Bundesgerichtshof (German Federal Court of Justice), judgment of 18 November 2020 — IV ZR 217/19, ECLI:DE:BGH:2020:181120UIVZR217.19.0 (BGHZ 227, 279) · Full text (PDF, German)
The case
The insolvency administrator of a machine-factory GmbH sued the company’s D&O insurer on the basis of assigned rights (para 1). In 2008, the GmbH had taken out a pecuniary-loss liability policy for company directors with a sum insured of €1.5 million per policy year; under clause 1.1 of the underlying ULLA conditions, cover exists where an insured person “is held liable in damages for a pecuniary loss on the basis of statutory liability provisions” — the bracketed wording expressly includes the insolvency administrator among potential claimants (para 2). After insolvency proceedings were opened in 2013, the administrator claimed from the managing director reimbursement of payments made after the company had become insolvent, under section 64 sentence 1 of the GmbH Act (old version) — at least €1.5 million for each of two policy years (paras 3–4). The insurer rescinded the contract for fraudulent misrepresentation and in any event regarded claims under section 64 sentence 1 GmbHG (old version) as outside cover (paras 3, 5). Both lower courts sided with the insurer; the Frankfurt Court of Appeal followed the line of the Düsseldorf Court of Appeal, which had classified the claim as a “reimbursement claim of its own kind” and not as a damages claim within the policy terms (paras 6, 8). The Fourth Civil Senate set the decision aside and remitted the case.
The court’s reasoning
The Senate resolves the coverage question from the perspective of the policy wording: standard insurance terms are to be construed as an average policyholder, seeking to understand them, would — in D&O insurance, a commercially experienced addressee familiar with standard terms but without legal training (paras 11–12). Three steps carry the result.
First, section 64 sentence 1 GmbHG (old version) is a “statutory liability provision”, because it attaches the director’s duty to reimburse — independently of the parties’ will — to asset-depleting payments made after the onset of insolvency (para 13). Secondly, the average policyholder does not read the term “damages” doctrinally — there is no sharply contoured legal concept of it (para 17) — but colloquially, as the “compensation of a detriment suffered”; he expects cover at any rate where the claim is directed at restoring the state of affairs that existed before the damaging event (para 18). That is precisely what section 64 sentence 1 GmbHG (old version) does: the director must restore the position prior to his wrongful payments, “regardless of whether this benefits the company or the company’s creditors” (para 23; unofficial translation). The intricate doctrinal classification as a “reimbursement claim of its own kind” — loss suffered by the creditors as a whole rather than by the company — is nothing the policyholder can or must reconstruct (paras 20–22); the clause wording does not turn on who suffered the loss (para 24). Thirdly, inclusion matches the recognisable purpose of D&O insurance as insurance for the account of the insured persons (liability-side cover): in the Senate’s words, the insured “will therefore not assume that precisely the liability risk under section 64 sentence 1 GmbHG, which is significant and potentially existence-destroying for him, is meant to be excluded from D&O cover because a pecuniary loss occurred not at the level of the policyholder but at the level of its creditors” (para 28; unofficial translation; see paras 26–27). Limited possibilities of defending the underlying claim change nothing — that is when the insured expects protection most (para 25). The case is nonetheless not finally resolved: rescission and knowing breach of duty remain to be examined on remittal (para 29).
Where the decision sits in the case-law
The judgment (BGHZ 227, 279) ends the restrictive lower-court line built on Düsseldorf Court of Appeal, judgment of 20 July 2018 — I-4 U 93/16, VersR 2018, 1314 (para 8) — that view is superseded. Subsequent case-law has taken up the standard; see, for instance, Cologne Court of Appeal, judgment of 16 November 2021 — 9 U 253/20. Since then, the real battleground of D&O cover has shifted to the exclusions, above all knowing breach of duty — most recently BGH, judgment of 19 November 2025 — IV ZR 66/25. On the statutory history: section 64 GmbHG (old version) was transferred, across legal forms, into section 15b of the German Insolvency Code with effect from 1 January 2021; the interpretative standards of the judgment — the average insured’s reading of the wording, compensation of a detriment rather than doctrine, the protective purpose of liability-side cover — are formulated independently of that change.
The decision was not rendered on tax liability — this is where inference begins and findings end: whether directors’ liability under sections 69 and 34 of the German Fiscal Code (AO) (for instance for unpaid VAT following denial notices) is a “statutory liability claim for damages” within clause 1.1 ULLA has not been decided by the BGH. In favour of cover: the Federal Fiscal Court has consistently attributed a damages-like character to the section 69 AO claim (BFH, judgment of 1 August 2000 — VII R 110/99, BStBl II 2001, 271; judgment of 26 September 2012 — VII R 3/11; judgment of 26 January 2016 — VII R 3/15), and the Fourth Civil Senate’s interpretative logic — compensation of a detriment, irrespective of who suffers it — appears transferable to the exchequer’s tax shortfall. It remains an open question, dependent on the individual policy terms.
The literature
The Senate expressly draws on the coverage solution prepared in the literature: Armbrüster/Schilbach, ZIP 2018, 1853 (1856, 1858 f.) are repeatedly adopted as “correct” — for the classification as a statutory liability provision (para 13), for the restoration criterion (para 23) and for the irrelevance of limited defences (para 25). The broad supporting literature — including Markgraf/Henrich, NZG 2018, 1290 (1292 f.), Brinkmann, in: FS Bergmann, 2018, p. 93 (104 f.), Commandeur/Brocker, NZG 2018, 1295 (1297) — is set out at paras 22–23; the contrary view (Lange, in: Veith/Gräfe/Gebert, Der Versicherungsprozess, 4th ed., § 21 marginal no. 36) is rejected at para 28. Of note for advisory practice is the clarification at para 27: the policy primarily protects the financial interests of the insured person, not of the company — protection of the policyholder is a mere “reflex effect”.
Three levels — kept strictly apart
Official headnote: “The claim of the company against its managing directors under section 64 sentence 1 GmbHG for reimbursement of payments made after the company became unable to pay its debts or after its over-indebtedness was established is a statutory liability claim for damages within the meaning of clause 1.1 ULLA.” (headnote; unofficial translation)
Administrative practice: No express administrative guidance exists — the decision concerns the civil coverage relationship; an administrative-practice level does not arise here (as at 19 August 2026).
Our conclusion for the defence: Expressly our own assessment: extending cover to directors’ tax liability under sections 69 and 34 AO is well arguable on the standards of this judgment — the Federal Fiscal Court itself treats the section 69 AO claim as damages-like, and clause 1.1 ULLA precisely does not turn on the identity of the injured party (exchequer instead of the creditors as a whole). But it has not been decided and depends on the individual policy: the definition of pecuniary loss, any tax or duty clauses, the exclusions (above all knowing breach of duty), the temporal scope (claims-made principle) and rescission risks decide each case. There is no coverage guarantee — but there is a clear operating instruction: set up every sections 69/34 AO case as a coverage case in parallel from day one.
Defence levers
- Notify cover immediately and in parallel: Report every claim against a director — civil or tax-based (sections 69, 34 AO) — to the D&O insurer without delay; observe policy obligations (notification, information, coordination) from the outset.
- Wording beats doctrine: Counter declinatures based on the doctrinal peculiarity of the claim with paras 17–18, 22 — what governs is the average insured’s understanding, not the construction of the cause of action.
- Evidence the damages character: For sections 69 and 34 AO, deploy the Federal Fiscal Court line (VII R 110/99; VII R 3/11; VII R 3/15) — as a supporting argument, not as a guarantee.
- Prepare the “knowing breach” front: The knowing-breach exclusion is insurers’ main practical defence (para 29; BGH IV ZR 66/25) — documented compliance organisation and decision trails serve both the coverage and the liability defence.
- Plan assignment and procedural architecture: Assigning the coverage claims to the claimant (as here, to the insolvency administrator) can bundle liability and coverage litigation — weigh the opportunities and risks before the first declaration.
Defence assessment: POSITIVE · Keywords: D&O insurance; clause 1.1 ULLA; section 64 sentence 1 GmbHG (old version); concept of damages; sections 69, 34 AO (open); knowing-breach exclusion
FAQ
Does D&O insurance now also cover tax liability under sections 69 and 34 AO?
That has not been decided — the BGH ruled solely on section 64 sentence 1 GmbHG (old version). The judgment’s interpretative standards and the damages-like character of the section 69 AO claim affirmed by the Federal Fiscal Court argue for cover; the outcome depends on the individual policy wording and exclusions. No guarantee can be derived — but a robust line of argument certainly can.
What objections remain open to the insurer after this ruling?
Everything the BGH did not decide: rescission for fraudulent misrepresentation, the exclusion for knowing breaches of duty, and the merits and quantum of the underlying liability claim itself (para 29). That is where coverage is decided in practice — and where documented organisation pays off.
Source box
- BGH, judgment of 18 November 2020 — IV ZR 217/19, ECLI:DE:BGH:2020:181120UIVZR217.19.0, BGHZ 227, 279 (courts below: Frankfurt am Main Court of Appeal, order of 7 August 2019 — 3 U 6/19; Wiesbaden Regional Court, judgment of 28 December 2018 — 1 O 371/16).
- Düsseldorf Court of Appeal, judgment of 20 July 2018 — I-4 U 93/16, VersR 2018, 1314 (superseded earlier line).
- Cologne Court of Appeal, judgment of 16 November 2021 — 9 U 253/20 (subsequent case-law).
- BGH, judgment of 19 November 2025 — IV ZR 66/25 (knowing-breach exclusion).
- BFH, judgment of 1 August 2000 — VII R 110/99, BStBl II 2001, 271; BFH, judgment of 26 September 2012 — VII R 3/11; BFH, judgment of 26 January 2016 — VII R 3/15 (damages character of liability under section 69 AO).
- Armbrüster/Schilbach, ZIP 2018, 1853 (1856, 1858 f.); Markgraf/Henrich, NZG 2018, 1290 (1292 f.); Brinkmann, in: FS Bergmann, 2018, p. 93 (104 f.) — each as cited in the reasons (paras 13, 22–23, 25).
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