JUDGMENT OF THE COURT (Sixth Chamber)

21 February 2008 ( )

(Failure of a Member State to fulfil obligations – Incorrect transposition – Directive 84/5/EEC – Article 1(4) – Compulsory insurance for civil liability in respect of motor vehicles – Conditions for the exclusion from compensation of passengers in an uninsured vehicle)

In Case C‑211/07,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 20 April 2007,

Commission of the European Communities, represented by N. Yerrell, acting as Agent, with an address for service in Luxembourg,

applicant,

v

Ireland, represented by D.J. O’Hagan, acting as Agent,

defendant,

THE COURT (Sixth Chamber),

composed of L. Bay Larsen, President of the Chamber, K. Schiemann and C. Toader (Rapporteur), Judges,

Advocate General: J. Mazák,

Registrar: R. Grass,

having regard to the written procedure,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 By its application, the Commission of the European Communities requests the Court to declare that, by maintaining in force clauses 5.2 and 5.3 of the Motor Insurance Agreement of 31 March 2004 between the Minister for Transport and the Motor Insurers’ Bureau of Ireland (MIBI) (‘the Agreement’), Ireland has failed to fulfil its obligations under 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 (OJ 1984 L 8, p. 17; ‘the Directive’), in particular the third subparagraph of Article 1(4).

Legal context

2 Article 1(4) of the Directive provides for an obligation on the Member States to establish a body with the task of providing compensation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation in respect of damage to property and personal injuries has not been satisfied. The third subparagraph of that provision states that ‘Member States may exclude the payment of compensation by that body in respect of persons who voluntarily entered the vehicle which caused the damage or injury when the body can prove that they knew it was uninsured’.

3 Under Irish law, the MIBI is the ‘authorised body’ for the purposes of Article 1(4) of the Directive.

4 The Agreement contains a clause 5, entitled ‘Exclusion of certain user and passenger claims’, paragraphs 2 and 3 of which read as follows:

‘5.2. Where at the time of the accident the person injured or killed … knew, or ought reasonably to have known, that there was not in force an approved policy of insurance in respect of the use of the vehicle, the liability of MIBI shall not extend to any judgment or claim … in respect of injury or death of such person while the person injured or killed was by his consent in or on such vehicle …

5.3. Where a vehicle, the use of which is not covered by an approved policy of insurance, collides with another vehicle and the use of that other vehicle is also not covered by an approved policy of insurance, the liability of MIBI shall not extend to any judgment or claim in respect of injury, death or damage to the property of the user of either vehicle.’

The pre-litigation procedure

5 By letter sent on 22 December 2004, the Commission raised the question of the incorrect transposition into Irish law of Article 1(4) of the Directive and gave Ireland notice to submit its observations in that regard.

6 In their reply to that letter, sent on 19 April 2005, the Irish authorities submitted that Irish law reflected the terms of Article 1(4) of the Directive and complied fully with Community law. In particular, they considered that the Directive authorises the Member States to exclude or to limit compensation in respect of all persons who know or ought to know that the vehicle they have entered is not insured.

7 Since it was not convinced by that answer, on 13 July 2005 the Commission sent Ireland a reasoned opinion, inviting it to comply with the opinion within two months of receipt.

8 In its reply sent on 14 October 2005, Ireland stood by the position it had held in its reply to the letter of formal notice.

9 In view of that reply, the Commission issued an additional reasoned opinion on 19 December 2005, requesting Ireland to comply within a further period of two months from receipt of the additional reasoned opinion. Ireland replied by letter of 20 February 2006.

10 Considering that the situation remained unsatisfactory, the Commission brought the present action.

The action

11 According to the Commission, clauses 5.2 and 5.3 of the Agreement are incompatible with Article 1(4) of the Directive. First, clause 5.2 excludes from the right to compensation persons who entered any uninsured vehicle, and not only those who entered an uninsured vehicle which caused damage or injury. Second, clause 5.3 of the Agreement, which concerns accidents between uninsured vehicles, excludes from the right to compensation all persons who entered the vehicles involved, even if, at the time of the accident, they were unaware that the vehicle they were in was an uninsured vehicle and even if the driver of that vehicle was not responsible for the accident.

12 In its defence, Ireland, which in the pre-litigation procedure had disputed the Commission’s complaints, conceded that the wording of clauses 5.2 and 5.3 of the Agreement was not wholly compatible with the relevant Community legislation, as interpreted by the Court in Case C-356/05 Farrell [2007] ECR I-3067.

13 Nevertheless, Ireland indicated that it disagreed with the Commission’s interpretation of the phrase ‘the vehicle which caused the damage or injury’ in the third subparagraph of Article 1(4) of the Directive where there is an accident involving several vehicles which are liable for the accident to different degrees.

14 It must be stated, first, that, by excluding from the right to compensation persons who entered any uninsured vehicle, without restricting that exclusion to persons present in an uninsured vehicle which caused damage or injury and, in relation to collisions between uninsured vehicles, to persons who, at the time of the accident, were aware that the vehicle which they had entered was uninsured, clauses 5.2 and 5.3 of the Agreement infringe the third subparagraph of Article 1(4) of the Directive.

15 It should be pointed out, second, that the question raised by Ireland concerning the interpretation of the third subparagraph of Article 1(4) of the Directive bears no relation to the complaints stated by the Commission in support of its action.

16 In the light of the foregoing, the action must be regarded as well founded.

17 Accordingly, it must be held that, by maintaining in force clauses 5.2 and 5.3 of the Agreement, Ireland has failed to fulfil its obligations under the third subparagraph of Article 1(4) of the Directive.

Costs

18 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs, if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and Ireland has been unsuccessful, Ireland must be ordered to pay the costs.

On those grounds, the Court (Sixth Chamber) hereby:

1. Declares that, by maintaining in force clauses 5.2 and 5.3 of the Motor Insurance Agreement of 31 March 2004 between the Minister for Transport and the Motor Insurers’ Bureau of Ireland, Ireland has failed to fulfil its obligations under the third subparagraph of Article 1(4) of 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;

2. Orders Ireland to pay the costs.

[Signatures]