Poole & Ors v Her Majesty's Treasury

A directive does not confer rights on individuals merely because its implementation would protect them or because it imposes supervisory duties on national authorities. The court must identify, from the directive’s wording, context, nature and purpose, a right which is necessary to achieve its intended result. A right to be regulated, or to equality of regulation, is not such a right.

National limitation periods may apply to claims for failure to transpose a directive, provided the principles of equivalence and effectiveness are satisfied. The exceptional approach in Emmott v Minister for Social Welfare has been confined to its particular circumstances. A Francovich claim is not an action for damages for negligence, and section 14A of the Limitation Act 1980 does not apply directly.

The claimants were Lloyd’s Names who claimed damages from the Treasury for alleged failures to implement and supervise compliance with Directive 73/239/EEC, the Insurance Directive. They alleged that inadequate regulation of authorisation, solvency, reserves, accounting and auditing caused losses arising from Lloyd’s underwriting liabilities.

The first sub-trial concerned two issues: whether the Insurance Directive conferred relevant rights on the Names, and whether the claims were time-barred. The court considered the directive’s purpose and provisions, the domestic regulatory framework, Community state-liability principles, and the limitation rules applicable to the pleaded claims.

1. Grant of rights. The claim failed because the Insurance Directive did not confer relevant rights on the claimants. Its purpose was to facilitate an open market in direct insurance and harmonise national supervisory provisions so far as then achievable. References to protecting insureds and third parties did not extend to insurers, investors, or Lloyd’s Names in their capacity as underwriters.

2. The directive assumed national supervision. Its supervisory provisions imposed obligations on Member States and competent authorities, but did not create a right in the regulated institutions to be regulated, or a right to equality of regulation. The reasoning in Three Rivers D.C. v Bank of England (No 3) and Peter Paul and Others v Germany supported that conclusion by analogy. The grant-of-rights issue was therefore answered no, which was sufficient to dispose of the claim.

3. Limitation. The court nevertheless held that the claims were statute-barred. The unqualified rule in Emmott v Minister for Social Welfare had been confined by subsequent authority and was no longer authoritative in that form. A reasonable national limitation period may run before a directive is implemented.

4. Under section 2 of the Limitation Act 1980, damage was an ingredient of the assumed Francovich or Factortame cause of action. Actionable damage arose when a Name joined, remained in, or increased participation in a syndicate exposed to the liabilities causing the loss. Later calls and payments did not create new causes of action where they related to earlier underwriting years. The claims were accordingly out of time.

5. The continuing nature of the breach did not assist the claimants. Although a failure to transpose may continue while the directive remains unimplemented, the pleaded losses related to liabilities incurred before 1993. Later breaches could not cause those losses.

6. Section 14A did not apply directly. A Francovich claim is a claim in tort, but not an action for damages for negligence. Even if section 14A were applied by analogy, the claimants had, or reasonably should have acquired, sufficient knowledge of their losses, the alleged regulatory failures and the Government’s relevant role more than three years before proceedings were issued. The principles of effectiveness and equivalence did not require a different result, and Marleasing S.A. v La Commercial Internationale de Alimentacion S.A. did not justify extending section 14A.

7. The claims were dismissed. The court reserved the form of order and ancillary matters for further consideration.