The Jordanian Civil Law regulates insurance contracts; see Articles 920–949 in Chapter Three, Part Four of Jordan’s Civil Law No 43 of 1976. The Jordanian legislature addresses the structure, conditions and effects of the contract, outlining the obligations of both the insured and the insurer, as well as specific provisions for certain types of insurance contracts (such as life insurance and fire insurance). These rules are regarded as a general framework governing insurance relationships.
For matters not expressly covered by these articles, the legislature has entrusted their regulation to specific laws, regulations and instructions – including the Insurance Business Regulation Law and the Compulsory Insurance System, which regulates the resolution of disputes related to insurance contracts. Accordingly, disputes are resolved through regular courts. However, the law initially requires consulting insurance companies to resolve the dispute amicably before resorting to court. Parties also have the right to exclude resorting to court and to instead resort to arbitration (an alternative means of dispute resolution) if the parties agree to this in accordance with the provisions of the law and procedures.
Litigation procedures in Jordan are governed by the Code of Civil Procedures and the Law of Magistrate Courts, and no special procedural provisions exist specifically for insurance disputes. However, for the purpose of resolving insurance-related judicial disputes, the law allows the judge to conduct technical expertise in insurance cases before compiling the evidence to facilitate dispute resolution in an amicable manner. In practice, when insurers are aware of the value of the disputed damages, they may seek amicable resolution of the dispute. This aims to reduce the consequences of litigation by avoiding awarding the plaintiff attorney’s fees and reducing the value of the legal interest awarded.
The statute of limitations in cases arising from an insurance contract is governed by the provisions of Article 932 of the Civil Code, which sets a three-year period preventing the hearing of claims arising from the insurance contract, starting from the occurrence of the incident that gave rise to the dispute or from the date that the claimant becomes aware of it. However, if the insured conceals information related to the insured risk or provides incorrect information or false data related to the risk, the limitation period begins only when the insurer becomes aware of the concealment or inaccuracy.
In the event of a dispute arising between the insured and the insurer regarding compensation, the insured has the right to resort to the Dispute Resolution Committee, headquartered at the Central Bank of Jordan.
Alternative dispute settlement is also widely encouraged in Jordan, the most prominent form of which is “negotiations” as an initial step to limiting the dispute between the parties. “Conciliation” is then resorted to, through a conciliatory approach between the parties. If the dispute is resolved through consensus, the injured party is then compensated according to the concluded agreement.
If an agreement is not reached between the parties, “arbitration” is the most common method for resolving complex disputes, with the parties agreeing, through the contract concluded between them, to refer any dispute that arises between the parties to arbitration.
The legal rules governing disputes arising from insurance contracts in Jordan are derived from multiple sources. The most important is Jordanian Insurance Law No 20 of 2023, which is the primary law governing insurance activity in Jordan and which defines the rights and obligations of the parties to insurance contracts (the insurance company, the insured and the beneficiary). In addition, the Customer Dispute Settlement System issued by the Insurance Regulatory Commission (2021) is a mandatory framework requiring insurance companies to establish an internal mechanism to receive and resolve customer complaints. The general rules of the Jordanian Civil Code (No 43 of 1976), particularly those related to contracts, are also applicable.
Foreign judgments may be enforced against or in favour of insurance companies in Jordan, provided that the legal requirements are met in accordance with the Jordanian Foreign Judgments Enforcement Law. These requirements include:
A request must be submitted to the Amman Court of First Instance, which is the competent court under Jordanian law. The foreign judgment must be certified by the issuing state’s institutions. The request is then submitted to the court and reviewed, and an enforcement order is issued if it meets the legal requirements. The judgment becomes enforceable like any other judgment issued by Jordanian courts.
Litigation in insurance contract disputes in Jordan has several unique features that distinguish it from other civil disputes – most notably, mandatory mediation as a condition for admissibility. The insured cannot file a lawsuit directly to the court unless they first exhaust amicable settlement avenues by filing a complaint with the insurance company and then resorting to the Financial Services Dispute Settlement Committee at the Central Bank of Jordan (as regular courts are not the only competent courts to resolve these disputes). In addition, the Financial Services Dispute Settlement Committee serves as a specialised semi-judicial body that provides free and mandatory mediation, which reduces the burden on the judiciary and provides faster resolution for the parties.
Jordanian courts enforce arbitration clauses contained in commercial insurance and reinsurance contracts, but within a specific and precise legal framework that achieves a balance between the parties. A key feature of enforcing arbitration clauses is the legal recognition of the arbitration clause. Jordanian Arbitration Law No 31 of 2023 regulates arbitration procedures and explicitly recognises any arbitration clause agreed upon in writing, whether pursuant to a separate contract or to a clause contained in the original contract. If a valid arbitration clause is found in the contract, the court before which the case is filed will refrain from considering the subject of the dispute and will refer the parties to arbitration.
The Hashemite Kingdom of Jordan is a member in the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), to which Jordan became a party in 1979. Foreign arbitration awards are enforced in Jordan by submitting a request for enforcement to the Amman Court of First Instance (the competent court), accompanied by a certified copy of the original arbitration award and a certified copy of the arbitration agreement. The court verifies that the formal documents stipulated in the convention have been met and that there are no grounds for rejection (such as the award being contrary to public order in Jordan). If the documents meet the legal requirements, the court issues an order for enforcement of the award, giving it the force of an executive order that can be executed through the relevant enforcement departments.
Arbitration is considered a primary method for settling insurance and reinsurance disputes in Jordan, given their technical and complex nature, which often requires specialised expertise. This method of resolution is particularly common in reinsurance disputes, disputes between insurance companies and brokers, and large-scale commercial disputes related to mega-projects.
Arbitration in Jordan is regulated by Arbitration Law No 31 of 2001, which is in line with international standards, ensuring the flexibility and full confidentiality of proceedings. Arbitration awards are final and are not subject to substantive appeal; appeals are limited to procedural defects and specific exclusive grounds, such as violations of public order or the invalidity of the arbitration agreement. It is important to note that Jordanian courts actively support the enforcement of these awards locally and internationally, in accordance with the New York Convention. This enhances the reliability of arbitration as an effective and distinct mechanism for settling disputes in the insurance sector.
Some conditions are included in the insurance contract by operation of law. In Jordan, these mandatory conditions aim to achieve a balance between the two parties of the contract (the insurance company and the insured) and to protect the public interest, even if not explicitly stated in the written document. One of the key conditions is the insurable interest condition, under which the law requires that the insured have a financial interest in the insured item or person. Both parties are obligated to disclose all the information that may affect the acceptance of the insurance or its terms. If the insured conceals or provides false information about a material fact, the insurer has the right to terminate the contract or to refuse payment of compensation.
Under Jordanian law – including the Jordanian Insurance Law – insurance companies have fundamental rights regarding the presentation of risks before the contract signing comes into effect. This is to ensure correct information and accurate risk assessment. The company has the right to interview the insured to obtain all essential data and facts that may affect the risk assessment, such as health status in life insurance or accident history in vehicle insurance. The company has the right to assess the risk and to reject it if it is found to be abnormal or exceed acceptable limits.
The company also has the right to refuse to insure the risk entirely, and the right to modify the coverage terms if there are factors that increase the risk. It has the right to submit the offer with exceptional conditions, such as specific exclusions or imposing a higher insurance value, as well as the right to void the contract in the event of dishonest disclosure. All of this is designed to ensure contractual fairness.
The insurance sector has witnessed a significant shift towards mediation and arbitration, with reliance on such alternative dispute resolution mechanisms increasing significantly. These mechanisms aim to resolve disputes more quickly than traditional litigation, while preserving the relationship between the contracting parties and tightening the regulatory framework for dispute resolution. Committees specialising in resolving medical disputes (such as medical committees) have witnessed significant developments in their working procedures, focusing their role on interpreting disputed clauses in contracts, where ambiguity in the clauses is often interpreted in favour of the insured.
Insurance coverage disputes are typically settled through gradual mechanisms, while the handling of reinsurance disputes differs fundamentally due to the nature of the contracting parties. Direct insurance disputes (between the company and the client) are settled through direct negotiation as a first step in attempting to fully resolve the dispute, or by resorting to dispute resolution if initial negotiation fails. Arbitration may also be resorted to if the contract contains an arbitration clause.
Concerning reinsurance contracts, disputes arising between companies (as companies) are referred to the judiciary like any other lawsuit if negotiation or amicable settlement fails. Arbitration may also be resorted to as a forum for resolving disputes if the contracts contain an arbitration clause in accordance with the law.
The position differs where the law views the insured party as a consumer. Since the Jordanian legislature considers the insured a consumer, the legal balance is largely in their favour. It requires that the conditions that lead to the loss or reduction of the insured’s rights be clearly and conspicuously presented, and it restricts the insurance company’s right to amend or terminate the insurance contract by unilateral will. It also requires certain mechanisms to protect the insured, such as interpreting the conditions in the event of ambiguity or conflict in the contract’s clauses in favour of the insured. The law places the consumer in a protected position and reduces the contractual power of the company.
According to established judicial practice, the third party who is harmed or the beneficiary of the insurance contract has the right to file a direct lawsuit against the insurance company – such as a third party obtaining a court ruling against the insured (the person who caused the harm) proving their responsibility and entitlement to compensation. The harmed party is allowed to sue the insurance company directly to recover compensation. The law explicitly stipulates this right in certain types of mandatory insurance (such as motor vehicle insurance), where the harmed party is given the right to directly refer to the insurance company to ensure that they receive compensation.
Jordanian civil law addresses the principle of bad faith regarding the concealment of incorrect information by the insured. Insurance law addresses the principle of utmost good faith as a fundamental principle in insurance contracts. Under insurance law, bad faith is defined as:
Under the law, the insured’s bad faith results in the termination of the contract and the insurer’s right to retain paid premiums as compensation. Meanwhile, the insurer’s (insurance company’s) bad faith is considered a reason for its liability for damages and incurred losses.
Insurance companies are subject to penalties for late payment of compensation. These penalties are financial fines imposed by regulatory authorities, requiring them to pay additional compensation to the insured for damages resulting from the delay. The system requires companies to adhere to specific time periods for settling claims. In the event of delay, the customer must be notified, explaining the reasons for the delay. In the event of repetition, penalties may escalate to the withdrawal of licences or partial suspension of activity. In certain types of insurance such as vehicle insurance, those affected have the right to file a formal complaint with the competent authority or committee to follow up on the violation. The company may also be required to provide a replacement vehicle to the insured during the repair period of the damaged vehicle.
Under the laws regulating the insurance sector, the broker is considered the insured’s agent in contracting procedures. Therefore, the representations and statements made by this broker to the insurance company are legally attributed to the insured and fully bind the insured, as long as they fall within the scope of the delegated authority. This responsibility is based on the principle of legal agency, whereby the agent’s actions are considered to be attributable to the insured. However, this obligation may be waived in cases where the broker exceeds the limits of their agency, commits fraud or deception with the knowledge or complicity of the insurance company, or makes representations that the insured knows are false. Therefore, the insured’s primary responsibility lies with selecting a credible broker and reviewing all statements made on their behalf to ensure that they are consistent with the facts and avoid any disputes.
Under Jordanian law, these arrangements can lead to legal issues, due to the legislation related to delegation. The Jordanian Civil Code regulates delegation, and legal arrangements are binding on the parties involved. In terms of legal liability, if problems arise during the implementation of the delegation – such as failure to comply with the terms or errors in processing claims – lawsuits may be filed against the delegate. Conflicts of interest may also arise if there is a conflict of interest between the parties, leading to non-compliance with the mandate. Furthermore, cases may arise regarding compensation for damages resulting from improper implementation of the delegation. One party may seek to recover funds or compensation in the event of a breach of the agreed terms.
Insurance companies (the insurers) may raise several legal defences to limit their liability or reject a claim for compensation entirely. The most prominent of those defences against the insured is the non-occurrence of the insured risk. The insurer argues that the incident/accident did not fall within the scope of the agreed-upon insurance coverage, or that it is excluded under the policy’s exclusions clause.
It is also possible to argue that there was a breach of the duty of disclosure (utmost good faith), where the insurer argues that the policyholder concealed information or provided false or incomplete information when concluding the contract, affecting the risk assessment. This may give the insurer the right to terminate the contract and refuse compensation.
In addition, the insurer may add that there was a breach of safety conditions – ie, the company may claim that the insured failed to take reasonable measures to prevent or mitigate the loss after the incident occurred, or that they acted with excessive or deliberate negligence contributing to the loss. In such cases, the insurer’s obligation to pay compensation is terminated.
The cost and complexity of this type of litigation is expected to continue rising in the coming years, due to evolving technological risks and tightening global regulations. However, as clearer case law and standards emerge – particularly around AI and environmental issues – some of the uncertainty may be mitigated. Insurance companies will likely continue to develop more specific exclusions in their policies, while insured parties will push for broader coverage. The result will be a litigation landscape that keeps pace with the environmental and technological developments, characterised by higher costs but with greater transparency and precision for all parties.
Litigation in Jordan is inexpensive compared to other countries, especially Western countries. Litigation is open to all, and the costs of an insurance case are 3% of the claim value. These fees, expenses and costs are borne by the losing party. To ensure fair litigation, Jordanian law provides for a request for deferment of fees. If the applicant who wishes to file a lawsuit proves that they do not have the funds, they can submit a request for deferment of fees. After a decision is issued to defer the fees, the plaintiff registers the lawsuit and proceeds with it without losing their legal right to file a lawsuit.
Plaintiffs can purchase insurance against the risk of legal costs through specialised insurance policies known as legal defence or litigation costs insurance. These types of insurance provide pre-emptive coverage within personal or commercial insurance policies for potential lawsuit costs, while the second type is specifically provided after the dispute arises to cover litigation costs and the risk of paying costs to the opponent in the event of a loss. Coverage typically includes legal fees, attorneys’ fees, witness and expert fees, and even potential court costs that may be awarded in favour of the opposing party. This type of insurance is a vital tool for reducing the financial risks for plaintiffs, enabling them to pursue their rights without fear of additional costs.
Jordanian law grants the insurer the right to recover their loss from a third party in certain circumstances. The law allows the insurer to replace the insured and to recover the compensation paid by the insurance company to the insured by substituting the insured’s rights against the person who caused the damage (the person responsible for the accident). This is also granted by law to an insurance company after it has paid compensation to the insured. The insurer can then replace the insured in claiming damages from the third party responsible for the damage, and can recover the compensation paid by the insurance company from a person who committed a serious violation or who was responsible for the accident.
The insurer’s right to pursue third parties (causative parties) is regulated by Article 926 of the Jordanian Civil Code, which provides that the insurer replaces the insured in exercising their rights against the party responsible for the damage after payment of compensation. The lawsuit is filed in the name of the insurer (insurance company), who exercises these rights by replacing the insured. This mechanism ensures that the insured does not receive double compensation.
The COVID-19 pandemic and the wars in Ukraine and Gaza have radically impacted the insurance litigation environment, exacerbating disputes. The pandemic has generated a number of claims related to business losses resulting from lockdowns. Insured companies have challenged their insurers to cover their losses resulting from business interruptions due to health lockdowns. However, insurers have adhered to their narrow interpretation of insurance policies, which excludes such losses.
Furthermore, the Ukraine war has disrupted supply chains and sparked disputes over maritime cargo claims related to war risks, as well as vessel and crop losses. The war in Gaza has also introduced complications in the insurance business, particularly in regions with trade, business or geopolitical links to the Middle East.
Insurance litigation is expected to evolve over the next 12 months as a result of new court rulings clarifying business loss coverage obligations related to the COVID-19 pandemic. Wars and geopolitical turmoil will continue to generate disputes over the extent of insurance companies’ risk coverage, prompting legislators to issue new regulations that address the challenges facing the insurance litigation environment and to clarify the obligations and limits of parties to insurance contracts.
These factors have led to the emergence of very important legal and experiential issues, as insurance companies seek to keep pace with the developments surrounding insurance transactions and litigation related to disputes arising from them – especially in areas such as property insurance in conflict zones, marine and aviation insurance during war, insurance against acts of terrorism or sabotage, and insurance for global supply chains affected by conflicts. Those cases are expected to set a legal precedent in interpreting the limits of “acts of war” coverage in commercial insurance contracts.
Previously discussed factors – such as the continuation of wars and geopolitical unrest – have directly and tangibly impacted the scope of available insurance coverage. Exclusions related to acts of war, hostilities, terrorism, government confiscation or occupation, civil unrest and revolutions have increased.
Many marine and aviation insurance policies now clearly state that damages resulting from the conflict in Ukraine or threats in the Red Sea are not covered unless additional coverage is purchased. Some companies now offer coverage for hazardous areas, but with strict conditions, and have become more conservative in accepting risks associated with conflict zones or geopolitical tensions. As a result, wars and geopolitical unrest have narrowed the scope of coverage and reduced insurers’ willingness to cover many risks, especially in areas affected by conflict or terrorist threats. Coverage has also become conditional, expensive and restricted by severe legal and geographical restrictions.
ESG measures are radically impacting the insurance industry by introducing new perspectives to risk assessment. Companies have become a decisive criterion for determining insurance premiums and terms. Companies that adhere to ESG criteria are granted preferential terms, while underperforming companies that do not comply with the criteria face higher premiums or are denied coverage, due to their failure to fully understand the full range of risks and to technically assess long-term performance. This has led to the evolution of insurance policies to address these new risks, while regulatory pressures have increased potential legal costs and fines in contracts.
Data protection laws further complicate underwriting, as insurance companies must now assess an organisation’s compliance with the law and the strength of its security programmes before granting coverage, which directly impacts insurance terms and premiums. These laws also significantly increase the risk of litigation, leading to numerous lawsuits and hefty fines for data breaches in violation of the law.
As a result, a specialised insurance area has evolved to address these new risks. This shift has led to the development of cyber insurance policies that offer tailored protection for data breaches, regulatory fines and business interruptions caused by cyber incidents. Insurers now employ advanced risk assessment tools and require organisations to demonstrate robust cybersecurity practices before offering coverage. The complexity of these policies reflects the growing importance of data security in the modern business environment, where a single breach can cause not only financial loss but also irreparable reputational damage. In addition, the rapid pace of regulatory change, with new laws and amendments continuously being introduced, requires insurers and insureds to stay vigilant and adjust coverage regularly to ensure full compliance and protection.
There are many developments that have affected insurance coverage and litigation in insurance claims, including the issuance of Compulsory Vehicle Insurance Regulation No 52 of 2024, pursuant to which the injured party’s right to compensation is waived in the event of assigning their rights to a third party or collecting any amounts from third parties other than the driver and owner. Also relevant is Article No 12 thereunder, which obliges the insurance company to settle claims amicably, to issue a decision within 14 days from the date of inspection of the damaged vehicle and to pay the compensation within a specified period.
In addition, the Medical Committees Regulation of 2025 was issued, pursuant to which specialised judicial medical committees were established to evaluate bodily injuries. Their mandate is to consider cases before the judicial authorities issue the necessary decisions concerning those cases, and to determine percentages regarding disability in order to ascertain the value of compensation payable.
Hammouri & Partners Attorneys at-Law
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