Risk Partners Life Sciences Roundtable 2025, thank you very much! 

OLG Schleswig: Limitation of the liability claim
in the case of a direct claim in the D&O insurance.

There is a new, exciting ruling from the world of D&O insurance. We recently reported on the decision of the Higher Regional Court of Cologne in the context of direct action. Now the Higher Regional Court of Schleswig has also made a groundbreaking decision.

What was it about? The focus was on the question of the statute of limitations. However, it must be borne in mind that the question of the limitation period in D&O claims is not trivial. On the one hand, there is the original claim for damages (statutory directors' and officers' liability separate from the D&O insurance) as well as a claim under cover law that arises between the parties - insurer, insured persons and insured companies - due to the conclusion of the D&O insurance. Now both the claim for damages and the contractual claims under the D&O insurance can become time-barred. If the limitation period for the claim under cover law is now suspended by filing a direct claim or a direct action with the insurer, what does this mean for the necessary liability claim? Can an insurer release itself from liability in this case if the claim is already time-barred? The decision of the Higher Regional Court of Schleswig has now clarified this question.

Background: A fire in a bakery caused considerable damage, of which the fire insurance only covered part, justifiably due to the contractual conditions. (Note: We therefore recommend regularly documenting and reviewing the sums insured and the content of the insurance cover). The operator of the bakery claimed the remaining loss by holding the managing director liable for breach of duty. As a result, the managing director assigned his claim for indemnification under the D&O insurance policy to the company (see the attached diagram). D&O insurance usually covers a company's executives. In the event of a claim, claims must first be asserted against the insured person before they can be enforced against the insurer. This often results in complex and time-consuming liability and coverage disputes. In practice, the dispute is increasingly being conducted in direct proceedings by assigning the insured person's right to indemnification to the policyholder. This allows the policyholder to assert its claims directly against the insurer. The decision: In its ruling of 26.02.2024(case no. 16 U 93/23), the Higher Regional Court of Schleswig stated that this assignment of the right to indemnification constitutes a "truce agreement" (pactum de non petendo) was implicitly concluded. This agreement prevents liability proceedings against the managing director as long as the claim against the insurer exists and suspends the limitation period for statutory liability claims. The suspension under cover law by filing a direct action or a direct claim with the insurer therefore also suspends the statutory limitation period.

The ruling by the Higher Regional Court of Schleswig fundamentally strengthens the position of companies that wish to take direct action against their D&O insurers. It deprives insurers of a further opportunity to reject claims without an indemnification. This makes it more attractive to take direct action against the D&O insurer rather than against the responsible managers. In addition to the transfer of control by the manager concerned, especially in the case of an assignment on account of performance in accordance with section 364(2) of the German Civil Code (BGB), there are other aspects to consider. These include, for example, the effects on public limited companies under the strict AG regime and, in principle, the disadvantages associated with the "direct action", such as contractual insurance obligations in the event of a claim. For this reason, Risk Partners will continue to closely monitor developments relating to direct action on behalf of our clients. We at Risk Partners will stay on the ball for you.

Also read our other blog posts

Venture Capital

We provide information on liability risks for VC funds in the VC Magazine

In December, we were asked by VC-Magazin whether we could provide insights into liability and risk management issues relating to venture capital funds. With pleasure! Together with the team, Florian not only provided insights into current challenges, but also suggested practical solutions to effectively minimize and sensibly transfer the risks of a VC fund. In the VC Magazine article, you will therefore find: added value of customized insurance concepts for VC funds (focus: D&O/E&O insurance #Moonshot Protect), key measures for risk prevention (learning curve from our claims world), indemnifying contractual provisions as a preventive measure, and

Read more "
Being Public

Public prosecutor's office investigates: Suspicion of deception in short-time work (Sono Motors)

No startup bonus for criminal and administrative offenses. The incident and possible insurance cover. As exclusively researched by Hannah Schwär and her team at Capital Magazin, the founders of Sono Motors are now also facing problems with the public prosecutor's office. According to Capital Magazin, subsidy fraud in the context of short-time work and the programs surrounding the corona crisis is in the offing. The company, which is listed on the NASDAQ via De-SPAC, has already filed a report with the SEC. While the loss amount of EUR 40,000 is still being

Read more "
Risk Partners

13th Hamburg Financial Lines Forum

Risk Partners at the Financial Lines Forum 13th Hamburg Financial Lines Forum. On October 12 and 13, 2023, the 13th Hamburg Financial Lines Forum took place with the participation of Risk Partners, a traditional event that once again served as a platform for the exchange of current trends. The program began with an overview of current developments and the handling of claims in financial lines, presented by Gabriele Schreiber-Sahin and Michael Hendricks. Dr. Oliver Sieg then shed light on directors' and officers' liability and the

Read more "
Being Public

New SEC Ruling: Transatlantic convergence in dealing with cyber security incidents

Foreign Filers / Private Issuers watch out! 2023 brought further harmonization of European and US standards for cyber incident reporting. According to the SEC Ruling, all companies listed on the US stock exchange are now required to publicly report significant data security incidents to the SEC within four working days. In addition, they must outline in their annual report (10-K) their procedures for identifying and addressing material cybersecurity risks, including the role of the board of directors. Note: This rule also applies to foreign private issuers (e.g., German companies that issue a

Read more "
Being Public

Global Integrity and Compliance Forum 2024 

𝗚𝗹𝗼𝗯𝗮𝗹 𝗜𝗻𝘁𝗲𝗴𝗿𝗶𝘁𝘆 𝗮𝗻𝗱 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗙𝗼𝗿𝘂𝗺 𝟮𝟬𝟮𝟮𝟰 "D&O and Co. - Plan B to cover personal liability!" Last Friday, Florian had the honor of taking part in the Global Integrity and Compliance Forum at the Ludwig-Maximilians-Universität in Munich. Under the motto "The RULE of LAW in the Era of Integrity & Compliance", international legal experts, company managers, in-house councils and compliance officers from all over the world gathered to discuss the future of good corporate governance in 2024. Key discussions and insights One of the

Read more "
Management

OLG Schleswig – Statute of Limitations for Liability Claims in the Case of Direct Claims in D&O Insurance

OLG Schleswig: Statute of limitations for liability claims in the case of direct claims in D&O insurance. There is a new, exciting verdict from the world of D&O insurance. Recently, we reported on the decision of the Higher Regional Court of Cologne in the context of the direct lawsuit. Now the Higher Regional Court of Schleswig has also made a groundbreaking decision. What was it about? The focus was on the question of the statute of limitations. However, it must be taken into account that the question of the statute of limitations in the event of a D&O claim is not trivial. On the one hand, there is the original claim for damages (statutory D&O liability

Read more "