Does a fraudulent victim have their own right to compensation under the Motor Vehicle Liability Insurance Act (WAM)?

That is the question now before the Supreme Court and on which the opinion of Advocate General Hartlief was recently published. The injured party in question suffered very serious injuries in a single-vehicle accident while she was a passenger in her sister's car. She claimed compensation for the damage she had suffered on the basis of her own right under Article 6 of the Motor Insurance Act (WAM). The WAM insurer refused to pay.

An investigation after the accident revealed that the injured party was the owner and usual driver of the car. Moreover, after her own claim had been refused, she had registered the car in the name of a friend and taken out insurance in that person's name. When completing the questionnaire, the injured party did not answer several questions truthfully, including the question of whether insurance had previously been refused and whether the policyholder and the co-driver had a valid driver's license. The WAM insurer argued that, had it been aware of the true state of affairs, no insurance would have been taken out.

The court

The insurer took the position that the injured party was in fact the policyholder and invoked a breach of the duty of disclosure with intent to mislead (Articles 7:928 and 7:930 of the Dutch Civil Code) and the limiting effect of reasonableness and fairness (Article 6:2 of the Dutch Civil Code). The court ruled in favor of the injured party. The fact that the injured party was involved in the conclusion of the insurance contract and in fact wanted to take out the insurance for her own car did not mean that there was a contractual relationship between the injured party and the insurer, as a result of which Article 7:928 of the Dutch Civil Code did not apply. Nor could this article be applied by analogy, with reference to the Bijrijders judgment of the Supreme Court. Finally, the appeal to the restrictive effect of reasonableness and fairness was also unsuccessful, partly because of the seriousness of the injury and the fact that there was no connection between the actions of the injured party and the occurrence of the damage.

The court of appeal

The court did not share this view and concluded that the duty of disclosure under Section 7:928 of the Dutch Civil Code had been breached. The duty of disclosure under this section also extends to ‘known third parties’ whose interests are also covered by insurance, such as the injured party in question. Payment to the policyholder and the ‘known third party’ could be refused on the basis of Article 7:930 of the Dutch Civil Code, as there was intent to mislead. The court went on to say that although Article 11 of the WAM precludes the imposition of insurance law sanctions against an injured party, this did not benefit the injured party in this case. According to the court of appeal, she could not be regarded as a ‘third-party claimant’ under the WAM, i.e. someone who has nothing to do with the insurance law relationship between the insurer and the insured, since she herself had indeed played a role in the conclusion of the agreement. The court of appeal ruled, for the sake of completeness, that the appeal to Article 6:2 of the Dutch Civil Code was also successful. The injured party had deliberately misled the insurer in order to construct WAM coverage. The court of appeal considered it unacceptable that she should benefit from this fraudulent construction.

AG Hartlief

The conclusion discusses the protective rationale behind the injured party's own right under the WAM, whereby, according to the AG, no distinction is made between injured parties who are policyholders and those who are not. The AG goes on to say that, based on the Bijrijders judgment, it can be assumed that analogous application of Article 7:941 of the Dutch Civil Code outside the contractual relationship is not possible. According to the AG, the same reasoning can be applied to Article 7:930 of the Dutch Civil Code. Conclusion: a general rule that intentional misrepresentation of the insurer by an (third) injured party leads to forfeiture of the right under Article 6 of the WAM cannot be accepted.

The AG then discusses a fairly recent judgment of the Court of Justice (Matmut) in a similar case. That case concerned a fraudulent policyholder who had suffered injuries as a passenger. The Court concluded that an insured person or policyholder can also qualify as a ‘third party who is the victim of an accident’, to whom any restrictions cannot be opposed. This is only different in cases of abuse of EU law. In this regard, it is important whether the intended purpose of the provision has been achieved and whether there was a subjective intention to obtain a benefit granted by EU law.

On the basis of the above, the AG concluded that the injured party had been wrongfully denied its own right under Article 6 of the WAM.

Conclusion

The position of the fraudulent third-party injured party is much debated, because their special, non-contractual position makes it less easy for the insurer to impose sanctions in principle.

The position of the injured party in this case is a special case, as her interests were (also) covered by the insurance and it was precisely her fraudulent conduct that led to the insurance being taken out. The court of appeal classifies her as a ‘known third party’ within the meaning of Article 7:928 of the Dutch Civil Code and seems to see this as (in our opinion, direct) grounds for the insurer to refuse payment. The consideration that Article 11 of the Motor Insurance Act does not preclude this therefore seems almost superfluous. However, the AG places her completely outside the scope of the statutory insurance law sanctions and grants her a separate right on the basis of her status as a ‘third party who is the victim of an accident’. We now await the ruling of the Supreme Court, which is (for the time being) scheduled for May 23, 2025.

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