By: Albors Galiano Portales
In Ruling No. 771/2026, dated May 21, the Supreme Court held that a German insurance company cannot invoke the clause in the policy stipulating submission to German law against an injured party residing in Spain. Contractual autonomy between the insurer and the insured applies between the parties, but does not extend to affecting the rights of an injured third party.
Supreme Court Ruling No. 771/2026, dated May 21 (Case No. 8332/2021), Civil Chamber, presiding judge Fernando Cerdá Albero, resolves a civil liability dispute arising from a defective medical device. The manufacturer’s insurer, a German company, objected to the direct action by invoking the clause in the insurance policy with its insured party stipulating submission to German law, under which such an action is conditional upon first obtaining an enforceable judgment or an acknowledgment of debt by the insured. The dispute specifically concerns a direct action brought by the injured party, who is a resident of Spain, against the German insurer, pursuant to the Rome II Regulation on the law applicable to non-contractual obligations, in particular Articles 5(1)(a) and 18 thereof.
On appeal, the insurer argued that the injured party had no direct cause of action against it, given that the clause providing for submission to German law—the law governing the insurance contract—constituted a clause defining the subject matter of the contract and, as such, determined the conditions under which that action could be brought. The Supreme Court dismissed the ground for appeal. It held, first, that since both connecting factors set forth in Article 5(1)(a) of the Rome II Regulation were present—the injured party’s habitual residence in Spain and the marketing of the product in Spain—Spanish law is the law applicable to the non-contractual obligation. Second, Article 18 of the same Regulation establishes an alternative criterion for allowing a direct action: It is sufficient that the law applicable to the tort or the law applicable to the insurance contract so provide. Since the former is Spanish law, Article 76 of the Insurance Act (LCS) expressly provides for a direct action by the injured party against the insurer, declaring such action immune from defenses that may be raised against the insured.
The Chamber bases this conclusion on two previous rulings. Supreme Court Ruling No. 1167/2025, dated July 17, had already held that it is sufficient for a direct action to be permitted under one of the two laws provided for in Article 18 of the Rome II Regulation, without it being necessary for the law governing the insurance contract to also permit it. The CJEU judgment of September 9, 2015 (C-240/14), in turn, held that the choice of law made by the parties to the insurance contract has no bearing on the injured party’s right to bring a direct action under the law applicable to the non-contractual obligation.
In short, the Supreme Court concluded that the clause in the insurance contract submitting it to foreign law is effective only between the insurer and the insured, but has no effect with respect to the injured third party. The injured third party’s right to direct action is protected under Article 18 of the Rome II Regulation and, pursuant to Article 76 of the Insurance Act, takes the form of the right to bring a direct action against the insurer. The practical consequence is that the choice-of-law clause agreed upon in the policy is effective only with respect to the internal relationship between the insurer and the insured: it cannot affect the position of the injured third party, whose right to bring a direct action is safeguarded by the mandatory provision of Article 18 of the Rome II Regulation.