third editionIn an increasingly global economy, questions arising from cross-border activities are an increasingly common part of day-to-day business activities. Among other things, these circumstances mean that companies frequently must contend with the legal requirements in multiple jurisdictions and deal with the associated legal exposures as well. The potential liability issues in turn raise sometimes difficult questions about indemnification and insurance. For those of us in the insurance industry, these cross-border liability, indemnification, and insurance issues can be challenging.


A newly updated resource can provide substantial help when these issues arise. The third edition of “Directors’ Liability and Indemnification: A Global Guide” has now been released. This volume, edited by my good friend Edward Smerdon of the Sedgwick, Detert, Moran & Arnold LLP law firm, provides a useful and helpful country-specific overview of these issues. Background information about the latest edition of this book can be found here.


This book aims to provide directors, their companies, their lawyers, and their insurers with an overview of the legal issues that arise in many different jurisdictions. The book also explains the “protection options” available in these jurisdictions through indemnification and insurance.



The latest issue is updated to reflect the changes in the global business and regulatory environment since the book’s last edition was released in 2011. As this edition’s preface notes, countries around the world have in recent years adopted a multitude of new corruption and corporate governance laws. In addition, directors’ duties have been codified for the first time in many countries. As I noted in a recent post about the global rise of collective investor claims, there has been an unprecedented surge in activity by investors seeking recoveries for alleged disclosure violations.



The book itself addresses the legal environments in 34 different countries – in the U.S., in Europe, in Asia, in Latin America, in the Middle East, and in Africa. This edition adds chapters devoted to Belgium and Luxembourg for the first time. Each of the chapters is written by local experts located in each of the various countries.


Each chapter provides a country-specific overview of directors’ duties and obligations. The text also describes each country’s claims environment, including the relevant criminal and regulatory liability issues. Each chapter includes an examination the principles governing the availability of indemnification and insurance in the country under consideration, as well. Among the many useful aspects of this guide, each chapter includes a description of the local rules concerning foreign insurers’ provision of D&O insurance.


Each country is presented succinctly. The presentation provides an introduction to the critical legal considerations. This volume will be most useful to those looking for a quick impression of the legal environment. For those looking for a deeper understanding, this volume also provides some starting points. Practitioners will find this volume to be a practical, helpful guide in trying to navigate these sometimes difficult issues.


It seems likely that the problems arising from the cross-jurisdictional business activity will only increase. This volume will likely prove a valuable reference for insurance advisors and others called upon to counsel companies in connection with the associated liability exposures and related insurance issues. We can only hope that future editions continue to expand the number of countries covered.


An Update on D&O Insurance in Brazil: The book’s chapter on Brazil notes the country’s adoption in recent years of several new laws, including in particular its January 2014 adoption of a new anti-corruption law. In the wake of this new law, federal investigators have been targeting bribery activities as part of what is known as Operation Car Wash. The investigation’s initial focus had been on events involving Petrobras, the multinational energy company partially owned by the Brazilian government, but now the investigation has spread to numerous other companies and has ensnared a number of public officials.


These events have had significant consequences for the D&O insurance marketplace in Brazil, as summarized in an October 4, 2016 memo from the DAC Beachcroft law firm (here). The high-profile corruption investigation has, according to the memo, underscored the “importance of having D&O insurance,” with greater take up of the product and with more companies buying higher limits. At the same time, premiums are increasing, particularly in the construction and in the oil and gas industries, because companies in these industries are perceived to be the most likely to be investigated.


In addition to increased premiums, D&O insurers are underwriting prospective insureds more closely. Underwriters are specifically inquiring about applicant’s awareness of their company’s involvement in the Operation Car Wash investigation. Companies listed in the U.S. are having difficulties obtaining renewal coverage in Brazil because of concerns over exposure to U.S. class actions (which have hit a number of U.S.-listed Brazilian companies caught up in the corruption investigation.)


Insurers are also issuing coverage on more restrictive terms – some policies are being issued with outright exclusions for corruption-related cases, while other policies contain exclusions precluding coverage for any event that might be related to Operation Car Wash. Some policies feature corruption exclusions that “carve back” coverage if an investigated person is found not guilty at the end of the criminal proceedings.


While these circumstances have roiled the D&O insurance market in Brazil, they are largely confined to that country. There has been no significant spillover effect to the insurance markets in other countries.