Environmental liability treaty nears completion

A new Europe-wide convention on civil liability for environmental damage is about to enter its final drafting stages and is expected to be opened for signature next year. The Convention would impose liability on the operators of specified dangerous activities for damage which they cause to the environment, but for EC countries a crucial question will be whether the European Commission bases any legislative proposals in this area directly on the Convention or opts for a different and more harmonised approach.

The Convention on Civil Liability for Damage Resulting from Activities Dangerous to the Environment has been drafted over the past four years by the Council of Europe, a pan-European organisation of democratic states. The Council's members include the EC and EFTA countries, but with recent additions from the former Soviet bloc its membership now stands at 27.

Over the next few months a high-level legal affairs committee is expected to put the finishing touches to the draft Convention. It will then be put forward for approval by the Council's Committee of Ministers before being opened for signature, probably in mid-1993.

It remains to be seen how influential the Convention will be on the EC's evolving policy on civil liability for environmental damage. The European Commission, which has been attending the drafting meetings as an observer, recently outlined its own thoughts on a possible Community liability regime in a draft green paper (ENDS Report 204, pp 14-16 ), and these are not everywhere consistent with the Convention. Moreover, the treaty itself currently contains two alternative clauses defining how EC countries should apply it (see below), and an agreement on which of these, or some other option, should feature in the final text is still some months off.

The main provisions of the draft Convention are as follows:

  • Objectives: The Convention's aims are to ensure that "adequate" compensation is paid for damage caused by activities dangerous to the environment, and to provide for the prevention and reinstatement of environmental damage.

  • Scope: The Convention applies to "dangerous activities". These are defined as operations involving dangerous substances, genetically modified organisms or micro-organisms likely to pose a significant risk to humans, property or the environment by virtue of their properties and conditions of use, landfills and other sites for the permanent disposal of waste, and other waste disposal or recycling installations "such as" those specified in an Annex II.

    The draft treaty goes on to define most of these activities in more detail. For example, "dangerous substances" are substances or preparations posing a "significant" risk to humans, the environment or property. An annex to the Convention will list substances considered "dangerous", and will include all those for which hazard classifications have been agreed under EC law. In addition, a substance or preparation which a manufacturer has classified as explosive, oxidising, extremely or highly flammable, toxic or very toxic, corrosive, irritant, carcinogenic, mutagenic, teratogenic or dangerous for the environment under the same EC rules will be considered "dangerous" under the Convention. However, the draft goes on to provide that designation of a substance as dangerous may be qualified by quantitative or concentration thresholds or restricted to particular risks or concentrations.

    Specifically exempted from the Convention is damage caused by nuclear materials or arising from off-site transport activities other than pipelines.

  • Defining "damage": The types of damage for which compensation would be available under the treaty include loss of life, personal injury, and loss of or damage to property. Liability would also be created for loss or damage "by impairment of the environment" other than property, although in this case compensation would be available only to cover the costs of reinstatement measures undertaken or to be undertaken. The "environment" is defined to include natural resources such as air, water, soil, flora and fauna, and landscape and cultural features.

    Compensation would also be available to cover the costs of preventive measures reasonably taken by any person, and any further loss or damage caused by such measures.

    The draft defines an "incident" as being "any sudden occurrence or continuous occurrence or any series of occurrences having the same origin, which causes damage or creates a grave and imminent threat of such damage." This implies that preventive measures could be taken by any person before damage actually occurred.

  • Liability: Under the Convention, an operator of a dangerous activity would be liable for damage resulting from incidents at the time when it was under his control. Where the incident was a "continuous" occurrence, all the operators concerned would be jointly and severally liable, unless any particular operator showed that only part of the damage occurred while he was in control of the activity, in which case he would be liable only for that part of the damage.

    The Convention also makes provision for cases in which damage is discovered only after a dangerous activity has ceased. Here the last operator would be liable, unless he showed that all or part of the damage resulted from an incident which occurred before he became the operator, in which case the foregoing provisions would apply.

    Under transitional provisions built into the Convention, where damage was caused by a continuous occurrence or series of occurrences, liability would apply only to that part of the damage caused by an occurrence or part of a continuous occurrence taking place after the treaty entered into force for a particular country.

    A separate liability regime would apply to landfills and other sites for the "permanent deposit" of waste. Here the operator at the time when damage caused by waste became known would be liable. The last operator would be liable for any damage which became known after a site closed.

    For landfills, the transitional arrangements would mean that liability would be incurred only for damage which became known after the treaty took effect for a particular country. But no liability would be created if the site concerned had by then been closed in accordance with the provisions of national law, or if the operator proved that the damage had been caused by waste deposited prior to the Convention's entry into force.

    Whether the Convention would apply retrospectively will obviously be a key consideration. In principle efforts have generally be made to ensure that it does not. However, proving that damage caused by part of a continuous occurrence which actually occurred after a particular date such as the Convention's entry into force will in many cases be impossible. The draft is further unhelpful on this point in not containing any general provisions on the burden of proof.

    Only in the case of the transitional provisions for landfills is it made clear that the onus would rest on the operator to show that damage was caused entirely by waste deposited before the Convention entered into force - again, a difficult if not impossible task.

    The draft includes a number of standard exemptions from liability, such as damage caused by acts of war or exceptional natural events. It also provides an exemption in cases where damage "resulted necessarily from compliance with a specific order or compulsory measure of a public authority." The latter would appear not to provide a defence against a civil claim where damage was caused, say, by a discharge even if this was fully in compliance with a consent.

    However, a further exemption is likely to weaken the effects of the Convention. It provides that an operator would not be liable where damage was caused by "pollution at tolerable levels to be anticipated under relevant local conditions." This might well provide a defence where a business caused damage deemed to be acceptable by a regulatory authority, and clearly would introduce an extra dimension into liability proceedings.

  • Limitation of liability: Parties to the Convention would have the discretion to set a financial ceiling on liability. However, this would not apply where it was proved that the damage resulted from the act or omission of an operator committed either with deliberate intent or in the knowledge that such damage would probably result.

  • State of the art defence: One of the issues which appears to have caused some conflict in the negotiations on the Convention is whether it should contain a state of the art defence. The matter has been resolved by a clause which allows a country when ratifying the treaty to reserve the right to provide such a defence in its national laws.

    Specifically, the draft says that countries may provide in their laws that an operator shall not be liable if he can show that, in the case of damage caused by a dangerous activity involving a dangerous substance or organism, "the state of scientific and technical knowledge at the time of the incident was not such as to enable the existence of the dangerous properties of the substance or organism to be discovered." No such defence is provided for waste management operations.

  • Alternative to operator liability: In the same way, a country would be permitted when ratifying the Convention to reserve the right to replace the liability of the operator by a guarantee fund or some other collective guarantee mechanism, on condition that this provided at least equal protection to the victims of environmental damage.

    However, the use of a collective compensation mechanism would not be permitted in all cases. In the case of sites for the permanent deposit of waste, it could only pay for damage caused by waste deposited before the Convention entered into force for any particular country, or by waste deposited by someone other than the current operator. And in the case of other dangerous activities, it could only pay for damage discovered after an operation had ceased, where the damage had been caused by an incident which occurred before the last operator took charge of the activity.

  • Financial security: Parties to the Convention would be obliged to ensure that operators of dangerous activities have insurance or other financial security "up to a certain limit and of such type and terms as specified by internal law" to cover their liability under the treaty.

    This broad obligation, however, would leave a good deal to governments' discretion. They need only ensure that financial security is obtained "where appropriate, taking due account of the risks of the activity, of the financial capacity of the operator and of the assurability of the risks of the activity."

  • Limitation periods: Claims for compensation would have to be lodged within five years of the date on which a claimant knew or "ought reasonably to have known" of both the damage and the identity of the operator.

    However, the draft then goes on to bar any claim more than 30 years after an incident which resulted in damage. For an incident consisting of a series of occurrences or a continuous occurrence, the 30-year limitation period would begin from the last occurrence or the end of those occurrences, respectively.

    Again, a separate rule is made for sites for the permanent disposal of waste. For these the 30-year period would at the latest run from the date on which the site was closed "in accordance with the provisions of national law."

  • Common interest groups: The draft Convention provides a role for any group which "takes care of the protection of the environment." These may ask a court or other nominated body to ban an unlawful dangerous activity posing a grave threat of damage to the environment. They may also request an order for an operator to take measures to prevent an incident, to take measures after an incident to prevent damage, or to carry out restorative measures.

    However, in practice this may not prove as radical a step as it sounds. Firstly, the draft provides that a country may announce when ratifying the Convention that it reserves the right not to apply these provisions at all.

    Secondly, a common interest group would not only have to show that its role as defined in its statutes is protection of the environment, but would also have to comply with "any further conditions of internal law" of the country in question. In the UK, the rules of locus standi would preclude actions of the kind allowed by the treaty in many cases.

    Thirdly, the draft provides that a country's internal laws may stipulate cases where requests by common interest groups would automatically be inadmissible.

  • Access to information: The draft treaty lays down two sets of rules on public access to environmental information. The first of these deals with information held by public authorities and public bodies with environmental responsibilities, and is modelled closely on the 1991 EC Directive on public access to environmental information.

    Secondly, provision is made for a person who has suffered damage to ask a court to order an operator to supply information "necessary to establish the existence of a claim for compensation."

    However, a court would be able to refuse a request which placed a "disproportionate burden" on the operator. An operator would also be entitled to refuse to provide information which might incriminate him. Moreover, the current text suggests that disclosure of information by an operator would be subject to the same restrictions as disclosure by public authorities. These permit national laws to restrict the right of access to information in cases where commercial confidentiality would be put at risk, or where matters "which are or have been sub judice, or under enquiry, or which are the subject of preliminary investigation proceedings" are involved.

    Interpreted strictly, these qualifications on the right of access to information held by operators would appear to define that right virtually out of existence.

  • National and EC laws: As a general rule, the Convention will not limit the rights available to anyone who has suffered damage under national laws or any other international agreement.

    Two alternative draft clauses are also included in the current text to govern the relationship between the Convention and EC law. The first provides that EC countries in their "mutual relations" shall apply the Convention's rules only if there is no EC rule on the subject concerned. The second provides that they shall apply the Convention only if there is no incompatibility with EC rules.

    The key question is whether the European Commission will be content to allow the Convention to dictate what happens in the EC, or whether it will press ahead with the ideas outlined in its draft green paper, possibly modified in the light of the Convention. One factor which may influence its thinking is that the Convention is in places so broadly drawn, and leaves so much to the discretion of individual countries, that it would almost certainly result in widely varying national liability regimes within the EC. The Commission's mission of harmonisation suggests that this is something which it would not favour, as its draft green paper has already made clear.

  • Entry into force: Only three countries would have to ratify the Convention for it to enter into force for those states. This rule appears to be a hangover from the days when the Council of Europe's membership was restricted to western European states, and it may be that this rule will be modified before the Convention is finally adopted.

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