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On the 26th of January 1996 Mrs Elaine Farrell has been travelled as a van passenger,
owned by the driver Mr A. Whitty. The vehicle was
not authorized for transporting passengers in the back part. Mrs Elaine Farrell was sitting on the van’s floor at the moment when A. Whitty has lost control of
the vehicle. She was injured
in the accident. Alan Whitty was not insured. In accordance with the provisions of Irish law in force at
the moment of accident, A. Whitty had
no obligation to hold liability insurance for bodily injuries arising in
the result of negligence suffered by Mrs Farrell. It belonged to the category of persons to whom, despite being
included in the scope of the Third Directive on motor insurance and entitled to protection under this directive, such rights were
not available under the Irish law. Although,
the third directive in regarding motor insurance,
introduced the obligation to have this type of insurance, at the time relevant
to the facts of the case, this aspect of the directive has not yet been
transposed into Irish law.


Elaine Farrell has asked for compensation to MIBI. Motor
Insurers Bureau of Ireland refused Mrs Farrell’s application of compensation, because under national law
there was no requirement to have insurance against the title of liability for personal injuries suffered by the
applicant. Mrs Farrell claimed her claim before the
Irish courts; High Court in duly applied to the Court for an application issuing the ruling for a preliminary ruling, in which he asked for tips on
the interpretation of the Third Directive on motor insurance.

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According to argumentation of Mrs Farrell, she was seeking a declaratory ruling,
indicating that on the day of the accident, the national regulations did not
properly implement all the relevant provisions of the First Directive in amended by the Third
Directive, in this particular art. 1 third of the directive1. In the main proceedings, the
defendant national authorities and the MIBI denied that the legislation in
force on the day of the accident did not correctly transpose art.

1 third of the
directive. In addition, those authorities also submitted that, since the national
legislation did not provide for compulsory insurance against civil liability in
respect of passengers in question any part of a motor vehicle, other than a large public
service vehicle, unless the design or construction of that part includes
passenger seats, they have applied the relevant provisions of the Directives in the right way and authorized; the relevant provisions of
Community law allow for the possibility of not extending the obligation to take
out civil liability insurance for persons staying in the above-indicated part of the

This case concerns the Community framework in compulsory
vehicle liability insurance. The framework
is defined by several directives aimed at facilitating the movement of vehicles
between Member States. Regarding motor vehicles, the first Directive imposed an
obligation to have civil liability insurance covering bodily injuries relationship with movement
of these vehicles. The insurance was
intended to cover damages arising in the territory of other Member States in
accordance with legal provisions in force
in these countries.


The second directive aims to reduce disparities between Member States level and
range content of compulsory third party
liability insurance, in particular by setting minimum guarantee sums. In addition, compulsory insurance must cover both personal
injury and damaged material. The second
directive also provides for the inability to refer to contractual clauses
against third parties, according to which the warranty does not cover the use
or driving of unauthorized persons, persons without a license or persons who do
not comply with the statutory technical requirements regarding the condition
and the safety of the vehicle concerned. Finally, the Second Directive requires the creation of a
guarantee fund paying compensation for damage to property or personal injury
caused by an unidentified vehicle or an uninsured vehicle.


The third directive also aims to reduce disparities between Member
States, in particular by filling existing gaps in compulsory
passenger insurance. The third directive
also contains provisions on the territorial scope of the insurance guarantee
and access to the guarantee fund. The
Fourth Directive, which is not applicable in the present case, it mainly
concerns the liquidation of damages resulting from traffic accidents outside the Member State of permanent
residence of the injured person.  In
order to facilitate the proceedings of the injured person, the directive allows
for the withdrawal from claim in the country of
permanent residence to the representative claims
designated in that State by the insurer of the responsible person.


Finally, Directive 2005/14 / EC2 modernize
and improves the Community motor insurance
scheme, in particular by extending to all victims the right to directly sue an
insurance company provided for in the
fourth directive.


It should be noted that the Community framework has been in place since
the beginning   the framework of the pre-existing green card scheme introduced
on 1st of January 1953 by the
United Nations Economic Commission for Europe and managed by the Council of Offices, the organization formed in
London in 1949. This system is designed, first, to
supervise third parties who are harmed car
accidents were not lossy with due to the
fact that material damages or bodily injuries sustained by them are caused by fault of the driver of the vehicle registered abroad, and secondly, eliminating the need for drivers to obtain motor
insurance at the border of each of visited countries. The green card scheme is
based on national insurance offices responsible for administration and liquidation of damages from accidents caused by drivers of
vehicles registered abroad and honouring vehicle insurance certificates
(“green card”)3 issued to persons insured by insurance companies belonging
to the system.


More specifically, European Union case law has shown how to determine
whether a specific legal entity is a “state emanation” and is
therefore subject to the principle of a direct vertical effect. The most
important body in this matter is the case Foster
v British Gas4.

Test for the term “state emanation” as used
in Foster, formulated as follows:

body, regardless of the legal form which he was held responsible, in accordance with the measure adopted by the
state, for the provision of a public service under the control of the state and
has special powers to this end that go beyond those resulting from the normal
rules applicable in relations between persons it is concluded in
each case between the authorities on which the provisions of the directive that
may give rise to direct effects may be invoked”.


However, also in Foster, The CJEU proposed a wider
formulation of the test, indicating that: “a directive could be invoked against
organizations or bodies that were they were subject to state power or control or had special rights
except those resulting from the normal rules applicable
to the relationships between individuals”5.


Interpretation of Foster, the test was a relatively controversial
issue in the field of EU scholarships since its formulation in1990. Uncertainty
about the exact limits and effects of Foster,
the test remained for a surprisingly long time, and the CJEU so far provided
only limited and piecemeal explanations, most recently in the judgment of 12th
of December 2013 in which the EU Court of Justice continues to refer in a less
than unequivocal manner to ‘bodies which, under the control of the Member
State, have been entrusted with services of general interest and who have
special powers to this end.


In Farrell, referring to who was responsible for the
failure to implement the EU Motor Insurance Directive in the wake of a car
accident, the CJEU explained that the conditions set out in the so called in
Foster test,
they have been delegated to perform the task in
the public interest of a Member State and have special powers for this purpose.

According to the CJEU, in  Foster   “The Court has not attempted to formulate a general test
that would cover all situations in which there could be one entity that could
be invoked by the Directive’s provisions that could have a direct effect”
and that it should be interpret in the light of paragraph 18 of the same judgment, in which
the Court stated that an individual may rely on such provisions for
organizations or bodies subject to the authorities or state control or have
special powers going beyond those which arise from the normal rules applicable
to relations between persons and, consequently, that “the conditions that an organization
must adequately be subject to the authority or control of a State and must have
special rights going beyond those which result from the normal rules applicable
to relations between individuals cannot be connected” 6 


By adding a bit more clarity, the CJEU explained that “state
emanations” are important to ensure the direct effect of EU directives after
their transposition period expires.


In conclusion, it should be remembered that Community law provided for
the introduction of compulsory civil liability insurance in relationship
with movement of motor vehicles. Injured third parties benefit from the possibility of direct claims against the liability
insurer, if it is not available to the competent local insurance fund. However, the Community law did not provide for approximation
of the provisions on civil liability with road accidents. In these
circumstances, the question arises whether and which dimension the liability insurance company or the
insurance guarantee fund may appoint against the injured person not only the
lack of liability of the insured, but also the injured person’s behaviour or exclusion
resulting from insurance contracts.


I believe that this is a desirable explanation that can potentially
contribute to increasing the effectiveness of secondary EU law. 


2002/0124/COD Legislative observatory

MIB Green Card System Explained

4 C-188/89
UE:C: 1990: 313 20

C-188/89 UE:C: 1990: 313 18


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