Compulsory motor insurance and MIB agreements stand up against judicial review

10 Nov 2017

The context of the challenge to the Road Traffic Act 1988

Road safety charity RoadPeace sought to challenge many aspects of the UK’s regime of compulsory insurance by way of taking judicial review (JR) proceedings against the Secretary of State for Transport, ie the UK Government. The Motor Insurers’ Bureau (MIB) appeared as an interested party.

The case was heard in February and judgment was finally given this week, on 7 November 2017. Two cases decided by the European Court of Justice (ECJ) since the hearing meant that the judge required further submissions on relevant points. The ECJ cases were Fidelidade v Caisse Suisse [C-287/16] and Farrell v Whitty [C-413/15].

  • Fidelidade held that national law allowing a motor insurer to seek to defeat a third party claim (in the event, one made by way of subrogation) by avoiding the policy for fraudulent misrepresentation was not compatible with the Codified Motor Insurance Directive (MID). This finding called into question the operation of declarations under s 152 of the RTA.
  • Farrell held that MIB Ireland should be regarded as an ’emanation of the State’ and could therefore be sued directly by a claimant who suffered loss as a result of the State’s defective implementation of the MID.

The RoadPeace JR took place against the background of the (UK) Department for Transport (DfT) having already signalled, via a specific consultation paper, that the ECJ decision in Vnuk v Zararovalnica [C-162/13] meant that certain limitations in the Road Traffic Act 1998 would have to be reviewed in order for the UK law to meet the (extended) scope of the MID as understood after Vnuk.

During the JR proceedings, the DfT accepted that both Vnuk and Fidelidade clearly meant that certain parts of the RTA would have to be amended. DfT also accepted the need for consequential amendments to the regulations under which claimants have a direct right of action against a motor insurer (the European Communities (Rights Against Insurers) Regulations 2002). However, as Farrell was decided in October 2017 it was therefore too early to take a definitive view on its application, if any, to the arrangements under which the UK MIB operated.

The decision on the merits

As can be seen from the table below, the Vnuk points (in respect of the RTA and the 2002 regs) and Fidelidade points are the only ones on which the judge was prepared to find that UK compulsory motor insurance law was incompatible with the MID.

But given that the DfT had conceded these points, it would perhaps be stretching things a little to state unequivocally that RoadPeace won on them. On every other live point, its claims of incompatibility were dismissed (it is also worth noting that a number of other criticisms of the RTA regime either fell away or were dropped as the case proceeded).

What this means for you

There is no impact on UK motor insurance arrangements for the time being.

The Vnuk and Fidelidade points (and the related points in the 2002 regs) are clearly understood by the Government and it is already taking action to resolve them. While the further written submissions that the judge requested from the parties on the Vnuk point may help to shed some light on the Government’s preferred approach and its possible timetable, it should be remembered that this topic is also under scrutiny by the European Commission under its REFIT review of the MID (consultation on which closed on 22 October).

Technical but important points made by the judge in relation to “use” of vehicles and the RTA regime include his endorsement of the recent BLM case Sahin v Havard & Riverstone [2016] EWCA Civ 1202 and of the earlier case EUI v Bristol Alliance EUI v Bristol Alliance Ltd Partnership [2012] EWCA Civ 1267. Another notable point was his refusal, following the reasoning in Sahin, to adopt a highly purposive approach (known in EU law as a Marleasing approach) to interpreting those provisions of the RTA which were challenged.

The JR may have succeeded in securing concessions from the Government on the scope of compulsory motor insurance post-Vnuk and on declarations post-Fidelidade. That said, these points were already on the Government’s radar and, we suggest, it was clear they were going to be addressed in any event.

Viewed in this manner, the JR would appear to have had very limited effects, the most welcome of which may well be the bringing to an end of suggestions of incompatibility of the very many provisions in respect of which the challenges have now been formally dismissed.


Table of outcomes in R (on the application of RoadPeace) v Secretary of State for Transport

[Case reference and full judgment [2017] EWHC 2725 (Admin)]



Decision re MID

Remedy (if any)

Judge’s reasons/comments


Group 1: restrictions in Road Traffic Act 1988

  1. Limitations in motor policies on certain “uses” under sections 143, 145 & 151

not incompatible


“The structure of the Directive protects third parties where the use is not covered by the terms of the compulsory cover. It would be a more expensive process to obtain insurance, yet quite unnecessary for the achievement of the Directive’s purposes…”

Para 54

  1. Identical limitations in 3(2) of European  Communities (Rights Against Insurers) Regulations 2002

(ECRAI regs)

not incompatible


“… these provisions do not create any new issues of conflict with the Directive, unless the defences which can be raised by the insurer in direct proceedings against it are more extensive than those which the insurer would be entitled to raise pursuant to the insurance contract, so as to avoid cover. But as I read the provisions, they do not have that effect. It would be a strange result if exclusions or grounds for avoiding the contract which could not be raised as against the third party in proceedings against the insured, could nonetheless be raised in direct proceedings against the insurer.”

Para 69

  1. Rights against insolvent insured transferred by Third Parties (Rights Against Insurer) Act 2010

not incompatible



  1. Fidelidade v Caisse Suisse C-287/16 rendering s152(2) incompatible

DfT conceded point


“The defendant [ie the Secretary of State for Transport] is plainly aware of the position and no remedy is called for…”

Para 71

Group 2: scope of compulsory insurance following Vnuk v Zararovalnica C-163/13

  1. Scope of RTA cover, ie s143 restriction to use on “road or other public place” and s185 restriction to vehicles “intended or adapted for use on roads”

DfT conceded point

Declaration of incompatibility & judge required  further submissions from the parties

“I do not accept ... that Francovich damages are an ineffective remedy, devised as the requirements are by the CJEU itself, to provide an effective remedy for a failure to transpose a Directive which causes damage.

I see no form in which any order ’setting aside’ any part of the domestic legislation can achieve anything other than chaos...

… it is very relevant that the European Commission itself is contemplating legislative amendment, because it recognises the unexpected problems which Vnuk, in its unqualified language taken at face value, creates.

I am satisfied that an appropriate form of declaration should be granted ... I have concluded thatfurther submissions, initially in writing, are required from the parties following the hand down of this judgment on whether more than a declaration is required.”

Paras 88, 89, 91 & 98

  1. Identical points in relation to
  • ECRAI regs 2(1) and
  • restriction of 2(1) to accidents in England & Wales only

DfT conceded point

Declaration of incompatibility & judge noted that Lord Chancellor already reviewing ECRAI regs

“I see no reason why a declaration should not be made, and in view of the limited nature of the change, I would have been minded to set a timetable for ministerial action but the Lord Chancellor, as the responsible Minister, is not a party.”

Para 100


Group 3: MIB agreements

  1. Protection/approval of awards for minors (untraced cases)

not incompatible


“Clause 14 [of the untraced agreement] represents a careful provision for minors and protected parties.”

Para 110

  1. Time limits for notifying police (untraced cases)

not incompatible


“It is difficult to see by reference to what principle of Community law [the agreements] could be said to be unlawful. The issue does not arise with the identified but inadequately insured driver …Evans [Churchill Insurance Company Ltd v Evans, C–442/10] does not suggest that there should be no differences between the provisions for insured and identified drivers and unidentified drivers [and, in respect of untraced cases] debate about whether the time limit was too short or too inflexible does not begin to demonstrate an incompatibility with Community law.”

Para 119

  1. “Significant injury threshold” for paying property damage (untraced cases)

not incompatible


“I accept [the MIB’s] submission that the scope of this exception was left by Article 10.3 of the Directive to the discretion of Member States. Nothing in the previous provision warrants a contention that they were incompatible with the Directive. There is nothing in this point.”

Para 126

  1. Terrorism exclusions for incidents before March 2017

DfT conceded point, although

MIB did not


[but a Francovich action would be an adequate remedy if the issue arose]

“I do not see that retrospective legislative change is workable or necessary. Nor do I see that any declaration is required.”

Para 131

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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Alistair Kinley

Alistair Kinley

Director of Policy & Government Affairs,

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