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PUBLISHED DATE: - 25-12-2024
DOI: -
https://doi.org/10.37547/tajpslc/Volume06Issue12-07
PAGE NO.: - 34-41
ANALYSIS OF THE PRACTICE OF APPLYING
THE LAW ON COMPULSORY PROFESSIONAL
LIABILITY INSURANCE
Izzat Palvanov
PhD, Head Of The Educational And Methodological Department, Higher
School Of Judges, Tashkent, Uzbekistan
INTRODUCTION
Although professional liability insurance is not
widespread in our country, it is becoming
mandatory for some industries. For example, the
second part of Article 7 of the Law "On Notaries"
states that "A notary engaged in private practice is
not entitled to carry out his activities without
concluding a contract for compulsory civil liability
insurance."
In world practice, there are various systems of
professional liability insurance for notaries, which
can be systematized into three types.
The first type is individual insurance, in which the
notary himself applies to an insurance company
(Germany, Finland, the Netherlands, Japan, Brazil).
The second type is self-insurance, that is, notaries
are united by mutual insurance societies (Canada,
Great Britain, South Africa, Australia).
The third type - a notary chamber (order of
notaries, notary insurance fund) enters into a
relationship with an insurance company,
representing the interests of all members, when
concluding an insurance contract, concluding a
professional liability insurance contract (Denmark,
USA, Belgium, Sweden, Quebec Province (Canada)).
For example, the Quebec Provincial Order of
Notaries, through its rules and standards of
professional practice, enables its members to
provide high-quality services to each community
engaged in notarial activities. However, despite all
the control mechanisms in place in the provision of
these professional services, professional errors
that may cause harm to third parties cannot be
completely ruled out. In order to protect the public
and to be able, if necessary, to compensate them for
the damage caused, the Quebec Code of
Professional Conduct requires all members of the
professional order to have professional liability
insurance for notaries. There are various options
for such insurance for members of professional
orders. The Order of Notaries of the Province of
Quebec has created a professional liability
insurance fund for notaries. Membership in the
RESEARCH ARTICLE
Open Access
Abstract
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Foundation is mandatory for every notary. The
assets of the insurance fund are separate property
and belong to all notaries; they are intended only
for professional liability insurance [1].
In Uzbekistan, professional liability insurance for
notaries is usually carried out according to the first
type of system, that is, each private notary must
insure his professional liability with an insurer
with an appropriate license. We will consider the
features of the professional activities of a notary,
the requirements for a person wishing to engage in
notarial activities, and define the concept and
conditions for the initiation of a notary's
professional liability. According to the legislation
on notarial acts, notarial acts are performed by
notaries in state notary offices and notaries
engaged in private practice.
The professional activity of a notary is
distinguished by a number of features, in
particular:
1) A notary works in the field of evidentiary law
and is involved in presenting qualified evidence in
a case. Notarial acts have special evidentiary force,
an example of which is the norm of Article 112 of
the Civil Code, according to which if the
requirements of the law on notarial certification of
a unilateral transaction are not met, such a
transaction is deemed invalid. The FC here
establishes that such a transaction is invalid if the
parties do not comply with the requirements of the
law on notarization of the contract;
2) A notary operates in a field where the parties do
not conflict and are not required to argue with each
other, which is a non-conflict jurisdiction. In the
event of a conflict situation, when the measures
taken by the notary to reconcile the positions of the
parties are in vain, the notary must refuse to
resolve the dispute and recommend that the
parties go to court;
3) There is a special opportunity to enter notarial
activities due to the increased qualification
requirements for a notary and the nature of his
preparation for carrying out this activity. Different
countries have different models and stages of
preparation for notarial activities, but they all
involve obtaining additional education and
practical skills that are not covered by the general
standard of higher legal education. Typically, these
stages include: first degree - law degree, second
level - diploma in notary law; third stage -
internship in notary offices; The fourth stage is
continuous professional development[2].
A person wishing to engage in notarial activities in
Uzbekistan must be a citizen of Uzbekistan, have a
complete higher legal education, know the state
language, have at least three years of work
experience in the field of law, including at least one
year as a notary assistant or consultant in a state
notary office, pass a qualification exam, and receive
a certificate of the right to engage in notarial
activities. A person who has a criminal record, has
been declared legally incompetent or has been
declared incompetent by a court cannot be a
notary. In addition, a notary may not engage in
entrepreneurship, advocacy, be the founder of bar
associations, serve in the civil service or local self-
government bodies, as part of other legal entities,
and also perform other paid work, except for
teaching, scientific and creative activities. He must
also comply with the standards of professional
ethics set forth in the Code of Ethics for Notaries[3];
4) A notary performs state legal functions on behalf
of the state, which reflects his legal status as a
person in the service of the state and society;
5) Notaries engaged in private notarial activities in
the Latin notarial system operate in a self-financing
and independent organization of their activities. At
the same time, notaries are accountable and
supervised by both state bodies and bodies of the
notarial community.
The main areas of notarial activity are: ensuring the
indisputability of rights and facts, as well as the
evidentiary value of documents; ensuring legality
in concluding contracts and performing other
notarial actions; Providing legal assistance to
persons who apply to a notary for notarial actions
[4]. The requirements for notarial activities are
determined by the Law "On Notarial Services", and
notaries operate on the basis of the Instructions
"On the Procedure for Performing Notarial Actions
by Notaries" in Appendix 1 to the Order of the
Minister of Justice of the Republic of Uzbekistan No.
2 dated January 4, 2019. Failure of a notary to
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perform one or more of his duties arising from the
performance of his duties may result in the notary
being held professionally liable if he has caused
harm to another person due to his actions
(omissions), carelessness or negligence.
The Law "On Notaries" provides for the
responsibility of public and private notaries:
Damage caused to a person as a result of illegal or
negligent actions of a public notary shall be
compensated in accordance with the procedure
provided for by law. A person who applies to a
notary to perform a notarial act: provided false
information on any matter related to the
performance of a notarial act; provided false
information related to the performance of notarial
acts; submitted invalid and/or forged documents;
A notary shall not be liable for failure to disclose
the absence or presence of persons whose rights or
interests may affect notarial actions performed for
a person.
Many authors, including S.Y. Fursa, P.M. Pavlik, T.M.
Kilichava, S. Khimchenko, studying the problems of
liability of notaries in case of non-fulfillment or
improper fulfillment of professional obligations,
use the term "civil legal liability"[5].
We believe that using the term "civil liability" in
this context is not entirely correct, because, as
noted above, we are talking about the professional,
that is, notarial, responsibility of a notary in the
performance of his activities. If we analyze the
norms of the Law "On Notaries", we come to the
conclusion that the legislator is only talking about
the liability that arises when a notary fails to
perform or improperly performs professional
duties. Therefore, it would be more appropriate to
use the term "professional liability", as it covers the
liability of a notary only in cases where he has not
performed or has not performed his professional
duties properly. In all other cases of the notary's
activities, as well as in any other person not related
to the performance of professional duties, we can
speak of civil liability.
The professional liability of a notary is a mandatory
sanction (additional burden) aimed at restoring
violated rights and interests of a notary who has
performed work in accordance with a certificate of
the right to engage in notarial activities and is
included in the Unified Register of Notaries, if they
have failed to fulfill or improperly fulfilled their
professional duties, state measures, and caused
harm to third parties.
Analyzing the norms of Articles 18-19 of the Law
"On Notaries", it can be concluded that the
conditions for the emergence of a notary's
professional liability are illegality, damage caused
to the client and/or third parties, and regardless of
guilt (including in the absence thereof).
The illegality of the actions of a notary consists in
violating the requirements of the legislation and
other regulatory legal acts on the implementation
of notarial activities and in making professional
mistakes by the notary, they are understood as
actions or omissions that result in the actual results
of notarial activities deviating from those expected
and leading to a deviation of the actual results of
notarial activities from those expected and
resulting in negative personal and/or property
consequences for clients and/or third parties, i.e.
the notary's violation of rights, It is also manifested
in the failure to fulfill or improperly fulfill the
obligation to confirm legally significant facts, as
well as the failure to perform other notarial actions
to ensure their legal certainty.
The damage to the client of the notary and/or third
parties associated with their receipt of poor-
quality notarial services, that is, non-compliance
with the requirements of regulatory legal acts or
the lack of services at all. We agree with the
position of the authors (S.Khimchenko and others),
who argue that a notary can cause both material
and moral damage to the client and/or a third
party, This will consist of moral suffering,
humiliation of honor, dignity, and damage to
business reputation and must be taken into
account separately[6].
The existence of a causal link between the notary's
illegal actions and the negative consequences for
the client and/or third parties resulting from the
notary's professional errors is one of the conditions
for the emergence of professional liability.
The view that a notary's professional liability arises
regardless of his or her fault seems very balanced
and reasonable. Determining whether or not a
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notary is at fault is not a mandatory component for
his or her professional liability to occur. For
comparison, let's consider the norms of Articles
1457-1458 of the Quebec Code of Civil Procedure.
These norms establish the following conditions for
the professional liability of a notary to arise,
namely: the notary's actions do not meet the
standards of a moderate level; the existence of
damage or loss caused to another person;
Causation, that is, the existence of a direct
connection between the notary's actions and the
damage caused. Regarding the question of whether
it is necessary to hold a notary accountable for his
or her professional misconduct, two options are
being considered. According to the first option, the
presence of fault is mandatory, while the notary is
not required to guarantee the result of the notarial
act. According to the second option, if the notary
also has to guarantee the result of the notarial act,
then determining the notary's guilt is not
important for holding him or her professionally
liable. It should be noted that in developed
countries, the tradition of taking into account only
three conditions for determining the professional
liability of a notary is widespread, and the
condition of the presence of fault is not given
special attention in this case.
It has been proven that a notary's professional
liability arises regardless of his fault. We see that
this approach is correct and reasonable.
Strengthening the liability of notaries is aimed at
protecting the interests of their clients and third
parties who may suffer harm as a result of notaries'
failure to perform or improperly perform their
professional duties.
Article 19 of the Law "On Notaries" stipulates that
a private notary must fully compensate for the
damage caused. It is noted in the scientific
literature on notarial liability that it is
inappropriate to apply such a form of liability as the
recovery of non-payment to a notary in the event of
improper performance of notarial actions. The
main form of liability should be compensation for
damage and restoration of violated rights.
In our opinion, this approach is not entirely
justified. The main form of professional liability is
indeed compensation for damage, but at the same
time, for professional liability in general and for a
notary in particular, such a form of liability as the
recovery of a fine is fully applicable as a type of civil
liability.
In accordance with current legislation, a notary
engaged in private notarial activities is required to
insure his professional liability.
The subject of the notary's professional liability
insurance contract is the notarial activities of a
private notary related to the insured's property
interests - liability for damage caused to third
parties as a result of non-fulfillment or improper
fulfillment. In accordance with the requirements of
Article 191 of the Law "On Notaries", only private
notaries are considered insured in a notary's
professional
liability
insurance
contract.
Beneficiaries under the notary's professional
liability insurance contract are individuals and
legal entities who have contacted the notary for
notarial actions and/or third parties.
In our opinion, the insurance risks under the
notary's professional liability insurance contract
may include: legal ignorance of clients resulting
from the notary's failure to explain their rights and
obligations to clients and to warn them about the
consequences of the notarial actions performed;
disclosure of information about documents known
to a notary in connection with the performance of
notarial acts, except as otherwise provided by law;
performance by the insured of a notarial act that is
contrary to current legislation or international law
and causes damage to the notary's client and/or
third parties; Loss, destruction or damage to
documents related to the professional activities of
a notary.
It is possible to propose that the insured event be
considered as an event provided for in the notary's
professional liability insurance contract, as a result,
the notary's professional liability for compensation
for damage caused to the client and/or third
parties is not fulfilled or professional duties are
improperly performed. To receive insurance
compensation, the insured (beneficiary) must
document the occurrence of an insured event, The
insured must also provide the insurer with
documents confirming the occurrence of an
insured event, the amount of damage, and the
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documents necessary for the payment of insurance
compensation in accordance with the insurance
requirements. After the insurer provides all
necessary documents important for making a
decision on the recognition of an insured event, the
insurer draws up an insurance report and makes a
decision to pay insurance compensation or refuse
to pay insurance compensation, which is notified in
writing to the policyholder and/or beneficiary.
The notary's professional liability insurance
contract must provide for the grounds for refusing
to pay insurance compensation. In addition to the
grounds established by Article 954 of the Civil
Code, an insurance contract may also provide for
other grounds: activities not related to the
professional activities of the insured; actions by the
insured against persons who do not have the legal
basis for granting the right to notarize; impact of
natural phenomena [7].
The notary's professional liability insurance
contract is terminated in accordance with the
requirements of Article 948 of the Civil Code, also,
if after its entry into force the possibility of an
insured event has disappeared and the existence of
the insured risk has ceased, the insured event shall
be deemed to have occurred due to the termination
of the notary's professional activities in accordance
with current legislation from the moment such
circumstances arise; Cancellation of the certificate
of the right to engage in notarial activities of the
holder of the insurance policy.
Professional liability insurance of notaries is
carried out to ensure compensation for damage
caused to the property interests of the insured's
clients and/or third parties and to the interests of
notaries themselves, This is confirmed by the norm
of Article 18 of the Law "On Notaries". To ensure
compensation for damage caused as a result of
notarial actions, a private notary is obliged to
conclude a contract of insurance of his liability for
private notarial activities.
Taking into account the above problems, L.M.
Gorbach, A.B. Kaun, A. Zaletov, T.A. Govorushko
emphasize that professional liability insurance of
notaries should be mandatory.[8].
An analysis of current legislative norms allows us
to conclude that professional liability insurance for
notaries should be mandatory, because Article 191
of the Law "On Notaries" establishes the
requirements for notaries to insure their
professional liability, the insured event, and the
minimum amount of the insured amount. Although
some important terms of a notary's professional
liability insurance contract are stipulated by the
established norm, other important terms of the
insurance contract are not stipulated at all (subject
of the insurance contract, insurance tariff, amount
of insurance payment and terms of its payment,
term of the insurance contract). contract,
procedure for amendment and termination, terms
of insurance payment, reasons for refusal of
insurance payment, rights, obligations and liability
of the parties), which indicates significant
shortcomings of this provision. Therefore, it is
appropriate to add the phrase "not contrary to law"
after the words "notary" in Part 3 of Article 191 of
the Law "On Notaries".
In modern practice, the institution of professional
liability insurance is becoming a very popular
model for securing one's professional interests and
protecting them in the event of an insured event. At
the same time, it should be noted that within the
framework of current legislation, in particular,
within the framework of the Civil Code, the
definition of types of liability insurance is
determined in very limited types of insurance
contracts. In particular, the Civil Code provides for
the possibility of concluding two types of insurance
contracts: tort or contractual liability insurance
contract.
Resolution of the Plenum of the Supreme Court of
the Republic of Uzbekistan dated 29.11.2017 No.
45 “On certain issues of the application of
legislation in the resolution of disputes arising
from insurance contracts by courts”[9] the
decision
does not address issues related to professional
liability insurance.
It should be noted that the main source of claims
against professionals are shortcomings, errors, or
wrongdoings that have led to financial losses for
clients or third parties. The nature of the damage
depends on the nature of the professional activity.
A professional's responsibility is to exercise due
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care and skill in the performance of their duties. At
the same time, he does not have to be competent in
all matters. The level of competence of a
professional employee should not be lower than
what one professional expects from another in the
same professional field. Protection from lawsuits
can be proof that a specialist is not exceeding their
authority, is being careful, and their actions are in
line with their level of competence. He must
convince the court that he acted honestly and
reasonably.
"On Insolvency" [10] according to Part Five of
Article 22 of Law No. O'RQ-763 of 12.04.2022, "The
court administrator must insure his liability for
damage caused to persons participating in the
insolvency case within ten days from the date of his
appointment as court administrator by the court."
The essence of the case considered in court
practice is as follows: The court administrator
violated the order of priority for satisfying
creditors' claims within the framework of the
enterprise's
bankruptcy
case,
incurred
unreasonable expenses, and committed other
violations. As a result, the claims of one of the
bankruptcy creditors were not satisfied and he
filed a claim with the economic court for
compensation for damages caused by the actions of
the court administrator. The court upheld the
claims and recovered 20 million soums from the
court administrator.
The property liability of the court administrator
was insured, and the creditor applied directly to
the insurer for damages by sending a letter of
voluntary performance of obligations under the
insurance contract. The amount of damage was
confirmed by a court document, and the creditor
did not expect any difficulties in obtaining the
money. However, the insurer refused to pay the
insurance compensation, arguing that the
beneficiary (in this case, the creditor) did not have
the right to apply directly to the insurer for
compensation. The creditor believed that his rights
and property interests had been violated and filed
a lawsuit against the insurer to recover 20 million
soums from the court administrator to compensate
for the damage caused.
In the case of the court administrator N. Aliyev, the
tax department's claims for damages caused by the
administrator in the amount of more than
20,000,000 soums as a bankruptcy creditor were
satisfied. Based on the above example, in
compliance with the norms of concluding a
professional liability agreement within the
framework of the practical implementation of the
"Insolvency (Bankruptcy) Act", the rights of all
participants to compensation for damage caused in
the event of a breach of professional liability or the
occurrence of an insured event are ensured. In
another case, the court awarded damages in the
amount of 10,750,989 soums to the tax department
in favor of the administrator N. Aliyev.
Today, the rules regarding the mandatory
professional liability insurance contract for court
administrators are not clearly reflected in the
legislation. Article 22 of the Law "On Insolvency"
only mentions that the court administrator is
obliged to insure his liability. This raises a number
of questions regarding the content, nature, object,
insured event, and terms of the contract related to
the insurance of the court administrator's liability.
In order to fill this gap, it is advisable to supplement
the Law "On Insolvency" with Article 251 entitled
"Compulsory Insurance Agreement for the Liability
of the Court Administrator" and define it as follows:
Article 251. Contract of compulsory insurance of
the liability of a court administrator
A contract of compulsory insurance of the liability
of a court administrator for causing damage to
persons participating in the insolvency case and
other persons due to failure to perform or
improper performance of the duties assigned to the
court administrator in the insolvency case shall be
concluded for a period of at least one year, with the
condition of renewal for the same period.
The minimum amount of insurance under a
contract of compulsory insurance of the liability of
a court administrator shall not be less than three
thousand times the base calculation amount per
year.
Within ten days from the date of approval by the
court of the procedures applicable to the
insolvency case (with the exception of the
insolvency case of a non-existent debtor), the
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external administrator must additionally conclude
a contract of compulsory insurance of liability for
damage caused by persons participating in the
insolvency case, damage caused to other persons in
connection with the failure to perform or improper
performance of the duties assigned to the court
administrator in the insolvency case.
A contract for compulsory insurance of the liability
of a court administrator shall be considered
extended for a subsequent period if the court
administrator has not notified the insurer of his
refusal to extend the contract at least one month
before its expiration. The validity period of the
extended contract for compulsory liability
insurance of a court administrator for the next
period shall not be terminated in the event of a
delay in payment of the insurance premium by the
court administrator or a delay in payment of the
next insurance premium for a period not exceeding
thirty days. The validity period of the extended
contract for compulsory liability insurance of a
court administrator for the next period shall not be
terminated in the event of a delay in payment of the
insurance premium by the court administrator or a
delay in payment of the next insurance premium
for a period not exceeding thirty days.
The objects of compulsory liability insurance of a
court administrator are the property interests of
the court administrator related to his liability for
compensation for damage caused to persons
participating in the insolvency case or to other
persons
in
connection
with
the
court
administrator's failure to fulfill or improperly fulfill
his obligations within the framework of the
insolvency case.
An insured event under a compulsory insurance
contract for the liability of a court administrator is
the occurrence of liability as a result of the court
administrator's failure to fulfill or improperly fulfill
the duties assigned to the persons participating in
the insolvency case or other persons approved by a
court decision in relation to the insolvency case.
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