1.          Relationship to the PICC

C1        Article 1.1.2 is a stand-alone provision. It is not modelled on any provision of the PICC.

2.          Scope of application: External gaps

C2        Article 1.1.2 deals with “issues not settled by the PRICL”. This does not refer to every gap left by the PRICL provisions, but only to so-called external gaps, as indicated by the title of the Article. The term “external gaps” refers to issues for which the PRICL does not claim to provide any guidance, such as agency relationships. Such external gaps are dealt with under Article 1.1.2. In contrast, if an issue falls within the scope of, but is not settled by the PRICL, the unresolved issue gives rise to an internal gap. Internal gaps are not subject to Article 1.1.2; they are instead filled in accordance with Article 1.1.6(2).

3.          Gap-filling by reference to the PICC

C3        Article 1.1.2 provides that questions which do not fall within the scope of the PRICL shall be determined in accordance with the PICC.

C4        However, the PICC are also incomplete and may give rise to external gaps. External gaps within the PICC are generally supplemented by recourse to the domestic law chosen by the parties. In absence of a choice of domestic law, external gaps within the PICC may be filled by reference to the law applicable in accordance with the applicable rules of private international law.

Illustrations

I1.         German Reinsurer B and US Reinsured A agree that the PRICL shall govern their contract of reinsurance. Assuming that the PRICL contains a gap with regard to a specific question concerning Reinsured A’s pre-contractual duty to disclose material information to Reinsurer B, as the duty of pre-contractual disclosure is expressly dealt with by the PRICL, gaps in this regard are to be considered internal gaps. Article 1.1.6(2) provides that such gaps are, to the extent possible, to be settled in accordance with the PRICL’s underlying principles so that no recourse to external rules shall be had.

I2.         Same facts as in the previous Illustration, this time assuming that the PRICL contains a gap with regard to the formation of the contract of reinsurance. As the PRICL does not provide rules on contract formation, there is an external gap in this respect. Article 1.1.2 provides that external gaps shall be settled in accordance with the PICC. In order to fill this gap, recourse shall be had to the PICC.

I3.         Same facts as in Illustration 1, this time assuming that the PRICL contains a gap with regard to the authority of bodies, officers or partners of either Reinsured A or Reinsurer B to act on their behalf. As the body’s authority does not fall within the scope of the PRICL, there is an external gap in this respect. Article 1.1.2 provides that external gaps shall be settled in accordance with the PICC. In Articles 2.2.1 et seq. PICC, the principles contain general rules with regard to the authority of agents. In Article 2.2.1 Comment 5 PICC, however, it is stated that as far as the question of authority of bodies, officers or partners is concerned, special national rules prevail over the general rules in Articles 2.2.1 et seq. PICC. In this case, an arbitral tribunal or court, as the case may be, is required to have recourse to the national proper law with regard to this question.

I4.         Same facts as in Illustration 1, this time assuming that the PRICL contains a gap with regard to Reinsured A’s capacity to contract. As the parties’ capacity to contract does not fall within the scope of the PRICL, it contains an external gap in this respect. Article 1.1.2 provides that external gaps shall be settled in accordance with the PICC. However, Article 3.1.1 PICC provides that the question of capacity to contract does not fall within the scope of the PICC. In this case, an arbitral tribunal or court, as the case may be, is required to have recourse to the national law applicable with regard to this question.