Environmental Liability in the European Union

By Kurland, Orin M. | Risk Management, August 1994 | Go to article overview
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Environmental Liability in the European Union

Kurland, Orin M., Risk Management

IT'S STILL NOT TOO LATE TO try to influence the direction the European Union (EU) will go regarding environmental impairment liability law. Last year, the Council of Europe did approve a "Convention on Civil Liability for Damage Resulting From Activities Dangerous to the Environment" that introduced a strict liability regime for pollution and environmental impairment damage. Council of Europe conventions, however, are not binding until the individual member states ratify them, which in this case appears doubtful.

Last year also witnessed the adoption by the European Commission of an "EU Green Paper on Remedying Environmental Damage." According to Gian Franco Ilariucci, chairman and managing director of broker Italcecar in Milan, "this paper was promulgated to provoke and stimulate proposals for remedying pollution and environmental damage and to provide standards of behavior to prevent or reduce such damage." The Green Paper also "seeks to investigate the possibility of remedying environmental damage not met by the application of civil liability principles such as joint compensation schemes, systems or mechanisms," he added.

One of the several options discussed in the Green Paper included the U.S.-style Superfund legislation imposing strict and retrospective liability on the insurance buying community, which "in my reading hasn't collected that much enthusiasm because of the members' awareness of the difficulties [the United States has experienced]," noted Frank Fine, European counsel for Jacques & Lewis in Brussels. "Because this initiative is still not that far along the pipeline, now is the time for interested parties to make their points known at the European Commission level," Mr. Fine stated at an International Insurance Council roundtable discussion held earlier this year in New York.

"In the area of environmental impairment liability, it is clear that the European Commission directives are not well-understood at this point and that there is considerable confusion and uncertainty as to the degree of implementation of strict liability," stated Robert C. Herrick, managing director of the Global Division of Sedgwick James Inc. in New York. This situation, along with a lack of enforcement of cleanup, has resulted in little environmental remediation taking place, reported Shaun E. Kelly, assistant vice president with AIG's Commerce and Industry Insurance Co. in New York.

The Environmental Marketplace

IN TERMS OF its monoline market for environmental impairment liability coverage, Europe is still in its infancy. This situation exists for several reasons, Mr. Kelly asserted, including "an absence of any unified environmental law or unified environmental insurance market in the European Union today." The two vehicles buyers generally could use to meet their needs for environmental insurance coverage were those under the civil (or in the United States, "general") liability policy, or ones available through selected pools, such as those in existence in Denmark, France, Italy and the Netherlands.

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