Insurance & Reinsurance
On May 24, 2022, the Quebec legislature adopted the Act respecting French, the official and common language of Québec (the “Act”). Enacted on June 1, 2022, the Act will introduce a major reform of the French language laws in Quebec, with far-reaching implications for consumers, businesses, and professionals throughout the province.
Clyde & Co identifies in this article some key provisions of the Act that will affect the obligations of damage insurers toward policyholders.
What’s the current state of the law?
Currently, section 55 of the Charter of the French language (the “Charter”) states that contracts of adhesion, contracts containing printed standard clauses, and related documents must be drawn up in French, except where prior consent is explicitly given by the adhering party. Contracts of adhesion are contracts where essential stipulations are imposed by one of the parties and are not negotiable.
Although the Charter is not aimed specifically at insurance contracts, insurance policies are generally construed as contracts of adhesion, where the policyholder is the adhering party.
The Act will considerably modify section 55 of the Charter. Under the new text of section 55, contracts of adhesion may only be drafted in another language than French if the adhering party is first given a French version of the contract and then explicitly expresses the wish that the contract be drafted in another language (section 55, 1st para. of the amended Charter).
Until the French version of the contract has been given to the adhering party, and until such party expresses the wish to have the contract drafted in another language, the other party may neither make them adhere to the contract nor send a document related to that contract other than in French (section 55, 2nd para.).
Once the adhering party expressly consents to be bound by the non-French version of the contract, documents related to the contract may be drafted exclusively in that language.
Finally, the new section 55 provides that no party to a contract of adhesion can charge the other party for the cost of translating contract documents into French (section 55, 3rd para.).
What does this mean for insurers?
When the new section 55 comes into force, insurers will have to remit policy documents both in French and English to new policyholders before they can make a choice as to which version they wish to be bound by. It is therefore crucial that insurers have French versions of their insurance products available as the new law makes it clear that no party may, unless the French version of the contract of adhesion has been given to the other party and that party has explicitly expressed willingness in that regard, make the other party adhere to a contract of adhesion drawn up in a language other than French.
Will there be exceptions?
Yes. The new section 55 provides that certain contracts will not be subject to the new regime.
There will be a specific exception for insurance policies that meet the following conditions:
The parliamentary debates surrounding the Act suggest that this exception would apply when a particular line or type of insurance is simply not available from insurers doing business in Quebec.
In addition, there will be an exception for contracts that are not contracts of adhesion but nevertheless contain standard clauses (whether printed or not). Insurance policies that involve important negotiations between insureds and insurers may not qualify as contracts of adhesion.
In these exception cases, the current regime of section 55 will apply, i.e., parties can give prior consent to be bound in another language than French, without the requirement that a French version be first remitted (section 55, 5th & 6th paras.).
What are the sanctions in case of not complying?
The Act introduces three types of sanctions in case of breach: penal, civil, and administrative sanctions.
First, fines up to $30,000 can be assessed against a company that fails to comply with a notice of non-compliance delivered by the Office Québécois de la Langue Française, doubled in the case of a second offence, and tripled for subsequent offences (sections 205 and 206).
Second, a party to a contract that violates the Charter can petition the courts to rescind the contract, provided that the party establishes prejudice because of the violation (section 204.17). In cases of contracts of adhesion, the burden of proof is reversed: the insurer will have the onus to show that the insured suffered no prejudice because of the violation (section 204.20). Alternatively, the insured may seek damages (section 204.19).
Finally, the Act introduces administrative sanctions, whereby the Government may revoke any type of permit or authorization of a similar nature to a corporate entity that repeatedly contravenes the Charter (section 204.27).
For the contracts that remain subject to the current regime, the Act provides that the civil and administrative recourses do not apply to them in case of failure to comply with the Charter (section 55, 7th para.).
When will the changes come into force?
The Act received the royal assent on June 1, 2022. The modifications to section 55 of the Charter will come into force one year after that, i.e., June 1, 2023 (section 201 of the Act). The provisions respecting the sanctions in case of not complying came into force on June 1, 2022.
The reform introduced by the Act is broad and will have an incidence on all aspects of the legislative environment in Quebec.