Pierre Sonigo, Federation of European Risk Management Associations
Green with liability
Following developments on the implementation of the European Liability Directive, Pierre Sonigo explores its implications for captives and operators in the region.
possible solutions”. Why is the implementatiown of the ELD so slow? Is it too complex? Are there sufficient cases? Or is it simply a lack of interest from the operators and the relevant authorities?
T The main features of the ELD
The Directive 2004/35/CE of the European Parliament and of the Council of April 24, 2004, commonly called the Environmental Liability Directive (ELD), had two objectives: the prevention and the remediation of environmental damage. Environmental damage is defined as damage to protected species and natural habitats (“nature”), damage to water and damage to soil. We can immediately note that this is much broader than the simple definition of “pollution” used in most insurance contracts.
The liable party is the “operator” who carries out occupational activities. The general principle is that polluters pay for any fault-based damage they cause to nature. A strict liability regime (no fault) applies to certain operators which perform dangerous activities, listed in Annex III of the Directive.
There are some cases for exoneration of liability, for example, force majeure, armed conflict, third party intervention. The framework of the directive has provided each member state with the opportunity to accept as a defence the granting of a permit to operate prior to the accident (permit defence), or that the scientific knowledge on the potential toxicity of the substances involved was not sufficient to anticipate the damages resulting from the accident (state of the art defence).
Finally, operators have to take preventive actions if there is an imminent threat of environmental damage and have an obligation to remedy, at their own cost, damage when it has occurred (paying a fine or financial compensation is not satisfactory).
o investigate the slow implementation of the Environment Liability Directive (ELD), the European Commission gathered together 200 experts in Brussels in November 2011 “to discuss and explore difficulties, causes, challenges and pathways for
An effective directive?
A report, prepared by the Commission for the Council, the European parliament and two other committees and published in October 2010, assessed the effectiveness of the ELD through its transposition into national laws and its effective implementation.
The report noted that although the directive entered into force on April
30, 2004, only four member states met the transposition deadline of April 30, 2007. It took almost three more years and several constraining judgments from the European Court of Justice to have the directive transposed on to the legislation of all 27 member states.
The main reasons for the transposition delays were related to difficulties in fitting the new regulation into existing legal frameworks on environmental liability, the complexity of the technical requirements of the directive with respect to the economic valuation of damages and the different types of remediation, and the many options left open to member states at the time of transposition.
This resulted in broad divergence concerning several key implementing provisions among the member states, including that:
• The definition of what is an operator can vary widely in each state;
• Fewer than half of the member states allowed the “permit defence” or the “state of the art defence” to be invoked by operators, a similar number decided not to allow either defence, and the remaining states admitted only one of the two defences;
• For multi-party causation, most member states opted for a system of joint and multiple liability, while a minority chose proportionate liability; and
• Regarding financial security, the issue is left to the discretion of the member states. Eight have introduced mandatory financial security measures, which will enter into force at various dates between now and 2014, while the remaining states will rely on voluntary financial security.
The long delay in transposing the directive revealed that little practical
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