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.
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.
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
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.
The government has this week launched a 14-week consultation to determine whether the current definition of a vehicle should be extended. It will question which type of vehicles should be covered by compulsory insurance.
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.
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.
We are still waiting for a road map from the Commission in which it is to set out its preferred approach to dealing with the unintended consequences of the Vnuk case on motor – and on other casualty – insurance policies. Continue reading
With less than a month to go to the referendum on the UK’s membership of the EU, it seems strange that the wackier consequences of compliance with the decision in Vnuk have not yet been trailed out by those hoping to leave the Union. After all, we’ve only just had a spat about whether the EU requires us to sell bananas in bunches of threes or fours and headlines along the lines of “Bonkers EU means Granny’s motability scooter has to be insured!” would hardly be any less edifying.
As 2015 and the New Year celebrations become ever more remote and we try to predict the future and prioritise work for 2016 the question arises as to where, when and how much resource to commit to responding to the very significant problems thrown up by the decision of Vnuk to UK insurance law. Continue reading
At the end of October the European Commission announced an extensive programme of work for 2016. There are 23 key initiatives and a further 27 proposals, the latter referred to collectively under the REFIT heading, to review existing EU laws. Item 25 of those is:
Motor Insurance Directive – evaluation. Evaluation of Directive 2009/103/EC intended to help EU residents involved in a road accident in another EU country. Under the Directive, subscribers to compulsory motor insurance policies in all EU countries are covered for motoring throughout the EU.
This wider work could perhaps have some influence on the present handling of the issues raised by Vnuk. This is a plausible (but far from certain) conclusion, given that the REFIT work on the MID could provide a means by which the Commission might take views, later in 2016, from stakeholders on a wide range of points related to the Directive. If that were so, then the broader focus of REFIT might allow the Commission – if it were so minded – some time in the medium term in which to think seriously about narrow reform to the MID in order to address some of the main concerns raised by the decision in Vnuk that compulsory insurance is required for any use of a motor vehicle that is consistent with its normal function.
About the Author
Alistair 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).