Judgment — ECLI:EU:C:2005:417
Date: 2005-06-30
Language of the case: Finnish
Court formation: First Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Approximation of laws;Freedom to provide services
Concepts: Motor vehicle liability insurance
Procedure: Reference for a preliminary ruling
Origin: Finland

summary of the main arguments put by the Finnish Government. 26. The Finnish Government takes the view that Community law does not extend to the harmonisation of the rules on civil liability. This is clear from the judgment in Mendes Ferreira and Delgado Correira Ferreira, (5) in which the Court declared that Community law had no influence on the type of civil liability – liability for risk or liability for fault – which must be covered by insurance. The directives require only that it be ensured that civil liability in respect of the use of vehicles was covered by insurance. The Member States therefore retain power to adopt the rules on civil liability applicable to accidents resulting from the use of motor vehicles. 27. Community law does not impose any restriction on the assessment in individual cases of the significance of the part played by the victim in the occurrence of the loss or injury. Under national law on liability the rule is that the victim who has himself played some part in the occurrence of the loss or injury is not, or not fully, compensated for his loss or injury. It is for the national court to determine the extent to which the general provisions relating to liability must be applied in individual cases. 28. Compensation may be limited or excluded if the victim knowingly accepted an increased risk of accident. On the basis of the general principles governing civil liability, the court may limit or refuse compensation if a person entered a vehicle knowing that the risk of suffering loss or injury during the journey would be appreciably greater than normal. Community law does not preclude the driver’s state of intoxication from being considered in the assessment as to whether compensation should be limited. Nor does Community law preclude greater blame from being apportioned to the owner of a car being driven by someone under the influence of alcohol if the owner was among the passengers. The Austrian Government points out that the owner or holder of the motor vehicle is not a third victim, but has a contractual relationship with the insurer, and that the owner of the car should therefore be assessed more severely in such a case than the other passengers. 29. According to the German Government, the directives concern only the legal relationship between the insurer and the owner of the motor vehicle. The directives do not govern the legal relationship between the person responsible for the accident and the victims. National law relating to compensation and liability is applicable to that relationship. 30. The Swedish and Austrian Governments introduce a further nuance. The Swedish Government claims that the adjustment of compensation may not result in the right to compensation being precluded for a certain category of persons or for a certain type of loss or injury. The Austrian Government maintains that compulsory insurance may not stipulate that the insurer may limit or exclude his obligation to compensate the passengers in cases where the driver of the vehicle was intoxicated. 31. According to the Commission, the questions referred for a preliminary ruling concern the relationship between the insurer and the person who has suffered a loss or injury. The question as to whether the person was responsible for his loss or injury and whether there is an obligation to compensate him in that context must be answered on the basis of national law. 32. It is also of the view that compulsory insurance may not provide that, particularly where the driver of the vehicle was intoxicated, compensation for personal injury and damage to property suffered by passengers of the insured vehicle is not to be paid. (6) In support of this argument the Commission refers to the judgment in Ruiz Bernáldez. (7) It is evident from that judgment that the Court took into account the situation created by the victims themselves, but only in the cases referred to in the first subparagraph of Article 2(1) of the Second Directive, which lists the special cases in which insurance is excluded. 33. In addition, Community law precludes a more severe assessment of the owner of the car who was travelling in the car as a passenger, since Article 1 of the Third Directive makes a distinction for the purposes of compensation only between the driver and the passengers. 34. Mr Paananen claims that it follows from the directives that the motor vehicle insurance must cover compensation for all passengers other than the driver. Compensation may be refused only in exceptional circumstances. He emphasises that compensation for loss or injury must be the rule since it is impossible for the passengers to demonstrate that they were unaware of the driver’s state of intoxication. VI – Analysis 35. By its questions the referring court essentially seeks to establish whether Member States may allow in their national legislation exclusions from the right of passengers to compensation arising from compulsory insurance against civil liability in respect of the use of motor vehicles other than the exclusions referred to in the directives. If Member States may not allow exclusions other than those referred to in the directives, it must be established whether a passenger who has suffered an injury and knew or should have known that the driver of the motor vehicle was driving under the influence of alcohol at the time of the accident can be wholly or partly excluded as such by national law from the right to compensation. A question that also arises is whether the owner of the car who was travelling in the car as a passenger may be assessed more severely than the other passengers because he permitted his car to be driven by someone who was acting under the influence of alcohol. A – Preliminary comment 36. The three directives contain minimum requirements with respect to insurance against civil liability in respect of motor vehicles. The First Directive provides for the introduction in all Member States of compulsory liability insurance which covers loss or injury occurring in Community territory. Initially it was left to the Member States to determine the cover of loss or injury and the terms and conditions of compulsory insurance. In 1984 provision was made by the Second Directive for minimum standards as regards the extent of the compulsory cover of damage to property and personal injury, which objectified the risks to road-users in the European Community. The Third Directive then widened the scope ratione personae to include passengers of motor vehicles other than the driver. 37. The three directives require the Member States to ensure that the owner or holder of any motor vehicle transfers his civil liability in respect of that vehicle to an insurance company under an insurance contract. (8) In addition, all compulsory insurance policies against civil liability arising from the use of vehicles must cover the whole territory of the Community (9) and provide for a single premium to guarantee at least the cover required in each of the other Member States. (10) As cover has been harmonised throughout Europe, it is guaranteed that victims will receive adequate compensation regardless of the Member State in which the accident has occurred. (11) 38. The system established by the directives is intended to ensure the free movement both of vehicles normally based in Community territory and of persons travelling in those vehicles and to guarantee that the victims of accidents caused by those vehicles receive comparable treatment irrespective of where in the Community the accident has occurred. (12) 39. The protection of the victim occupies an important place in the three directives. Although the protection of the victim was already of fundamental importance under the First Directive, the legal position of potential victims was further improved and extended by the Second and Third Directives. The later directives seek to correct certain imperfections in the system, some of which came to light only with the passage of time. To improve the position of the victim, the Second Directive provides that certain exclusion clauses do not apply to victims. Furthermore, Article 1(4) of the Second Directive explicitly permits ‘any other practice which is more favourable to the victim’. (13) The Third Directive widens the circle of victims to protect a ‘particularly vulnerable category of potential victims’, namely the passengers. B – May Member States allow in their national legislation exclusions from the right of passengers to compensation arising from compulsory insurance against civil liability in respect of the use of motor vehicles other than the exclusions referred to in the directives? 40. With respect to the passenger’s right to be compensated for personal injury by the motor vehicle insurer the Finnish legislature has adopted a specific provision for cases in which the driver was intoxicated (Paragraph 7(3) of the Law on motor vehicle insurance). That provision was applicable at the time of the events here at issue. It provides that compensation is to be paid for any loss or damage suffered by an intoxicated driver only if there is a special reason. Compensation for the losses or injuries suffered by passengers who were in the car at the time of the accident and were aware or should have been aware of the driver’s condition is similarly to be paid only if there is a special reason. 41. Article 2(1) of the Second Directive prescribes certain exclusions from cover which are deemed permissible: they apply only within the framework of the contractual relations between the insured and the insurer and may not be relied on as against third parties who are victims of an accident. The second subparagraph of Article 2(1) provides for an exception. If the insurer can prove that persons who voluntarily entered the vehicle which caused the damage or injury knew that the vehicle was stolen, the insurer may rely on this as against the passengers. 42. The Community legislature’s intention with this provision was to provide for an exception to the rule that statutory provisions or contractual clauses in an insurance policy may not be relied on as against passengers and third parties who are the victims of an accident. This exception must be interpreted narrowly and as being exhaustive since it forms a departure from the general rule. (14) Any other interpretation would have the effect of allowing Member States to limit payment of compensation to third-party victims of a road accident to certain types of damage, thus bringing about disparities in the treatment of victims depending on where the accident occurred, which is precisely what the directives are intended to avoid. (15) 43. This interpretation of Article 2 of the Second Directive is corroborated by Article 1 of the Third Directive, which widens the circle of victims to include passengers, with a view to protecting this particularly vulnerable category of potential victims. By adopting this measure, the Community legislature has deliberately sought to enlarge the group of persons protected by the directives. In view of the aim of the directive, namely to protect the victim, I am of the opinion that a national provision which automatically excludes any cover from the outset is inconsistent with the three directives. 44. Paragraph 7(3) of the Finnish Law on motor vehicle insurance completely excludes from compensation certain categories of insured persons where certain elements of their conduct are concerned. It imposes an assumption of shared blame on the passenger if he enters a car the driver of which is intoxicated. In point 42 I came to the conclusion that the second subparagraph of Article 2(1) of the Second Directive lists all the cases in which the insurer may invoke statutory provisions or contractual clauses in an insurance policy against a passenger. Member States are not therefore permitted to include in their national legislation any exclusions from the passenger’s right to compensation arising from compulsory insurance against civil liability in respect of the use of motor vehicles other than the exclusions referred to in the directives. 45. I would also point out in this context that an insurer cannot therefore rely on national statutory provisions or contractual clauses to refuse to compensate passengers who are the victims of an accident caused by the insured vehicle. Otherwise, the rights which a passenger has acquired under the Third Directive would become illusory. 46. My answer to the question set out in point 35 is therefore that Community law precludes exclusions from cover by compulsory insurance against civil liability in respect of the use of motor vehicles other than the exclusions referred to in the second subparagraph of Article 2(1) of the Second Directive from being relied on as against passengers. C – May a passenger who has suffered an injury and knew or should have known that the driver of the motor vehicle was driving under the influence of alcohol at the time of the accident be wholly or partly excluded as such by national law from the right to compensation? 47. The directives do not include any specific provisions relating to the choice of a certain type of liability. As is evident from the judgment in Mendes Ferreira and Delgado Correira Ferreira, the extent of the passenger’s liability is in principle determined by national law. (16) In that judgment the Court stated that ‘as Community law stands at present, the Member States are free to determine the type of civil liability applicable to road accidents. However, they must ensure that the civil liability arising under their domestic law is covered by insurance which complies with the provisions of the three directives in question.’ 48. How far the obligation to pay compensation extends in specific cases is left in part at least to the discretion of the Member States. The extent of any contributory fault on the part of the victim and the implications thereof for his right to compensation are in principle determined by national law. If under national law the driver is found to be liable and the victims are found to have a claim to compensation, the insurer is obliged, with due regard for the directives, to pay compensation. The directives preclude the possibility of an insurer himself limiting or excluding compensation by relying on national legislation. It is for the national court to determine and possibly to limit the compensation in each case with due regard for the circumstances, on the basis of the general principles concerning civil liability. 49. However, the application of national law on liability must not result in the erosion of the material provisions of the directive. 50. As a rule, a passenger, being a passive road-user, cannot be blamed for an accident. However, a person who enters a vehicle knowing that the risk of his suffering loss or injury during the journey will be greater than normal accepts an increased risk of an accident. This can be seen as a form of contributory fault. It cannot be inferred by law that such contributory fault precludes, by definition, any claim to compensation. 51. Only in exceptional situations may the extent of the compensation paid to the victim be limited on the basis of an individual assessment. (17) Whether that is in fact so in this case depends on the circumstances, in particular whether the conduct of the victim in the specific situation created a serious danger and whether he or she, as a passenger, was aware of that danger. It is for the national court to make that assessment. 52. My answer to the second question is therefore that Community law does not preclude the possibility of national law partly curtailing the right to compensation of a passenger who has suffered loss or injury and who knew or should have known that the driver of the motor vehicle was driving under the influence of alcohol at the time of the accident on the ground that he is partly to blame. It is for the national court to make that determination on the basis of an individual assessment and with due regard for the circumstances. D – May the owner of the car who was travelling in the car as a passenger be assessed more severely than the other passengers because he has permitted his car to be driven by someone who was acting under the influence of alcohol? 53. As the Commission rightly points out, the only distinction made by the directive with respect to compensation is that between the driver and the passengers. Article 1 of the Third Directive provides that the insurance against civil liability in respect of the use of motor vehicles is to cover liability for personal injuries to all passengers, other than the driver, arising from the use of that vehicle. The seventh recital of the preamble to the Second Directive states that it is in the interest of victims that the effects of certain exclusion clauses be limited to the relationship between the insurer and the person responsible for the accident. 54. It follows that, where a driver who is not the owner or registered holder of the motor vehicle causes an accident and the motor vehicle is insured by a passenger, the legal relationship between the insured person and the insurer passes to the person causing the loss or injury. In such a situation the original insured person has a legal relationship with the insurer solely as a victim. As stated in point 39, the protection of the victim occupies an important place in the three directives. 55. The owner of the car who was travelling in the car as a passenger cannot therefore be treated more severely than the other passengers on the ground that he permitted his car to be driven by someone who was acting under the influence of alcohol. VII – Conclusion 56. In view of the foregoing, I propose that the Court answer the questions referred by the Korkein oikeus as follows: (1) Community law precludes exclusions from cover by compulsory insurance against civil liability in respect of the use of motor vehicles other than the exclusions referred to in the second subparagraph of Article 2(1) of Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles from being relied on by the insurer as against the passengers; (2) Council Directive 72/166/EEC of 24 April 1972 on the approximation of the laws of Member States relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability, Second Directive 84/5 and Third Council Directive 90/232/EEC of 14 May 1990 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles do not preclude the partial exclusion of a passenger who has suffered loss or injury and who knew or should have known that the driver of the motor vehicle was driving under the influence of alcohol at the time of the accident from the right to compensation on the ground that he was partly to blame. It is for the national court to make that determination on the basis of an individual assessment and with due regard for the circumstances; (3) Directive 72/166, Second Directive 84/5 and Third Directive 90/232 preclude the possibility of the owner of the car travelling in the car as a passenger being assessed more severely than the other passengers on the ground that he permitted his car to be driven by someone who was acting under the influence of alcohol. 1 – Original language: Dutch. 2 – Council Directive on the approximation of the laws of Member States relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability, OJ, English Special Edition 1972 (II) p. 360. 3 – Second Council Directive on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles, OJ 1984 L 8, p. 17. 4 – Third Council Directive on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles, OJ 1990 L 129, p. 33. 5 – Case C‑348/98 [2000] ECR I‑6711, paragraphs 23, 28 and 29. 6 – See Case C‑129/94 Ruiz Bernáldez [1996] ECR I-1829, operative part, in conjunction with Article 1 of the Third Directive. 7 – Cited in footnote 6; see paragraphs 18 to 21. 8 – Article 3(1) of the First Directive. 9 – Article 3(2) of the First Directive. 10 – Article 2 of the Third Directive. 11 – Fifth recital of the preamble to the Second Directive. 12 – See the judgment in Ruiz Bernáldez, cited in footnote 6, paragraph 13. 13 – See the Opinion of Advocate General Lenz relating to the judgment in Ruiz Bernáldez (cited in footnote 6, point 23). 14 – See also the [advisory opinion] of the EFTA Court of 17 November 1999 [in Case E-1/99], Storebrand and Finanger, EFTA Court Report, p. 119, paragraph 25. 15 – See Ruiz Bernáldez, cited in footnote 6, paragraph 19, and the judgment of the EFTA Court cited in footnote 14, paragraph 24. 16 – Cited in footnote 5, paragraph 29. 17 – See the judgment of the EFTA Court cited in footnote 14, paragraph 26.