Insurance Litigation 2026

Definitive global law guides offering comparative analysis from top-ranked lawyers

Definitive global law guides offering comparative analysis from top-ranked lawyers

Contributing Editor Emma Ager Clyde & Co

Practice Guides

Insurance Litigation

Contributing Editor Emma Ager Clyde & Co LLP

2026

Chambers Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair, Stephen Dinkeldein, Vivienne Button and Sean Marshall Content Reviewers Lawrence Garrett, Marianne Page, Heather Palomino, Alison Moore, Adrian Ciechacki and Michael Irvine Content Coordination Manager Nancy Tsang Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Joanna Chivers Head of Production Jasper John Production Coordinator Genevieve Sibayan

Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com

Contents

INTRODUCTION Contributed by Emma Ager, Clyde & Co LLP p.5 BAHRAIN Law and Practice p.9 Contributed by Hassan Radhi & Associates

MEXICO Law and Practice p.174 Contributed by De la Garza & Acosta Abogados, S.C. Trends and Developments p.192 Contributed by OCAMPO 1890

OMAN Law and Practice p.198 Contributed by ALC Lawyers & Counsel SPAIN Trends and Developments p.216 Contributed by Hogan Lovells Cadwalader SWITZERLAND Law and Practice p.224 Contributed by CMS von Erlach Partners Ltd Trends and Developments p.242 Contributed by CMS von Erlach Partners Ltd

BELGIUM Law and Practice p.23 Contributed by Lydian BERMUDA Law and Practice p.33 Contributed by Carey Olsen

CANADA Law and Practice p.41

Contributed by Stieber Berlach LLP Trends and Developments p.57 Contributed by Stieber Berlach LLP CHINA Law and Practice p.63 Contributed by W&H Law Firm Trends and Developments p.77 Contributed by AnJie Broad Law Firm

UK Law and Practice p.248 Contributed by SDV Fenchurch Trends and Developments p.259 Contributed by SDV Fenchurch UAE Law and Practice p.267 Contributed by NHB Legal Trends and Developments p.285 Contributed by NHB Legal

DENMARK Law and Practice p.84 Contributed by Bruun & Hjejle

FRANCE Law and Practice p.102 Contributed by Signature Litigation AARPI Trends and Developments p.118 Contributed by Signature Litigation AARPI GERMANY Law and Practice p.124 Contributed by Noerr Trends and Developments p.141 Contributed by Noerr

USA Law and Practice p.289 Contributed by Thompson, Coe, Cousins & Irons, LLP

USA – CALIFORNIA Trends and Developments p.306 Contributed by TittmannWeix USA – FLORIDA Trends and Developments p.312 Contributed by Cozen O’Connor

INDIA Law and Practice p.147 Contributed by Tuli & Co

USA – IOWA Trends and Developments p.319 Contributed by Dickinson, Bradshaw, Fowler & Hagen, P.C.

JAPAN Law and Practice p.164 Contributed by Hiratsuka & Co

USA – MARYLAND Trends and Developments p.324 Contributed by Funk & Bolton, P.A.

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Contents

USA – NEVADA Trends and Developments p.331 Contributed by Dickinson Wright PLLC USA – NEW JERSEY Trends and Developments p.336 Contributed by Pollock Law, LLC

USA – NEW YORK Trends and Developments p.343 Contributed by Wachtell, Lipton, Rosen & Katz

USA – NORTH CAROLINA Trends and Developments p.348 Contributed by Teague Campbell Dennis & Gorham LLP USA – TEXAS Trends and Developments p.354 Contributed by Thompson, Coe, Cousins & Irons, LLP

4 INSURANCE LITIGATION 2026

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INTRODUCTION

Contributed by: Emma Ager, Clyde & Co LLP

Clyde & Co LLP is the world's pre-eminent insurance law firm, providing high-quality advisory and dispute resolution services to insurers and their clients across established and emerging markets. It offers coverage and defence capabilities across all lines of insur- ance and reinsurance, from small claims to the most complex losses. Its dispute resolution practice spans litigation, alternative dispute resolution, and conten- tious regulatory proceedings, supporting clients in managing risk and achieving efficient outcomes. Its market-leading practice includes 65 Partners across

the UK and 176 globally, alongside a wider network of specialists who regularly work with insurers. With over 70 offices and associated locations across the UK, Europe, North America, Latin America, Asia Pa- cific, the Middle East and Africa, it supports clients both domestically and internationally. The firm’s in- surance expertise is complemented by our corporate and advisory practice, offering services including policy wording, product development, funding and recoveries, delivered through seamlessly integrated, cross-jurisdictional teams. including product liability, D&O, property, profes- sional indemnity and excess liability. She is also an experienced litigator of coverage disputes in the English Courts, including at appellate level where she has appeared before the UK Supreme Court, and in arbitration proceedings. She regularly acts in, or supports, complex disputes across multiple jurisdictions, including the United States, Europe and South America.

Contributing Editor

Emma Ager is head of Clyde & Co’s market-leading Bermuda Form practice. She has extensive experi- ence running high-value coverage disputes to arbitration, advising on both insurance and reinsurance

matters. She regularly acts for, amongst others, London market insurers, reinsurers, and major Bermuda Form insurers. Emma advises across a wide range of insurance and reinsurance classes,

Clyde & Co LLP The St Botolph Building 138 Houndsditch London EC3A 7AR United Kingdom Tel: +44 20 7876 4491 Email: Emma.ager@clydeco.com Web: www.clydeco.com/en/people/a/emmaager

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INTRODUCTION Contributed by: Emma Ager, Clyde & Co LLP

This 2026 edition of the Chambers Insurance and Reinsurance Practice Guide covers changes to law and legislation which impact insurers handling claims in several jurisdictions in various continents. As with the edition last year, it also analyses both current and potential future trends. Many of those trends are rep- licated across multiple jurisdictions and can be sum- marised below. Technology, Cyber and AI-Related Disputes The most consistent global trend is the rapid emer- gence of cyber, technology and AI-related risks as a major source of insurance disputes. Jurisdictions including the UK, France, the UAE, Denmark, China and Canada all identify cyber losses, technology fail- ures, ransomware incidents and data breaches as increasingly important sources of litigation. There is also growing concern regarding cloud outages, software failures and failures of critical digital infrastruc- ture, which can generate widespread business inter- ruption losses without any traditional physical damage. These developments have intensified debates regard- ing so-called silent cyber exposure. Whilst attempts have been made to clarify whether cyber-related losses are intended to be covered under traditional property, liability and financial lines policies, disputes continue to arise where losses fall between dedicated cyber policies and more traditional insurance prod- ucts. Issues also arise as to whether state-sponsored cyber-attacks might be treated as an act of war and so fall within the scope of a war exclusion in a policy. Artificial intelligence represents the next phase of this evolution. For example, France, Denmark, Canada and China all identify AI-related liability as a signifi- cant emerging exposure. Judicial consideration of AI- generated evidence has been reported and several jurisdictions have highlighted professional responsi- bility concerns arising from lawyers’ over-reliance on AI-generated material. The consistent line adopted by judiciary around the world is that professionals remain responsible for work produced with the assistance of AI tools. As a result, a potential increase in AI-related professional negligence claims might be anticipated. Separately, legal practitioners have highlighted that AI could help generate an increased number of claims

generally (against both insureds and insurers) and insurers are already reporting an increase in notifica- tions that appear to be the result of AI use. One aspect of this is that the use of AI tools has enabled third-party claimants more easily to generate claims than previ- ously, which has increased the exposure of insureds, who in turn have sought to pass this on to their insurers. Several jurisdictions also anticipate future disputes concerning automated decision-making, algorithmic bias and AI-generated professional advice, which raises issues concerning the allocation of responsi- bility between developers, deployers and users of AI systems. The UAE and the USA additionally report growing concerns regarding AI-generated claims, complaints and supporting evidence, raising practi- cal questions regarding authentication, reliability and evidential standards. Canada has reported that D&O insurers face “AI washing” claims which allege that companies or directors have overstated or misrepre- sented AI capabilities. The rapid growth of data centres and digital infrastruc- ture also appears throughout the guide. Denmark, France, Japan, Mexico, Oman, the UAE and the UK in particular all identify data centres as a developing area of insurance exposure. Power failures, cooling-sys- tem breakdowns, energy supply resilience/depend- ence and cyber incidents are becoming increasingly important underwriting and claims considerations. Contributors also note growing concerns regarding accumulation risk, as multiple policyholders become dependent upon a relatively small number of digital infrastructure providers. Furthermore, traditional busi- ness interruption policies do not necessarily cater for interconnected data centre operations. Climate Change and Environmental Liability Climate-related risks continue to influence virtually every area of the insurance industry. Across multiple jurisdictions, contributors report increasing losses arising from severe weather events, flooding, envi- ronmental contamination and business interruption. The impact has been noted by legal practitioners in multiple jurisdictions. In the UAE, severe rainfall and flooding events continue to generate significant claims activity and complex disputes concerning causation,

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INTRODUCTION Contributed by: Emma Ager, Clyde & Co LLP

valuation and policy scope. Oman has responded by expanding compulsory natural catastrophe protection within motor insurance, illustrating how regulators are increasingly intervening to address climate-related exposures. There is a growing concern too regarding environ- mental claims involving hazardous substances such as PFAS – for example, this is a major source of cover- age disputes in the USA. Climate-related disputes frequently raise difficult questions regarding aggregation, business interrup- tion, valuation and policy trigger. Insurers are respond- ing through more detailed underwriting, revised exclusions, sub-limits and increasingly sophisticated catastrophe modelling. Environmental liabilities represent another significant area of development. The growing importance of ESG-related obligations is causing particular concern. France, Denmark, the UAE, the UK and the USA all report increasing scrutiny of sustainability disclosures, climate governance and environmental reporting. Directors and officers are facing greater exposure to claims arising from alleged greenwashing, inadequate climate-risk management and failures in sustainability reporting. While ESG litigation remains (or appears to remain, as far as it is possible to tell) relatively limited in some jurisdictions, such as India, Japan, Mexico and Oman, contributors generally expect ESG claims to become more prominent as disclosure obligations expand and regulatory scrutiny intensifies. The introduction of climate-related reporting requirements in jurisdic- tions such as the UAE and France is likely to accel- erate this trend – the latter reports that directors are exposed to claims arising from a failure to implement credible transition plans too. Geopolitical Instability and Global Supply Chains Geopolitical instability and war have become one of the defining influences on insurance disputes in recent years. Contributors from various jurisdictions all iden- tify sanctions, political violence, war-risk exposures and supply-chain disruption as increasingly important sources of litigation.

Marine, cargo and logistics insurance appear particu- larly affected. In the Middle East, increasing disputes concerning cargo rerouting, port congestion, stor- age issues, delay-related losses and the interaction between marine, construction and project insurance programmes are being reported, most especially from troubles in the Strait of Hormuz. These disputes often turn on complex questions regarding causation, tim- ing, policy trigger and the allocation of losses between multiple policies. The UK similarly reports substantial litigation arising from sanctions, aviation losses, political risk claims and geopolitical disruption. The aviation disputes arising from aircraft retained in Russia following the invasion of Ukraine have generated significant judi- cial consideration of war-risk provisions, confiscation clauses and reinsurance recoveries in recent years. Sanctions-related disputes have also become increas- ingly common. Several jurisdictions report growing challenges arising from overlapping sanctions regimes and the practical difficulties associated with cross- border payments. Even where coverage is accepted, insurers may face obstacles in processing payments through international banking systems or recovering funds from reinsurers subject to different regulatory regimes. Cyber warfare adds further complexity. Increasing attention is being turned to cyber war exclusions and questions concerning attribution. As cyber operations become more sophisticated and state involvement becomes harder to establish, disputes concerning the application of traditional war exclusions are likely to increase. Canada has reported potential “tariff washing” claims, where companies or directors miscommunicate or omit material information regarding tariff impacts, mitigation strategies and financial implications. Com- panies may struggle to keep track of an ever-evolving tariff landscape. Policy Wording; Aggregation As with prior years, perhaps the most consistent theme across all jurisdictions is the central importance of policy wording.

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INTRODUCTION Contributed by: Emma Ager, Clyde & Co LLP

Whether the dispute concerns cyber incidents, cli- mate-related losses, supply-chain disruption, pro- fessional liability or geopolitical events, contributors repeatedly emphasise that outcomes are increas- ingly determined by the precise language used within policies. Several jurisdictions report growing disputes concerning exclusions, endorsements, sub-limits and the interaction between multiple policy provisions. Aggregation has become one of the most commer- cially significant areas of insurance litigation. The issue arises repeatedly across multiple classes of business, including cyber insurance, professional indemnity, D&O liability, casualty claims, construction disputes and catastrophe losses and has real world impact on the value of claims. As risks become more interconnected, aggregation disputes are likely to become even more important. Systemic cyber incidents, widespread technology failures, supply-chain disruptions and climate-related losses all have the potential to generate large numbers of related claims arising from a common underlying cause. Claims Handling and Regulatory Intervention Another recurring theme is the increasing scrutiny of insurer conduct and claims handling. Several jurisdictions have reported growing judicial and regulatory interest in the manner in which insurers investigate, evaluate and resolve claims. In many juris- dictions, disputes are no longer confined to questions of coverage. Policyholders increasingly challenge the claims process itself, including delays, requests for information, communication failures and decision- making practices. In the UK, for example, the introduction of Section 13A of the Insurance Act 2015 continues to influence mar- ket behaviour by exposing insurers to potential liabil- ity for failing to pay valid claims within a reasonable time. Similar developments are evident elsewhere. For example, the UAE and Oman appear to be potentially moving towards the introduction of reforms designed to improve transparency and claims-handling stand- ards.

Belgium introduced legislation in 2024 requiring non- marine insurers to respond to claims within three months and to pay within 30 days after settling a claim. Financial penalties can be imposed in the event of a breach. In the USA, contributors refer to the availability of “bad-faith” remedies in insurance litigation, which is determined at state level. A growing number of states have enacted laws creating additional penal- ties such as damage multipliers, recovery of legal fees and interest rates of up to 18% for insurers who have unreasonably delayed or denied payment. Regulators are also focusing increasingly on opera- tional resilience, cybersecurity, consumer protec- tion and governance. Growing regulatory attention to operational controls, technology governance and customer outcomes are being reported across multi- ple jurisdictions. These developments are influencing both underwriting practices and litigation strategy. Looking Ahead The jurisdictions represented in this guide vary consid- erably in terms of legal systems, regulatory structures and market maturity. Nevertheless, there is remark- able consistency in some of the challenges they face. Technology, artificial intelligence and digital infrastruc- ture are likely to remain dominant sources of future disputes. Climate change and ESG obligations are also likely to continue to influence underwriting, gov- ernance and claims. Geopolitical instability, sanctions and supply-chain disruption are expected to remain persistent features of the risk landscape, at least in the short-term. At the same time, courts and regulators are placing increasing emphasis on policy wording, aggregation, claims handling and insurer conduct. Against this backdrop, insurers, policyholders and their advisers are devoting greater attention to policy drafting, programme design and risk allocation before losses occur. Whilst many of the issues raised in this year’s report reflect concerns which have been raised in previous editions, the coming years are likely to see further evolution as legal frameworks strive to adapt to an increasingly complex risk environment.

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BAHRAIN

Iran

Bahrain

Qatar

Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan Hassan Radhi & Associates

Saudi Arabia

U.A.E.

Contents 1. Key Drivers and Resolution of Insurance Disputes P.11 1.1 Common Triggers of Insurance Disputes p.11 1.2 Role of Policy Wording and Drafting p.11 1.3 Dispute Resolution Strategy and Outcomes p.12 2. Jurisdiction and Choice of Law P.12 2.1 Choice of Law in Insurance Contracts p.12 2.2 Jurisdiction and Forum Selection p.12 2.3 Cross-Border Disputes and Conflicts Issues p.13 2.4 Anti-Suit Injunctions p.13 2.5 AI-Related Dispute Resolution and Jurisdiction p.13 3. Arbitration in Insurance Disputes P.13 3.1 Recognition of Arbitration Clauses p.13 3.2 Enforcement of Arbitral Awards p.14 3.3 Practical Use of Arbitration in Insurance Matters p.14 4. Coverage Disputes P.14 4.1 Evolving Trends in Coverage Disputes p.14 4.2 Policy Wordings and Interpretation Developments p.15 4.3 Cyber and Technology-Related Coverage Issues p.15 4.4 Aggregation and Limits of Liability p.15 4.5 Sanctions and Illegality Issues p.16 4.6 Late Payment and Claims Handling Practices p.16 4.7 ESG and Climate-Related Coverage p.16 4.8 Delegated Authority and Claims Responsibility p.17 4.9 Financial Lines Coverage Trends p.17 4.10 Casualty Coverage Trends p.17

5. Claims Against Insureds P.17 5.1 Key Exposure Areas for Insureds p.17 5.2 Shifting Risk Landscape p.18 5.3 Defence Costs and Litigation Complexity p.18 5.4 Cost Risk Management and Funding Solutions p.18 5.5 AI-Driven Claims Volumes and Complaints p.19 6. Third-Party Claims and Defence Trends P.19 6.1 Third-Party Claims and Direct Actions p.19 6.2 Emerging Liability and Defence Trends p.19 7. Geopolitical Factors P.19 7.1 Geopolitical Drivers of Insurance Disputes p.19 7.2 Sanctions and Payment Challenges p.20 7.3 War, Political Risk and Exclusions p.20 7.4 Supply Chain and Systemic Loss Events p.20 7.5 Forward Outlook and Market Response p.20 8. Emerging Risks P.21 8.1 Market Overview of Emerging Risks p.21 8.2 Impact of ESG on Underwriting and Insurance Litigation p.21 8.3 Data Protection Laws p.21 8.4 Data Centres p.21 8.5 Social Media Risk p.22 8.6 Next Generation Nuclear p.22 9. Legislative and Regulatory Key Trends P.22 9.1 Regulatory Focus Areas and Supervisory Trends p.22 9.2 Forthcoming Reforms and Market Impact p.22

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BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates

Hassan Radhi & Associates was founded in 1974 by Dr Hassan Ali Radhi and has developed from a local practice into one of Bahrain’s most established law firms, serving clients across Bahrain, the GCC and internationally. From an early stage, the firm recog- nised the importance of cross-border legal work and strengthened its international capabilities through an association with the renowned US law firm Coudert Brothers, operating for almost eight years as Coudert Brothers in Association with Hassan Radhi. This rela- tionship enhanced the firm’s expertise in international

business transactions, commercial law, banking, in- surance and multi-jurisdictional matters. Building on this foundation, the firm continued to expand its ca- pabilities and reputation across Bahrain and the Gulf region. In 1994, following the admission of additional partners, it adopted its current name, Hassan Radhi & Associates – Attorneys & Legal Consultants. Today, the firm provides comprehensive legal services and strategic advice across all areas of Bahraini law.

Authors

Mohamed Shaban is a senior lawyer at Hassan Radhi & Associates with extensive experience in dispute resolution and advisory work. His practice focuses on civil and commercial litigation, insurance and

Mohsin Al Alawi is a partner at Hassan Radhi & Associates and has led the firm’s courts and disputes team since 2014. He has represented corporate clients in major disputes before the Bahraini courts and has

reinsurance, banking and financial disputes, employment matters, and domestic and international arbitration. He regularly represents local and international clients before the Bahraini courts and advises insurers, financial institutions and corporations on complex contentious and non-contentious matters. Mohamed holds an LLB from the University of Bahrain, an MSc in Islamic Finance from Coventry University, an Advanced Diploma in Islamic Finance from BIBF, and a CMI Level 7 professional management qualification.

extensive experience in litigation, court procedures, regulatory proceedings and complex transactions. His practice spans banking and finance, construction, investment, manufacturing, transport, utilities, insurance, real estate, healthcare and education. Mohsin is recognised for his strong command of procedural and substantive legal issues, his ability to manage significant and technically complex matters, and his practical approach to advising and representing clients across a broad range of sectors.

Qassim Al Fardan is a partner at Hassan Radhi & Associates with strong experience in litigation, legal research and arbitration. He is known for his ability to analyse complex legal issues, formulate effective case

strategies, and interpret Bahraini law in comparison with regional jurisdictions. Qassim has extensive experience in researching legislation, judgments and arbitral matters, and is a strong advocate in written submissions and oral arguments before the courts. He has been registered as an arbitrator with the GCC Commercial Arbitration Centre since 2014.

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BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates

Hassan Radhi & Associates Office 91 & 92 Building 372

Road 4611 Block 346

Manama Sea Front Kingdom of Bahrain Tel: (+973) 17 535 252 Fax: (+973) 17533358

Email: info@hassanradhi.com Web: www.hassanradhi.com

1. Key Drivers and Resolution of Insurance Disputes

1.2 Role of Policy Wording and Drafting Policy wording contributes materially to insurance disputes in Bahrain. However, the difficulty often lies not only in the meaning of a particular clause but also in how the policy has been drafted, structured and presented. Problems may arise where standard international wordings are adopted without sufficient adaptation to Bahraini law, where the schedule and endorsements are inconsistent with the general condi- tions, where there are discrepancies between Arabic and English versions, or where the contractual hier- archy between different policy documents is unclear. Article 696 of the Bahrain Civil Code is particularly important. Conditions relating to invalidity, forfeiture of the insured’s rights or arbitration may not be invoked against the insured unless they have been prominently highlighted, such as through block lettering or larger print. Articles 697 and 698 provide further protection against certain late-notification provisions and arbi- trary or insufficiently specific exclusions. Recurring areas of contention include exclusions, noti- fication requirements, non-disclosure or misrepresen- tation, warranties and conditions precedent, deducti- bles, policy limits, aggregation provisions, causation wording, claims-made provisions and arbitration clauses. Insurers should therefore consider not only whether the intended protection appears somewhere in the policy, but whether it has been drafted and pre- sented in a manner that makes it legally enforceable.

1.1 Common Triggers of Insurance Disputes Motor insurance disputes represent the largest cat- egory of insurance disputes by volume in Bahrain. This is principally because third-party motor liability insurance is compulsory and motor accidents gener- ate a continuous flow of claims. Disputes commonly concern responsibility for the accident, repair costs and methods, depreciation, total-loss valuation, bod- ily injury compensation, compliance with claims pro- cedures and delays in settlement. By value and complexity, significant disputes also arise under property, fire, engineering, construction, marine, cargo, medical and professional liability poli- cies. These disputes are more likely to concern cau- sation, the application of exclusions, the adequacy of disclosure, the valuation of loss, policy limits and the conclusions reached by loss adjusters or techni- cal experts. The overall pattern has not materially changed in recent years, and motor insurance remains the prin- cipal source of claims by number. However, the mar- ket is gradually encountering more specialised issues arising from professional indemnity, cyber-risks, tech- nology failures and, more recently, war and political violence risks. These claims may be fewer in number but tend to involve higher values, more complex policy wording and a greater cross-border or reinsurance element.

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BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates

1.3 Dispute Resolution Strategy and Outcomes

In the absence of an effective choice, Article 17 gen- erally applies the law of the parties’ common habitual residence or, where there is no common habitual resi- dence, the law of the place where the contract was concluded, unless the circumstances indicate the application of another law. The parties may also select different laws for severable parts of the same contract. The parties’ choice remains subject to Bahraini pub- lic policy and any overriding mandatory provisions. In consumer insurance contracts, the choice of law may not deprive the consumer of mandatory protec- tion available under the law of the consumer’s habit- ual residence. Party autonomy is therefore generally broader in reinsurance and other negotiated commer- cial policies than in retail or consumer insurance. 2.2 Jurisdiction and Forum Selection Jurisdiction clauses in insurance contracts are con- sidered under the general principles of Bahrain Civil and Commercial Procedures Law. The court will first determine whether Bahraini jurisdiction exists under the statutory rules governing international jurisdic- tion. A contractual forum clause will be considered within that framework and cannot confer jurisdiction where the matter falls outside the court’s competence or displace any exclusive or mandatory jurisdiction prescribed by law. In ordinary domestic insurance policies, it is uncom- mon for the parties to select the courts of another country. The insured, the risk and the insurer are usu- ally connected with Bahrain, and disputes are ordi- narily submitted to the Bahraini courts. Where par- ties wish to exclude court proceedings, an arbitration clause is generally more common than a foreign court jurisdiction clause. Foreign jurisdiction clauses are more frequently encountered in reinsurance, marine, aviation and other substantial commercial risks involving an inter- national reinsurer or a policy based on an international market wording. In those cases, the clause should be clear and consistent with the governing-law provi- sion, the service-of-process arrangements and any dispute-resolution provisions appearing in the under- lying policy or reinsurance contract.

In general insurance disputes, insurers commonly seek to assess the claim through an internal claims team, a loss adjuster or an external technical expert before deciding whether to reject, settle or partial- ly admit it. Where the exposure can be reasonably quantified, insurers often prefer an early commercial settlement to prolonged litigation. This enables the insurer to control defence costs, establish a definite reserve and avoid the uncertainty associated with court-appointed expert evidence. Insureds may also favour settlement where coverage is reasonably clear but the principal disagreement concerns quantum. Formal proceedings are more likely where the parties disagree on a fundamental coverage issue, the validity of an exclusion, causa- tion, allegations of non-disclosure, or a substantial difference between competing valuations. Motor insurance is more structured because the compulsory third-party and comprehensive motor policies, together with their claims procedures, have been standardised by the Central Bank of Bahrain. The CBB also maintains a formal complaints process for unresolved insurance complaints. Early settlement generally reduces legal and expert costs, but it may not be appropriate where the dispute raises an issue affecting a wider portfolio of policies. In such cases, an insurer may prefer to obtain a judicial determination rather than establish an adverse com- mercial precedent through repeated settlements. 2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts Insurance and reinsurance contracts are not subject to a separate conflict-of-laws regime in Bahrain. The applicable law is determined under Law No 6 of 2015 on Conflict of Laws in Civil and Commercial Matters with a Foreign Element. Party autonomy is generally recognised. Article 4 allows the parties to select the applicable law, includ- ing international trade law and commercial customs.

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BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates

2.3 Cross-Border Disputes and Conflicts Issues Cross-border insurance disputes are addressed through two related but distinct regimes. The inter- national jurisdiction of the Bahraini courts is deter- mined under Civil and Commercial Procedures Law, while the substantive law applicable to the dispute is determined principally under Law No 6 of 2015 on Conflict of Laws in Civil and Commercial Matters with a Foreign Element. Where foreign law applies, the parties are responsible for submitting and establishing the relevant provisions of that law. If they fail to do so, the court may apply Bahraini law. This creates a practical need for properly authenticated legal materials and, where appropriate, expert evidence explaining the content and applica- tion of the foreign law. Other practical difficulties include inconsistent gov- erning-law and jurisdiction clauses, the involvement of insurers and reinsurers in different jurisdictions, translation and legalisation requirements, service outside Bahrain, parallel proceedings and differences between the governing law of the underlying liability and the governing law of the insurance contract. In tort claims, Law No 6 of 2015 also recognises that an injured party may bring a direct claim against the insurer where the law governing the insurance con- Bahraini law does not generally employ the common- law concept of an anti-suit injunction as the ordinary means of enforcing an exclusive jurisdiction clause. A party faced with proceedings allegedly brought in breach of such a clause would normally raise a juris- dictional objection before the court in which the pro- ceedings have been commenced. The court would then determine the effect of the clause within the applicable statutory jurisdictional framework. tract permits such an action. 2.4 Anti-Suit Injunctions The position is more clearly regulated where the par- ties have agreed to arbitration. Under Article 8 of the UNCITRAL Model Law, as adopted in Bahrain, a court before which an action is brought concerning a mat- ter covered by an arbitration agreement must, upon a timely request, refer the parties to arbitration unless

the agreement is null and void, inoperative or incapa- ble of being performed. Anti-arbitration relief would therefore be exceptional. A party challenging the arbitration would ordinarily rely on the invalidity, absence or limited scope of the arbitration agreement, non-arbitrability of the dispute or another ground recognised by the Model Law. Applications for court-ordered interim measures are not, by themselves, inconsistent with an agreement to arbitrate. 2.5 AI-Related Dispute Resolution and Jurisdiction Our firm is not aware of any developed body of report- ed Bahraini court decisions addressing jurisdiction or choice of law specifically in relation to AI systems. Such disputes would currently be dealt with under the existing rules applicable to contracts, torts, data processing and cross-border civil and commercial disputes. In a contractual claim, the governing-law and jurisdic- tion clauses in the relevant technology, licensing, sup- ply or service agreement would be the starting point. In a tort claim, the court would consider where the legally relevant wrongful act occurred, although iden- tifying that location may be difficult where the system, developer, operator, data source and affected person are situated in different jurisdictions. AI disputes may create practical questions concerning the characterisation of the claim, the identity of the responsible party, the place at which an automated decision was made, and the relationship between the governing law of the underlying service and the law applicable to personal data. Until more specific legislation or case law develops, careful contractual allocation of responsibility and jurisdiction will remain particularly important. 3. Arbitration in Insurance Disputes 3.1 Recognition of Arbitration Clauses Arbitration clauses in insurance and reinsurance con- tracts are generally recognised in Bahrain. Law No 9 of 2015 adopted the UNCITRAL Model Law on Inter-

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BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates

national Commercial Arbitration, including its 2006 amendments. Where court proceedings are com- menced in respect of a dispute covered by a valid arbitration agreement, the court must refer the parties to arbitration if the objection is raised within the time prescribed by the Model Law. Insurance policies are nevertheless subject to the additional formal protection in Article 696 of the Civil Code. An arbitration condition may not be invoked against the insured unless it has been prominently highlighted by block lettering, larger print or an equiv- alent method. Merely including the clause among lengthy standard conditions may therefore be insuf- ficient. In commercial and reinsurance contracts negotiated between sophisticated parties, arbitration clauses are commonly upheld where the parties’ agreement is clear. To minimise disputes, the clause should iden- tify the seat, applicable rules, number and method of appointment of arbitrators, language, governing law and scope of disputes referred to arbitration. 3.2 Enforcement of Arbitral Awards Bahrain is a party to the New York Convention and has adopted the UNCITRAL Model Law through Law No 9 of 2015. Under Article 35 of the Model Law, an arbitral award is recognised as binding irrespective of the country in which it was made and may be enforced upon written application to the competent Bahraini court. The applicant must submit the award or a copy and may be required to provide an Arabic translation where the award is not in an official language of Bah- rain. Recognition or enforcement may be refused only on the limited grounds stated in Article 36. These include incapacity, invalidity of the arbitration agreement, lack of proper notice, inability to present a case, excess of jurisdiction, procedural irregularity, non-arbitrability and conflict with Bahraini public policy. The enforcement court does not conduct a rehearing on the merits. In practice, difficulties are more likely to concern service, translation, proof of authority, the scope of the arbitration agreement, due-process objections, public policy or the identification and

attachment of assets than a substantive reconsidera- tion of the tribunal’s decision. 3.3 Practical Use of Arbitration in Insurance Matters Arbitration is not the usual mechanism for high-volume retail or motor insurance disputes, which are generally handled through the claims process provided by the CBB complaints framework in the motor insurance or the Bahraini courts. It is more common in reinsurance disputes and in high-value or specialised policies, including major property, engineering, construction, marine, energy and professional liability risks. Arbitration may provide greater procedural privacy than court litigation, particularly where the parties select institutional rules containing confidentiality pro- tections or include an express confidentiality agree- ment. However, confidentiality should not be assumed to arise comprehensively from the Model Law alone. The agreement should address the confidentiality of pleadings, evidence, hearings, awards and informa- tion disclosed during enforcement or annulment pro- ceedings. Personal data processed in the arbitration also remains subject to applicable data protection requirements. An award is not subject to an ordinary court appeal on the facts or law. An application to set aside is the exclusive court recourse and is available only on the limited grounds in Article 34 of the Model Law. The parties may agree on an internal arbitral appellate mechanism, but this is distinct from an appeal to the Bahraini courts. 4. Coverage Disputes 4.1 Evolving Trends in Coverage Disputes One developing feature of coverage disputes is the legal characterisation of the insurer’s defence. In par- ticular, an insurer may contend that the event was never within the insuring clause, rather than relying on an exclusion, forfeiture provision or condition that removes an otherwise existing entitlement. This distinction can be significant because Article 696 of the Civil Code prevents an insurer from relying on

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BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates

4.3 Cyber and Technology-Related Coverage Issues Cyber-related coverage litigation remains relatively limited in Bahrain, and there is not yet a substantial body of reported decisions defining the treatment of cyber events under conventional policies. Neverthe- less, standard property, crime, professional liability and business interruption policies increasingly contain express cyber exclusions or limitations, while special- ised cyber policies are available to insure specifically defined technology and data risks. Potential disputes include whether a cyber incident caused physical damage, whether business inter- ruption cover requires physical loss, whether social- engineering fraud falls within crime or cyber cover, whether data restoration costs constitute insured loss, and whether a cloud or technology-service provider outage triggers contingent business interruption cov- er. Systemic incidents may also raise difficult aggrega- tion questions where one vulnerability affects multiple systems, locations or insured entities. Policy drafting is responding through more detailed definitions of cyber events, systems, data, security failures and insured loss. Insurers are also introducing sublimits, waiting periods, vendor-related conditions, ransomware provisions and exclusions addressing state-backed or war-related cyber operations. 4.4 Aggregation and Limits of Liability Aggregation and limit disputes are not the largest cat- egory of insurance cases by number, but they can become central in substantial property, construction, professional liability, marine and systemic-loss claims. The principal questions are whether multiple losses constitute one occurrence or several occurrences, whether they arise from a single originating cause, and whether separate limits, deductibles or sublimits apply. Before proceedings are commenced, the insurer will usually appoint a loss adjuster or an expert with expe- rience in the relevant class of insurance. The resulting report may form the basis for rejecting the claim, limit- ing the amount admitted or applying a particular policy limit. The insured may respond by appointing its own expert and challenging the methodology, assump-

conditions concerning invalidity or forfeiture unless they have been prominently highlighted. Where a poli- cy provision has not been presented in the prescribed manner, the insurer may seek to characterise the matter as an absence of initial coverage. The insured may respond that the argument is, in substance, an attempt to apply an exclusion or forfeiture provision that does not comply with Article 696. Coverage disputes therefore increasingly require care- ful analysis of the structure of the policy: the insuring clause, definitions, conditions, exclusions, endorse- ments and the legal consequence of each provision. Insurers are responding by refining policy architecture and separating fundamental coverage requirements from exclusions, while insureds increasingly scruti- nise whether a purported limitation is substantively an exclusion or forfeiture condition. 4.2 Policy Wordings and Interpretation Developments Bahraini courts apply the general Civil Code principles of contractual interpretation. Where the wording is clear, the court should not depart from it in an attempt to identify a different intention. Where interpretation is required, the court seeks the parties’ common intention, considering the nature of the transaction, commercial practice and the standards of loyalty and confidence applicable to the relationship. In cases of doubt, Article 126 provides that the term is interpreted in favour of the party who would be preju- diced by its application and, in particular, in favour of the debtor where the term creates or increases an obligation. Insurance policies may also constitute con- tracts of adhesion, in which case Article 59 requires ambiguity to be interpreted in favour of the adhering party – ordinarily the insured. Exclusions are generally construed within the policy as a whole and must be sufficiently clear to identify the risk removed from cover. Endorsements normally prevail over inconsistent standard conditions where that hierarchy is clear, but ambiguity may arise where the endorsement does not expressly identify the pro- visions it replaces or modifies.

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BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates

tions, causation analysis or interpretation adopted by the insurer’s adjuster. Neither party’s private expert report is necessarily determinative. Once litigation begins, the dispute fre- quently becomes a combination of technical assess- ment and legal interpretation. The court must deter- mine the policy’s legal effect while evaluating the competing factual and technical conclusions. 4.5 Sanctions and Illegality Issues Insurance companies operating in Bahrain are regulat- ed by the Central Bank of Bahrain and are subject to financial crime, sanctions-screening, anti-money laun- dering and counter-terrorist financing requirements. The CBB’s Compliance Directorate disseminates rel- evant blacklists and supervises licensees’ compliance with financial crime requirements. An insurer may therefore be unable to make a pay- ment where payment to the claimant, beneficiary, intermediary or relevant financial institution is prohib- ited by an applicable sanctions measure. Depending on the circumstances, the insurer may need to sus- pend or block the transaction, conduct enhanced due diligence, report the matter or seek regulatory authori- sation. The existence of sanctions may affect the abil- ity to pay without necessarily determining, by itself, whether the underlying claim falls within the policy. Illegality exclusions must also be drafted carefully. Article 698 of the Civil Code treats as invalid a clause that generally excludes activities contrary to laws and regulations unless the excluded activity is specifically identified. Public policy may also prevent enforce- ment of an insurance obligation that would require an unlawful act or defeat a mandatory rule of Bahraini law. 4.6 Late Payment and Claims Handling Practices Claims handling and delay remain important regula- tory and litigation issues. Article 712 of the Civil Code requires the insurer, once the insured risk has materi- alised, to pay the amount due within 30 days from the date on which the entitled person submits the details and documents necessary to establish the right to payment. However, the article does not provide any

liability on the insured if the amount is not paid during the 30 days. The CBB Rulebook also requires insurers handling claims to respond promptly, explain how the claim will be processed, identify any action required from the customer and handle claims fairly. Under the CBB complaints procedure, a non-life insurer’s complaints team should acknowledge a complaint on the same day and provide a written response within one week; longer periods apply to life insurance complaints. Motor claims are subject to a particularly structured framework under the unified compulsory third-party and comprehensive policies. These rules, together with CBB complaint escalation, encourage insurers to adopt documented claims procedures rather than dealing with claims on an informal or inconsistent basis. 4.7 ESG and Climate-Related Coverage ESG and climate-related coverage disputes have not yet developed into a distinct or significant category of insurance litigation in Bahrain. Climate-related losses are generally dealt with under conventional property, engineering, marine, business interruption or liability policies rather than through a separate body of ESG- related policy wording or case law. The principal issues are therefore likely to remain whether the relevant physical event is insured, wheth- er an exclusion applies, whether the insured complied with risk-management requirements and how the loss is valued. Insurers may address heightened envi- ronmental exposure through underwriting surveys, deductibles, sublimits, geographical risk assessment, maintenance conditions and exclusions for gradual pollution or deterioration. ESG considerations may increasingly influence insur- ers’ investment, governance and underwriting pro- cesses, but there has not yet been a corresponding material increase in Bahraini coverage disputes alleg- ing ESG misrepresentation, greenwashing or breach of climate-related obligations. The position may change as sustainability disclosure and environmental compli- ance requirements become more detailed.

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