On November 28, 2024, the Colombian Council of State upheld a ruling that annulled the inclusion of an insurer as a civilly liable third party in a fiscal liability proceeding initiated by the Office of the Comptroller General (the “CGR” for its acronym in Spanish). The case involved failed investments by a government entity, which had taken out fidelity and financial risk insurance to mitigate potential losses.
1. Background:
The CGR initiated a fiscal liability proceeding in 2008 against public officials responsible for the financial losses. It included an insurer in the case, arguing that the insurance policy covered the damages. In 2010, the CGR expanded the insurer’s involvement, citing an additional policy. Finally, in 2013, the CGR issued a ruling holding the insurer liable for indemnification.
The insurer challenged this decision, arguing that the two-year statute of limitations under Article 1081 of the Colombian Commercial Code had already expired, since the CGR had knowledge of the facts since 2008.
2. Key Rulings by the Council of State:
1.- Applicability of the Statute of Limitations:
The court reaffirmed that before the enactment of Law 1474 of 2011, insurance claims in fiscal liability cases were subject to the two-year statute of limitations under Article 1081 of the Commercial Code, given that Law 610 of 2000, which governed fiscal liability proceedings at the time, did not address this issue.
2.- Time-Barred Claim:
The CGR became aware of the failed investments in 2006 and initiated proceedings in 2008, meaning the two-year limitation period expired in 2010. By the time the CGR issued its 2013 ruling, the claim against the insurer was legally time-barred.
3.- No Interruption of the Statute of Limitations:
The CGR argued that the statute of limitations was interrupted when the insurer was included in the proceeding. However, the court ruled that neither the mere inclusion of the insurer in the proceeding nor any tacit recognition of liability qualified as a valid interruption of the statute of limitations under Article 2539 of the Colombian Civil Code.
3. Conclusion
This ruling strengthens legal certainty for insurers by reaffirming that government authorities cannot extend insurance coverage beyond statutory time limits. It also underscores the strict interpretation of insurance statute of limitations rules, reinforcing that liability must be determined within the applicable contractual and statutory framework.
Lucas Fajardo Gutiérrez | Partner of the Insurance and Reinsurance Team
Luis Alejandro Peña | Associate of the Insurance and Reinsurance Team
Brigard Urrutia
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