LIECHTENSTEIN Law and Practice Contributed by: Alexander Ospelt, Lukas-Florian Gilhofer, Vivianne Auer and Laura Bayer, Ospelt & Partner Attorneys at Law Ltd
7.2 Foreign ART Transactions Liechtenstein does not automatically classify an ART contract written abroad as “reinsurance” simply because the issuing jurisdiction calls it such. The deci- sive question for Liechtenstein regulatory and solven- cy purposes is: does the arrangement, in substance, transfer insurance risk from a (re)insurer? • if the answer is yes, Liechtenstein treats the ART contract as reinsurance for supervisory, account- ing, and solvency purposes. • if no, the ART contract is not treated as reinsurance and is instead classified under the appropriate regulatory regime (financial instrument, derivative, securitisation, investment product, etc). The place of domicile or the qualification of the coun- terparty as a (regulated) reinsurer abroad is not deci- sive. 8. Interpreting an Insurance Contract 8.1 Interpretation of Insurance Contracts and Use of Extraneous Evidence Under Liechtenstein law, the general principles gov- erning the interpretation of contracts apply equally to insurance contracts. No distinction is drawn between the interpretation of consumer contracts and that of commercial contracts. As a primary rule, the common intention of the parties at the time of contract forma- tion prevails insofar as such intention can be estab- lished. Where no actual concurrence of intention can be determined, the contract or the relevant provision must be interpreted according to its ordinary meaning, having regard to the purpose of the agreement. However, interpretation is not confined to the literal wording where this would fail to reflect the parties’ true intentions. The contract may be construed con- tra verba where necessary to give effect to the par- ties’ actual intent, ascertained within the recognised framework of contractual interpretation. Where a clear meaning nevertheless cannot be derived, the declara- tion of intent must be interpreted in accordance with the principles of good faith and honest commercial practice (supplementary interpretation).
Pursuant to Section 914 of the ABGB, contractual gaps in an otherwise validly concluded agreement may be filled by the courts, provided such gaps were left by the parties, typically unintentionally. The courts assess how the parties would reasonably have regu- lated the matter had they been aware of the omission, taking into account customary practice and the pre- sumed intention of the parties. Supplementary inter- pretation under Section 914 of the ABGB does not, however, extend to the essentialia negotii of the con- tract. Where ambiguities persist, Section 915 ABGB provides that unclear provisions are to be interpreted to the detriment of the party who formulated them – in practice generally the insurer. 8.2 Warranties Liechtenstein law does not recognise “warranties” as a distinct category of insurance term in the com- mon law sense (ie, strict conditions precedent whose breach automatically discharges the insurer from liability). Therefore, a clause is not treated as a “war- ranty” simply because it is labelled as such, and there is no special statutory definition of “warranty” in insur- ance contracts. Any clause that imposes a duty on the policyholder – such as risk-increasing restrictions, obligations to notify, safety obligations, or pre-contractual disclosure duties – is interpreted using the general principles of contract interpretation under the ABGB, in particular Sections 914 et seq of the ABGB. Warranties are generally treated like other contrac- tual clauses, but ambiguities are typically construed against the party drafting them, similar to the “contra proferentem” principle. If a warranty is breached – eg, the insurer fails to provide the promised additional coverage – the insured party can assert rights under the contract, potentially including claims for perfor- mance or damages. 8.3 Conditions Precedent In Liechtenstein, parties to an insurance contract may agree that the liability of the insurer is subject to the condition that the policyholder has complied with certain specific obligations – ie, obligations or circumstances that must be fulfilled before the insur- er’s liability arises. Typical examples include timely
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