Dr Nicholas Bevan

Dr Nicholas Bevan

Monday, 15 September 2014


The Prime Minister, who campaigned unsuccessfully against the election of Jean-Claude Juncker as European Commission President has nominated Jonathan Hill, Baron Hill of Oareford as the British European Commissioner with responsibility for the Financial Stability, Financial Services and Capital Markets Union.  
Baron Hill nominated to European Commission

If Baron Hill’s appointment is confirmed, his portfolio would extend to the European Commission’s current investigation into the UK’s failure to properly implement the European Directives on motor insurance (Council Directives 72/166/EC; 84/5/EC; 90/232/EEC; 2000/26/EC; 2005/14/EC and 2009/103/EC).  Given that the European Commission has an unfettered discretion on whether to bring infringement proceedings and given the hostile political climate and the increasingly Euro-sceptic stance of the UK administration, it is possible that the European Commission may decide against pursuing an infringement action against the United Kingdom, notwithstanding the numerous defects in our national law transposition of these Directives.

For those of us arguing for wide-spread reform in this area, Baron Hill’s appointment might be viewed as a serious setback.  However it is conceivable that the Jonathan Hill might, on being properly briefed, realise that the UK national law provision is so obviously flawed in a way that unjustly confers windfalls to the motor insurance industry at the expense of the innocent victims whom the scheme is supposed to protect, that he will encourage a wide-scale review within the DfT of its defective implementation of these Directives.  

He would be wise to do so, as EU law provides other remedies that are capable of delivering the same outcome. 

There is a growing awareness amongst the road traffic accident practitioner fraternity that where a UK national law provision fails to provide the minimum standard of compensatory protection required under EU law, then it is possible to obtain redress through the courts. 

The doctrine of direct effect may now extend to injured victims wrongly refused full compensation by the Motor Insurers Bureau on the basis that were the MIB's true status examined by a properly informed court it would be held to be an emanation of state. 

Furthermore an aggrieved party can also rely on the indirect effect of a directive.  See the following exceprt from the Court of Justice in Bernhard Pfeiffer and others v Deutsches Rotes Kreuz, and others CJEU 2004 Case C-297/01 that some view as having blurred the boundary between direct and indirect effect:

111  It is the responsibility of the national courts in particular to provide the legal protection which individuals derive from the rules of Community law and to ensure that those rules are fully effective.

112  That is a fortiori the case when the national court is seised of a dispute concerning the application of domestic provisions which, as here, have been specifically enacted for the purpose of transposing a directive intended to confer rights on individuals. The national court must, in the light of the third paragraph of Article 249 EC[LINK to excerpt] , presume that the Member State, following its exercise of the discretion afforded it under that provision, had the intention of fulfilling entirely the obligations arising from the directive concerned (see Case C 334/92 Wagner Miret [1993] ECR I-6911, paragraph 20).

113  Thus, when it applies domestic law, and in particular legislative provisions specifically adopted for the purpose of implementing the requirements of a directive, the national court is bound to interpret national law, so far as possible, in the light of the wording and the purpose of the directive concerned in order to achieve the result sought by the directive and consequently comply with the third paragraph of Article 249 EC (see to that effect, inter alia, the judgments cited above in Von Colson and Kamann, paragraph 26; Marleasing, paragraph 8, and Faccini Dori, paragraph 26; see also Case C 63/97 BMW [1999] ECR I 905, paragraph 22; Joined Cases C 240/98 to C 244/98 Océano Grupo Editorial and Salvat Editores [2000] ECR I-4941, paragraph 30; and Case C 408/01 Adidas-Salomon and Adidas Benelux [2003] ECR I-0000, paragraph 21).

As Mr Justice Jay’s ruling in Delaney v Secretary of State for Transport 2014 makes clear, the language of the directives is clear, unambiguous and it leaves the UK with very little discretion as to how its obligations are transposed into UK law, so that a failure to fully implement them is likely to be deemed sufficiently serious to warrant a Francovich award against the UK.

The DfT were fully briefed in February 2013 on the numerous infractions of EU law in its statutory and extra-statutory provision.  We were promised detailed proposals initially in July, then in the Autumn of last year but nothing has been heard from them since.

So it is to be hoped that if Baron Hill is appointed to this post, he will see the merit in conceding with grace what can (and will eventually) be secured independently of the Executive through the courts by a consistent interpretation of our national law.  What insurers and claimant representatives require is a clearly articulated policy that complies with EU minimum standards of compensatory protection, ideally in a codified form that is consistent with rule of law and legal certainty principles.

Wednesday, 10 September 2014

DAMIJAN VNUK European Court of Justice, 4 Sept 2014, Case C-162/13

For those interested, I supply links to the judgment of the Court of Justice of the European Union and to the Advocate General's opinion:

CJEU Judgment in Damijan Vnuk of 4 September 2014, case C-162/13

Click here 

Opinion of Advocate General Mengozzi, 6 February 2014

Click here 

See my earlier post commenting on the case.


European Court of Justice ruling in Damijan Vnuk
A recent European Court of Justice ruling has wide-ranging implications for all motorists, their insurers and above all for the compensatory entitlement of accident victims.  
Unlawful restrictions with wide implications
EU member states cannot restrict the scope of their national law provision imposing the duty to insure against third party risk from motor vehicle use, the Court ruled.  This has immediate consequences not only for motor insurers, whose long established policy has been to restrict their contractual indemnity to claims arising out of accidents that occur ‘on roads or other public places’, but also for the premium paying public and motor accident victims.  
Damijan Vnuk

Road Traffic Act 1988 is defective: 
 the duty to insure should extend to farmyards and private property

In Damijan Vnuk v Zavarovalnica Triglav C-162/13, a Slovenian farmworker was knocked off a ladder by a reversing tractor and trailer, whilst he was stacking bales of hay in a barn loft.  The incident occurred in a farm yard on private property. 
His claim against the driver’s motor insurers failed at first instance and when he appealed the Slovenian Supreme Court referred the case to the Court of Justice of the European Union to determine whether the duty to insure ‘the use of vehicles’ within the meaning of Article 3(1) of the First Directive on motor insurance (72/166/EEC) covered the accident circumstances.
A number of member states intervened in the proceedings, including the UK, and they argued that the compulsory insurance requirement should not apply. 
Different emphasises
In Vnuk, the Court noted the subtle variations of emphasis within the different language editions of the motor insurance directives, the different the ways in which individual member states have implemented the compulsory third party insurance requirement and the importance of a consistent approach.  It noted that ‘where there is divergence between the language versions of a European Union text, the provision in question must be interpreted by reference to the general scheme and purpose of the rules’.  
EU law policy objective of protecting victims
The Court made an important observation on policy that impacts not only how one should interpret the motor insurance directives but also on the prospects of Francovich damages being awarded where an individual has sustained loss caused by a member state’s infringement of a directive.  It stated that the objective of protecting accident victims was of equal importance to the dual aim of freeing the movement of persons and goods with a view to achieving the internal market.  Hitherto, the social aim of providing compensatory protection was widely considered to be subordinate to the wider objective of encouraging free movement within the EC.
Court of Justice ruling
As to the facts of the Vnuk case, the Court ruled that the accident circumstances were capable of falling within the scope of insurance cover required under the directives.  It referred Mr Vnuk's case back to the Slovenian courts to make the necessary factual findings.  
On the specific issue as to whether a reversing trailer propelled by a tractor was required to be covered by the article 3 insurance ‘use of vehicles’ requirement, it ruled that it was.  Motor vehicle use covers ‘any use of a vehicle that is consistent with the normal function of that vehicle’ [59].  Compare that with the much narrower definition within section 185 below.
When one considers the definition of ‘vehicle’ provided in what is now article 1.1 of the sixth consolidating directive on motor insurance (2009/103/EC ) in the light of this new interpretation, it suggests that many vehicles which are currently considered under our national law to be exempted from the third party insurance obligation, such as ride along mowing machines and airport tugs (on the basis that they are not intended or adapted for road use) are in fact capable of falling within the definition.  

However it should be noted that article 5.2 of the sixth directive provides a safety clause that allows member states to devise a list of vehicle types that are to be derogated from the insurance requirement but they must also be covered by the compensatory guarantee scheme under what is now article 10. The minister must now act promptly not only devise a list of motor vehicles that are to be exempted from the compulsory insurance requirement, but he will need to notify the European Commission, incept regulatory provision for these vehicles to be ‘plated’ and to ensure that the MIB Uninsured Drivers Agreement encompasses these claims. As the MIB's liability for such vehicles can be subordinated to other existing cover, where it exists (such as under a household or public liability policy) then the financial impact of this extended scope will be mitigated.
The Court also ruled that ‘the fact that a tractor, possibly with a trailer attached, may, in certain circumstances, by used as an agricultural machine has no effect on the finding that such a vehicle corresponds to the concept of 'vehicle' in Article 1(1) of the First Directive.’  The Vnuk ruling opens the way to arguments that third party cover extends to the use of a stationary tractor or other motor vehicle generating electricity or powering machinery, provided this is a ‘normal use’.  Compare that with the much narrower definition within section 185 below.

Accident locations
Although the Court’s characteristically elliptical judgment did not expressly rule that the geographic scope of the duty to insure extended to private property, such as the farm yard where Mr Vnuk was injured, this is the inescapable conclusion to be drawn from the Court’s judgment.  It appears to have subsumed considerations as to the location of the accident within a broader concept that any motor vehicle use must be covered by insurance.  This is clear from its concluding paragraph where it ruled that ‘the concept of 'use of vehicles' in that article [viz article 3] covers any use of a vehicle that is consistent with the normal function of that vehicle. That concept may therefore cover the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn, as in the case in the main proceedings, which is a matter for the referring court to determine.’
Flawed UK statutory and extra statutory provision
It will be readily appreciated that sections 143 and 145 of the Road Traffic Act 1988 restrict the duty to take out third party motor insurance and the scope of cover to be provided by authorised motor insurers in the United Kingdom to the ‘use of a motor vehicle on a road or other public place’.  Section 185 restricts the definition of ‘motor vehicle’ to ‘a mechanically propelled vehicle intended or adapted for use on roads’.  These restrictions conflict with the wider scope required by the motor insurance directives.  
These same restrictions in the scope of the duty to insure also impact on the Uninsured Drivers Agreement 1999 or the Untraced Drivers Agreement 2003.  This is because these agreements inherit the same defective restrictions in geographic and technical scope that are grafted on directly from the Road Traffic Act 1988. 
Gaps in protection
Under UK law those injured by motor vehicles in private lanes and car parks, gated communities and private caravan sites are excluded from the compensatory guarantee provided under the various schemes for which the Secretary of State for Transport is responsible.  The same applies to anyone injured on a public road by a motorised vehicle not intended or adapted for road use.  
The UK’s current national law provision is not only unlawful but it is also lacks common sense.  When the life-time compensatory needs of a chronically injured victim can amount to many millions of pounds, what possible good is served by exposing these motor accident victims to these arbitrary restrictions?  One way or another, the tax payer always funds the bill.  
It is trite law that although a European directive does not have direct effect between individuals, it is still possible to benefit from provisions that conform to the three conditions set out in Francovich as developed by Brasserie du Pecheur:

  •          the rule of law infringed must be intended to confer rights on individuals;
  •          the breach must be sufficiently serious, and
  •          there must be a direct causal link between the breach of the obligation and the damage sustained by the injured parties
Accident victims denied compensation due to the currently flawed restrictions contained in Part VI of the Road Traffic Act 1988 or under either of the Uninsured Drivers Agreement 1999 or the Untraced Drivers Agreement 2003 have two principal means of redress.

  •          The first is to cite the relevant European law  when presenting their claim and to require a Community law compliant interpretation of sections 143, 145 and 151 of the Road Traffic Act 1988 and / or the MIB Agreements.  
  •          If the court considers that the contra legem rule prevents it from delivering an EU law consistent interpretation, then the victim may be entitled to Francovich damages against the Secretary of State for Transport.  However the right to compensation is not automatic: a party affected by an infringement of a directive will have to satisfy the multi-factored test expounded by Lord Clyde in  R v Secretary of State for Transport, ex parte Factortame Ltd and others [1999] 4 All ER 906.
In fairness to the Government, the Vnuk ruling will probably come as something of a nasty surprise to a number other member states.  This is likely to have a significant bearing on any Francovich claim featuring a historical breach by the UK of the geographic and technical scope of the insurance requirement under article 3.  Looking forwards, the Vnuk ruling does not seem to permit member states any appreciable discretion on the geographic scope.  Technical arguments on what constitutes a motor vehicle may well prove to be a fertile ground for litigation.
Failings at the Department for Transport
Early last year, the Secretary of State for Transport was warned (in the responses to his own consultation on the MIB Agreements) that the UK statutory and extra-statutory provision for road accident victims contained a large number of defects that breached the minimum standards of protection required under EU law.  These included a detailed explanation as to why the geographic and technical scope of the insurance obligation within the Road Traffic Act 1988 was too narrowly confined.  The minister chose to do nothing. The Vnuk ruling confirms that these warnings were correct.
The minister's inaction is unacceptable not only for those unfortunate enough to be motor accident victims but also for the motor insurers that underwrite the cost of compensating these victims.  The Minister needs to discharge his constitutional duty to implement European law and this involves articulating a clear and Community law compliant policy that will confer proper compensatory safeguards and enable insurers to revise the terms of their policies and to set appropriate reserves. 
Time’s up
Hitherto, successive holders of the office of the Secretary of State for Transport have chosen to ignore the numerous deficiencies in the compensatory schemes their department is responsible for.  After Vnuk, the incumbent minster has little choice if he is to avoid the embarrassment of an infringement action, judicial review or further Francovich rulings.  He must take decisive action: first by undertaking an EU law compliant review of the entire UK statutory and extra-statutory provision for victims of motor accidents and then by rectifying the numerous defects that such an exercise will inevitably reveal. 

His department has recently incurred a substantial liability for Francovich damages in Delaney v Secretary of State for Transport 2014 EWHC QB (currently listed for appeal in February 2015) for a blatantly unlawful exclusion of liability clause within the Uninsured Drivers Agreement. A similar outcome is in prospect as and when other defects are challenged.  The European Commission is also actively investigating the United Kingdom's defective transposition of the motor insurance directives.

Mr McLoughlin, time's up!

Tuesday, 2 September 2014


Click on the image below to access the full Modern Law Journal article from July 2014.

Monday, 1 September 2014


In a World Turned Upside Down I argue that Mr Justice Jay's ruling against the Secretary of State for Transport is merely the tip of the iceberg.  Successive ministers have allowed the Motor Insurance Bureau and the motor insurance industry generally to write into our national law provision numerous exclusions and restrictions of liability that undermine Parliaments original concept of a providing a comprehensive scheme that guarantees that victims are fully compensated.  The comprehensive guarantee is supposed to apply regardless of whether the perpetrator is insured, under insured, completely uninsured or simply unidentified.  It is even supposed to protect victims from insolvent insurers. This is why our motor insurance is so costly.

Unfortunately successive ministers have given in to the powerful insurance lobby that has managed to qualify its liabilities with an increasing number of exceptions and exclusions of liability that undermine the original concept and which also breach the minimum standards of protection required under European law. The flaws provide the mulit-billion pound insurance industry with windfalls at the expense of the innocent victims whose interests the scheme is supposed to protect.

The article also examines why the Department for Transport was unable to explain its reasons for introducing exclusions of liability in the Uninsured Drivers Agreement 1999 when it was obvious that they were unlawful and why a large bureaucracy should claim to have no documentary evidence that might cast light on its insurer biased policies. Could it be that i insurance industry lobbyists are dictating the terms of our social policy to a credulous and compliant executive?

Click on the image below to access the article in full.  Reproduced here with the permission of the Journal of Personal Injury Law and its publishers Thomson Reuters.