EU court will decide if exclusion order can be applied to €3m insurance payout
THE Court of Justice of the European Union (CJEU) is to be asked to decide whether insurer FBD was entitled to impose an exclusion in a motor insurance policy on which it ultimately had to pay out €3m because of a High Court decision.
FBD had claimed it was entitled to impose a condition in a policy that a person insured on a van was not covered if they carried anyone in the back of the vehicle which was not designed or constructed with passenger seating.
A 19-year-old man, who was subsequently made a ward of court and now 35 years old, was one such passenger in a van which crashed into another vehicle in Co Louth in June 1999. He cannot be named now that he is a ward of court.
He suffered serious life changing injuries and in 2009 the High Court approved a settlement for €3m for him against the owner of the van who was insured by FBD.
This had followed an earlier ruling that FBD was not entitled to claim the insurance policy was void because of the no rear passengers clause.
The High Court found a previous EU Court of Justice ruling in relation to EU motor insurance directives requiring equal treatment of all passengers in a vehicle meant FBD could not refuse indemnity to the insured.
FBD, which paid out the €3m settlement, appealed that ruling saying it was entitled to recoup that money from the State if its appeal succeeded. This was because the High Court went beyond the previous EU court ruling and had essentially given the relevant EU directive a form of retrospective horizontal direct effect against a private insurer, FBD argued.
The State opposed the appeal and said the High Court decision should stand.
Today the Court of Appeal said the matter should be referred to the CJEU for a decision.
Mr Justice Gerard Hogan, on behalf of the three-judge court, said it was clear this case raised difficult and unresolved issues concerning the extent to which EU motor insurance directives can be held to have a direct effect against a private party.
The judge said he wanted the CJEU to determine, in a situation where national law provides for an exclusion in motor insurance over no fixed seats in the rear of a vehicle, is the national court obliged to disapply the exclusion clause such that the victim could recover damages against the private insurance company.
Alternatively, the question to be answered is: Would such a result amount in substance to a form of horizontal direct effect of an EU directive against a private party in a manner prohibited by EU law?