ECJ finds MIBI liable for compensation of van crash victim

The Motor Insurers Bureau of Ireland (MIBI) has been held to be liable for the compensation of a victim of a van crash 21 years ago who was entitled to compensation under an EU directive but not under Irish law.

The EU’s European Court of Justice (ECJ) in Luxembourg on Tuesday ruled that despite the failure of the Irish authorities to transpose part of a directive on mandatory insurance for drivers into Irish law, the directive did still have “direct effect” on the obligations of the MIBI because it is in effect an arm of the State.

The case is a reference from the Irish Supreme Court in 2015 (Elaine Farrell v Alan Whitty, the Minister for the Environment, Ireland and the Attorney General, Motor Insurers Bureau of Ireland).

The Supreme Court asked the ECJ to guide the Irish courts as to whether the MIBI, which pays insurance claims to victims of uninsured drivers, was solely liable for compensating Ms Farrell.

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In January 1996 she had been hurt in a crash of a van she was travelling in whose driver, Alan Whitty, was not insured because Ireland had failed properly to transpose an EU directive requiring that all passengers in motor vehicles should be covered by the insurance of a vehicle’s driver.

Insured

In Irish law, drivers of commercial vehicles not fitted with rear seats did not need at that stage to be insured against their own negligent driving. If the court found that the MIBI was a branch of the state, an “emanation of the state”, it alone would be responsible for compensation to Ms Farrell. Otherwise damages would be the responsibility of the state, notably the Department of the Environment and the Attorney General, because of their failure to transpose the directive properly.

The issue involves important EU legal principles arising from what is known as the doctrine of the “direct effect” of EU directives in domestic law and which are applicable to “vertical’ disputes” between the individual and the State, but not disputes between private parties.

It has been essential to know what are the boundaries of “the state” for the purposes of applying the doctrine of vertical direct effect.

The MIBI refused Ms Farrell’s request for compensation because it argued that liability for her personal injuries was not a liability in respect of which insurance was required under national law.

Following a case in the High Court, which also saw a reference to the ECJ on the interpretation of the Third Motor Insurance Directive, Ms Farrell was paid compensation. However, a dispute remained as to who bears responsibility for financing the damages paid.

The Supreme Court took the view that that depends on whether the MIBI is, or is not, an “emanation of Ireland”, and asked the ECJ for assistance in the matter.

Having provided its clarification, the substantive matter now returns to the Irish courts for determination.