Supreme Court clarifies applicable law for accidents abroad involving uninsured drivers
Moreno v Motor Insurers’ Bureau
3 August 2016
Unfortunately, road traffic accidents whilst abroad on holiday or on business are an all too common occurrence. Even more problematic are claims caused by untraced or uninsured drivers.
In the last few years, the UK courts have had to consider many thorny legal issues arising from such claims. The latest judgment from the Supreme Court has brought some long awaited clarity and certainty to claims brought against the MIB as a compensation body following accidents abroad, bringing them in line with claims covered by insurers. Head of DWF’s European Group, Sara-Jane Eaton discusses the decision in Moreno v Motor Insurers' Bureau (2016).
Ms Moreno, a UK resident, was the victim of a car accident whilst on holiday in Greece in May 2011, and sustained life changing injuries to her legs. The Greek registered vehicle was driven by an uninsured driver which led the claimant to seek damages from the Motor Insurers' Bureau in the UK upon her return from holiday.
The crux of the claim was whether English law should apply to the assessment of damages as opposed to Greek law as the measure of damages would be more generous under English law.
Through a series of Council Directives, in particular Directive 2009/103/EC (the Sixth Directive) adopted into English law by the Motor Vehicles (Compulsory Insurance) Information Centre and Compensation Body) Regulations 2003 (the 2003 Regulations), victims are protected by being able to seek compensation in their own country from a national compensation body which provides them with a guarantee fund when the accident abroad involves uninsured or untraced vehicles.
In the previous Court of Appeal cases of Jacobs v Motor Insurers' Bureau (2010) and Bloy v Motor Insurers' Bureau (2013) it was held that English law applied to the determination of the scope of compensation recoverable even though the accidents occurred abroad.
The key provision relied upon by the claimants in these cases was Regulation 13(2) (b) of the 2003 Regulations:
The compensation body shall compensate the injured party in accordance with the provisions of Article 1 of the second motor insurance directive as if it were the body authorised under paragraph 4 of that Article and the accident had occurred in Great Britain.
Crucially in Jacobs, the Court of Appeal had interpreted this provision as meaning that damages should be assessed in accordance with English law.
At the time of the Jacobs judgment, there was concern that it did not sit neatly with the provisions of Regulation (EC) No.864/2007, referred to as "Rome II". The general rule under Rome II is that the law of the country where the accident occurs applies not only to liability, but also to the scope and assessment of the damages recoverable. It came into force on 11 January 2009 which was after the relevant date in Jacobs.
The decision in Jacobs was seen as creating an anomaly whereby claimants would be treated differently depending on whether they were injured by an insured driver on the one hand or by an uninsured or untraced driver on the other.
In accidents involving insured drivers, the applicable law would be the law of the country where the accident occurred. In accidents involving uninsured or untraced drivers it would be English law. When the MIB makes a payment, it is entitled to recover the sums paid from its equivalent body in the relevant country; however a further unsatisfactory consequence of the Jacobs decision was that in a less favourable jurisdiction it would not be entitled to recover more than the sum payable had the foreign law applied.
It is perhaps unsurprising that the issue remained contentious and found its way back to the courts once Rome II was fully in force. In Moreno the MIB argued that since Rome II had come into force, Regulation 13 could not be applied so as to provide for a level of compensation that was different from that obtainable in the country where the accident occurred.
At first instance Gilbart J found in favour of the claimant (i.e. that English law applied) as he was bound by previous case law in Jacobs and Bloy. However he recognised the force in some of the MIB's arguments and permitted the leapfrogging of the case from the lower court to the Supreme Court.
Supreme Court findings
In allowing the MIB’s appeal, the focus of the findings was on the correct interpretation of Regulation 13(2)(b). The anomaly created by Jacobs was the key issue and the Court of Appeal’s analysis of the provision in Jacobs was ultimately rejected.
The starting point for Lord Mance who gave the lead judgment was that the 2003 Regulations should be interpreted in a sense which is not inconsistent with the Directives. The scheme created by the various Directives was to be looked at holistically:
it can be seen to be a scheme of which the constant aim has been to improve the prospects and ease with which injured parties can recover the compensation to which they are “entitled” in respect of any loss or damage caused by vehicles.(paragraph 30)
Regardless of whether a claimant seeks to recover damages from an insurer or from the MIB “the compensation to which he or she is entitled is and remains the same”.
The Court of Appeal had been correct up to a point in its analysis of the reasoning behind the expression “as if it were the body authorised under paragraph 4 of that article and the accident had occurred in Great Britain”, in that it was right to say that the Regulation had resolved a difference between the UK’s Uninsured Drivers’ Agreement and the Untraced Drivers’ Agreement. The former covered the use of British registered vehicles in Great Britain or the EU, whereas the latter is limited to accidents occurring in Great Britain. Regulation 13(2)(b) had the effect of extending the MIB’s liability to cover the untraced driver scenario where the accident occurred abroad.
However, the Court of Appeal had been wrong to go further and say that Regulation 13(2)(b) affected the principles governing the assessment of damages:
Once it is concluded that the scheme of the Directives is to provide a consistent measure of compensation, whatever the route to recovery taken by the victim, there is certainly no need to regard regulation 13(2)(b) as having any further purpose or effect.
The MIB’s appeal was allowed so that its liability to Ms Moreno is to be determined in accordance with the law of Greece.
Lord Mance and the SC Justices had needed to impose a "purposive approach" on the 2003 Regulations in order to bring the UK legislation in line with the overall purpose of the consolidating Sixth European Motor Insurance Directive of 2009.
Overall, the judgment represents a sensible approach adopted by the Supreme Court in the light of the effect of Rome II and will provide certainty going forwards for the MIB in its capacity as a compensation body, preventing a claimant from being able to claim greater and/ or differing damages from the MIB in the UK than s/he would be entitled to recover from a guarantee fund or an insurer under the laws of the country where the accident occurred. It also now removes the unsatisfactory position of the MIB paying more than it is entitled to recover from its foreign counterpart.
It is also worth highlighting that Lord Mance noted that the arrangements arising from the Directives and Regulations in this area "will, no doubt be one of the many current arrangements requiring thought" following the EU referendum. Whilst the legislative implications are not yet clear, it is to be expected, or at least hoped that the arrangements will remain in place as they were ultimately designed to protect RTA victims both here and abroad.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.