Racing

No, The End Is Not Nigh for Motorsport in Europe

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Reading motorsports websites all over Europe recently, you would think it was Doomsday for motorcycle racing, and all forms of motorized sports.

Even in as august a publication as The Times (of London, that is), the headlines warned of impending disaster:. “EU insurance rule ‘will destroy British motor sport’“. Is the end nigh for motorsport in Britain?

The short answer is “No, but it’s complicated”. So where did these warnings that the sky is falling come from?







On Wednesday, the MCIA (the Motorcycle Industry Association, the body representing the British bike industry), the ACU, and the AMCA (both representing motorcycle racing, on road and off road) issued a joint press release, warning that motorsport in the UK could come to an end due to a ruling by the European Court in Luxembourg.

The ruling stems from a judgment in the case of Vnuk v. Triglav, case C-162/13 before the European Court of Justice, and known as the Vnuk judgment. The case involved a Slovenian farm worker, Damijan Vnuk, who was injured when he was knocked off a ladder by a tractor reversing with a trailer.

Vnuk was working on a farm at the time, and sued for compensation from the motor vehicle insurance policy of the tractor. The lower Slovenian courts rejected his claims, but the Slovenian Supreme Court referred the case to the ECJ.







From Farmyard to Racetrack

How does the case of an injured Slovenian farm worker result in the end of motorsports in the UK? At the heart of the case is the fact that Vnuk was injured in an accident which happened on private property.

The European motor insurance directive (2009/103/EC), aimed at allowing vehicles to travel freely within the EU by ensuring that vehicles registered in the EU must have third party liability insurance, is not worded clearly enough to make a distinction between use on private property and use in traffic.

This lack of clarity is at the root of the problem, and the reason the Slovenian Supreme Court referred the case to the ECJ for clarification.







In the Vnuk judgment, the ECJ interpreted the directive to mean that any motor vehicle, whether on private or public land, must be covered by third party insurance. That would also extend to racing vehicles, be they racing motorcycles or cars, racing on circuits on private land.

It would mean, for example, that at every European round of MotoGP, every Grand Prix rider, from Marc Márquez and Valentino Rossi down to Romano Fenati and Patrik Pulkkinen would have to be insured against any damage they would cause to other riders in a crash.

Arguably, Valentino Rossi and Movistar Yamaha could easily afford that insurance, though the smaller teams in Moto3 might struggle. But the real issue is with the bottom level of racing, at club, regional, and even national level.

Insurance for a club racer, or even a national racer, could end up being so prohibitively expensive that it becomes basically uninsurable. Without club racing and track days, operating a race track is not economically viable.

Silverstone struggles to stay afloat financially as it is; if it was forced to rely solely on the income from MotoGP and F1, it would be bankrupt within days.

Tidings of Doom

This is the Doomsday scenario which the MCIA press release was warning of. But why do it so publicly? On December 21st, the UK government formally opened the consultation process for incorporating the Vnuk judgment into UK law, and was calling for public input into how to implement it into law.

By issuing their press release now, the MCIA ensured maximum exposure for the issue, grabbed the headlines, and galvanized people into taking part in the consultation process.

The aim, of course, is to see the worst effects of the Vnuk judgment avoided, and for motorsports to continue to function as they have in the UK.

It is a shame, however, that the press release generated such a batch of alarmist headlines. The reality of the situation is that while there is genuine cause for concern, the chances of motorcycle racing ending in the UK – or anywhere in Europe – are close to zero.

Not because motorsports are such an important part of the economy (even though they are) but because the implications of the Vnuk judgment are so far reaching and touch on so many different industries that the EU is already working on fixing it.

Brexit

But first, we have to talk about Brexit. Why does the UK have to implement the Vnuk judgment if the people voted to leave the EU in the referendum held on June 23rd, 2016?

Firstly, as the UK government consultation paper makes clear, because the UK remains a full member of the EU up until the moment the UK actually leaves, two years after the government sends the Article 50 notification.

If the UK does not have legislation to deal with the effects of the Vnuk judgment, anyone involved in a crash on a race track will be liable for damages, and will have to carry insurance to cover third party liability.

In the UK, where injury claims tend to be much higher than in other parts of Europe, the cost of insurance is also much higher, making it prohibitively expensive.

Without legislation to cover this, it would also be extremely sensitive to fraud: two riders on a track day could simulate a crash, one could feign an injury, submit a claim, and then share the insurance payout between them.

Even when the UK does leave the EU, the terms of the Brexit deal could leave the UK still subject to EU legislation. If the UK opts for a so-called “soft Brexit”, the UK would retain unhindered access to the single market, but still have to abide by EU law.

Even in the case of a “hard Brexit”, where the UK leaves the EU altogether, the UK may still decide keep motor insurance law in sync with EU law, to allow cars, trucks, and bikes to travel freely between the EU and the UK without complicated insurance and customs procedures.

For the sake of cross-Channel tourism, the UK and France may want to keep customs complications more like Turkey than like Russia.

Not Just the UK, the EU as Well

Though the UK may be the worst affected by the Vnuk judgment because of the peculiarities of British law, the case also has implications throughout Europe.

The other 27 member states of the EU will also have to implement legislation to deal with the insurance liability imposed. This could have a devastating effect not just in the UK, but especially in racing-mad countries such as Spain, Italy, Germany, and even Slovenia.

The EU recognizes this, and is taking action to fix it. The EU body charged with addressing this – the FISMA Directorate General of the European Commission – is urgently seeking to change the wording of the motor insurance directive.

It was never the intention of the directive to force insurance on all types of motor vehicles, wherever they are used. The aim of the law was to ensure that anyone who was the victim of a traffic accident would be able to obtain compensation.

Words Matter

The directive was meant to cover normal traffic on public roads. But the wording was not clear enough to specify that, allowing the ECJ to interpret it to mean any vehicle in any location, on public or private land.

That would include racing motorcycles and racing cars, but also Segways inside airports, mobility scooters inside shopping centers, forklift trucks inside warehouses, tractors in farmyards, and electric buggies on golf courses.

Forcing all of these vehicles to cover third party insurance would be extremely expensive.

Even without compulsory insurance, any accident would be covered by the general compensation funds set up to cover the cost of damages caused by uninsured drivers. The issue here is that these compensation funds are filled by contributions from motor insurance.

Without modifying the motor insurance directive, ordinary road users could find themselves indirectly paying out for golfers being knocked over by golf buggies, Amazon warehouse staff being hit by forklifts, or Jorge Lorenzo being hit by Andrea Iannone. There is an issue of fairness here.

The Fix Is In

So the European Commission intends to fix this issue, by changing the wording of the European Motor Insurance Directive, to make it clear that it is only intended to cover vehicles being used for transport purposes on public roads or on areas accessible to the public.

The proposal issued by the DG FISMA says ” the scope of the Motor Insurance Directive should be limited to the use of vehicles in the context of traffic.”

The preferred option set out in the proposal is as follows:

“The scope of the Directive would relate only to accidents caused by motor vehicles in the context of traffic. This would be done by defining locations and types of activities that are to be understood to fall within that definition. The use in traffic could mean where the use of a vehicle is for the transport of persons or goods, whether stationary or in motion, in areas where the public has access in accordance with national law. Activities that would fall outside of this definition would be regulated at Member State level and it would be for them to decide whether they wish to pool them with other activities by regulatory means. The guarantee funds would not be obliged, under EU law, to compensate consequences of traffic accidents unrelated to use in traffic. No changes in premiums or guarantee funds would be needed to absorb the potential need to compensate victims of accidents occurring in the context of purely agricultural, construction, industrial, motor sports or fairground activities involving vehicles where these occur outside of the sphere of use in traffic.”

This proposal would basically exempt motorsports (along with many other activities) from the directive. The difficulties posed by the Vnuk judgment would be dissolved, while ensuring that all vehicles in the EU have to be insured when used in traffic.

Innocent victims of road traffic accidents involving vehicles from other EU member states would receive compensation in full, and riders taking part in a motorcycle race would do so at their own risk, exactly as is the case now.

Of course, until the EU, through the DG FISMA, modifies the text of the motor insurance directive, all EU countries find themselves in a bit of a legislative black hole. The FISMA proposal states that action will be taken in the third quarter of 2016.

The third quarter of 2016 has come and gone, but no new publications have been issued. Work is ongoing, but they need to hurry up. If they don’t, it won’t quite kill motorsports in the EU, but it will create a rather major inconvenience.

Photo: © 2016 Tony Goldsmith / www.tonygoldsmith.net – All Rights Reserved

This article was originally published on MotoMatters, and is republished here on Asphalt & Rubber with permission by the author.







David Emmett

One of MotoGP's most respected journalists, David Emmett is the proprietor of the esteemed MotoMatters. We are very grateful to republish David's work here on A&R...though dread the day we ever again get in a car with him.

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