The Amended Motor Vehicle Insurance Directive: Stalling Third-Party Rights

The law on compulsory motor vehicle insurance has been driving forwards for decades. With each iteration of the Motor Vehicle Insurance Directive (MVID), along with the Court of Justice’s rulings which expanded their protective reach, third-party victims of motor vehicle accidents were furnished with greater rights, remedies, and access to compensatory redress across the EU. Perhaps the most controversial decision of the ECJ during this time came in 2014 in Vnuk v Zavarovalnica Triglav. (In)famously, in Vnuk and its progeny of cases the ECJ interpreted the MVID as applying to vehicles on public and private land, where the vehicle was being used according to its normal function. The result of the expanded case law was concern expressed from Member States, national compensatory bodies and other interested organisations (such as the motorsport industry) that the law had been applied too broadly and was placing onto these bodies and their members an unreasonable burden. Following a consultation exercise by the EU Commission, Directive 2021/2118 was enacted which amended the law, reversing the decision in Vnuk but also limiting rights for third-party victims of motor accidents in unexpected ways. In this blog post, we provide an overview of the law and present a critical examination of the amending Directive. 


The history of the MVID has been widely discussed and subject to broad commentary. Legislative protection began in 1972 and with five further revisions, culminating in its Sixth Consolidating Directive in 2009, the law was used to facilitate the free movement principles of the EU and to place on an equal footing the protection of third-party victims of accidents involving motor vehicles. Its evolution has been ably outlined by Advocate General Mengozzi. The Second Council Directive 84/5/EEC laid down the principle of compulsory cover for damage to property and personal injuries. The Third Council Directive 90/232/EEC extended the cover to personal injuries to all passengers other than the driver (Article 1); the Fourth Motor Insurance Directive 2000/26/EC provided special provisions applicable to injured parties such as the direct right of action against insurers (Article 3) and the establishment of a national compensation body (Article 6). The Fifth MVID, Directive 2005/14/EC, extended the scope of intervention of the body provided for in Directive 84/5/EEC to damage to property or personal injuries (Article 2). It further restricted insurance cover exclusion clauses whilst extending cover to personal injuries and damage to property suffered by pedestrians, cyclists and other road users. A prohibition was ordered on the application of excesses against injured parties and these individuals’ right to information was broadened (Article 4). In 2009, via the Sixth Directive 2009/103/EC, an opportunity was taken for consolidation of these expanding rights and obligations. 

Vnuk and its progeny

The MVID had, therefore, been subject to legislative action to ensure passengers and other third-party victims of accidents involving motor vehicles were protected wherever in the EU the damage or loss took place. Restrictions were present in these Directives, and a significant aspect – one which had been subject to rulings by the ECJ – was the geographic scope of the duty for compulsory motor vehicle insurance (affecting motorists, insurers and the national compensatory bodies’ potential liability). Beyond legislative action, judicial activism was evident in the development of protective rights. Prior to Vnuk, Member States such as Spain and the UK had interpreted the MVID as imposing the requirement for compulsory motor vehicle insurance for vehicles on roads and other public places. In Vnuk, the ECJ held that there was nothing in the Sixth MVID which restricted its scope to roads and other public places. Therefore, obligations for the compulsory insurance of vehicles was to be construed as applying regardless of their location, simply insofar as its use is consistent with its normal function (para 56). 

The activism present in Vnuk was followed by three further cases advancing the judgment. Juliana, Andrade and Núñez Torreiro which, as instructive as they were to expansion of the geographic scope of compulsory insurance, provided anything other than the instructional guidance desired as to consistency of approach. Juliana held that where a motor vehicle was capable of being driven, albeit purposefully incapacitated and stored on private land, it continued to be subject to the requirement to be compulsorily covered by insurance. In Andrade the ECJ continued that vehicles could have different functions depending on how they were used, and depending on its particular use at the time of the accident would determine whether insurance cover was compulsory or not (see Marson and Ferris for commentary). Finally, on 20 December 2017, and some three weeks after the Andrade judgment, the ECJ in Núñez Torreiro ruled that a military vehicle being used in an exercise conducted in a restricted area at the time of the accident was a “motor vehicle” for the purposes of the MVID. 

The consequence was that the MVID, through the jurisprudence of the ECJ, was confused. The “stationary” vehicle in Andrade did not fall under the requirement for the application of compulsory motor vehicle insurance, yet the parked and disabled vehicle in Juliana did. The tractor in Vnuk was subject to compulsory insurance as it was being used in its normal function at the time of the accident, and this reasoning was extended to a military vehicle in Núñez Torreiro using a (possibly inappropriate) wheeled platform when the terrain called for a tracked vehicle. The capacity of the compulsory motor vehicle insurance regime to include an unanticipated number and type of vehicle coming within range of the MVID, along with extensions to its geographic scope, led to calls for a review of the law. Following the conclusion of the public consultation exercise, a new Directive, 2021/2118, was enacted to amend the Sixth MVID, rolling back the development of the law, and intending to provide clarity to this area.

Directive 2021/2118

We now discuss some of the main contributions of Directive 2021/2118 to the problems raised in Vnuk, Juliana, Andrade and Núñez Torreiro. These latest amendments entered into force on 22 December 2021 and having to be implemented in national regulation on 23 December 2023 at the latest, have created a not insignificant shift in the protections to third-party victims of motor vehicle accidents and the obligations on Member States to ensure the compulsory insurance of motor vehicles. There are several concerns with the developments created by Directive 2021/2118, and we explore the most relevant to the cases previously outlined in this blog. 

Definition of motor vehicle and use

The Sixth MVID, at Article 1, defined a motor vehicle as one “… intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled.” This classification was broad and sought to exclude from the scope of the national transposing law many vehicles and would, almost certainly, have omitted the all-terrain vehicle used in Núñez Torreiro. Thus, the MVID had been transposed differently in Member States and provided different levels of protection to EU citizens depending on where in the Union they had become a victim. Given the latitude in interpretation facilitated by the designation, Directive 2021/2218 extended the classification of “motor vehicle” so, at a revised Article 1, is inserted

1a. “use of a vehicle” means any use of a vehicle that is consistent with the vehicle’s function as a means of transport at the time of the accident, irrespective of the vehicle’s characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion

The new Article incorporates the Juliana ruling regarding the requirement for the motor vehicle to be subject to a policy of insurance, if not when the policy will be available for use and/or any exclusions to be relied on by insurers. Section 1a maintains the classification of motor vehicles and its protective scope, yet removes this safety by linking a motor vehicle with its being used as a means of transport at the time of the accident. In so doing, it possibly lessens the protection available to victims whilst broadening the scope of evading responsibility for insurers. This inclusion to the Directive has the potential to result in litigation and references to the ECJ to determine its scope and its place within the existing case authorities.

Use of vehicles (at the time of the accident)

Interestingly given the history of the MVID, was the Preamble to Directive 2021/2118 and its possible implications, essentially rolling-back the protective purpose of the MVID. At Recital 5, it is expressed that the ECJ’s decisions in Vnuk, Andrade and Núñez Torreiro have clarified the meaning of “use of vehicles” insofar that motor vehicles are intended normally to serve as a means of transport, irrespective of their characteristics, and the use of such vehicles covers any use of a vehicle consistent with its normal function as a means of transport. This is notwithstanding the terrain on which the motor vehicle is used or whether it is stationary or in motion (yet makes no mention of Juliana). However, the Sixth MVID will no longer apply if, at the time of the accident, the normal function of such a vehicle is “use other than as a means of transport”. This could be the case if the vehicle is not being used within the meaning of Article 3(1) of that Directive, where its normal function is, for instance, “use as an industrial or agricultural power source.” In the interest of legal certainty, it continues, it is appropriate to reflect that case law in Directive 2009/103/EC by introducing a definition of “use of a vehicle”.

However, this is more concerning when considered in the context of determining causality at the time of the accident. How will the law be applied to motor vehicles which have ceased being used as a means of transport, for example burger vans, mobile libraries, mobile catering vehicles, perhaps even mobile homes? In Juliana, the ECJ considered that the obligation to insure at the time of the accident could not be made ex post facto. Rather, for the purposes of legal certainty, that conclusion must be drawn ex ante as, at least according to the ECJ, vehicles cannot drift in and out of the obligation to insure dependent on what activity they happen to be engaged in or their mode of use at the time of the accident (para 54). But if this is the case, and if we consider that Juliana might, as the newer instruction from the ECJ, impliedly repeal inconsistent aspects of Andrade where these issues did stop the application of compulsory insurance, why did the EU in Directive 2021/2118 specifically reverse the Juliana-established extension to the geographic scope of insurance and insert the stipulation of a motor vehicle being one which “is consistent with the vehicle’s function as a means of transport at the time of the accident”? It might be argued that the EU was specifically seeking to legislate to avoid the extensions Juliana established, and thereby calling into question its authority as precedent. An obligation to insure is quite different from the application of the policy in specific circumstances, a point made correctly by the ECJ in paragraph 55 in Juliana, yet the EU has established the ability for vehicles to be excluded from the application of insurance cover when declared as not “admitted for use on public roads in accordance with its national law.” 

Public road derogation

Until Directive 2021/2118’s amendment of the Sixth MVID, the MVID was not restricted to only public land and roads, indeed it applied to public and private land. The Commission’s Review gave it an opportunity to assess the direction taken by Vnuk as to the compulsory insurance of motor vehicles on private land. Directive 2021/2118 adds the following passage to Article 5 of the Sixth MVID: “A Member State may derogate from Article 3 in respect of vehicles not admitted for use on public roads in accordance with its national law.” Article 3 imposes the obligation on Member States to take all appropriate measures to ensure that civil liability in respect of the use of a vehicle is covered by insurance. The derogation allows a Member State to issue the Commission with a list of vehicles which would not be subject to compulsory insurance, typically because the body responsible for such vehicles has its own provision for covering any claims by a third-party victim. Vehicles owned by the State (ambulances, police vehicles and so on) would be those vehicles typically on the list.

It is accepted that the stipulation to public road only applies to the derogation applied for by a Member State to a limited class of vehicle, but those words will need defining, despite the Directive’s Preamble. At Recital 8 of the Preamble, public roads are considered as those “areas not accessible to the public due to a legal or physical restriction on access to such areas, as defined by its national laws.” In the UK, the Road Traffic Act 1930 and Road Traffic Act 1988 both resulted in case law which confirmed that various quasi-public roads and public places would be covered by the requirement to hold (compulsory) insurance. Campsites and caravan parks (DPP v Vivier [1991] 4 All ER 18), pay-and-display car parks (Montgomery v Loney [1959] NI 171), even dockyards (Buchanan v MIB [1955] 1 All ER 607) have each been confirmed as satisfying the definition of a “road” but problems continue in the use of the word “public” and the inherent restrictions this creates. 

The UK courts have also ruled on areas which are not considered “public places” which include privately owned land adjoining a private club (Pugh v Knipe [1972] RTR 286), a company car park used by staff and customers (R v Spence [1999] EWCA Crim 808) and a roadway at a university campus (Cowan v DPP [2013] EWHC 192 (Admin)). However, it should be acknowledged that many of these judgments involve criminal cases rather than application to civil matters. Yet turning to the civil jurisdiction with private roads, for instance, those which lead to a group of buildings, industrial estates and quarries, where the public at large would not be invited and to which the general public would not have access are a few examples where a derogation could apply. Coupled with this development in the law is a further element in the revised Article 5. The derogation, as with the original Sixth MVID, also requires the Member States to ensure that those vehicles are treated in the same way as vehicles in respect of which the insurance obligation referred to in Article 3 has not been satisfied. Hence, the national guarantee fund would ensure that third-party victims have a source from which to claim damages in the event of an uninsured vehicle (here read vehicle on the derogated list) causing them injury and loss (as noted in Article 10). 

The amending Directive adds at subsection 6 another potential problem:

Where a Member State derogates, under paragraph 5, from Article 3 in respect of vehicles not admitted for use on public roads, that Member State may also derogate from Article 10 in respect of compensation for damage caused by those vehicles in areas not accessible to the public due to a legal or physical restriction on access to such areas, as defined by its national laws.

The obligation on Member States to establish a national compensatory body ensured there would exist an “insurer of last resort” to compensate victims in the event that no policy of insurance existed against the driver at fault. Exclusions to this requirement used to apply just to the list of vehicles submitted to the Commission by the Member State in very limited circumstances, and it was not geographically restricted. By allowing States to extend this to vehicles not accessible to the public according to national laws will allow Member States to, potentially at least, expose third-party victims to situations where they will be undercompensated. This means a third-party victim has potentially no claimant from which to seek the recovery of compensation. The vehicle, if used exclusively on private land, will not be subject to compulsory insurance and the national compensatory body will have no obligation (and even, here, no jurisdiction) to intervene in such a case. 

Concluding thoughts

Directive 2021/2118 has provided the EU Member States with the instruction to reverse Vnuk. It restricts compulsory motor vehicle insurance to those vehicles operating in their normal function. Further, it widens the derogations from compulsory motor vehicle insurance of vehicles which are not intended for use on a public road.

Taken as a whole, these changes may be conceived as a win for most insurers and policyholders. The fear of increased insurance premiums for policyholders following the Vnuk extension to compulsory motor vehicle insurance has been removed. Yet, the Directive’s amendments are a fundamental loss to third-party victims of serious injury which occurs on private land by uninsured vehicles. Moreover, the very policyholders who have saved further expense on their insurance premiums will merely find that whilst the insurance company avoids its potential responsibility for providing compensation, that same policyholder will, in their role as taxpayer, undertake the compensatory responsibility for the injured third-party. It is a shame that the protections advanced by the ECJ in Vnuk and the cases that followed have been reduced through what seems to be overcompensation through Directive 2021/2118. This new direction for the compulsory insurance of motor vehicles exposes third-party victims to greater risk and provides little gain to those Member States who take advantage of its restraint to the Sixth MVID. Ultimately, until a review of the effects of Directive 2021/2118, and the enactment of a Seventh MVID, many more third-party victims of accidents involving motor vehicles will be left uncompensated or under-compensated. Neither of which is an enviable position.