Further clarification of the scope of motor insurance: European Court of Justice decision in Núñez Torreiro (C-334/16)

Yesterday the ECJ published its judgment in this case, a reference from Spain. Sr Núñez Torreiro was injured when the all-terrain military vehicle in which he was a passenger overturned during an exercise inside a restricted military area. The key question was whether Spanish legislation could exclude these circumstances from the scope of compulsory cover as required by the Motor Insurance Directive? The advice of the Advocate General, given in June this year, was that it could not.

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Vnuk: increasing costs for businesses?

The Vnuk problem

The original case arose from an injury claim in which a Slovenian worker was knocked off a ladder by the trailer attached to a reversing tractor on a farm.  The ECJ ruled that as this vehicle was intended to be used on a road, it should be covered by the compulsory motor insurance regime under the 6th Motor Insurance Directive (MID).

More specifically, the decision was that compulsory motor insurance applied to any vehicle being used anywhere, for any purpose, for which it was intended.  Such a wide ambit encompasses all sorts of vehicles traditionally covered under EL and PL policies, for example agricultural vehicles, construction vehicles, forklift trucks, EBTs and driveable aircraft steps.

How this ruling is interpreted among European courts is up for debate and is currently being considered by the EC. The outcome will have significant ramifications for the general insurance arrangements of corporates.

Action plan

A much-awaited action plan from the European Commission (EC) on how to deal with the ramifications from the European Court of Justice (ECJ) decision in Damijan Vnuk v Zavarovalnica Triglav remains elusive, much to the frustration of governments, insurers and businesses across Europe.

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Commission considers significant European support for Motor Insurance Directive change

As we mentioned in two recent Vnuk blogs the European Commission has picked up the pace in considering the issues that arise both in respect of that judgment but also in respect of the Motor Insurance Directive. Whilst a broader consultation closes in October a narrower Inception Impact Assessment consultation closed this week with 20 substantive responses. There are two Government responses (UK and Ireland) with British, French, German, Irish, Spanish and Maltese insurers responding through member organisations such as the ABI. Additionally the Council of Bureaux, the Secretariat for 47 National Guarantee Funds (the European MIBs) has also responded on behalf of its members. Motorsport responses are also strong with two from the UK and one from Ireland, again responding collectively on behalf of members. All of the above favour the “in traffic” amendment to the Motor Insurance Directive to reflect a narrower compulsory insurance obligation than is implied by the Vnuk judgment itself (save for the French Insurance Federation which takes the view that its compulsory cover already includes Vnuk).

The contrary case in respect of Vnuk is presented by three lawyer lobbying groups: APIL, FOCIS and PEOPIL. The first two are broadly representational of UK legal firms but the latter has a much broader Pan-European (an indeed wider global) membership.

A narrow reading of “for” and “against” is dangerous on a technical issue and responses, even of those arguing for the ‘full Vnuk’ accept that there should be exceptions. The weight of insurer responses and particularly that of the Council or Bureaux should, one would hope, carry significant weight with the Commission. The very clear concerns of motorsport about the existential threat posed by the ‘full Vnuk’ are articulately expressed and broaden to include reference to other European treaties and societal considerations.

There is an ongoing debate about the issue and further work to be done. The wider consultation on MID does not close until 20 October and there will be further opportunity to reinforce the arguments about the scope of MID and Vnuk in those submissions. BLM is hosting a workshop on the subject on 25 September and is happy to welcome interested parties.

 Written by Terry Renouf, consultant at BLM

REFIT of European motor insurance: Vnuk one of four measures to be addressed

Having been largely silent for a year about how to tackle the Vnuk problem (i.e. the extended scope of compulsory motor insurance to any normal use, anywhere, of any motor vehicle) the European Commission appears to have picked up the pace significantly in just announcing a new four-week consultation period running from 24 July to 21 August.

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Vnuk consultation – aiming at a moving target?

The Government’s preferred approach here is ‎described as “the amended Directive option”. It is probably more pragmatic than the alternative  “comprehensive option”,  which could give rise to significant complications and unintended consequences for insurers and users of a wide range of motorised vehicles.

A big problem, however, is that we don’t know either what the amendment to the Directive might look like or what might be the timeframe for change – there has been nothing visible from the Commission since the change of the lead Commissioner necessitated by Lord Hill’s resignation after the UK’s EU referendum in June. To this extent, the DfT’s consultation may be in the unenviable position of aiming at a moving target – or even an unknown one.

Nevertheless, it remains important to engage with DfT on the consultation‎ and we shall continue to arrange meetings to address the detail in the 61 page paper. The attached one page summary may offer an easier way in, and please get in touch if you would like to get involved.

About the Author

akAlistair Kinley is BLM’s Director of Policy & Government Affairs.

Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.

He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).

An Englishman, a Northern Irishman and a Slovenian question

Transport Minister Andrew Jones MP (Harrogate & Knaresborough) replied this week to questions from Sammy Wilson MP (East Antrim) about how the UK Government intends to deal with the decision of the European Court in Damijan Vnuk v Zavarovalnica Triglav (a Slovenian case).

Mr Wilson – who backed the leave campaign, as did 55% of his constituents – represents a constituency with a large farming sector and his interest in Vnuk seems more likely to stem from that background than from the need for technical alignment of UK and EU motor insurance regimes.

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Commission option three appears favoured by stakeholders

It has been little over a month since the Commission released its eagerly anticipated road map setting out possible options to deal with the potentially complex consequences of the Vnuk decision. Although setting out four options, the road map which is entitled ‘Adaptation of the scope of Directive 2009/103/EC on motor insurance’ seems to lean in favour of a modest but important change to the Sixth European Motor Insurance Directive (MID). This is the third of four options identified by the Commission.

Since publication of the road map, we have held two well-attended meetings with insurer customers and stakeholders from the motor sport industry to consider views, share opinions and outline next steps. There was, as one would expect, some speculation at the meetings about how the workings out of the UK’s decision to leave the European Union might affect both the current handling and ultimate resolution of the Vnuk dossier. Nonetheless and in line with our preliminary thinking, option three – amending the MID to limit the need for compulsory motor insurance to the use of vehicles in traffic – looked very much to be the preferred choice.

Of course, there is uncertainty about what the exact wording of the proposed amendment to the MID would be. The Commission suggests that use of a vehicle in traffic could be defined as the transport of persons or goods, whether stationary or in motion, in areas where the public has access in accordance with national law. The present wording of the Road Traffic Act 1988 requires cover for use on “a road or other public place”. Quite how this phrase fits with the Commission’s suggested definition will dictate the scope of any amended required to the RTA once the positon at EU level has been confirmed.

As to timelines for amending the MID, it would seem that by summer 2017 is a possibility, but deadlines on Vnuk have slipped before … and there is some irony, perhaps, in the road map’s statement, nearly two years after the case, that “a swift response at EU level is warranted.”

One outcome we are keen to avoid for the post-Vnuk amendment being caught in the wider REFIT exercise (see, for example our December 2015 post about REFIT here). However, if this does get caught up with REFIT there could be considerable delay.

The immediate next step seems to be for the Commission to confirm its preferred option following the road map’s publication. It has set out Q3 2016 as its target date. We, like many others, await developments with interest.

Portrait photograph of Alistair Kinley, Director of Policy & Government Affairs

Alistair Kinley is director of policy and government affairs at BLM.

European Commission publishes road map for dealing with Vnuk decision

This morning the Commission released its road map setting out possible options to deal with unintended consequences of the Vnuk decision. The carefully-worded text is headed “Adaptation of the scope of Directive 2009/103/EC on motor insurance” and sets out four possible options.

Despite the four options described, the road map reads, to me at least, as leaning in favour of the sort of modest but important change to the Motor Insurance Directive that we have already outlined on this blog.

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