The Fourth Motor Insurance Directive gives injured parties in a car accident a direct right of action against the insurer of the vehicle which is insured and normally based in another Member State. Here, the English resident was a passenger who was injured in a Greek-registered car, insured by a Greek insurer. The Directive also provides that, if the foreign insurer has not provided a reasoned reply to a claim for compensation within 3 months, the compensation body in the injured party's own country (here, the Motor Insurers' Bureau ("the MIB")) must take action within 2 months. If the foreign insurer still does not pay, the MIB will compensate the injured party and then bring a subrogated claim against the foreign insurer for reimbursement.
In this case, the injured party made a claim for compensation against the Greek insurer in May 2009. No reply was received within 3 months. Accordingly, she had a right to pursue a claim against the MIB from the beginning of September 2009. However, when the Greek insurer became insolvent in February 2010, the MIB advised that it was no longer able to intervene in the matter because the Greek insurer was no longer authorised and it argued that the injured party should instead claim against the Greek Auxiliary Fund (which deals with claims from policyholders entitled to compensation following the insolvency of a Greek insurer). At first instance, the judge agreed that the MIB was not liable to compensate the injured party because the Fourth Directive did not provide protection where an insurer has become insolvent and the right to claim against the MIB was a purely procedural facility and did not give the injured party a substantive claim in the event of the Greek insurer's insolvency.
The injured party appealed and the Court of Appeal has now allowed that appeal.
It held that a right to notify and pursue a claim against the MIB had arisen in September 2009 because the circumstances specified in the Fourth Directive had occurred, and not because of the Greek insurer's insolvency (which in fact did not occur for another a few months). The time at which an insurer must have official authorisation is only at the time of the accident. If an insurer subsequently ceases to be authorised, that does not terminate the rights of the injured party. There was no need to imply into the Directive a requirement that the insurer has not entered into a formal insolvency process at the date when a claim is made to the MIB.