Insurance Contract 8.1 Interpretation of Insurance Contracts and Use of Extraneous Evidence Insurance contracts are subject to the same gen- eral principles of interpretation as other contracts. The Supreme Court has confirmed in two judgments ( Analog Devices v Zurich Insurance and Emo Oil v Sun Alliance and London Insurance Company ) that the principles of construction set out by Lord Hoffman in ICS v West Bromwich Building Society should be applied to the interpretation of insurance contracts. Further, the 2021 case of Brushfield Ltd v Arachas Corporate Brokers Ltd and AXA Insurance DAC help- fully summarised the principles applicable to the inter- pretation of insurance policies in Ireland. The Irish courts consider the ascertainment of the meaning the document would convey to a reasona- ble person, having all the background knowledge that would reasonably have been available to the parties in the situation in which they were at the time of the contract (“matrix of fact”). Certain things are excluded from the admissible background, including previous negotiations and declarations of subjective intent. The meaning of the document is not the same as the particular meaning of the words; it is what the parties
using those words against the relevant background would reasonably have understood them to mean. The courts apply the words’ ordinary and natural meaning. It is assumed that people ordinarily do not make linguistic mistakes in formal documents. How- ever, if it is clear from the matrix of facts and the back- ground that something is wrong with the language, judges can attribute to the parties the intention they clearly had. The court takes an objective approach to determin- ing the intention of reasonable persons in the position of the parties. Where a contractual term is genuinely ambiguous, the contra proferentem rule will apply and the interpretation less favourable to the drafter is adopted. The rule also applies to consumer contracts. 8.2 Warranties In non-consumer contracts, no specific wording is required to create a warranty. The word “warranty” is not required, but may be considered as evidence of the intention to create a warranty. Further, a warranty may be express or implied (Section 33 of the MIA). A warranty is treated differently from a contractual term in that it must be strictly complied with, regard- less of whether it is material to the risk. The insurer is discharged from liability from the date of breach of the warranty, although without any prejudice to any liability incurred before that date. The Irish courts construe warranties strictly, as a breach entitles the insurer to repudiate liability even if the breach is not material to the loss. CICA replac- es warranties in consumer contracts with suspen- sive conditions and abolishes the basis-of-contract clauses. 8.3 Conditions Precedent The effect of a breach of a condition depends on whether the condition is a condition precedent to lia- bility. Conditions precedent to liability relate to mat- ters arising after a loss has occurred – most com- monly in relation to notification. The Irish courts will generally not construe an insurance condition as a condition precedent unless it is expressed as such or the policy contains a general condition precedent
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