Huge blow for insurance firms

Huge blow for insurance firmsSupreme Court rules in Schlettwein, NamibRe's favour Finance minister Calle Schlettwein has welcomed the ruling by the Supreme Court last week. Eight insurance companies that are challenging the constitutionality of a law requiring them to do business with the state-owned Namibia National Reinsurance Corporation (NamibRe), were dealt a severe blow in their ongoing legal battle with finance minister Calle Schlettwein in the Supreme Court last week.

The court ruled that the minister and NamibRe may appeal a judgement that was delivered on the matter by High Court judge Thomas Masuku in September last year.

Schlettwein and NamibRe dragged Hollard Insurance Company of Namibia Limited, Hollard Life Namibia Limited, Sanlam Namibia Limited, Santam Namibia Limited, Trustco Insurance Limited, Trustco Life Limited, Outsurance Insurance Company of Namibia Limited, Old Mutual Life Assurance Company Namibia Limited and their respective CEOs to court after they refused to re-insure a percentage of their insurance premiums with NamibRe, in defiance of the legislation.

In his judgment, Masuku had ordered that the implementation of constitutionally-questioned parts of the NamibRe Act, and regulations and government notices issued in terms of it near the end of 2017, would be suspended until pending legal challenges against the law have been finalised.

Schlettwein and NamibRe then filed an application for leave to appeal in the Supreme Court, but Masuku dismissed their request.

A petition was then filed at the Supreme Court to ask for permission to appeal against Masuku's decision. However, acting appeal judge Theo Frank refused the petition near the end of January this year.

This led to an application to the Supreme Court, based on complaints by Schlettwein and NamibRe that Frank should not have dealt with the case, as he represented insurance companies in a prior litigation.

Schlettwein welcomed the ruling by the Supreme Court in a statement last week.

“It is an important step in strengthening reinsurance in Namibia and ending the current outflows of reinsurance premiums from the domestic economy,” he said.

According to the finance ministry the Supreme Court has upheld, with costs, the government's application to set aside - on grounds of a reasonable perception of bias - a ruling made by Frank.

“Acting Justice Theo Frank, the Supreme Court held, had ties to the insurance industry which were such that he should not have sat in the matter. These ties include arguing for insurers in an unsuccessful constitutional litigation and his current chairmanship of the Nedlife holding company, which is one of the litigants in the main proceedings,” the ministry said.

Having reached these conclusions, the Supreme Court said it was satisfied that the test for recusal had been met, according to the ministry.

The ministry said that Frank was required to disclose his interests to the parties, but had not done so.

“Given these conclusions, the court held it was unnecessary to consider further aspects raised, including that as a director and now chairman of companies in the industry, Judge Frank was still receiving substantial emoluments while sitting in the matter. He had also served for years on the Trustco board.”

In the second part of the ruling, the Supreme Court reversed Frank's dismissal of government's application for leave to appeal against Masuku's ruling last year. In the judgment by Justice Petrus Damaseb, with which justices Elton Hoff and Bess Nkabinde concurred, the court described the government's prospects of success as more than reasonable.

The finance ministry said the appeal will be heard as soon as it can be enrolled.

ELLANIE SMIT