Tag: Liability

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Dutch Supreme Court advisors suggest Court of Appeal judgment upholding State duty of care in Urgenda climate litigation should stand.

The Dutch Court of Appeal‘s confirmation of the Court of First Instance at The Hague judgment in the climate litigation case, should stand. So advised two senior court advisors to the Supreme Court last week (they also announced a full English translation to be posted to the site today, Friday. Again quite a service from the Dutch judiciary!) As in the European Court of Justice, their opinion is not binding, but it is highly authoritative.

Others for whom this issue is their daily bread and butter no doubt will analyse the Opinion in great detail, discussing as it does issues of trias politica, direct effect of international law etc. Of particular note are their concluding remarks, where they emphasise the importance of the ECHR in the action, and (in trias politica context) the fact that the courts cannot and must not directly instruct the political class to legislate. All it can do is point out what is needed and where the Government fell short. That will leave the claimants with the task of pondering how to operationalise the judgment should the Supreme Court follow.

Geert.

 

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Arica Victims v Boliden Mineral (Sweden). Lex causae and export of toxic waste. Relevant for the business and human rights /CSR debate.

Update 5 February 2021 having now the benefit of access to an English translation of the Court of Appeal judgment (which incorporates large sections of the first instance judgment; Swedish copy here), here’s some clarification. The first instance judgment seems to have held that Rome II does not apply ratione temporis; that Swedish SC authority had held the ordinarily applicable rule to be locus delicti commissi; that that authority however had not expressly considered the situation where ldc and locus damni differ; and that, ia referring to the Rome II regime, a victim friendly approach should apply which it held in this case to lead to locus damni, being the law of the victim’s domicile which would benefit it mostly, so the ruling suggested, for familiarity reasons. The first instance court then held that lex causae to include statutes of limitation which looked less beneficial (5 years) at first sight however which then profited from a Chilean SC 2010 ruling in the Santa Laura case, in which the SC essentially held that for torts that continue to cause injury, the limitation period has not yet started, regardless of when the actions have become known to the injured parties. No claims therefore were held to be statute-barred. Burden of proof for the causal link was held not to be part of the lex causae, instead being procedural hence subject to Swedish law, lex fori. The Court of Appeal at 9.6, in its summary of the first instance judgment, then reports the first instance judges held that intervening factors, such as post-dumping construction and the use by residents of wet sludge as backfill material, was not reasonably foreseeable by Boliden, hence disrupting liability, and that for the period before that, safe levels of presence of arsenic in injured parties’ blood lay a lot higher than suggested by claimants.

Whether the first instance judges had taken proper account of Chilean case-law on the arsenic toxicity issue was  an important part of the appeal, however the Court of Appeal as reported in my original post, below, held [p.3] that the first instance judges’ finding of a favor victimis rule had no basis in the SC’s authorities and that locus delicti commissi had to be applied [p.5]. In determining ldc, the center of gravity was held to have to be followed, ‘This center may be established with regard to where the qualitatively important elements have their focus rather than according to quantitative criteria’. LDC was therefore held to be Sweden. This is a finding of great interest to the environmental law and human rights litigation. The Court of Appeal, too, held [p.7] that lex causae includes statutes of limitation. This is where the action then derailed. The CA found [p.9] that the limitation period has to be calculated from the latest time when measures to prevent the injury could have been taken. This, it held, fell sometime during 1999 (when, following instruction by the Chilean authorities, the sludge was moved a short distance away from the initial site).

Original post__________________

I reported earlier on the decision at first instance in Arica Victims v Boliden Mineral. The Court of Appeal has now reversed the finding of Chilean law as lex causae, opting instead for Swedish law. Lindahl has good review here and I rely on it quite heavily for I do no speak Swedish.

Boliden Mineral exported toxic waste to Chile in the ’80s, prior to either Basel or EU or OECD restraints (or indeed bans) kicking in. A first issue for consideration was determination of lex causae. Rome II does not apply ratione temporis (it only applies to tortious events occurring after its date of entry into force) – residual Swedish private international law applies. My understanding at first instance was that the applicable law rule referred to lex loci damni, Chile. The Court of Appeal has gone for lex loci delicti commissi: whether this was by use of an exception or whether the court at first instance had simply misunderstood Swedish PIL, I do not know.

Having opted for lex loci delicti commissi, the Court of Appeal then considered where this was. Readers of the blog will know that this is relevant for CSR /business and human /environmental rights discussions. Lindahl’s Linda Hallberg and Tor Pöpke summarise the court’s approach:

In order to determine which country’s law applied to the case, the court examined a sequence of events that had influenced, to varying degrees, what had led to the alleged damage. According to the court, the decisive factor in the choice of law were acts and omissions that could be attributed to the Swedish mining company, as the case concerned this company’s liability for damages.

Instead of determining the principal location of the causative events using quantitative criteria, the court considered it to be where the qualitatively important elements had their centre of gravity. Further, in contrast with the district court’s conclusion, it held that the Swedish mining company’s alleged negligence had its centre in Sweden and therefore Swedish tort law should be applied in this case (the law of the place in which a delict is committed).

Unlike more ‘modern’ CSR cases the fact do not concern mother /daughter company relations yet the considerations of locus delicti commissi are nonetheless interesting.

The Court of first instance had employed Chilean’s longer statute of limitation. The Court of Appeal tried to stretch Sweden’s shorter one of 10 years (the case concerns a potentially tortious act which occurred more than 30 years ago): any subsequent damage that had been caused by the mining company’s failure to act during the period after the toxic waste had been shipped to Chile would advance the starting point for the limitation period. However this was at the latest 1999 and the 2013 action therefore had been taken too late.

On 25 June last the Supreme Court rejected further consideration, the Court of Appeal’s finding therefore stands.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.6.3, Chapter 8.

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Arica Victims v Boliden Mineral. Lex causae and export of toxic waste.

‘Reading’ Arica Victims v Boliden Mineral (I have a copy of the case, but not yet a link to ECLI or other database; however there’s a good uncommented summary of the judgment here] leaves me frustrated simply for my lack of understanding of Swedish. Luckily Matilda Hellstorm at Lindahl has good review here (including a hyperlink to her earlier posting which alerted me to the case in 2017).

Boliden Mineral exported toxic waste to Chile in the ’80s, prior to either Basel or EU or OECD restraints (or indeed bans) kicking in. A first issue for consideration was determination of lex causae. Rome II does not apply ratione temporis (it only applies to tortious events occurring after its date of entry into force) – residual Swedish private international law applies, which determined lex causae as lex loci damni. The Court found this to include statute of limitation. This would have been 10 years under Swedish law, and a more generous (in Matilda’s report undefined) period under Chilean law. Statute of limitation therefore following lex causae – not lex fori.

Despite this being good for claimants, the case nevertheless failed. The Swedish court found against liability (for the reasons listed in Matilda’s report). (With a small exception seemingly relating to negligence in seeing waste being uncovered). Proof of causality seems to have been the biggest factor in not finding liability.

Leave to appeal has been applied for.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 8.

 

 

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Universal Music: Szpunar AG suggests the Bier case-law does not apply to purely economic loss under Article 7(2) Brussels I Recast.

 

I have earlier reported on the referral in Universal Music, Case C-12/15. Szpunar AG opined today, 11 March (the English text of the Opinion is not yet available at the time I write this post) and suggests (at 37) that the Court not apply its Erfolgort /Handlungsort distinction per Case 21/76  Bier /Minnes de Potasse. He reminds the Court of Bier’s rationale: a special link between the Erfolgort and the case at hand, so as to make that place, the locus damni, the place where the damage arises, well suited to address the substantive issues raised by the claim. (He also reminds the Court, at 30, that the language of what is now Article 7(2) only refers to the harmful event; not in the slightest to damage).

In cases where the only damage that arises is purely economic damage, the locus damni is a pure coincidence (in the case of a corporation suffering damage: the seat of that corporation), bearing no relation to the facts of the case at all (lest it be entirely coincidental). The Advocate General skilfully distinguishes all relevant CJEU precedent and in succinct yet complete style comes to his conclusion.

The Court itself embraces its Bier ruling more emphatically than its AGs do (see the similar experience of Cruz Villalon AG in Hejduk).  That Universal Music is quite clearly distinguishable from other cases may sway it to follow the AG in the case at issue. However its fondness of Bier (judgment in 1976; it had been a hot summer that year) may I fear lead it to stick to its fundamental twin track of Erfolg /Handlungsort no matter the circumstances of the case.

Geert.

European private international law, second ed. 2016, Chapter 2, Headings 2.2.11.2, 2.2.11.2.7

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Slowdown of recovery is not ‘environmental damage’ under the EU Directive. The High Court in Anglers’ Society.

R (Seiont, Gwyrfai and Llyfni Anglers’ Society) v Natural Resources Wales has a long history. That’s not meant to be a fairy tale opening: it actually has legal relevance.

Article 2(2) of the environmental liability Directive provides the following definition: “ ‘damage’ means a measurable adverse change in a natural resource or measurable impairment of a natural resource service which may occur directly or indirectly.” ‘Environmental damage’ is further defined in Article 2(1), providing a variety of layers which need ‘unpacking’ in the words of Hickinbottom J. He concludes, after lengthy and instructive analysis, that  “damage” as defined in article 2(2) of the EL Directive is restricted to a deterioration in the environmental situation, and does not in addition include the prevention of an existing, already damaged environmental state from achieving a level which is acceptable in environmental terms – or a deceleration in such achievement. Since “environmental damage” is a subset of “damage”; “environmental damage” necessarily has that same restriction.

The judgment is very considered and there is not much point in repeating it here: please refer to the text for a thorough read on the ELD, the water framework Directive, habitats and much more.

Geert.

 

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Lots of pennies make a pound. Dutch court upholds State duty of care in climate litigation.

Update 29 December 2017. In Milieudefensie et al v The Netherlands the Rechtbank Den Haag was less accommodating to plaintiff in similar public interest litigation involving air pollution. Arguments included Directive 2008/50, WHO health standards, and Articles 2-8 ECHR. It is clear that cases like these will continue to be brought, and will not always side with environmental action groups. Yet there is no doubt that they are an essential part in making Governments sit up and take proper action rather than relying on the separation of powers principle effectively to do nothing. (Greenberg Traurig have good review here).

nUpdate 12 November 2015: the Belgian case has been held up due to the language regime in Belgium’s civil procedure rules.

I have reported previously on this action, when it was launched. The Court at The Hague held late June. For good (and impressive) measure, it immediately released an English translation of the judgment. Jolene Lin has excellent overview here, I will simply add the one or two things which I thought were particularly striking.

Firstly, this judgment was not written by a bunch of maverick ‘environmental’ judges. It is the commercial court at The Hague which issued it (see the reference to ‘team handel’, ‘handel’ meaning commerce, or trade).

The judgment hinges on the State’s duty of care which the court established. Urgenda, applicant, had suggested that regardless of the individual behaviour of Dutch citisens and corporations, the Government carries overall or ‘systemic’ responsibility (‘systeemverantwoordelijkheid’), as the representative of the sovereign Dutch nation, to ensure that it controls emissions emanating from The Netherlands. Article 21 of the Dutch Constitution and the international no harm (sic utere tuo) principle featured heavily in the court’s acceptance of the State duty of care. That the Dutch action might only be a drop in the ocean, did not impress the judge: plenty of pennies make a pound, and at any rate, The Netherlands, as a developed nation, were found to have increased responsibility.

At 4.42 and 4.43, the Court then applies what in EU law is known as the Marleasing principle.

‘From an international-law perspective, the State is bound to UN Climate Change Convention, the Kyoto Protocol (with the associated Doha Amendment as soon as it enters into force) and the “no harm” principle. However, this international-law binding force only involves obligations towards other states. When the State fails one of its obligations towards one or more other states, it does not imply that the State is acting unlawfully towards Urgenda. It is different when the written or unwritten rule of international law concerns a decree that “connects one and all”. After all, Article 93 of the Dutch Constitution determines that citizens can derive a right from it if its contents can connect one and all. The court – and the Parties – states first and foremost that the stipulations included in the convention, the protocol and the “no harm” principle do not have a binding force towards citizens (private individuals and legal persons). Urgenda therefore cannot directly rely on this principle, the convention and the protocol. (….) 

This does not affect the fact that a state can be supposed to want to meet its international-law obligations. From this it follows that an international-law standard – a statutory provision or an unwritten legal standard – may not be explained or applied in a manner which would mean that the state in question has violated an international-law obligation, unless no other interpretation or application is possible. This is a generally acknowledged rule in the legal system. This means that when applying and interpreting national-law open standards and concepts, including social proprietary, reasonableness and propriety, the general interest or certain legal principles, the court takes account of such international-law obligations. This way, these obligations have a “reflex effect” in national law.‘

In this respect the court also referred extensively to the European Court of Human Rights’ case-law on the duty of a State to put into place a legislative and administrative framework to address the challenges posed by dangerous activities.

The Court also, with reference to international scientific consensus, concluded that climate mitigation, rather than adaptation, is the more effective, efficient and least expensive way to address climate change.

Eventually it settles for a finding of duty of care and ensuing responsibility to reduce the emission of greenhouse gases by at least 25% viz 1990 levels, by 2020. This 25% is the floor of what the international scientific community suggests is needed properly to address the dangers of climate change. (The court, in deference to trias politica, therefore did not want to go higher than that floor).

Next up (other than appeal, one might imagine): the Belgian courts, which have been seised of a similar action.

Geert.

Declaration of interest: I advice the Belgian litigation pro bono.

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FIPA, Tws Automation and Ivan: ECJ confirms the secondary nature of ‘principles’ in EU environmental law

European environmental law principles may not have practical legal force in and of themselves. They are transposed into secondary law. It is their (incorrect) application and interpretation in conjunction with secondary law, which gives rise to citizens and corporations calling upon the principles to support their individual position. Hence despite their trumpeted value as ‘principles’, in the law in practice, individual citizens or corporations need transposition of said principles in secondary law, to argue that such secondary law has infringed the principles.

A clear application of this reality, is the recent ECJ judgment in Case C-534/13, a case with an impossibly long series of applicants and defendants, which for ease of reference I have dubbed FIPA, Tws Automation and Ivan in title of current posting. (After the main protagonists).

The main issue that arose, was whether national (Italian) legislation under which no provision is made for the authorities to require owners of polluted land who have not contributed to that pollution to carry out preventive and remedial measures, and the sole obligation imposed concerns the reimbursement of the measures undertaken by those authorities, is compatible with the ‘polluter pays’ principle, the precautionary principle and the principles that preventive action should be taken and that environmental damage should be rectified at source as a matter of priority.

The ECJ emphasises the role of Directive 2004/35 in this context. Held that the Directive does not hold against such absence. And recalled in line with previous case-law, that the environmental principles of the Treaty ‘do no more than define the general environmental objectives of the European Union, since Article 192 TFEU confers on the European Parliament and the Council of the European Union, acting in accordance with the ordinary legislative procedure, responsibility for deciding what action is to be taken in order to attain those objectives. (…)  Consequently, since Article 191(2) TFEU, which establishes the ‘polluter pays’ principle, is directed at action at EU level, that provision cannot be relied on as such by individuals in order to exclude the application of national legislation — such as that at issue in the main proceedings — in an area covered by environmental policy for which there is no EU legislation adopted on the basis of Article 192 TFEU that specifically covers the situation in question (…) Similarly, the competent environmental authorities cannot rely on Article 191(2) TFEU, in the absence of any national legal basis, for the purposes of imposing preventive and remedial measures.(…)’ (at 39-41)

A sobering conclusion, yet one solidly rooted in legal practice and institutional balance. Geert.

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Universal: Dutch Supreme court (Hoge Raad) quizzes the ECJ on purely economic loss and the Brussels Regulation

(Thank you to Vincent Dogan and Freerk Vermeulen for flagging the case). In Universal, Case C-12/15, the Dutch Hoge Raad has asked the ECJ for assistance in determining whether and /or how Article 5(3) of the Brussels I Regulation (now Article 7(3) in the recast) needs to be applied to cases of purely economic loss (also known as purely financial loss).

Haven’t we seen that before? Yes, we have: in Zuid-Chemie, Case C-189/08, the same Hoge Raad asked essentially the same question, however the ECJ did not answer it, for there was also physical damage (with the same victim).

Universal Music International Holding BV is the mother company of among others a Czech group of companies, who acquired a target company in the Czech Republic. A calculation error by one of the lawyers advising the parties (Ouch. All us, lawyers, sympathise), led to Universal having to pay five times what it thought it was going to pay. Arbitration and settlement ensued. This included agreement that the holding company, plaintiff in the current proceedings, would pay the amount settled for. It duly did, from a Dutch bank account. It now sues the Czech lawyers who wrongly advised the Czech subsidiary and does so in The Netherlands, as the alleged Erfolgsort in its tortious relationship with these lawyers, is The Netherlands.

Questions referred, are whether purely economic loss sustained in the Erfolgort (and without direct loss, economic or otherwise, elsewhere) lead to jurisdiction for that Erfolgort; and if so, how one determines whether the damage is direct or indirect (‘follow-up’), and where that economic loss is to be located.

I have aired my unhappiness with the Erfolgort /Handlungsort distinction on this blog before. Most recently viz Hejduk. I blame Bier (the judgment. Not the (at least as it is spelled in Dutch) drink): extension of Article 5(3) seemed good in principle but led to a continuing need to massage the consequences. The court advisors to the Hoge Raad have sympathy for the view that Bier’s main justification for accepting jurisdiction for the Erfolgort (a close link with the case leading to suitability from the point of view of evidence and conduct of the proceedings) is not present in the case of purely economic loss, particularly where events for the remainder are entirely Handlungsort related. The ECJ may well follow this reasoning, although in doing so it might yet again create another layer of distinguishing in the Bier rule.

Geert.

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Suing for the climate – Dutch style. Is there a maverick judge in the courtroom?

As has been more or less widely reported, the Dutch NGO Urgenta is planning to serve proceedings upon the Dutch State some time in November, seeking a court order obliging the State to present within 6 months, a realistic plan to reduce drastically The Netherlands’ CO2 emissions, and actively to inform the public of the causes and consequences of climate change. The draft proceedings (in Dutch only) review summarily (well, still leading to a 114 page document) the State’s obligations under public international law, and EU law, and the proposed consequential liabilities.

Trail Smelter, Minnes de Potasse, the Stern Report….: they all are mentioned. Of specific interest is the emphasis put on human rights, and the emphatic defence of the argument that The Netherlands also has a duty of care vis-a-vis damage occurring elsewhere (in particular: the developing world).

A maverick action? No doubt, and no doubt so intended – as are copycat actions. Desperate? Probably. However when desperate action meets maverick judge, interesting things do happen…

Geert.

 

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Legal advice and legitimate expectations – The ECJ in Schenker

In Schenker, Case C-681/11, defendants in the main proceedings were members of the Spediteur-Sammelladungs-Konferenz (Freight Forwarding Agents Consolidated Consignment Conference; ‘the SSK’). The SSK was an interest group comprising some of the ordinary members of the Zentralverband der Spediteure (Central Association of Freight Forwarding Agents; ‘the Zentralverband’). The Zentralverband, which was set up as an association, represents the collective interests of freight forwarding agents and of logistics service providers with a forwarding licence.

The SSK pursued the objective of ‘enabling more favourable road/rail consolidated consignment rates to be granted to shippers and to end consumers (compared with the rail tariffs for general cargo) and – through the creation of equal conditions of competition – of promoting fair competition among its members, an objective … to be pursued whilst having particular regard to ensuring compliance with Austrian, [European Union and European Economic Area (EEA)] law on cartels’.

The Austrian competition court confirmed that the arrangement was a ‘minor cartel’, meaning that it could go ahead without the approval of the competition authority. Hence, it would seem – but I am not au fait with the detail of Austrian competition law – putting the ball back in the camp of the cartel: for a finding of mini-cartel does not to me seem to imply a finding of non-breach of competition law.

Advice of counsel had confirmed the existence of a ‘mini cartel’ both at the time of the 1996 agreement and later, in 2006, at the entry into force of a new competition law. In neither instance had counsel advised on the legality or not under EU competition law. The European Commission raided the offices of members of the cartel in 2007, following which the Austrian competition authority pursued the case for breach of EU (as opposed to national) competition law. The courts in first instance held that the finding of a mini-cartel implied the absence of impact on cross-border trade, which is  prerequisite for EU competition law to apply. Upon appeal, questions were referred to the ECJ.

The Court held that an undertaking which has infringed that provision may not escape imposition of a fine where the infringement has resulted from that undertaking erring as to the lawfulness of its conduct on account of the terms of legal advice given by a lawyer or of the terms of a decision of a national competition authority.

In the case of the competition authority, since it does not under EU law have the power to adopt a decision concluding that there is no infringement of EU law, it cannot cause companies to entertain a legitimate expectation that their conduct does not infringe competition rules. Moreover, in the present instance the national authority examined the companies’ conduct on the basis of national competition law only.

In the case of the legal advice, a person may not plead breach of the principle of the protection of legitimate expectations unless he has been given precise assurances by the competent authority (the ECJ referred to its finding in  AJD Tuna, and Agrargenossenschaft Neuzelle). It follows that legal advice given by a lawyer cannot, in any event, form the basis of a legitimate expectation on the part of an undertaking that its conduct does not infringe EU competition law or will not lead to a fine.

The judgment to me it would seem to have important implications: for legal advice is often sought by companies not just to enable them to adapt their behaviour, but also to buy themself an insurance policy.

Geert.

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