A Comparative Assessment of the Applicable Law on Insurance Contract (Iran and European Union Law)

An insurance contract may connect two or more legal systems by virtue of interefering with one or several foreign elements. These systems can involve Iranian or European Union Law. European Union Law indicates Special Direction that contains criteria which determine the Applicable Law on Insurance Contracts. However, Iranian Private International Law has no specific Laws in this regard and consequently, making the general rules of the conflict of laws as the Applicable Law on Insurance Contract. The main rule in this field is Article 968 of the Civil Code. According to the connecting factors of the EU Insurance Directive, the non-life insurance follows the law of the home country of the policy-holder, or in case of the policy-holder being a legal entity, the law of the home country of that particular establishment of legal entity to which the contract relates is applicabale. Life insurance contract follows the law of the Member State of the habitual residence or nationality of the policy holder. The mentioned connecting factors make the law of the country to govern the contract which is most closely connected to the contract. In Iranian legal system, insurance contract of commercial and consumer characteristics shall be distinguished; freedom to choose the applicable law is granted to insurance contract of commercial characteristics. Contract of consumer characteristics must be amended in the regime of Article 968 of the Civil Code and the connecting factors to govern the insurance contract shall be predicted in the mentioned article to which the contract is most closely related. Finally, a logical and acceptable conflict rule in the field of the Applicable Law on Insurance Contract will be proposed to Iranian legislative body.