The Insurance Mediation Directive - Transposition Challenges And Pitfalls

Author:Ms Sinéad O'Loghlin
Profession:Dillon Eustace


The Government's second attempt to transpose the Insurance Mediation Directive must this time give full effect within the Irish jurisdiction to the rights and obligations vested in service providers and consumers under the directive. Sinead O'Loghlin and Tom Carney consider some basic legal issues, which should be borne in mind when interpreting the transposing Irish legislation.

European law required Ireland to transpose Directive 2002/92/EC of 9 December 2002 on insurance mediation ("the directive") by 15 January 2005. The Government's priority of meeting the directive's January transposition deadline yielded to a second attempt to do it properly and to revoke the earlier European Communities (Insurance Mediation) Regulations, 2005 ("the regulations"), which entered into force on 14 January last.

The Government's adoption of the European Communities (Insurance Mediation) (No.2) Regulations ("the No. 2 regulations") and revocation of its earlier regulations must be interpreted as an admission that it improperly transposed the directive in January. Not to transpose the directive properly a second time could leave the State further exposed to European Commission infringement proceedings before the European Court of Justice. The Government's transposition "take-two" may imply the State's exposure during the intervening period between the two sets of regulations.

General Considerations for Transposition

The rights of and duties on service providers and consumers under the directive must be given full effect in the No. 2 regulations. Resulting from improper transposition, service providers might be able to challenge future enforcement proceedings of the Financial Regulator successfully and consumers/service providers might be denied legal rights guaranteed by the directive. Further, where either service providers or consumers (denied through improper transposition rights guaranteed by the directive) in commercial relationships amongst themselves suffer financial loss or damage, the State might be found liable for such loss and damage.

The proposed adoption of the No 2 regulations gives us an opportunity to examine the State's duty under EU and Irish constitutional law when transposing EU directives and to consider why, - 2 - as a matter or law, a second attempt was required to give full effect to the directive. The Government's consultation process on the No. 2 Regulation offered us all an opportunity to identify the challenges that face the draft transposition text.

Article 249 of the EC Treaty provides that any EU directive is binding as to the objective (as stated in the directive) to be achieved, but leaves to each Member State a choice as regards the means or method by which the directive is to be implemented in national law.

Once a directive is fully and properly transposed into national law, the legal rights guaranteed to citizens flow not from the directive itself but from the transposing national law. Failure to transpose a directive properly, therefore, can result in confusion as regards the source of rights before the national courts and the denial of rights between parties (like consumers and service providers) who otherwise might have enjoyed rights under national law. EU law operates in some cases to punish a Member State for incorrectly transposing...

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