December 28, 2017

ECJ provides further comment on Compulsory Motor Insurance Regime

The European Court of Justice recently determined that vehicles capable of dual functions are only subject to compulsory motor insurance provisions when the vehicle in question is being used for transport purposes.

The decision in Vnuk suggested that Article 3(1) of the Motor Insurance Directive was to be interpreted in an expansive manner imposing a requirement for compulsory insurance on any vehicle used on private property, whether that use was for transport or a mechanical function.

However, the decision in the case of Rodrigues indicates that the ECJ wishes to restrict this wide interpretation of Article 3(1).  Perhaps a more measured approach will now be taken to the issue of 'use of vehicles', much to the relief of motor insurers.

Background

Mrs Alves was applying herbicide in a vineyard belonging to Mr and Mrs Rodrigues de Andrade.  The tractor was stationary with the engine running, powering the spray device used to administer the herbicide.  A landslip occurred, carrying the tractor away into the vineyard, causing the death of Mrs Alves.

The ECJ was asked to consider whether the motor insurer of the tractor was liable for the incident.

Decision

Given the circumstances of the incident, the ECJ made clear that the tractor itself fell within the definition in Article 1(1) of the Motor Insurance Directive, and although the tractor was stationary this did not preclude it from "falling within the scope of its function as a means of transport and, therefore, within the scope of the concept of ‘use of vehicles’ within the meaning of Article 3(1)…"

However, the ECJ held that the issue to be established in matters involving dual function vehicles was to determine what the tractor's 'principal function' was at the time of the incident. 

At the time of the incident, it was found that the function was to power the spray device being used by Mrs Alves and not as transport.

The ECJ therefore found that the motor insurer was not liable for the incident.

What can we learn?

  • The decision in Rodrigues is in marked contrast to the initial interpretation of Vnuk which was perceived as imposing the requirement for compulsory insurance on any vehicle used on private property.
  • Rodrigues provides clarity to insurers and practitioners alike on the issue of insurance for accidents involving dual use vehicles, albeit there are likely to be examples (such as a combine harvester) where the distinction between transportation and alternative functions may not be as clear cut as that found in this case. Therefore, it would not be a surprise to find further cases involving dual use vehicles before the ECJ in due course.
  • Beyond dual use vehicles, the ramifications of Vnuk across a whole range of circumstances are still unclear.The interpretation of the Motor Insurance Directive regarding the issue of 'use' remains under constant consideration whether within the UK Court system or the ECJ;
  • By way of example, the ECJ is due to consider case number C-80/17 (Fundo de Garantia Automóvel v Juliana & Juliana), in which it has asked to consider the issue of whether or not the obligation to insure a motor vehicle under the Directive extends to a vehicle owner who chooses to keep their vehicle immobilised on private land away from the public highway;
  • Whilst the outcome of the European Commission's consultation on the Motor Insurance Directive remains uncertain, it is more likely that the "driving in traffic" exception favoured by insurers, will be enacted;
  • The compatibility of the Road Traffic Act with the MID continues to be addressed on a case by case basis.