Motor Vehicles (Compulsory Insurance) Act 2022

Policy background

3. In 2014 the CJEU found in the Vnuk case that the obligation of compulsory motor insurance contained in Articles 3 and 10 of the EU Motor Insurance Directive (Directive 2009/103/EC) ("the 2009 Directive"), extends to the use of vehicles on private land. Its effect could also apply the 2009 Directive to vehicles not constructed for road use.
4. This interpretation is wider than the compulsory third-party motor insurance obligation in the law of England and Wales and the law of Scotland as set out in Part VI of the RTA. The provisions of Part VI only require drivers of vehicles on roads or other public places to have compulsory third-party motor insurance (‘road’ is defined in section 192 of the RTA as "any highway and any other road to which the public has access"). Further, the definition of ‘motor vehicle’ in section 185 of the RTA only applies to a "mechanically propelled vehicle intended or adapted for use on roads". Driving without such insurance is a criminal offence. See section 143 of the RTA for the criminal offence provisions, and section 145 for the requirements of a policy of insurance.
5. The Government has consistently voiced its disagreement with the broad interpretation of the scope of the 2009 Directive in Vnuk, and there appears to be very little appetite among stakeholders for its implementation into domestic law. In light of the judgement, the Department for Transport conducted a consultation 1 exercise that sought the views of the public and industry on the options for amending UK domestic law from December 2016 to April 2017. The consultation attracted 902 responses with around 94% responding that the Vnuk judgement would be worse than the current position on motor insurance in the UK. A summary of consultation responses 2 was published in July 2017.
6. The Department also worked with the Government Actuary’s Department (GAD) between 2017 and 2019 to investigate the potential impact in the UK of the Vnuk judgement. The GAD’s Report 3 was published in February 2021, and identified significant potential increases in motor insurance premiums associated with the Vnuk judgement and potential issues with police enforcement on private land.
7. In 2018, the case of Lewis v Tindale [2018] EWHC 2376 (QB), upheld in Motor Insurers’ Bureau v Lewis [2019] [2019] EWCA Civ 909 ("Lewis"), found that the interpretation of the 2009 Directive in the Vnuk judgement was sufficiently clear and precise to have direct effect and could therefore be enforced directly against the MIB, as an emanation of the state and the body responsible for compensating victims of uninsured and untraced drivers under Article 10 of the 2009 Directive. The Lewis case found that the MIB was an emanation of the State for this purpose essentially because similar bodies, like the Motor Insurance Bureau of Ireland, had previously been held by the CJEU to be emanations of the state, on the basis that those bodies' functions mean they were tasked with meeting the State’s unimplemented obligation to pay compensation.
8. As the scope of the compulsory third-party motor insurance obligation in GB only extends to motor vehicles and to roads and other public places, the Lewis decision meant that the MIB’s liability for insurance claims extended beyond this, and applied to accidents on private land and potentially to a greater range of vehicles not constructed for road use. The direct effect rights to claim compensation from the MIB created by Lewis were preserved in domestic law following the end of the EU Exit Transition Period (TP) under section 4 of the European Union (Withdrawal) Act 2018 (EUWA), and are referred to in this note as "section 4 rights".
9. The Act meets the Government’s public commitment, as announced via a Written Ministerial Statement on 29 June 2021, to remove Vnuk from the law of England and Wales and the law of Scotland. It will do this by removing the section 4 rights against the MIB created by Lewis, and making it clear that compulsory third-party motor insurance is only required "on a road or other public place" and for "motor vehicles" as set out and defined in the RTA. The Act also clarifies that the case of Vnuk and any other case that followed the Vnuk interpretation in respect of Articles 3 and 10 of the 2009 Directive are removed from retained case law within the meaning of section 6 of the EUWA.