Professional secrecy in banking and insurance

Our Luxembourg law firm, Wagener & Associés, recently obtained summary judgment in our client’s favour in litigation relating to the duty of professional secrecy. It was the President of the Luxembourg District Court who issued the ruling.

The case started with a family dispute between two brothers, both legal heirs to their father. One of the brothers suspected the other had concealed information and assets belonging to their father’s estate.

The claimant requested disclosure of various documents from a Luxembourg insurance company, -with whom two life insurance policies had been signed by his late father-, and a custodian bank, -where the assets of the said policies had been deposited-. The requested documents included the life insurance contracts, bank statements and related transaction statements.

In litigation such as this, banks and insurance companies generally rely on their duty of professional secrecy to avoid the disclosure of client documentation.

In order to grant the request for disclosure of certain documents, the summary judge relied on the following legal principle: “the right of any heir to preserve his/ her hereditary rights is a matter of public interest, whether they are acting as executors of the person leaving the inheritance, or they are acting in their capacity as heirs who suffered an infringement of their rights”.

In general, and with regard to professional secrecy, the summary judge considered that he “must weigh up the interests of the parties to the dispute and assess the consequences of the claim and he may waive the duty of professional secrecy in certain instances.”

In this case, in order to avoid the application of the insurer’s duty of professional secrecy, the summary judge held that “the heirs have the right to obtain from the insurer the information relating to the life insurance contracts if that is necessary to assess the usefulness of the transaction and whether the paid premiums are excessive or not.”

In order to also avoid the application of the bank secrecy rules, the summary judge pointed out that: “it is admitted that secrecy does not exist with regard to those who act as successors of the deceased, or, in other words, with regard to those considered to belong to the confidentiality sphere of the client, as they are beneficiaries of the inheritance and, more particularly, heirs of the deceased who have special rights”.

Thus, the summary judge decided that “a bank cannot justify hiding behind the duty of professional secrecy in order to deny an account holder’s heir any information that this heir is entitled to obtain solely on the basis of his/ her condition as an heir” and that “the heirs are therefore entitled to obtain all the relevant information from the bank, including information as to who were the beneficiaries of transferred funds because such information is essential to implement their right to issue litigation in case of concealment of inheritance.”

This decision, in addition to confirming the principles already adopted by former court decisions on the rights of heirs, has significant value for the protection of heirs’ rights.

Thus, the claimant, to whom disclosure is denied, does not bear the burden of proof as to the reasons why a life insurance policy was taken out, or whether the premiums were excessive or otherwise. On the contrary, based on an approach that appears more equitable and more protective of heirs’ rights, this judgment confirms that it is precisely the right to obtain the requested documents that should allow the heir who claims that his rights have been infringed, to assess whether information on the quantum of the estate has been concealed.