• Editorial (by Mariusz Wichtowski)
• Welcome to Croatia (by the HR Bureau)
• Latvian false insurance history statements and a new IT tool (by Juris Stengrevics)
• Mediation aimed at conciliation of disputes (by Stefano C. Re)
• Uninsured driving:
  • 2 years of intensive fight against uninsured driving in the Czech Republic (by the Jakub Hradec)
  • UK Government set to clamp down on uninsured drivers (by MIB UK)
• Bus and coach passengers’ rights (by the CEA)
• About arbitration (by Alain Pire)
• Agenda

print e-CoBnews n°32

Editorial

(by Mr. Mariusz Wichowski, CoB President)

Dear Colleagues,

At this time as every year we are preparing our General Assembly.

This year we will have the opportunity to meet all together in Dubrovnik thanks to the kind invitation of Croatian Bureau. I’m sure we will have the opportunity not only to discuss and take decisions in several important issues during our official congress but we will also use this occasion for bilateral meetings.

As every year we publish the newest edition of CoBnews and I hope this can be a good introduction to our expected meeting as well as an interesting input into daily work and cooperation.

I’m sure you will find several interesting materials to read.

Our friends from the Croatian Bureau have prepared a Welcome Address presenting information regarding their beautiful country, history, insurance market as well as a very important element of men’s wear – the tie. Croatia is very famous and popular as a holiday destination but we should also note that it is also a strong and rising insurance market in this part of Europe. I’m sure we all are very glad to visit Croatia.

After this pleasant introduction we will also have the possibility to address several interesting subjects that have or could have essential influence on our crossborder collaboration. Some of this topics present national experience, other relate to the general matters of international cooperation or introduce the latest EC regulations.

This year during our General Assembly we will have the opportunity to participate in the Workshop with only one topic: International fraud in MTPL.
I’m sure the article of our Latvian colleagues regarding their national experience in fighting against this insurance disease could be a very good introduction to a planned seminar.
 
Although our collaboration seems to be rather smooth, from time to time we can observe the need to find a clear solution for disputes arising between Bureaux. Having more than 60 years of tradition we are still dealing with the sensitive subjects which could give rise to problems with common understanding of the rules in the Green Card System. This is also proof that we are operating in a living organization and litigations are normal consequences of our activity. It is not always easy to solve these disputes. The articles received form the Italian Bureau regarding the mediation and the other article prepared by our Secretary General about arbitration should make the procedures of these two measures more similar.

As a never-ending story we could name another topic presented from two different points of view. Uninsured driving is one of the most important problems in compulsory MTPL insurance in our countries. Despite many ideas and introduced rules a considerable amount of registered vehicles are still not insured. The way to fight against uninsured drivers will be presented by our Czech and British colleagues.

Recently the EC presented a new regulation concerning the Bus and oach Passenger Rights. Usually we are afraid of new regulations bearing in mind the fact that every new rule could raise new problems in our daily business. Does this regulation have a real impact on the functioning of compulsory MPTL insurance in our countries? Should we modify our internal rules of claims settlement? These questions along with others must be answered but this time we intend to deliver basic information about this latest initiative of EC.

As you see our Secretariat together with all the volunteers have prepared several diverse and interesting articles and I hope everybody will find something motivating and attracting to read.

Enjoy this edition of CoBnews and see you soon in Dubrovnik!

Welcome to Croatia

(by the Croatian Insurance Bureau)

Dear Delegates,

The Croatian Insurance Bureau – Hrvatski ured za osiguranje has the honour to host the 45th General Assembly of the Council of Bureaux and the pleasure of welcoming the delegates of all 45 Member Bureaux of the Council of Bureaux to Dubrovnik.

Let us share with you some facts about our country, the CoB General Assembly host town and our insurance market.

As you put on your tie before going to work or when you write with your ballpoint pen, do you ever think of Croatia? Our guess is that you do not. Why should you? Well, your tie is, after all, a direct descendant of the very same tie - cravat (the word "cravat" stems from the Croatian root for Croat - 'hrvat') that Croatian soldiers used to tie around their necks in the 17th century. The style caught on, spreading from Paris to Britain, then via the British Empire around the globe. Moreover, the ball-point pen that you use was invented by S. Penkala, a Croatian engineer who constructed the first ballpoint pen and the first fountain pen in 1906.

The Republic of Croatia covers an area of 56,538 km2, and its territorial waters cover 31,900 km2. The coastline including the 1,244 islands is 6,176 km long. The Republic of Croatia has 8 National Parks, 10 Nature Parks, 2 Strict Nature Reserves, nearly 100 Special Reserves, 19 Forest Parks, 28 Protected Landscape Areas and 72 Nature Sights. According to the latest census, Croatia has a population of 4.8 million. In the northern regions, the way of life is typically Central European, whereas the South is Mediterranean.

Croats first settled the eastern coast of the Adriatic Sea in the seventh century A.D. and throughout the centuries they were to remain the most vulnerable outposts of the West, defending it against the East. Although there was an independent Croatian dukedom and later a kingdom from the 9th to the 12th century, today Croatia is one of the newest states in Europe. It adopted its constitution on 22nd December 1990, and was recognised internationally on 15th January 1992. The international recognition of its sovereignty and its acceptance into the membership of the UN in 1992 marked the end of a crucial period in the establishment of Croatia as a new state in the European and world community. After the collapse of the communist regime in the democratic elections in the spring of 1990, Croatia became a parliamentary democracy.

The capital of Croatia is Zagreb, a city of one million inhabitants, the hub of Croatian culture, education and trade.

The unit of Currency is kuna (HRK). The meaning of kuna is a marten - its skin had been used in past as a unit in trade.

The official language is Croatian, written in the Roman script. Croatian for beginners: Good morning/ afternoon/ night – Dobro jutro/ Dobar dan/ Laku noć; Hi/ Bye – Bok; Goodbye – Doviđenja; Thank you – Hvala; How are you? – Kako si?

The Croatian National Emblems are the tricolour Croatian flag: three equal horizontal bands of red (top), white, and blue superimposed by the Croatian coat of arms; and the Croatian coat of arms consisting of one main shield (a checkerboard of 13 red and 12 silver (white) fields) surmounted by five smaller shields that form a crown over the main shield; the five small shields represent five historic regions, they are (from left to right): Croatia, Dubrovnik, Dalmatia, Istria, and Slavonia.

It is hard to express what makes Dubrovnik interesting in a couple of words – its history with the word Libertas (liberty) proudly standing on its flag for centuries or its present as a tourist and cultural centre hosting many musical, art and theatre events year round. Dubrovnik is a town of both spirituality and liberalism, with 17 monasteries and churches, one of the oldest synagogues in Europe, a pharmacy from 1317 as well as a refuge. All of them make up the mosaic that is witness to its eternal liberal spirit and the freedom of its inhabitants preserved in the course of the stormy centuries. The most distinctive symbol of the historical town protected by the UNESCO are its walls, surrounding the city in an uninterrupted chain of 1940 meters. Forts, bastions, towers and separate fortifications, the walls of Dubrovnik are one of the most beautiful and most solid fortification systems in the Mediterranean.

Dubrovnik was one of the smallest but most important merchant states in the Mediterranean, independent for 450 years. It had consular offices in more than 80 cities. Its fleet of almost 700 merchant ships rivalled that of Venice.

Under the heavenly patronage of St. Blasius and crowned by the famous Libertas (liberty) banner flying from a high stone pillar guarded by its legendary knight Orlando, Dubrovnik is a city whose story is best told by the city itself.

The Croatian Insurance Market

In 2010, the 25 Croatian insurance companies generated HRK 9 233mn (€ 1 267mn) in gross written premiums.

In the non-life market the GWP amounted to HRK 6 788mn (€ 932mn), accounting for 73.51% of the total premium income of the Croatian insurance market. The largest class of non-life business is the Motor Third Party Liability Insurance with a gross written premium of HRK 2 866mn (€ 393mn) and a non-life premium share of 42.2% and 31.1% of the total Croatian market.

The Croatian Insurance Bureau has 20 Members, of which 15 are active in motor insurance. The 15 motor insurers issued 1 926 644 MTPL insurance policies with an average premium of 204 €.

We look forward to seeing you in May in Dubrovnik.
 

Latvian false insurance history statements and a new IT tool

(by Juris Stengrevics, Chairman of the Board, MIB of Latvia)

As we all know, the membership of the Republic of Latvia to the European Union in May 2004 as well as the current economic situation of the country have given rise to a situation where a substantial number of former Latvian residents have chosen to move to other European countries looking for job possibilities.  Official information states that, for example, in 2010 at least 10 000 former residents of Latvia left the country. Most often they chose Ireland, Great-Britain, Sweden, Norway and some other Western European countries as their destination. The same is observed for former residents of many other Eastern European countries. Of course, they are becoming participants of road traffic in these countries as well as participants of the insurance system.

Directive 2009/103/EC of 16 September 2009 (6th Directive of the European Parliament and of the Council), Article 16 “Statement relating to third party liability claims determines that:
“Member States shall ensure that the policyholder has the right to request at any time a statement relating to the third party liability claims involving the vehicle or vehicles covered by the insurance contract at least during the preceding five years of the contractual relationship, or to the absence of such claims.

The insurance undertaking, or a body which may have been appointed by a Member State to provide compulsory insurance or to supply such statements, shall provide that statement to the policyholder within 15 days of the request.”

Article 50.1 of the Latvian Compulsory Civil Liability Insurance of Owners of Motor Vehicles Law, in compliance with provisions of the 6th Directive, determines that the Motor Insurers’ Bureau of Latvia (hereinafter – MIB of Latvia) is obliged to provide the owner (a lessee) of a motor vehicle upon his request with the information about history of third party liability insurance.

The insurance history statements are issued by MIB of Latvia as a document on the printed form of MIB of Latvia with a handwritten signature and a stamp. A copy could be sent to the client by e-mail if he wishes so but the original document is always sent through registered mail. Statement contains the information on insurance contracts concluded and the insurance claims caused. In 2009 700 statements were issued by MIB of Latvia against 2000 statements in2010.

During the last months of the year 2010 MIB of Latvia received several official requests from foreign insurance companies, mostly from Ireland and Great-Britain, to confirm the origin of the insurance history statements submitted to them by former Latvian residents who were trying to receive a discount when paying insurance policies in their new country of residence for their vehicles registered in that country. The discount which could be given based on such statements could reach up to 65% of the premium. Unfortunately, in some cases, the discount claimed was based on fraudulent information, therefore having an unfavorable impact on the insurance system (e.g. risk assessment) as well as an impact on the image of Latvia and its residents.

While checking requests from foreign insurers MIB of Latvia discovered that in most cases the insurance history statements submitted to them were indeed false. The fraud methods were various - sometimes quite simple - like hiding the information on accidents by a corrector and making a copy of the document. Some of the false statements were provided with false signatures or stamps. Some had a completely different look. In one case a person even tried to submit a false statement twice - to one insurer first (who sent the statement to MIB of Latvia for checking) and a 6 months later to another insurer, who had doubts on the authenticity of the document and decided to send it to MIB of Latvia. Although the number of the statements sent to MIB of Latvia for checking was not important, it is possible that the actual number of false statements could be much higher. Some cases were also reported to State police by MIB of Latvia in order to start criminal proceedings to find the responsible parties.

All of the statements received by MIB of Latvia from foreign insurers were also checked in the data base and respective foreign insurance companies have immediately been informed about the results.

Since the very beginning the IT system of MIB of Latvia has been developed with the aim to benefit from diverse online possibilities. Therefore, for example, Latvian insurance companies can already receive online information on the current state and the history of the Bonus-Malus class of their clients from our IT system.

After a careful study of the false insurance history statement problem and considering the possibilities to prevent such situations,  a new IT tool has been developed and introduced in our webpage WWW.LTAB.LV with an aim to solve the above mentioned problem. The new IT tool provides a fast and convenient possibility to insurance companies from other countries to check the authenticity of the online insurance history statements. Each printed insurance history statement issued as from February 4, 2011 contains a genuine printed authenticity code. In addition insurance companies can check the authenticity of the insurance history statements submitted to them by their potential clients by entering the code on our web page on the Data From Database – Issued Statement Validity Control or at the following link http://vestures.ltab.lv/validity.

Thus MIB of Latvia has ensured that the entire process of checking the requests and giving replies to insurers can be done online in a fast and effective way. Consequently we suppose that the problem of false insurance history statements has been solved.

Mediation aimed at the conciliation of disputes

(by Stefano C. Re, UCI, Italian Bureau)

The Italian Parliament approved in March the Law decree n. 28, effective on 20/03/2010, which introduces mediation (aka, ADR, Alternative Dispute Resolution) as a countermeasure to the increasing number of legal proceedings brought to the Italian Courts, be it Giudice di Pace or Tribunale. The aim of mediation is to reduce the load of Italian Courts in reason of at least one million legal proceedings per year and provide citizens with the possibility to quickly solve their disputes. To reach this goal, the law decree includes a very wide range of civil and commercial disputes on subject matters about any “disposable right”, including cross‐border litigation.

This article will try to provide a short introduction to this important news in Italian legislation, from the point of view of MTPL.

Mandatory precondition

Also the long‐lasting experience of the USA can tell that ADR is more successful when people is obliged to make an attempt in front of a mediator, before to go to Court. In matter of accidents arising from the circulation of motor vehicles and boats ADR will be a mandatory precondition to legal proceedings starting as from March 21st 2011.

Tax credits and incentives

To further encourage people to avail their selves of ADR, the Law decree foresees that no document, be it acts or agreements, shall be taxed or charged in any way. Moreover, the costs of the mediation procedure – which must be paid by each party – are granted a tax credit up to 500 euro (reduced to 250 if the mediation is not successful).

Referral to mediation

As far as the pending cases are concerned, the Judge can refer the parties to mediation at any stage of the legal proceedings, if he/she thinks that this may help a settlement before his/her final Judgement.

Register

To ensure a fair, trustworthy, experienced, independent mediation, the Law decree and special ministerial decrees fix the rules according to which a Mediation Provider Organisation (MPO) can be accepted to provide ADR and officially recorded in a Register by the Ministry of Justice. Both public agencies and private bodies can constitute an MPO and, provided that they meet the requirements foreseen by the law, be entered in the Register. However, any MPO shall write its own regulations which must include some general rules but is allowed to personalise others. Mediators Also mediators are to be registered with the Ministry of Justice, provided that they have attended and passed a special 40 hours training by institutions accepted and authorised by the Ministry of Justice, in the attempt to raise the mediation success rate. Each MPO must cooperate with at least 5 mediators and any mediator cannot work for more than 5 MPOs.

Confidentiality

Mediators are bound to confidentiality, they can discuss with the parties separately and cannot reveal anything to the other party, unless expressly authorised. Mediators cannot be called to Court to testify and the information collected by them cannot be used in Court.

MTPL

As said, an attempt to mediate is a precondition to access the Court, in case of a dispute about the settlement of the loss in MTPL claims. Potentially , the Italian motor insurance Bureau UCI OR the correspondents of foreign Insurers will be a party in each of the ADR procedures concerning claims arising from accidents occurred in Italy in which a vehicle registered abroad was involved.

Let"s now take a look on the development of an ADR procedure.

Starting the procedure

Any of the parties involved can start the procedure, either the claimant, the insured, or the insurer, and any of them can be asked to take part to the mediation as well as the drivers, if different from the claimant and the insured. The party which starts the procedure chooses the MPO, in any place of Italy, no matter neither where any of the party lives or is based nor where the accident occurred. As most MPOs will be specialised only in some subject matters, any of them is allowed to develop its own internal procedural rules and some eventually MPOs may obtain better results than others, the party who wishes to start the procedure shall take all this into consideration at the moment to choose the MPO: the activity of the lawyer is basic at this stage as he/she is supposed to know the “better” MPO.

Duration and limits

As one of the aims of ADR is a quick solution of disputes, the Law decree allows a maximum duration of the mediation process of 4 months.

The Mediation Provider Organization schedules the date of the first, and potentially last, meeting within 15 days from the date of the request and informs by any means the other party/ies (be it the insurer, or an handling agent, or the Bureau, and optionally the insured or the driver). The Law decree does not provide any formal rule or limitation in dispatching communications.

Also, there is no limit in the value of the dispute which is practically unlimited.

No‐show

The party invited to mediate is not obliged to take part to it. However, the failure to appear may be used against the party in the following legal proceedings, especially if not justified. If allowed by the internal rules of the interested MPO, the mediator may also release a mediation proposal (see below) based only on the elements provided by the party who requested the mediation.

Agreement

If both parties appear in front of the mediator, the latter collects all the information from the parties, oral or written, examines them, discusses with the parties all together or separately; the meeting may last all day long; the mediator is also allowed to defer the parties to another day to let him examine the case or, if necessary, to charge an expert for an independent expertise on material loss or personal injuries. However, as the aim is to solve cases quickly and with mutual satisfaction, the mediators are trained to use more common sense than legal basics.

The mediation process may result in an agreement between the parties. In this case the lawyers are requested to draw a Settlement agreement which will be issued by the mediator and signed by the parties. This document becomes a writ of execution, deemed to be enforceable and placing a judicial lean on the party"s assets.

Proposal

When it"s not possible to reach an agreement, the mediator is allowed to make a written proposal which the parties may accept or not. If both parties ask for it, the mediator is obliged to write a proposal.

To refuse a proposal is possible, but it may have serious consequences in the following legal proceedings: if the proposal corresponds with the subsequent Court judgement, the winning party that rejected the proposal may be excluded from the recovery of the costs incurred (which are usually supported by the losing party).

When the proposal corresponds only in part to the subsequent Court judgement, fees recovery may be reduced.

It is uncertain, and only legal practise will show, what is meant by “corresponds (totally or in part) to the subsequent Court judgement”. It is also questioned what influence may have on legal proceedings a proposal made by the mediator inaudita parte, in the absence on the party who did not appear.

Fees

This procedure has of course a cost. A ministerial decree fixed both the administrative costs as well as the fees for the mediator. Adjustments are supposed to be issued periodically.

Each party must first pay Euro 40,00 as administrative cost to the MPO.

The mediator"s fees vary according to the value of the dispute and are determined by ministerial decree for public agencies whereas private organisations can fix their own fees. The decree foresees that, for both public and private, in subject matters where ADR is a mandatory precondition to legal proceedings, the mediator fees are reduced by at least 1/3.

If the mediator makes a proposal his fees are increased by 20%; if he is able to lead the parties to an agreement, his fees are increased up to 20%; he is also allowed to ask +20% in particularly difficult cases which demand a peculiar effort.

Eventually, in case of no show of the party invited to mediation, the mediator fees are reduced by 1/3.

The following table shows, in an MTPL case, the amount of the fees to be paid by each party to a mediator who cooperates with a public agency (fees determined by ministerial decree) bearing in mind that private Organisations are free to fixe their own fees:

Final considerations

In the daily claims handling practice, the highly relevant costs of legal proceedings in Italy are well known. Such costs are increased by the delay of the Courts, the frequent deferral of hearings due to missing or overburdened Judges. In some cases, ADR would considerably reduce the costs for litigation, whereas in others it would only represent a further cost to be reimbursed in case of negative judgement.

Insurers, claims handling agents, loss adjusters and lawyers frequently discuss about the opportunity to take part to ADR, in consideration of the risk of charges in case of no show, or on the contrary if it"s opportune to be party which starts the mediation process.

ADR supporters rely on the mediation process introduced by the Law decree n. 28/10 as an epoch‐making event in Italian legal world.

It is clear that mediation procedure will, in some cases, lead the Italian Bureau and the correspondents of foreign Insurers to settlement solutions, proposed by the mediator, which do not strictly stick to the technical evaluation of the loss. On the other hand, this should have the positive effect of a reduction in legal proceedings and of the relevant costs.

2 years of intensive fight against uninsured driving in the Czech Republic

(by Jakub Hradec, CEO, CZ Bureau)

The amendment of the Czech MTPL Insurance Act, which introduced “daily charges” of the Czech Insurers´ Bureau against owners and/or operators of registered uninsured vehicles, was brought into effect as of 1st January 2009. After 2 years of operating this system of an effective fight against uninsured driving inspired from Finland and Sweden we can briefly inform about results achieved until the end of the year 2010.

During the year 2009 we have issued ca 133 thousand invoices and nearly 190 thousand invoices in 2010. In 2009 we collected through these daily charges over 65 million CZK (ca 2,6 million €) into our guarantee fund and in 2010 already 196 million CZK (ca 7,84 million €).

Developments in the structure of vehicles in the Czech Republic between the end of the year 2007 (last stable year before we started our new activity – our intensive PR campaign during autumn 2008 was an important preparation for introducing the new system as of January 2009) and the end of the year 2010 are the following:

• Increase of registered vehicles + 5,8 %
• Increase of insured vehicles + 11,86 %
• Decrease of uninsured vehicles -25,6 %
• Increase of permanently deregistered vehicles +100 %.

Another interesting and important development occurred in the portfolio of uninsured claims: in 2010 we received 25% less of uninsured claims compared to 2008. Regarding their financial volume it is premature to give a final statement due to the development of bodily injury cases, nevertheless our best estimate of the decrease of the financial volume is ofca 19%.

Although we are reasonably successful with our recoveries from uninsured claims we still needed to receive contributions amounting to 100 million CZK (ca 4 million €) from our member companies for 2009 in favour of our guarantee fund and we were happy to reduce them for 2010 by 50% to 50 million CZK (ca 2 million €). The intensification of our fight against uninsured driving during 2010 allowed, in 2011, to bring down to zero the number of contributions from our member companies to the guarantee fund. The 2011 cash flow needs of our guarantee fund are covered by the income from daily charges and from recoveries from uninsured claims, in other words by our own business activity.

To measure the level of operated registered uninsured vehicles is not an easy task, but based on our full market data and statistics in MTPL insurance (contracts as well as claims) as well as on our own claims data and data of the Central Register of Vehicles we are able to reach a qualified estimate of it. If in 2008 we estimated the level of operated uninsured vehicles in our country around 4,4%, we managed to bring it down to 1,4 % by the end of 2010.

We believe we are on the right track to getting uninsured vehicles in our country under control and we certainly work on intensifying this control during the third year of the new system. We would also like to take the opportunity of thanking our colleagues from Finland and Sweden once again for exchanging views with us.

Government set to clamp down on uninsured drivers

(by MIB UK)

As MIB anticipated, Road Safety Minister, Mike Penning has given his support and approval to the Continuous Insurance Enforcement (CIE) scheme. This move was consolidated on 11 January 2011 when the Department for Transport made the Commencement Order to make it an offence to be the registered keeper of a vehicle which does not have insurance. The scheme is scheduled to come into force in late spring.

This significant step means an increased focus for MIB on two key areas of work. One ensuring that motorists are sufficiently aware of the changes in law and two that preparations are in place for the soft launch of CIE. This means MIB is busy making sure that additional agents are trained and in place in a new call centre to handle enquiries from the public – in addition to working on PR and publicity plans with the DVLA and other stakeholders.

As part of this increased focus MIB will continue to support members with regular information, updates and support materials plus advice and guidance from MID Account Managers. A typical example of this is the CIE Industry e-Newsletter*, which provides subscribers with useful CIE information such as FAQs, preparation checklists and most recently a comprehensive guide on identifying and removing duplicate reports – aimed at minimising the risk of the CIE Insurance Advisory Letters (IAL) being sent in error to a policy holder with insurance cover in place.

Insurance brokers are key partners in ensuring that the delivery of CIE is a success. Many of the materials produced for MIB members can be used with your broker partners and indeed, where appropriate, these are distributed directly to BIBA for circulation to their members. Time spent informing brokers of the processes, consequences and responsibilities related to CIE can only be beneficial and re-enforce strong business relationships. A sustained industry effort must be given to MID1 and 2 vehicles - particularly as achieving the CIE ‘Time-to-Supply’ (TTS) targets will prevent unnecessary errors and complaints that may arise e.g. from customers in receipt of an IAL or stopped by the police because they appear to be uninsured.

Although there remains much to do in the remaining months, there is no doubt that the industry will rise to the challenge and together deliver CIE as an effective measure to further reduce the level and impact of uninsured driving in the UK.
 

Bus and coach passengers' rights

(by the CEA)

The European Commission (EC) aims at establishing passenger rights for all modes of transport in its 2001 White Paper “European transport policy for 2010” . The urgency was repeated in the Communication on strengthening passenger rights within the European Union in 2005. The EC had, therefore, proposed a new regulation on bus passengers’ rights. The proposal comprises a whole chapter (Chapter II) to liability of bus and/or coach undertakings.

The EC proposed that each bus/coach operator

- “shall be liable for the loss or damage resulting from the death of, personal injury or mental harm to, passengers, caused by accidents arising from the operation of bus and coach [...]” (art. 6)

- “has to provide bus/coach passengers with advance payments for personal injuries/deaths resulting from a road traffic accident.” (art.8)

The CEA’s main concerns were:

• The need for a strict liability scheme for the protection of bus passengers had not been  justified by evidence of specific detriment to bus and coach passengers under current legislation, when compared to other road users. The regulation would have created a new class of claimant, since the claims settlement procedure for bus passengers would have been very different from the ones for other road traffic victims. Furthermore it would have expanded on the existing liabilities of bus and coach operators, imposing burdens that do not exist for other road users.
• The proposals for strict liability provisions for bus and coach passengers would have created confusion for bus/coach passengers and other road users, because:

o road traffic victims would  have to follow different claims settlement procedures depending on whether they are a passenger in a bus or in a car;
o it would  increase the costs for bus/coach operators and therefore their passengers, which defeats the objective to promote bus/coach use.

• The liability proposals as drafted could have been an invitation for fraudsters to take advantage of the provisions, which do not place the burden of proof on the claimant, thus benefitting criminals and creating a risk to road safety, where bus/coaches are targeted by fraudsters.
• The regulation would have created a conflict of rules between tort law and civil law, which would have  caused confusion for bus/coach passengers and operators.

The CEA met with the European Commission in October 2009 to discuss the CEA’s  position paper and the Council discussions on bus passengers’ rights. Contrary to the CEA position, the Commission wanted to keep the chapter on liability in the proposed regulation and remained firm on this issue in discussions with the European Council. However, the Commission was willing to accept changes that would make the text more acceptable to the insurance industry. The Commission also clarified that the liability rules would only apply to contractual situations between the bus passenger and the bus operator. The Commission had foreseen a strict liability regime up to €220 000, with a fault-based liability regime above this amount.

The Commission did not agree with the CEA position that bus passengers are exposed to the same accident risk as car passengers and should therefore be treated equally. It is the Commission’s opinion that bus passengers should be treated differently because they pay for bus travel. Antonio Cancian MEP (IT, EPP-ED), the new rapporteur for the European Parliament’s Committee on Transport and Tourism (TRAN) on this issue. did also not agree with the CEA position that bus passengers are exposed to the same accident risk as car passengers and should therefore be treated equally. Like the European Commission, Cancian believed that a different treatment of bus passengers is justified, because the bus passenger pays for the travel and can therefore expect additional service and care from the bus operator.

The political agreement on the EC Regulation on bus passengers’ rights that was reached after lengthy discussion by the EU’s Transport, Telecommunications and Energy Council on 17 December 2009 fully reflected the concerns raised by the CEA with the European Commission, the European Parliament and the Council. The Commission has expressed its agreement with the Swedish EU Presidency’s compromise proposal on Chapter I. The Swedish compromise proposal deleted a large part of chapter two of the original proposal.

The two remaining articles refer to national law, as recommended in the CEA paper, and only foresee a strict liability regime if this is required by national law. The new proposal is understood to suggest compensation for personal injury of at least €220 000 and for property damage of €1 200. In addition, the advance payments disputed by the CEA in the original text are apparently replaced by the obligation to provide assistance to an injured person after an accident for immediate needs such as transport, which deleted most of the proposed articles suggested by the EC. Instead the compromise proposal suggests first assistance to be provided to victims. Furthermore, the EC highlighted that the importance of the Regulation’s compliance with the Motor Insurance Directive and therefore, agrees with a clear reference to national law. The Commission also agreed that is was essential that passengers in all vehicles be treated equally.

In second reading the CEA welcomed the requirement in MEP Cancian’s (EPP,IT) draft recommednationto provide adequate evidence (prima facie evidence) for advance payments to avoid fraudulent claims, but the CEA believed that the first assistance as suggested by the Council would already fully meet passengers’ needs. The CEA reiterated its support for the Council’s text, where it refers to the applicable national civil and liability law and provides the necessary legal clarity and certainty. Furthermore, the CEA fully supports the Council text that does not aim to introduce a liability regime unfamiliar to a number of national legal systems. The CEA also pointed out that Cancian’s proposal to extend liability to non-contractual relationships goes beyond the intended scope and privileges bus passengers have in comparison to air and train passengers.

On 15 February 2011 the Regulation concerning the rights of passengers in bus and coach after a third reading conciliation agreement was finally adopted, following two years of negotiations.

The Regulation will be applicable to all regular services’ passengers with a scheduled distance of more than 250 km. Additionally, for below 250 km distances, a set of rules will also apply to comprising basic rights (ie submission of complaints, the right to compensation for loss of or damage to wheelchairs or other mobility equipment, obligation for carriers to ensure disability-related training of personnel, a complaint handling mechanism). The text adopted contains inter alia the following provisions:

• Compensation in the event of accidents for death or injury of passengers as well as for loss or damage to their luggage. In this respect ceilings for financial compensation under national law must be over the minimum amounts set in the regulation (EUR 220 000 per passenger, and EUR 1200 per item of luggage). Damage to assistive devices such as wheelchairs has to be compensated entirely.
• Assistance to cover passengers' immediate practical needs after an accident where necessary (ie food, clothes, transport, first assistance, and accommodation up to a limit of EUR 80 per night and person for a maximum of 2 nights).
• Liability issues are to be dealt with in accordance with national law and the existing EU legislation in order to take account of diverging legislation on this subject in different member states. This is in accordance with the CEA position to avoid the introduction of new liability rules at EU level. The text will, as requested by the CEA, refer to national liability rules.

About  arbitration

(by Alain Pire, Secretary General, Council of Bureaux)

When reading the minutes of the meeting held in London in 1949, it is clear that the founders of the Green Card system intended to implement an arbitration procedure in order to solve conflicts arising from the future application of the « Inter-Bureaux Convention » they had just signed.

In a few words, this procedure was the following: when a dispute has to be solved through arbitration, the Secretariat had to draft a “statement of facts” which was accepted by the parties involved in the dispute. This document was then submitted to the arbitrators appointed by the Bureaux (each Bureau was bound to appoint an arbitrator) who had to express his point of view in writing and the majority view was decisive. When a “statement of facts” could not be drafted, the question had to be submitted to the deliberation of the President and Vice-Presidents, who, at the time, formed the Standing Working Committee.

No trace of the use of this procedure can be found in the archives of the Secretariat of the Council of Bureaux.

In 1992, the Council of Bureaux adopted a simplified procedure which allowed the application of the arbitration clause laid down in the “Inter-Bureaux Convention”. This procedure reminded that the Bureaux involved in a dispute had to try to find an amicable solution. If they couldn’t they were invited to appoint an arbitrator by mutual agreement and to inform the Secretariat of the Council of Bureaux. If no nomination could be carried out within six weeks, the President had the responsibility of appointing an arbitrator. In addition, the General Assembly was invited to approve a list of eight people who were likely to be chosen as arbitrators.

Although many disputes could be settled amicably or after the intervention of the Secretary General or the President, we cannot say that this arbitration procedure had a lot of success. Why? Probably because it was too simplified and it did not allow solving incidents that could arise during the procedure. We can particularly note the lack of precision regarding the powers of the arbitrator. Did he have to arbitrate according the rules of law or could he act as an amiable compositeur?

Furthermore, the list of arbitrators approved by the General Assembly included individuals who knew the convention between Bureaux quite well but who were all professionally linked to one or the other national Bureau. Consequently, their impartiality was not guaranteed. Yet, this is a paramount condition if the parties involved in the dispute are to trust the arbitrator.

In 2002, when the Council of Bureaux adopted the Internal Regulations, it opted for the arbitration procedure established by UNCITRAL (United Nations Commission on International Law). This was a very detailed procedure which allowed to find a solution to all difficulties likely to arise during the procedure, notably delays due to one of the parties’ inaction. The first times this procedure was used it unfortunately did not give satisfaction to the Bureaux involved. The Bureaux mainly complained about the duration and cost of the procedure. This dissatisfaction lead the Management Committee to carry out a new “strategic” study on the use of arbitration within the framework of the solution to inter-Bureaux disputes. A Working Group was created to this effect. Its efforts are far from being over and the objective of this article is certainly not to present an interim report but to express a few personal considerations regarding the question.

First of all, we must note that by choosing the procedure including three arbitrators, the Council of Bureaux didn’t necessarily make the right choice. Indeed, experience proves that, although they should act as judges, two out of the three arbitrators, i.e. those who were appointed by the parties, act as the lawyers of these parties. Of course this behaviour has an impact on the costs. We could solve this question by choosing the procedure including one arbitrator, a possible solution within the framework of the UNCITRAL procedure, but this choice gives rise to other difficulties linked to the choice of this arbitrator who must be independent and also know the specificities of the Green Card.

The analysis of the first paragraph of the arbitral clause laid down in the Internal Regulations (« Any dispute arising out of these Internal Regulations or related to them shall be resolved by mediation or by arbitration ») deserves attention.

A distinction must be made between disputes which refer to the interpretation to give to the Internal Regulations and disputes which are related to them.
 

When examining the behaviour of the Bureaux since the creation of the Green Card System, we notice that, unlike the wish expressed in 1949 by the founders of the System, they expressed a true aversion to the idea of entrusting to arbitration the interpretation of the conventions which bind them. They have always preferred the solution of entrusting to a committee or a working group the examination of questions raised by the Bureaux whereas these questions rose from conflicts linked to the handling of specific cases which should have given rise to arbitration. The course of action followed by the Council of Bureaux has very often given positive results. To be convinced we can simply take a look at the list of decisions adopted by the different General Assemblies.

A well-known exception must however be pointed out. It is the interpretation of the normally based concept introduced by the European Directive of 1972 (1st motor Directive) which gave rise to many discussions between the Signatory Bureaux of the Multilateral Agreement (at the time called, “Supplementary Convention”) without really leading to a consensus. Although they were supposed to have recourse to arbitration, certain Bureaux opted for a judicial solution which lead to the referral to the European Court of Justice. The awards given by the Court, if they offer the advantage of being compulsory for the entire European Union, do not necessarily answer the questions asked by the Bureaux in the expected way. The “Fournier” case, for example, was quickly followed by the agreement concluded between EEA Bureaux on “false plates” which adopts a solution that differs from that of the Court.

In addition, we shall note that if a dispute arises between two Bureaux regarding the interpretation to give to the Internal Regulations and if they decide to have recourse to arbitration, the arbitrator will normally have to give a ruling according to the rules of law, i.e. to respect the text of the Internal Regulations and its interpretation which is laid down in the Explanatory Memorandum. We can therefore express certain doubts regarding the capacity of arbitration to find a different solution than the one which, in most cases, is already known.

When the respective interpretations of two Bureaux differ from one another regarding a provision of the Internal Regulations, it is in the best interest of these Bureaux to first consult the Secretariat in order to receive the confirmation of the official interpretation and possibly, if any doubts remain, consider the mediation procedure which should, in best cases and with the help of the mediator, lead to a common understanding of the rule which is at the source of the dispute. If we reach the conclusion that there is no answer to the question asked, the latter must then be examined by one of the two committees (GRC and SRC) in charge of the interpretation of the Internal Regulations.

The considerations developed here above lead us to note that, regarding the interpretation of the Internal Regulations, the recourse to arbitration is certainly not the ideal solution.

The arbitral clause also deals with disputes related to the Internal Regulations and which should also be subject to arbitration. The situations stated relate almost exclusively to the handling of claims either by the Bureau of the country of accident, the agent it designated or by the correspondent of the insurer. The question that raises most conflicts is the one regarding article 3.4 and more specifically the question of determining whether the claim was dealt “in the best interest of the insurer who issued the Green Card or the insurance policy or, if appropriate, the Bureau concerned”.

We must admit that when a Guaranteeing Bureau is the direct debtor of the reimbursement, in case, for example, of a false Green Card or in the absence of insurance, arbitration is a reasonable way, if bilateral discussions and mediation failed, to solve the question of determining whether the claim is settled in its best interest.

Within this context the trickiest question regards the choice of the arbitrator. Indeed, he must not only know the rules of the Green Card system but should also ideally have a true knowledge of the terms regarding the settling of claims in the country of accident. To go back to the solution which implied drawing a list of arbitrators at the disposal of the Bureaux is therefore just a partial solution to the question.

Disputes between Bureaux following the application of article 4.6 and 4.7 also give rise to problems given the fact that the award only binds Bureaux and not the insurer and his correspondent who are often at the source of the dispute. Within the framework of article 4.7, the only action of the Bureau of the country of the claim, taken within the framework of the Internal Regulations, is to verify the legitimacy of the handling of the correspondent. Arbitration should only focus on this aspect. Regarding article 4.6 the subject of the dispute should be the decision of replacing the correspondent taken by the Bureau of the country of the claim. It is not certain that arbitrators who have dealt with disputes linked to these two articles of the Internal Regulations have adopted the same approach.

What can we conclude (temporarily) from this reflection? That, first of all, two questions must be examined thoroughly. The first relates to the scope of arbitration which deserves to be specified carefully. The second relates to the choice of arbitrators who must be both competent and independent.

Next meetings

May 2011

25th May 2011, Management Committee Meeting (Dubrovnik)

26th May 2011, General Assembly (Dubrovnik)

27th May 2011, General Assembly (Dubrovnik)

June 2011

14th June 2011, Meeting of the Uninsured Driving Working Group (Brussels)

15th June 2011, Meeting of the Monitoring Committee (Brussels)

15th June 2011, Meeting of the Bona Fide Working Group (Brussels)

October 2011

5th October 2011, Strategy Day (Brussels)

6th October 2011, Meeting of the Management Committee (Brussels)

25th October 2011, Meeting of the Specific Rules Committee (Brussels)

26th October 2011, Meeting of the General Rules Committee (Brussels)

November 2011

10th November 2011, Meeting of the Application Committee (Brussels)

24th November 2011, Meeting of the Management Committee (Brussels)