Transfer of rights to third parties
I13Establishing liability in Scotland
1
This section applies where a person (P)—
a
claims to have rights under a contract of insurance by virtue of a transfer under section 1, but
b
has not yet established the insured's liability which is insured under that contract.
2
P may bring proceedings against the insurer for either or both of the following—
a
a declarator as to the insured's liability to P;
b
a declarator as to the insurer's potential liability to P.
3
Where proceedings are brought under subsection (2)(a) the insurer may rely on any defence on which the insured could rely if those proceedings were proceedings brought against the insured in respect of the insured's liability to P.
4
Subsection (3) is subject to section 12(1).
5
Where the court grants a declarator under this section, the effect of which is that the insurer is liable to P, the court may grant the appropriate decree against the insurer.
6
Where a person applying for a declarator under subsection (2)(b) is entitled or required, by virtue of the contract of insurance, to do so in an arbitration, that person may also apply in the same arbitration for a declarator under subsection (2)(a).
7
In the application of this section to an arbitration, subsection (5) is to be read as if “
tribunal
”
were substituted for “court” and “
make the appropriate award
”
for “grant the appropriate decree”.
8
When bringing proceedings under subsection (2)(a), P may also make the insured a defender to those proceedings.
9
If (but only if) the insured is a defender to proceedings under this section (whether by virtue of subsection (8) or otherwise), a declarator under subsection (2) binds the insured as well as the insurer.
10
In this section, the reference to the insurer's potential liability to P is a reference to the insurer's liability in respect of the insured's liability to P, if established.