European and Irish courts have found that the MIBI is an emanation of the State, and as such, it is subject to the principle of direct effect. Donal Creaton explains the case
In Brief: The long running saga of the Farrell v Whitty case has come to a close, with the European Courts upholding the Irish High Court’s finding that the Motor Insurer’s Bureau of Ireland (“MIBI”) is an emanation of the Irish State for the purposes of European Law. It was confirmed that the principle of direct effect does apply to the MIBI agreement.
Farrell v Whitty
This case involved an uninsured driver, at fault for an accident in which Ms Farrell was injured, with Farrell then suing the MIBI. The question that arose was whether a passenger in the rear of a van with no seats was an insurable risk, for the purposes of compulsory insurance. Irish legislation said no – excluding a passenger such as Ms Farrell from seeking compensation where they were travelling in a part of the vehicle that was not equipped to carry passengers. A European Directive said yes – compulsory insurance must cover liability for personal injuries to all passengers, other than the driver, arising out of the use of a vehicle. However, Ireland had not yet transposed the Directive into national law, despite the fact that the deadline had passed. This led to a number of appeals, and ultimately the question was referred to the European Courts.
The principle of direct effect derives from EU law and sets out that, once a transposition date has passed, European legislation will apply directly to Member States even if the Member State has not implemented the European legislation into their national legislation. The relevant EU directive had direct effect in Irish law, but there was still a question of whether it applied to the MIBI. Direct effect does not apply to relations between purely private bodies, but only the State and its emanations. In order for Ms Farrell’s claim to succeed, the MIBI must be considered “an emanation of the State.”
“Emanation of the state”
The MIBI was held to be an emanation of the Irish State. The Court stated that the provisions of directives are capable of having direct effect against a private body, such as the MIBI, where the Member State has conferred special powers on the body. In this case, the State had granted the MIBI power to oblige all insurers carrying on motor insurance in the State to be members of it, and to fund it.
In situations where the transposition date for an EU directive has passed, the MIBI, as an emanation of the Irish State, will be subject to the principle of direct effect. This, in effect, means that an EU directive will prevail over any clauses of the MIBI agreement which conflict with the Directive. The Supreme Court formally dismissed the appeal in Farrell v. Whitty in November 2017, bringing the 10-year legal wrangle on the issue to a close, and drawing a line under the case which stemmed from an accident which occurred on 26th January 1996, over 22 years ago!