The Court of Appeal in Ireland last week heard the Irish MIB’s appeal against the High Court’s decision last September that MIBI members – those motor insurers authorised to write in Ireland – are liable to meet claims, in Ireland, made against Setanta, the collapsed motor insurer. Mr Justice Ryan, President of the Court of Appeal, reserved its judgment to an unspecified date, which he said would be “as soon as possible”.
The High Court had decided that the proper interpretation of the MIBI’s articles and of the Irish insurance compensation legislation meant that the MIBI, rather that the insurance compensation fund (ICF), would have to bear the liability for these claims (estimated to be up to €90 million). As was noted in this previous blog about the first instance decision, such an outcome is different from the position in the UK, where the FSCS rather than the MIB would fund claims against a failed insolvent motor insurer. Last month, the Central Bank of Ireland – the financial regulator – said of the first instance decision in the Setanta case, that: “The pay-out of claims by the MIBI is unlimited whereas the ICF is limited in what it pays out with respect to each claim. This development could put further financial pressure on the sector.” [Non-life insurance section of Macro-Financial Review 2015:II, published on 15 December 2015].
In 2013, in the Csonka case (C-409/11), the European Court of Justice had indicated that national motor insurers’ bureaux would not ordinarily, under the Motor Insurance Directives, meet these sorts of claims (i.e. made against policies issued by a motor insurer that had since become insolvent). However, it also clearly stated that “Member States may, as regards the conditions for the payment of compensation from the national compensation fund, adopt measures more favourable to the victims than those provided for under the directives on insurance against civil liability in respect of the use of motor vehicles.” This possibility of more favourable arrangements was, for Mr Justice Hedigan in the High Court, persuasive. He said “[he did] not believe that the case of Csonka has any relevance … There is nothing, however, that prevents member states … going further and making provision that is more favourable to such victims. That is what has happened in Ireland”.
The above, of course, “is all words, all words; a young man’s talk*” whereas the critical next step in the saga of Setanta will be the effect of the words used in the Court of Appeal’s judgment. We hope to be able to report on that very soon.
[* Spoken by the mythical Irish warrior Cuchulain, originally known as Setanta, in the play On Baile’s Strand]
About the Author
Alistair Kinley is BLM’s Director of Policy & Government Affairs.
Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.
He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).