Divergence from EU is ‘new normal’
‘Motor vehicles’ case is just one example of the legal differences arising as a result of Brexit, writes Steven Smart
As we have moved beyond the transition period post-brexit, an interesting example of the potential for divergence between the laws of the UK and the EU has been clarified recently. Although the legal principles in dispute are technical, the practical ramifications for injured parties, policyholders and insurers are not.
In 2014, the European Court of Justice delivered a judgment in the case of Vnuk v Zavarovalnica Trigalev in which, by interpreting a European Directive on laws relating to motor insurance, the applicability of policies in the United Kingdom was suddenly reshaped.
A tractor moving across a farm yard in Slovenia hit a ladder on which Mr Vnukw as standing, as a result of which he sustained significant injuries. The case was referred from the national court for consideration of what“use of a motor vehicle” meant under the relevant directive. the european court of Justice extended the long-held understanding of use of a mechanical vehicle to amount to its “normal function”, even if this did not take place on a public road.
This created much consternation. Legal experts opined that the logical extension of the decision was that compulsory insurance was necessary for any mechanical vehicle being used in a normal way, which might extend to racing vehicles, electric scooters, golf carts or theoretically lawnmowers, even if used on private land. If so, this seemed clearly at odds with the Road Traffic Act 1988, which required coverage to extend to losses caused by or arising from the use of a vehicle “on a road or other public place”.
The High Court in England subsequently held that UK provisions breached European law as they were inconsistent with the judgment. This opened up the possibility of suing the state, or at least the body responsible for dealing with such matters which was an extension of the state, namely the Motor Insurers Bureau (MIB). The 2019 case of Lewis v Tindale removed any doubt. The claimant had been injured when he was struck by a 4x4 vehicle being used on private land. The Court held that the inconsistency between UK and EU law was such that there had been a failure to implement the legal requirement sofa compulsory insurance regime and accordingly, the MIB required to pay damages.
In 2021, the Government said the UK would no longer follow the decision in Vnuk, having weighed up the implications. The Motor Vehicles (Compulsory Insurance) Bill has recently passed and await s royal as sent. it is anticipated to come into force within months. It will not amend any existing terms of the Road Traffic Act but will instead insert a further section making it clear any previously binding EU case law in the area will no longer be applicable.
The main effects will be not only to remove the requirement of insurers to provide cover for accidents which do not take place on public roads , a measure calculated to save some £2 billion per year or £50 per annum for the average motorist, but also to create a dichotomy between the law of theukandeu.
As the UK is distancing itself from the original Vnuk decision, the EU is seeking to codify its application across Member states ,. whilst the view might be expressed that this is a more niche example of potential divergences that can arise, the figures quoted suggest this is far from the case.
The claimant lobby might argue those injured in such circumstances in the UK are disadvantaged where the prospects of securing damages from the negligent party direct may not be positive. A variety of entities which utilise a wide range of“vehicles” in circumstanceswhere it would never have been envisaged compulsory motor insurance was necessary, now relieved of the requirement to indemnify potential liabilities, will no doubt welcome
the relief afforded. so will insurers who can point to the historic regime supporting the argument that standard motor insurance coverage was never intended to extend to such accidents.
This is a stark example of legal differences and political issues which have arisen and will continue to arise as we move into what might be termed “the new normal.”
Steven Smart is a Partner, Horwich Farrelly.