Bill 96: Minister clarifies requirements for contracts by mutual agreement

Business-to-business contracts, including some commercial insurance contracts, may still be concluded in a language other than French.

On February 17, in a parliamentary committee, the Quebec government proposed amendments to section 44 of Bill 96, which amends section 55 of the Charter of the French Language. This section deals with the language of contracts, an issue of concern to insurers and brokers.

The Parliamentary Committee on Culture and Education (CCE) is currently analyzing Bill 96 closely. The amendment proposed to section 44 of Bill 96 by the Minister responsible for the French Language, Simon Jolin-Barrette, states that this section does not apply to the contracts listed below or to the related documents. Paragraph 3 mentions that this exclusion covers a contract used in relations with parties outside Quebec.

Jolin-Barrette clarified the meaning of the proposed amendment in committee. “This section applies to contracts of adhesion and, consequently, it does not apply to contracts by mutual agreement.”

In the preliminary version of the Journal des débats of the February 17 CCE meeting, the Minister stated: “There had been a... I would say a misunderstanding regarding the scope of section 55. So, we are clarifying things, particularly with respect to businesses, which can contract in the language of their choice.”

“We had the example of a private company that wants to contract with another private company. It can do so in a language other than the official language if it wishes. Similarly, a company from here that does business with a company in the United States, British Columbia, China, Switzerland, India, the company can contract in the language of its choice. So, we’re clarifying that,” the minister added.

The problem of the presence of standard clauses in mutual agreement contracts is also addressed by the proposed amendment to section 44. During discussions with Liberal MP Hélène David, Minister Jolin-Barrette confirmed that, in addition to the Chamber of Commerce of Metropolitan Montreal (CCMM), “other partners from the business community, the banking community, and exporting companies also want the wording to be amended in line with what was presented.”

In its brief, the CCMM recommended that the parliamentary commission “encourage the translation into French of all commercial legal documents, while recognizing the validity of contracts voluntarily signed by businesses in a language other than French.”

Amendment adopted

The amendment to Article 44 was adopted by the CCE members. At the end of the session of March 30, 2022, members were discussing section 113, which amends Chapter 3 of the Charter dealing with remedial measures. Bill 96 has over 200 sections to be analyzed in detail.

At the same time, the CCE must proceed with Bill 9, legislature introduced last October, which creates the office of National Student Ombudsman. Slightly more than two months of parliamentary business remain until the summer recess. After that, MLAs are not expected to return to the National Assembly until after the October 4, 2022 election.

Up to now, failure to comply with the requirements of the Charter has not resulted in a contract being considered null and void, but rather in monetary penalties. Section 204 of Bill 96 takes the exercise a step further by providing, among other things, that the provisions of a contract that contravenes the Charter may be rendered null and void or have their obligations reduced, at the request of the person who suffered the damage. This clarification was made by lawyers Andrée-Anne Perras-Fortin and Caroline Jonnaert of the Robic law firm in an article published on the Droit-Inc website on December 15.

The exception to the rule

According to Nathalie Durocher of Delegatus, an insurance contract “is generally a contract of adhesion because the essential stipulations of the contract are drafted unilaterally by the insurer, as opposed to a contract by mutual agreement, whose stipulations are negotiated between the parties. In insurance parlance, a so-called ‘handwritten’ policy can generally be described as a contract of adhesion,” she explained in an email.

“Thus, except on rare occasions, the insurance contract is a contract of adhesion, which is subject to the application of section 55 of the Charter of the French Language. The current wording of section 55 implies that a French version of contracts of adhesion should be available, but the parties may agree to be bound by a version in another language, if that is their express wish,” Me Durocher adds.

The new amendment to article 44 of Bill 96, adopted during its detailed study before the CEC in February, stipulates that “some insurance contracts could be exempted from the requirement of francization. However, this application would be limited to certain exceptions indicated in the proposed amendments to sections 55, 21 and 21.5 of the Charter, as proposed in Bill 96, the final text of which has not yet been adopted by the National Assembly,” the lawyer said.

“In other words, if sections 44, 13 and 14 of Bill 96 are adopted in their current form by the National Assembly, as amended on February 17, certain insurance contracts that do not have an equivalent in French in Quebec and that meet certain specific conditions, such as insurance contracts originating outside Quebec or those that are not widely used, might be drafted only in a language other than French,” Nathalie Durocher continues.

Her office is waiting for the final version of the Charter amendments before making a definitive decision.

Brokers concerned  

Earlier this year, several brokers told Insurance Journal they had misgivings about the proposed new obligations regarding the language of contracts.

When insurers have to write a more complex policy, as is often the case in commercial insurance, the wording of the contract is very precise, and translation can be tricky.

“Each major brokerage firm has several different directors and officers (D&O) liability policy models, with their own unique features,” says Catherine Lanctôt, Senior Vice President and Manager, and National Leader Financial Services and Client Services group, Aon Canada. Nearly all of her volume is placed with North American insurers, and the policies are in English. For larger companies, Lloyd’s of London syndicates are the primary providers.

This language issue is therefore very real, and is yet another issue that is not yet resolved by the follow-up to Bill 82 regarding the amendments to the Civil Code of Quebec. “We could see additional capacity disappear, and this must not happen. That would be very unfortunate, because the clients would pay the price,” Catherine Lanctôt says.

At Ostiguy Gendron, Monique Gagnon points out that directors’ and officers’ liability policies are practically all modelled in London or the United States. “I have never had a client make a negative comment in this regard,” says the broker specializing in corporate liability.

“Insurance is a partnership in risk financing. The contract must be acceptable to both parties. You want to have the right insurer for the right case, for the right price and under the right conditions,” she says.

“If contracts must be in French only, we are depriving the client of access to the best products available in the market,” she adds.

Ostiguy Gendron president Jean-Philippe Martineau says that in his 18-year career in the brokerage business, he can count the number of times a client chose not to do business with an insurer that could not offer a policy in French on one hand.

The real problems of interpretation that lead to litigation in court often stem from a flawed translation of the contract clauses, in his view. “When we have a French version, we often consult the original English document to be sure we understand the coverage,” he says.

Monique Gagnon believes that insurance is a product that can evolve between renewals, and insurers adjust the wording as they become more aware of the risk covered by the contract. If the product has been improved by the insurer, this usually happens in English.

Clients who prefer to use the French version may end up with inferior coverage because the French translation has not yet incorporated the most recent improvements made by the insurer, Gagnon explains. “In the best of all possible worlds, we would have a bilingual policy with a clause saying that the client has the most extensive coverage,” she says.

Jean-Philippe Martineau points out that the government has the right to require contracts to be in French, and has the power to set the rules. Insurers will then opt to comply with the new rules or to exit the Quebec market. “I hope that insurers will decide to comply with the decision made,” he says.