Poole & Ors v Her Majesty's Treasury

The judge determined two threshold issues: (1) whether Directive 73/239/EEC (the Insurance Directive) conferred individual rights on Lloyd’s Names such that the United Kingdom could be liable under the Francovich/Factortame state‑liability principles, and (2) whether the claims were statute‑barred. The court analysed the Directive, its recitals and subsequent amending Directives, and the relevant domestic legislation (notably the Lloyd’s Act 1982 and the Insurance Companies Act 1982) in light of authorities on Community law and state liability.

Key legal conclusions:

• The Insurance Directive was aimed at harmonising authorisation and supervisory arrangements to facilitate freedom of establishment for insurers and to protect insureds; it was not intended to create a general right for insurers or investors (such as Lloyd’s Names) to be “regulated” or to be beneficiaries of supervisory rights. On construction and by analogy with authority (notably Three Rivers and Peter Paul), the Directive did not grant the Claimants the rights they asserted.
• Even assuming arguendo that a Francovich/Factortame cause of action existed, the Claimants’ pleaded claims were time‑barred. The ordinary six‑year limitation under section 2 of the Limitation Act 1980 applied and the causes of action accrued well before the limitation cut‑off. The Claimants’ alternative reliance on Emmott (that time cannot run before transposition) was held to be inapplicable in its unqualified form; Emmott has been confined by subsequent authority and will not displace ordinary limitation rules except in truly exceptional circumstances.
• Section 14A of the Limitation Act 1980 (latent damage provision) could not be extended to cover Francovich/Factortame claims or otherwise used to salvage the Claimants’ case by way of Marleasing‑style interpretation: the statutory language and permissive limits of Community law did not require such interpretation in this context.

Result: the claims were dismissed because the Directive did not confer the asserted individual rights and, in any event, the claims were statute‑barred.

Background and nature of the claim. The claimants were a large group of underwriting Names at Lloyd’s who alleged that the United Kingdom had failed to implement the First Non‑Life Insurance Directive (Council Directive 73/239/EEC) and related amending instruments. They said that the failure to implement and to supervise Lloyd’s properly caused under‑reserving (including liabilities for IBNR) and losses arising from reinsurance‑to‑close (RITC). They sought damages under the Francovich/Factortame state‑liability principle.

Procedural posture. The matter proceeded as a first‑instance trial in the Commercial Court before Langley J. Two preliminary issues were tried first: (i) the Grant of Rights Issue (whether the Directive intended to confer rights on Names) and (ii) the Limitation Issue (whether claims were time‑barred and, if so, whether Community law or section 14A altered that result). An extensive Agreed Statement of Facts and factual evidence from sample Names and market participants were placed before the court for the limitation inquiry.

Issues framed and legal framework.

• Nature and scope of the Insurance Directive and its recitals and articles concerning authorisation, technical reserves, solvency margin and supervisory co‑operation; later amending Directives and the 1991 Accounts Directive were considered for context.
• Domestic implementing and regulatory scheme: Lloyd’s Act 1982 and the Insurance Companies Act 1982, relevant statutory instruments, and later reforms culminating in Part XIX of FSMA 2000.
• State liability for breach of Community law (Francovich/Factortame/Dillenkofer): the three conditions for liability were adopted as the applicable test.
• Limitation law: section 2 Limitation Act 1980 (six years) and section 14A (latent damage extension), and relevant Community principles (effectiveness and equivalence) including Emmott, Steenhorst‑Neerings, Fantask and subsequently developed authorities.

Court’s reasoning on the Grant of Rights Issue. The judge construed the Directive and concluded it was primarily designed to facilitate freedom of establishment and to co‑ordinate minimum supervisory measures to protect insureds; it presupposed (but did not prescribe in detail) national supervisory systems rather than confer a suite of enforceable rights on insurers or investors such as Lloyd’s Names. The court relied on the reasoning and analogies in Three Rivers (banking supervision) and the ECJ decision in Peter Paul to hold that the Directive did not confer the pleaded rights on the Claimants.

Court’s reasoning on Limitation. The judge addressed and rejected the Claimants’ primary contention that Emmott precluded the running of limitation prior to proper transposition; subsequent authority and later domestic decisions confined Emmott to exceptional circumstances. The court held that the cause(s) of action accrued on the relevant commitments and calls relating to pre‑1993 years (in particular the 1992 and earlier years subject to R&R), such that the six‑year limitation period had run. The alternative argument invoking section 14A was analysed and rejected: the Francovich/Factortame cause of action is not a negligence claim within the meaning of section 14A, and Marleasing‑style interpretative techniques did not justify reading section 14A into claims of this character. Even applying section 14A analogously, the factual record showed the sample Names had knowledge (actual or constructive) more than three years before proceedings commenced.

Ancillary findings and context. The judgment reviews the long market history: asbestosis/pollution losses, open years, RITC problems, Lloyd’s internal reports (Fisher, Neill, Task Force), public and market awareness, action groups, and R&R/Equitas restructuring. The court observed that many Names and action groups had considered or pursued claims (including reliance on Community law) well before the trial. The judge found no relevant misconduct or concealment by the Government sufficient to disapply limitation by virtue of Community law principles.

This is a first instance judgment. The court dismissed the claims. Langley J held that Directive 73/239/EEC did not confer the rights on Lloyd’s Names for which the claimants sued and, in any event, the claims were time‑barred under the Limitation Act 1980 (section 2); the Emmott principle could not be extended to defeat ordinary national limitation rules in this case and section 14A did not assist the claimants.