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 wasnot 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 ofthe vehicle.
She was injuredin the accident. Alan Whitty was not insured. In accordance with the provisions of Irish law in force atthe moment of accident, A. Whitty hadno obligation to hold liability insurance for bodily injuries arising inthe result of negligence suffered by Mrs Farrell. It belonged to the category of persons to whom, despite beingincluded in the scope of the Third Directive on motor insurance and entitled to protection under this directive, such rights werenot 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 relevantto the facts of the case, this aspect of the directive has not yet beentransposed into Irish law. Elaine Farrell has asked for compensation to MIBI.
MotorInsurers Bureau of Ireland refused Mrs Farrell’s application of compensation, because under national lawthere was no requirement to have insurance against the title of liability for personal injuries suffered by theapplicant. Mrs Farrell claimed her claim before theIrish 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 onthe interpretation of the Third Directive on motor insurance. According to argumentation of Mrs Farrell, she was seeking a declaratory ruling,indicating that on the day of the accident, the national regulations did notproperly implement all the relevant provisions of the First Directive in amended by the ThirdDirective, in this particular art. 1 third of the directive1.
In the main proceedings, thedefendant national authorities and the MIBI denied that the legislation inforce on the day of the accident did not correctly transpose art.1 third of thedirective. In addition, those authorities also submitted that, since the nationallegislation did not provide for compulsory insurance against civil liability inrespect of passengers in question any part of a motor vehicle, other than a large publicservice vehicle, unless the design or construction of that part includespassenger seats, they have applied the relevant provisions of the Directives in the right way and authorized; the relevant provisions ofCommunity law allow for the possibility of not extending the obligation to takeout civil liability insurance for persons staying in the above-indicated part of thevehicle.This case concerns the Community framework in compulsoryvehicle liability insurance. The frameworkis defined by several directives aimed at facilitating the movement of vehiclesbetween Member States.
Regarding motor vehicles, the first Directive imposed anobligation to have civil liability insurance covering bodily injuries relationship with movementof these vehicles. The insurance wasintended to cover damages arising in the territory of other Member States inaccordance with legal provisions in forcein these countries. The second directive aims to reduce disparities between Member States level andrange content of compulsory third partyliability insurance, in particular by setting minimum guarantee sums. In addition, compulsory insurance must cover both personalinjury and damaged material. The seconddirective also provides for the inability to refer to contractual clausesagainst third parties, according to which the warranty does not cover the useor driving of unauthorized persons, persons without a license or persons who donot comply with the statutory technical requirements regarding the conditionand the safety of the vehicle concerned. Finally, the Second Directive requires the creation of aguarantee fund paying compensation for damage to property or personal injurycaused by an unidentified vehicle or an uninsured vehicle. The third directive also aims to reduce disparities between MemberStates, in particular by filling existing gaps in compulsorypassenger insurance.
The third directivealso contains provisions on the territorial scope of the insurance guaranteeand access to the guarantee fund. TheFourth Directive, which is not applicable in the present case, it mainlyconcerns the liquidation of damages resulting from traffic accidents outside the Member State of permanentresidence of the injured person. Inorder to facilitate the proceedings of the injured person, the directive allowsfor the withdrawal from claim in the country ofpermanent residence to the representative claimsdesignated in that State by the insurer of the responsible person. Finally, Directive 2005/14 / EC2 modernizeand improves the Community motor insurancescheme, in particular by extending to all victims the right to directly sue aninsurance company provided for in thefourth directive. It should be noted that the Community framework has been in place sincethe beginning the framework of the pre-existing green card scheme introducedon 1st of January 1953 by theUnited Nations Economic Commission for Europe and managed by the Council of Offices, the organization formed inLondon in 1949. This system is designed, first, tosupervise third parties who are harmed caraccidents were not lossy with due to thefact 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 motorinsurance at the border of each of visited countries. The green card scheme isbased on national insurance offices responsible for administration and liquidation of damages from accidents caused by drivers ofvehicles registered abroad and honouring vehicle insurance certificates(“green card”)3 issued to persons insured by insurance companies belongingto the system. More specifically, European Union case law has shown how to determinewhether a specific legal entity is a “state emanation” and istherefore subject to the principle of a direct vertical effect.
The mostimportant body in this matter is the case Fosterv British Gas4.Test for the term “state emanation” as usedin Foster, formulated as follows:”…body, regardless of the legal form which he was held responsible, in accordance with the measure adopted by thestate, for the provision of a public service under the control of the state andhas special powers to this end that go beyond those resulting from the normalrules applicable in relations between persons it is concluded ineach case between the authorities on which the provisions of the directive thatmay give rise to direct effects may be invoked”. However, also in Foster, The CJEU proposed a widerformulation of the test, indicating that: “a directive could be invoked againstorganizations or bodies that were they were subject to state power or control or had special rightsexcept those resulting from the normal rules applicableto the relationships between individuals”5.
Interpretation of Foster, the test was a relatively controversialissue in the field of EU scholarships since its formulation in1990. Uncertaintyabout the exact limits and effects of Foster,the test remained for a surprisingly long time, and the CJEU so far providedonly limited and piecemeal explanations, most recently in the judgment of 12thof December 2013 in which the EU Court of Justice continues to refer in a lessthan unequivocal manner to ‘bodies which, under the control of the MemberState, have been entrusted with services of general interest and who havespecial powers to this end. In Farrell, referring to who was responsible for thefailure to implement the EU Motor Insurance Directive in the wake of a caraccident, the CJEU explained that the conditions set out in the so called inFoster test,they have been delegated to perform the task inthe 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 testthat would cover all situations in which there could be one entity that couldbe 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 whichthe Court stated that an individual may rely on such provisions fororganizations or bodies subject to the authorities or state control or havespecial powers going beyond those which arise from the normal rules applicableto relations between persons and, consequently, that “the conditions that an organizationmust adequately be subject to the authority or control of a State and must havespecial rights going beyond those which result from the normal rules applicableto relations between individuals cannot be connected” 6 By adding a bit more clarity, the CJEU explained that “stateemanations” are important to ensure the direct effect of EU directives aftertheir transposition period expires. In conclusion, it should be remembered that Community law provided forthe introduction of compulsory civil liability insurance in relationshipwith movement of motor vehicles. Injured third parties benefit from the possibility of direct claims against the liabilityinsurer, if it is not available to the competent local insurance fund. However, the Community law did not provide for approximationof the provisions on civil liability with road accidents.
In thesecircumstances, the question arises whether and which dimension the liability insurance company or theinsurance guarantee fund may appoint against the injured person not only thelack of liability of the insured, but also the injured person’s behaviour or exclusionresulting from insurance contracts. I believe that this is a desirable explanation that can potentiallycontribute to increasing the effectiveness of secondary EU law. 12004/0137/COD22002/0124/COD Legislative observatory3MIB Green Card System Explained4 C-188/89UE:C: 1990: 313 205C-188/89 UE:C: 1990: 313 186C-413/15