A UK court has ordered the Motor Insurers’ Bureau to pay penalty interest under Spanish law, sending a clear message to insurers handling cross-border claims: delays can be costly.
On August 1, 2025, the High Court in London delivered its decision in DHV v Motor Insurers’ Bureau ([2025] EWHC 2038 (KB)), a case that’s likely to resonate with insurance professionals across the UK. The dispute revolved around a serious road accident in Mallorca, involving a British national, an uninsured vehicle, and a lengthy wait for compensation.
The facts are straightforward, but the implications run deep. In the early hours of July 21, 2017, DHV, a British citizen, was struck by a vehicle while crossing a road after a wedding in Mallorca. The vehicle was uninsured. DHV suffered very severe brain injury and multiple orthopedic injuries, spending 48 nights in hospital. Because the driver was uninsured, the Spanish guarantee fund would ordinarily be obliged to pay compensation. Due to arrangements between the UK and Spain, the Motor Insurers’ Bureau (MIB) stood in for the Spanish fund.
DHV, acting through his litigation friend and mother, WTX, filed a claim with the MIB. The case was heard in the High Court of Justice, King’s Bench Division, applying Spanish substantive law but using English procedural rules. The central issue was whether the MIB should pay penalty interest on the compensation sum under Article 20 of the Spanish Insurance Contract Act of 1980.
Spanish law requires insurers to pay compensation within three months of notification or face penalty interest, unless the delay is justified or not attributable to the insurer. The MIB accepted it was in default of the obligation to pay compensation within three months of the claim notification (September 19, 2017), but argued that the delay was justified because the claimant did not quantify his claim until August 2024, three months before trial.
The court found that the MIB had sufficient information to make at least some payment much earlier, including the MIB notification form from September 19, 2017, and an Immediate Needs Assessment dated October 6, 2017, which detailed DHV’s injuries and hospital stays. The assessment described a sub-arachnoid haemorrhage, interhemispheric subdural haematoma, right frontal subdural haematoma, signs of cerebral oedema, skull and nasal fractures, scapular and pelvic fractures, rib fractures, right frontal contusions, large superficial wounds, partial removal of the left ear, post-traumatic amnesia, and worsening of a pre-existing knee injury. The court noted that under Spanish law, insurers are expected to make prompt payments or offers of compensation, even if full quantification is not possible within the three-month window.
The MIB made three interim payments: £50,000 on June 17, 2021, £70,000 on June 16, 2022, and £50,000 on October 31, 2022. However, the court found these were not voluntary offers of compensation but were made only after court intervention or orders, and thus placed limited weight on them.
The judgment stated that the defendant’s failure to pay any compensation before the three-month window closed activated the Spanish court’s power to impose penalty interest. The court rejected arguments that procedural delays or lack of a detailed schedule justified the delay, emphasizing that Spanish law applies a restrictive approach to such justifications and that the intent of Article 20 is to penalize undue delay.
The court ruled that the MIB was in default and ordered it to pay penalty interest from December 19, 2017 (three months after notification) to April 28, 2025 (14 days after the MIB offered to pay the outstanding amount of damages). The judge found no special case or justification for the delay and stated that the insurer’s conduct was contrary to the purpose of Article 20.
No insurance policy clauses were discussed in the judgment; the focus was on statutory obligations under Spanish law and the conduct of the insurer.
For insurance professionals in the UK, this case is a reminder: when handling cross-border claims, especially those involving uninsured vehicles and foreign law, prompt action is essential. Waiting for full quantification before making a payment or offer can result in significant financial penalties. The court’s ruling underscores that, in international claims, speed and good faith matter - and the cost of delay can be steep.
