COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(93) 47 final 
Brussels, 14 May 1993 
m:: 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND PARLIAMENT 
AND THE ECONOMIC AND SOCIAL COMMITTEE : 
GREEN PAPER ON REMEDYING ENVIRONMENTAL DAMAGE 
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Table of Contents 
1.0 Introduct ion 4 
2.0 Remedying environmental damage using mechanisms 
of civil I iabi I i ty 6 
2.1 The prob I ems 6 
2.1.1 Fault-based liability 6 
2.1.2 Strict liability 6 
2.1.3 Channelling liability 7 
2.1.4 Multiplicity of liable parties 8 
2.1.5 Who and what is damaging the environment 
i ) Chron i c po I I ut i on 8 
ii) Emissions under government 
author izat ion 9 
i i i ) Damage from the past 9 
2.1.6 Limitationof liability 9 
2.1.7 Def ining environmental damage 10 
2.1.8 Problems in proving causation 10 
2.1.9 The right to bring a legal action 11 
2.1.10 The question of adequate remedy 11 
2.1.11 The problem of insurability 11 
2.2 The general Trends in the law on environmental 
I iabi I ity 13 
2.2.1 General view of the trends of national 
I eve I 14 
2.2.2 Solutions adopted at international level 15 
2.2.3 The position taken at Community level 17 
3.0 Remedying environmental damage through joint 
compensât ion systems 20 
3.1 The prob I ems 20 
3.1.1 Requiring restoration as the remedy 20 
3.1.2 Allocating the cost of restoration 21 
3.1.3 Maintaining a preventative effect 21 
3.2 Solutions adopted at international and national 
level 21 
3.2.1 International schemes 21 
3.2.2 National schemes 22 
3.2.3 Proposals at a Community level 23 
4.0 Possible directions for Community action 23 
4.1 Horizontal approach towards civil liability for 
damage to the environment 23 
4.1.1 Fau I t-based I i ab i I i ty 25 
4.1.2 Strict liability 25 
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4.2 Horizontal approach towards Joint compensation 
systems 27 
4.3 Look I ng ahead 28 
Annex I : Trends at national level 1 
Annex II : Situation in non-Member States : 
Japan and the Uni ted States 2 
Annex III : Trends at international level 5 
Annex IV : The system created by the Council of Europe 
Convent ion 7 
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1.0 Introduction 
Seveso, Amoco Cadiz, Sandoz, Corunna and the Braer are names that 
conjure up memories of major environmental accidents within the 
European Community. They aroused public outrage and dramatized the 
need to clean up and restore damaged environments. However, damage from 
industrial accidents forms only a small part of the environmental 
damage occurring within the Community today. Emissions from industrial 
facilities and motor vehicles pollute the air, causing forests to die. 
Waste waters from cities and farms pollute surface and ground waters. 
Hazardous substances deposited in the past contaminate soils. The 
damage caused by these non-accidental activities may be less 
spectacular than damage from headline-grabbing accidents, but it is 
more extensive, and no less in need of remedial action. 
The questions raised by the content of this Green Paper are posed to 
provoke the wide-ranging discussion which the Commission seeks on this 
subject of remedying environmental damage in order better to inform 
its future actions in this area. To facilitate this debate and 
discussion, the Commission will convene formal consultations, including 
hearings, with experts from the Member States as well as with other 
interested parties such as industry and agriculture. Any proposal for 
possible action presented by the Commission should be in accord with 
the principle of subsidiarity, should be the subject of a cost-benefit 
analysis and should take account of its coherence with other 
propositions (such as taxes etc.) 
This Green Paper considers f irst the usefulness of civil liability as a 
means for allocating responsibility for the costs of environmental 
restoration. Civil liability is a legal and financial tool used to 
make those responsible for causing damage pay compensation for the 
costs of remedying that damage. By requiring those responsible to pay 
the costs of the damage they cause, civil liability also has the 
important secondary function of enforcing standards of behaviour and 
preventing people from causing damage in the future. The subject is on 
the environmental protection agenda of the European Community today for 
several reasons: 
(a) The public demand for systems of accountability and 
compensation that becomes strongest whenever environmental 
accidents occur, like the industrial accident at Seveso or the 
poisoning of the Rhine during the Sandoz fire. 
(b) The pledge of the Council of Ministers to take action in the 
area of civil liability when it adopted the Fourth and Fifth 
Environmental Action Programmes and other legislation.C) 
Furthermore, the request of the Joint Transport and Environment 
Council of 25 January 1993 for an "examination of the feasibility 
(1) 0J No C 328, 7.12.87, p. 15, paragraph 2.5.5; Council Directive 
84/631/EEC on the supervision and control within the European 
Community of the transfrontier shipment of hazardous waste, 0J No L 
326, 13.12.84, p.31. 
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of developing a system of penalties and civil liability for 
pollution of the environment". The Commission has already responded 
to part of this request of the Council by adopting, on 24 February 
1993 a Communication on "A Common Policy on Safe Seas"^2^ 
(c) The Council of Europe has drawn up a Convention concerning 
strict liability for damage resulting from activities dangerous to 
the environment; other international organizations are making 
efforts to set international conventions in place establishing 
liability regimes for environmental damage. 
(d) The use of different systems of civil liability for remedying 
environmental damage among the Member States could lead to 
distortions of competition and the single market. 
A Community-wide system of civil liability for environmental damage 
would draw on a basic and universal principle of civil law , the 
concept that a person should rectify damage that he causes. This legal 
principle is strongly related to two principles forming the basis of 
Community environmental policy since the adoption of the Single Act, 
the principle of prevention and the "polluter pays" principle. 
The "polluter pays" principle is evoked, because civil liability is 
a means for making parties causing pollution to pay for damage that 
results. The prevention principle is involved in that potential 
polluters who know they will be liable for the costs of remedying the 
damage they cause have a strong incentive to avoid causing such damage. 
If civil liability for environmental damage operates differently in 
Member States, industries in some Member States will be required to pay 
the costs of the damage they cause, while industries in other Member 
States will be able to avoid those costs, because restoration is not 
required or the cost is passed on to taxpayers. Industries not 
required to pay restoration costs receive, in effect, a competitive 
advantage. 
A general system for environmental damage represents for sectors such 
as transport a way of internalising certain external costs. 
The Green Paper seeks secondIy to investigate the possibiI ity of 
remedying environmental damage not met by the application of civil 
liability principles. Details of existing joint compensation schemes, 
their problems and limitations are therefore canvassed. 
It should be noted that despite the importance of the question of 
penalties, these are not the subject of this Communication. 
(2) Com(93)66 final 
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2.0 Remedying environmental damage using mechanisms of civil 
liability: 
2.1 The problems 
The legal doctrine of civil liability provides a way for the injured 
party to obtain compensation for the damage he has suffered. It was 
developed to cover situations where it was more just to make the person 
responsible for the act or incident causing the damage to bear the 
consequent costs, either because that person was at fault or should for 
other reasons be held liable for losses resulting from the damage. 
Civil liability arises under private law, distinguishing it from 
obligations arising under public law, such as criminal liability and 
administrative liability. 
There are two possible approaches to civil liability, with fault and 
strict IiabiI ity. 
2.1.1 Fault-based liability 
Liability because of fault requires proof that the liable party 
committed a negligent or otherwise wrongful act which caused damage. A 
finding of fault depends on whether the party had a duty to behave 
according to a certain standard of care or rule of law, and breached 
that duty. 
In the field of environmental liability, there is a strong interplay 
between fault-based liability and environmental regulations. The 
standards and the procedures set down in environmental statutes can 
provide guidance for determining whether a party's actions were 
reasonable or negligent under the circumstances. Non-compliance with 
environmental laws can provide evidence of fault. On the other hand, 
compliance with regulations and permits can indicate the reasonableness 
of a party's behaviour. As environmental protection laws are enacted, 
new obligations arise that could lead to potential liability. 
Under fault-based liability, the victim may have difficulty proving the 
other party's act was wrongful. 
The vigorous use of fault-based liability by government authorities can 
thus play an important role in ensuring that environmental legislation 
is respected, as well as providing a means of recovering the costs of 
repairing environmental damage caused by wrongful acts. Liability for 
fault does not, however, provide a means to recover costs where fault 
cannot be shown. 
2.1.2 Strict liability 
Strict liability, or liability without fault, eases the burden of 
establishing liability because fault need not be established. However, 
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the injured party must still prove that the damage was caused by 
someone's act. Strict liability provides an incentive for taking 
measures to prevent damage from occurring in the first place. 
Defining the scope of a strict liability regime for damage to the 
environment is a difficult but essential step. Potentially liable 
parties need to know the scope of the costs they would be expected to 
pay in case of damage. This need for legal certainty conflicts with 
the need for flexible definitions that can take account of new 
technologies or other unforeseeable developments. 
Some major difficulties can arise in applying civil liability concepts 
to obtain compensation for environmental damage. Conclusive scientific 
evidence is often unavailable , for example, regarding the long-term 
effects of a given pollutant on the environment. Concepts such as 
"liability," "damage," and especially "environment" are vague and 
ambiguous, and interpretations vary from one legal system to the next. 
A strict liability regime that is too broad in scope may come to be 
regarded, in certain cases as too expensive for the sectors concerned. 
Some argue, for example, that strict liability can stifle investment in 
industry. On the other hand, a regime that is too narrow in scope runs 
the risk of not covering all the activities it should and thus 
improperly allocating costs of restoring damage. 
The critical step is to decide which activities and processes should be 
subject to such a regime. Some of the factors that could be considered 
in determining the appropriateness of strict liability for a particular 
sector or type of activity include: 
the types of hazard posed by a particular activity; 
the probability that damage might occur from the activity, and 
the possible extent of that damage; 
the incentive that strict liability would provide for better 
risk management and prevention of damage; 
the feasibility and cost of restoring the damage that would be 
I ike I y to occur ; and 
the potential financial burden of strict liability on the 
economic sector involved. 
the need for and availability of insurance. 
2.1.3 Channel Iing Liability 
Determining who should bear the liability can also be difficult. 
Imposing liability on a specific party, known as "channelling," can be 
an efficient and equitable way of cost internalization. It can also 
promote the prevention aspect of strict liability, if liability is 
channelled to the party having the expertise, resources, and 
operational control to carry out the most effective risk management. 
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2.1.4 Multiplicity of Iiable parties 
Where more than one party may have been responsible for the damage, or 
for a share of the damage, problems in how to apportion liability for 
the damage may arise. To ease the injured party's burden of bringing 
suit against multiple parties, legal systems often permit the case to 
be presented against more than one potentially liable party at the same 
time. How the liability is then apportioned among the liable parties 
depends on whether liability is Joint or Joint-and-severaI. Under 
joint liability, the liable party must pay compensation only for that 
amount of damage which can be actually attributed to his particular 
activity. In the case of aggregate pollution, precise determinations 
may be impossible. 
Under joint-and-severaI liability, each party is liable for the entire 
amount, but may often proceed in turn to seek contribution from other 
liable parties. This can cause several problems, including congestion 
in the courts. Inequity results if the injured party sues the party 
with the most financial assets first, instead of the party who caused 
the most damage. This is known as the "deep pocket" effect. Joint-and-
several liability may also lead to "forum-shopping," if parties are 
from different countries and one country's laws are more favourable to 
the injured party. 
As liable parties sort out among themselves how the costs of 
compensation should be shared, litigation becomes complex. This can 
make civil liability a compensation mechanism with extremely high 
transaction costs. A way to alleviate such problems is to allocate 
responsibility in advance by designating the order in which potentially 
liable parties should be sued or by the channelling of liability. 
2.1.5 Who and what is damaging the environment 
If the act that causes damage can be characterized as a fault or if 
there are other circumstances creating a responsibility, the person 
causing the damage becomes liable for the consequences. Fault can 
consist of an intention to cause damage, or carelessness which results 
in a damage. The law of civil liability generally has few problems 
dealing with damage caused by the wilful or negligent act of a 
particular party, if the liable party is identifiable and the damage 
can be causally linked to the wrongful act. 
However, problems arise where these elements are not clear: 
i) Chronic pollution 
Environmental damage may occur because of the aggregate effect of a 
number of polluting acts spread out over time and place. Where the 
damage has been caused by the cumulative impact of the activities of 
many operators, it is not possible to determine which actor's actions 
caused the particular damage. This is the case with discharges to the 
atmosphere which result in acid rain. Sometimes none of the acts are 
such that they would incur damage resulting in liability. For example, 
a single authorized discharge of pollutants into a river may not cause 
identifiable damage, but the combined impact of all the authorized 
discharges is to damage the river. 
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In the case of damage caused by cumulative pollution it is difficult to 
attribute damage to the act or responsibility of a particular party and 
it becomes necessary to explore more collective ways of sharing the 
responsibility for the costs of restoration, such as Joint mechanisms 
of compensation. (See section 3.0 below) 
ii) Emissions under government authorization 
The purpose of environmental permits is to enable government 
authorities to limit the total amount of pollutants to a level that 
will not cause unacceptable impact or damage. This requires a 
determination of the level of pollution at which damage occurs, then an 
allocation of permits restricting total emissions to below that level. 
However, it is often difficult to foresee, let alone assess, all the 
immediate or long-term effects of pollutants and the margin of safety 
needed to prevent damage. Consequently the situation can arise where 
damages to the environment do occur, in spite of the fact that all 
relevant emissions are authorized. 
If the operator exceeds the limit values set in the permit or carries 
out other activities not foreseen in the permit, the operator should be 
held liable for any resulting damage. On the other hand, if the 
operator has fully disclosed all relevant data for evaluation by the 
permitting authority and complied with the standards set in the permit, 
there may be reasons for holding the public authority — and ultimately 
the taxpayer — responsible for ensuing damage. It would provide the 
operator with an incentive for full disclosure and compliance with the 
permit, so as to avoid liability. It would provide the government 
authority with an incentive to make responsible decisions, including 
setting precise and clear restrictions in permits. 
iii) Damage from the past 
Deposits of hazardous substances from long ago pose one of the most 
significant types of environmental damage within the Community. Other 
types of damage from the past, such as acid-rain devastated forests, 
are also in urgent need of cleanup or other remedial action. 
Civil liability may not, however, provide a way to recover the costs of 
restoring such damage. Sometimes the damage is from so far back in 
time that no liable party is identifiable. Sometimes the party can be 
identified but is not liable, because liability was not established 
when the damage occurred. Or the party may be identifiable, liable, 
but insolvent. 
2.1.6 Limitation of liability 
There is debate on whether strict liability should be limited. Some 
argue that if a liable party has taken all reasonable measures of 
prevention and has insured against the cost of foreseeable accidental 
damage, it does not make sense to drive him out of business if 
unforeseeable and unpreventable damage occurs. The desired result, 
after all, is to recover restoration costs and to prevent future 
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damage, not bankruptcy. On the other hand, limits on liability could 
reduce incentive for prevention and transfer the burden of restoration 
costs above those limits to the taxpayer, thus interfering with the 
"polluter pays" principle. 
Any limits on liability would have to be set at a high level so as not 
to undermine the prevention function of strict liability. An OECD 
draft recommendation on compensation for victims of accidental 
pollution(3) suggests that, if limits are set, potential polluters 
might also be required to contribute to a compensation fund to cover 
the portion of costs over the limits paid by liable parties. 
2.1.7 Defining environmental damage 
A legal definition of damage to the environment is of fundamental 
importance, since such a definition will drive the process of 
determining the type and scope of the necessary remedial action — and 
thus the costs that are recoverable via civil liability. Legal 
definitions often clash with popularly held concepts of damage to the 
environment, yet are necessary for legal certainty. But the debate 
over how to define the object of environmental damage, the degree of 
impact considered damage, and who has the right to decide these issues 
has not yet been resolved. 
Regarding the definition of "environment," some argue that only plant 
and animal life and other naturally occurring objects, as well as their 
interrelationships, should be included. Others would include objects 
of human origin, if important to a people's cultural heritage. The 
draft Council of Europe Convention, for example, puts forward the 
following broad definition of the environment: "Environment includes 
natural resources both abiotic and biotic, such as air, water, soil, 
fauna and flora and the interaction between the same factors-, property 
which forms part of the cultural heritage; and the characteristic 
aspects of the landscape." 
Another debate centres on the degree of impact that should be 
considered environmental damage. The amended Commission proposal for a 
Council Directive on civil liability for damage caused by waste defined 
"impairment of the environment" as meaning "any significant physical, 
chemical or biological deterioration of the environment"^4). Actual 
physical destruction or gross contamination is generally considered 
damage, but what about lesser impacts? All human activities result in 
emissions, but the point at which these emissions are to be considered 
"pollution" is not clear. Nor is it clear at which point "pollution" 
causes actual damage. 
2.1.8 Problems in proving causation 
To obtain compensation for damage, the injured party must prove that 
the damage was caused by an act of the liable party, or by an incident 
for which the liable party was responsible. Special problems arise in 
the case of environmental damage. As discussed in the section on 
(3) C(91) 53, August 1991 (OECD). 
(4) Com(91)219 final 0J N' C 192, 23.07.91, p 
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chronic pollution, establishing a causal connection may not be possible 
if the damage is the result of activities of many different parties. 
Difficulties also arise if the damage does not manifest until after a 
lapse of time. Finally, the state of science regarding the causal link 
between exposure to pollution and damage is highly uncertain. The 
liable party may try to refute the injured party's evidence of 
causality with alternate scientific explanations for the damage. 
2.1.9 The right to bring a legal action 
In a civil liability case, the right to sue is normally given only to 
the party with a legal interest in recovering compensation. Where 
damage occurs to property that is not owned, no injured party with the 
right to bring a legal action can be identified. With no legal or 
natural person to sue on behalf of the environment, the costs of 
restoring environmental damage cannot be recovered via civil liability. 
There exist several different approaches to the question of access to 
Justice for environmental matters among the Member States. 
2.1.10 The question of adequate remedy 
The traditional aim of civil liability is to compensate the injured 
party by requiring the party responsible for the damage to pay the 
costs of any resulting loss. The loss is generally computed in terms 
of the depreciation in economic value of the damaged property or the 
actual cost of repairing the damage. Damage to the environment which 
does not in itself have an economic value but may have great value in 
other terms — such as the loss of a species or of a picturesque 
landscape — cannot be compensated directly in terms of economic loss. 
However, if there is an obligation to maintain those elements of the 
environment in a healthy state, a concurrent obligation arises to 
restore these elements to that state whenever they are damaged. This 
obligation carries with it the right to claim the costs of restoration 
from the party who caused the damage. The amount of compensation the 
liable party is obliged to pay is computed in terms of the actual cost 
of environmental restoration. 
The objective of environmental protection efforts is to maintain the 
environment at the level of quality that society determines. Where 
environments are damaged below that standard, restoration is the only 
environmentally sound remedy. In order for civil liability to function 
effectively as a legal remedy, a base of legal duty and economic 
assessment must also be in place. 
2.1.11 The problem of insurability 
Discussions of civil liability inevitably raise questions about 
insurability, since insurance is a means of controlling the risk of 
economic loss. 
Insurance serves as an important compensation mechanism where damage 
occurs accidentally and restoration costs are covered by the insurance 
policy. If an insurer links availability of insurance to the quality 
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of an enterprise's risk management, it may have a deterrent effect in 
promoting better accident prevention and other environmental protection 
controls over the economic activity. 
The uncertainties which make civil liability a difficult fit for 
environmental damage also create problems with regard to insurance. 
Insurers are hesitant to provide coverage if they are uncertain about 
the types and probabilities of damage that may occur, or if unpredicted 
losses drain the pool of money. The civil liability regime 
established, the absence of limits on liability, and the coverage of 
particular risks such as gradual pollution are some of the factors 
which make it hard for insurers to determine the insurability of what 
are already extremely complicated risks and, in some cases, to decide 
how much cover they are able to provide. They react by raising the 
prices of premiums or by withdrawing from the market of environmental 
liability insurance a I together.<5) 
Today, insurance coverage for pollution-related damage can be difficult 
and even impossible to obtain in some cases. It is a relatively new 
service and not all insurers have the technology or capacity yet for 
providing it. At present there are many cases where studies on the 
insurability of these risks are preceded by preliminary technical 
studies. Insurers may limit their potential losses contractually by 
excluding specific risks from coverage or by lowering the maximum 
amount of coverage. They may involve the policyholder financially in 
the effort to avoid loss by applying sizable deductibles to each loss. 
Insurers have also sought to limit coverage of accidental losses to 
damage occurring by a "sudden" event, a definition which excludes 
damage caused gradually, such as a slow leak from an underground tank. 
France, Italy, and the Netherlands have intervened to set up pools of 
insurance to cover gradual as well as sudden pollution. 
There is some movement today to require certain industries or 
activities posing particular hazards to cover their potential liability 
through some kind of financial security. For example, the recent 
German Environmental Liability Act requires specific installations to 
ensure security to cover liability. The proposed Directive for civil 
liability for damage resulting from waste would require the liability 
of the producer and the eliminator to be covered by insurance or any 
other financial security. 
A number of concerns arise when insurance is required. If insurance is 
compulsory, enterprises must be able to obtain coverage on the market 
for the required amount. Such coverage may not be available. If it is 
available and the cost of restoring the environmental damage is above 
the policy amount, the liable party must still pay the additional 
amount. 
(5) A rise in tort liability claims for pollution-related damage is one 
reason cited for the liability insurance crisis in the United 
States in the 1980s. Other explanations for the dislocations 
within the U.S. insurance market at that time include recurrent 
historical cycles of hard and soft insurance markets and changes in 
the supply of capital available to insurers. 
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Under compulsory insurance, insurers might become "licensors" of 
industry, by providing or withholding insurance coverage according to 
whether the industry member seeking coverage was a "good" or a "bad" 
risk. Some insurers already evaluate the quality of a firm's risk 
management and loss prevention measures, before providing environmental 
liability coverage. From an environmental protection point of view, 
risk evaluation by the insurance industry is beneficial, since it 
reduces the risk of environmental damage at the same time that it 
reduces the insurers' risk of economic loss. However, the problem of 
the "bad risk" who cannot obtain insurance coverage remains. 
Imposing liability insurance on firms and activities which represent a 
danger to the environment presupposes that the insurability of such 
risks will be determined and if, with due regard to the nature of the 
risk, insurance is made available, the conditions of coverage and the 
system of civil liability envisaged will have to be established. State 
intervention may be necessary if private insurers do not provide 
insurance coverage adequate to cover the risk of environmental damage, 
or if premiums are too high for SMEs. One feature of such intervention 
might be to avoid creating unjustified discrimination between firms or 
imposing obligations which vary according to company size. 
Consideration must be given to the experiences of countries such as 
France. Italy and the Netherlands, which have already set up insurance 
pools for covering pollution damage, and the lessons to be learned from 
the German law on environmental liability, which contains specific 
provisions on insurance. 
It is possible to require insurance cover to be taken out by operators 
but many industry members oppose compulsory insurance because they fear 
it would make them captive to high premium demands from insurers. 
Larger companies are already leaving the insurance market because they 
find it more economical to se If-insure. This creates problems for 
small and medium sized enterprises (SME) — those most in need of 
liability insurance for environmental damage — because it leaves them 
with less economic leverage to fight expensive premiums. 
2.2 The General Trends in the law on environmental liability 
It is important to evaluate the position regarding civil liability in 
the Member States and in the framework provided by international 
conventions to identify the trends which they reveal, taking account of 
the problems raised in relation to reparation of. damage to the 
environment. 
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2.2.1 General view of the trends at national level 
Concepts of liability for damage to the environment are relatively 
recent. The need to develop specific rules has not been felt by all 
Member States since a number of cases where damage was caused to the 
environment could fall under the more traditional types of liability. 
Most legislation which has been developed has been based on these 
concepts and has tried to adapt them in order to cover the specific 
nature of damage to the environment. 
In general civil liability for environmental damage in the twelve 
Member States rests upon fault on the part of the person who causes the 
damage. 
In the absence of specific legislation on civil liability for 
environmental damage, the courts of law have tended, where damage has 
occurred, not always to ask for full evidence of the fault of the 
wrongdoer, or to find other ways of easing the victim's burden of 
proving damage, or the link of causation between that damage, the 
wrongful act and the fault. This has been done within the limits for 
judicial interpretation existing in the Member States and with 
considerable variations from one Member State to another. 
This general approach (fault-based liability) is associated with 
another trend, the development of a strict liability regime. Several 
laws have introduced liability without fault for damage caused by 
specific activities which were deemed to be dangerous. Thus, liability 
for damage caused during air or railway transport (most Member States), 
for damage caused by pipelines for hydrocarbons (Denmark), dangerous 
activities in general (Italy, Portugal), the handling of dangerous 
substances (Netherlands), nuclear energy (several Member States), or 
biotechnology (Germany) has been introduced by legislation. 
It appears that there is not within the Member States any recent 
legislation on environmental damage which does not provide for strict 
liability. In the Annex is a list of certain of the Member State 
legislation which has adopted this approach. Within this legislation, 
certain characteristics can be identified. 
From these general trends in national legislation for the restoration 
of damaged environments it is possible to identify certain common 
character ist ics. 
The question of what constitutes damage to the environment is scarcely 
addressed by the different pieces of national legislation. The 
different pieces of national legislation refer, rather, to general 
principles of law and provide for compensation for death, bodily injury 
or for damage to an attributed item of property. 
The legislation does not normally contain rules on the burden of proof 
or the I ink of causât ion. Here the general principles of law of each 
Member State apply as they have evolved through legislation and court 
Jurisprudence. However, the solutions contained in the German 
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Environmental Liability Law of 1990 should be emphasised. For example 
the law defines environmental damage by reference to death, personal 
injury and property damage resulting from modification of the 
environment. This is defined in Article 3.1 as being the entry into 
soil, air or water of products, vibration, noise, pressure, rays, gas, 
steam, a change in temperature or other similar phenomena. This 
modification of the environment has to arise from an installation 
listed in the annex to the law. ChanneI Ii ng of Ii ab iIi ty is towards the 
person in charge of the installation. Provision is also made for 
lightening the burden of proving a I ink of causât ion. The law 
establishes a presumption of causation under certain conditions by 
stating that if an installation is capable of creating the damage it is 
presumed that that installation caused the damage. The defendant can 
reverse this presumption. As regards the question of insurance the 
owners of installations which are capable of causing significant damage 
are required to take out liability insurance or to have sufficient 
financial guarantees in case of litigation. 
In some instances, the environmental legislation of Member States has 
gone beyond the traditional rules of liability. For example the Danish 
legislators considered it necessary, as regards waste sites, to provide 
a system which authorised the government to recover the costs of clean­
up of abandoned contaminated sites from the person who caused the 
contamination (Act of 1983). A similar system exists in the 
Netherlands under the Soil Clean-Up Interim Act of 1983. 
The general legislative framework existing in each Member State 
concerning civil liability is far from presenting a homogenous approach 
to the mechanisms for remedying environmental damage, even if there is 
a recent legislative trend towards the creation of strict liability 
regimes for certain activities dangerous to the environment. 
However, this clear orientation does not resolve the differences which 
exist between Member States which stem from the different fields of 
application chosen made subject to strict liability. Areas covered by 
strict liability (waste, water resources, industrial installation 
dangerous to the environment, GMOs) vary from one Member State to 
another. This disparity cannot evidently guarantee a remedying of 
environmental damage in identical conditions and does not produce the 
same results as regards effective environmental restoration. 
2.2.2 Solutions adopted at an international level 
The need to redress damage resulting from transboundary pollution has 
led to the development of international liability for damage to the 
env i ronment. 
Under principles of international law, states are held responsible for 
preventing any activities carried out on their territories from having 
adverse effects on other states. If transboundary damage does occur, 
the injured state can seek compensation from the state which failed to 
meet this international obligation. The famous "Trail Smelter" verdict 
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of 11 March 1941 formally recognizes the liability of the state on 
whose territory the activities causing the transfrontier damage take 
place.(6) 
Civil liability for environmental harm is dealt with in a number of 
international instruments. Table I in the Annex sets out international 
conventions dealing with liability and compensation which are either 
already existing or under negotiation. Table II lists a number of 
conventions, either already existing or under negotiation which contain 
provisions relating to civil liability. 
It is possible to discern a number of common points between the 
Convention on Third Party Liability in the Field of Nuclear Energy 
(Paris 1960), the International Convention on Civil Liability for Oil 
Pollution Damage (Brussels 1969), and the Council of Europe Convention 
on Civil Liability for Damage Resulting from Activities Dangerous to 
the Environment. 
All establish a system of str ict I iabiIi ty. with provision for certain 
number of exemptions or defences. 
As regards the channelling of responsibility, liability attaches to the 
operator (Paris Convention Article 3, Brussels Convention Article 3.1, 
Council of Europe Convention Articles 6 and 7). It should be noted 
that the Brussels Convention channels liability to the owner of the 
ship at the moment of the incident, and expressly excludes action 
against any other person, such as agents of the owner, caption etc, 
unless such a person has acted with the intention to cause damage or 
knowing that damage would result from their action (Article 3, amended 
in 1984). Nevertheless the owner of the ship is not liable if they can 
show that the pollution damage results from an act of war, from 
hostilities, civil war, or insurrection, or from a natural phenomenon 
which is exceptional, inevitable and unavoidable. 
In the Brussels Convention, damage to the environment has the following 
definition: "pollution damage" means "loss or damage caused outside 
the ship carrying oil by contamination resulting from the escape or 
discharge of oil from the ship, wherever such escape or discharge may 
occur, and includes the cost of preventative measures and further loss 
or damage caused by preventative measures" (Article 1). The Convention 
provides that the liability of the owner may be limited, unless the 
incident occurs as a result of the fault of the owner. 
In the Council of Europe Convention the problem of channelling of 
Iiabi Iity is resolved as follows: The Convention channels liability 10 
the operator, defined as "the person who exercises the control of a 
dangerous activity" (Article 2.5). Dangerous activities are defined as 
activities performed professionally and involving dangerous substances, 
genetically modified organisms, or micro-organisms. 
The definition of damage in the Convention includes impairment of the 
environment insofar as this is not covered by damage to persons or 
property "provided that compensation for impairment of the environment, 
(6) Trail Smelter Case (United States v. Canada), 3 R. Int'l Arb 
Awards 1905 (1941). 
- 17 -
other than for loss of profit from such impairment, shall be limited to 
the costs of measures of reinstatement actually undertaken or to be 
undertaken". 
Concerning the scope of IiabiIity. for the majority, these instruments 
are limited to damage caused by specific economic activities. (Nuclear 
energy, carriage of dangerous goods, hydrocarbons, operations involving 
dangerous substances etc.) 
Article VI1(1) of the Brussels Convention provides, as regards 
insurance that "the owner of a ship registered in a Contracting State 
and carrying more than 2000 tonnes of oil in bulk as cargo shall be 
required to maintain insurance or other financial security, such as the 
guarantee of a bank or certificate delivered by an international 
compensation fund, in a sum fixed by applying the limits of liability 
prescribed (in the Convention) to cover his liability for pollution 
damage under this Convention". 
As regards IImltat ion of IiabiIi ty the Brussels Convention provides 
that a shipowner can limit liability to an aggregate amount of 2000 
francs per tonne not exceeding 210 million francs (franc is defined in 
the Convent ion). 
Concerning the question of risk insurance the Council of Europe 
Convention provides for a compulsory financial security scheme, taking 
account of the particular risks posed by the activity, without a 
specifically identified limit on liability. 
2.2.3 The position taken at Community level 
Community-wide action involving the doctrine of civil liability has 
been taken primarily in the area of product safety and consumer 
protection. In 1985, the Council adopted Directive 85/374/EEC 
instituting strict liability for the producer of defective 
products.(') The Directive is based on the concept of the 
"defective product," i.e. a product which does not provide the safety 
which a person is entitled to expect. It provides that the 
manufacturer of the defective product is liable for the damage, even 
where not at fault, unless he can prove that the product's defect is 
due to compliance with mandatory regulations issued by public 
authorities. The Directive covers only losses suffered by a private 
(7) Council Directive 85/374/EEC of 25 July 1985 on the approximation 
of the laws, regulations and administrative provisions of the 
Member States concerning liability for defective products (OJ. No L 
210, 7.8.85, p. 29). 
- 18 -
consumer. It does not cover damage to the environment, if that damage 
is not damage to property owned by a private person. The question of 
insurabiIity is not addressed in the framework of this Directive. 
Applications of civil liability for environmental protection purposes 
have been discussed for some time. In 1984, for instance, the Council 
adopted Directive 84/631/EEC on the supervision and control within the 
European Community of the transfrontier shipment of hazardous 
waste.<8) The 19th recital called for a defining of the liability of 
the producer and any other person accountable for damage "in order to 
guarantee effective and fair compensation for damage which may be 
caused during the shipment of dangerous waste." Article 11(3) 
expressly provided for the Council to determine the conditions for 
implementing civil liability for the producer. 
In 1986, following the Sandoz fire which resulted in the poisoning of 
the Rhine River, the Council declared that the key to more effective 
protection of Community waterways lay in, inter alia, prompt cleanup 
and restoration, coupled with equitable arrangements for liability and 
compensation by the polluters for any damage caused.(9) it called on 
the Commission to review the Community's existing measures for 
preventing pollution and for remedying damage caused by pollution and, 
if necessary, to submit appropriate proposals. Two weeks later the 
European Parliament adopted a complementary resolution calling 
expressly on the Commission to "put forward proposals for a Community 
system governing fault [sic] liability for accidents connected with 
all chemical and high risk activities."(1°) 
The adoption of the Single Act in 1986 and the insertion of Art. 130r 
into the EEC Treaty provided impetus for further discussion of civil 
liability for environmental damage. This article provides that action 
by the Community relating to the environment shall be based, inter 
alia, on the principle that the polluter should pay. The "pol luter 
pays" principle seeks to properly attribute external costs of 
pollution. Community applications to date have aimed at making 
operators bear the costs of environmental protection measures imposed 
by the public authorities.^11^ In addition, the Directives on waste, 
waste oil, and toxic and dangerous waste(12) make express reference 
to the "polluter pays" principle as the basis for a system making the 
holder and/or the producer of waste responsible for the costs of safe 
disposal. Civil liability for the cost of cleaning up environmental 
contamination would be a concrete application of this principle. 
(8) OJ No L 326, 13.12.84, p. 31. 
(9) Bull. EC 11-1986, point 2.1.146. 
(10) Doc. B 2 - 1259/86, OJ No C 7, 12.01.87, p. 116. The French 
text calls for "responsabilité civile sans faute." 
(11) An elaboration of the "polluter pays" principle can be found in 
Council Recommendation 79/3/EEC, OJ No L 5, 9.1.79, p.29. 
(12) Council Directive 75/442/EEC, OJ No L 194, 25.7.75, p. 39; 
Council Directive 75/439/EEC, OJ No L 194, 25.7.75, p. 23; 
Council Directive 78/319/EEC, OJ No L 326, 13.12.84, p.31. 
- 19 -
In response to these developments, the Fourth Environmental Action 
Programme,^13^ released in 1987, declared that the Commission would 
consider the scope for arriving at a better definition of 
responsibility in the field of the environment, and envisaged the 
possibility that the polluter should assume greater liability for 
damage caused by products or processes. In addition, after requests in 
1989 and 1990 from the European Parliament for an absolute liability 
regime for damage resulting from the release into the environment of 
genetically modified organisms, the Commission pledged to consider the 
issue of civil liability for damage to the environment 
horizontally.<14) 
In October 1989, the Commission presented a proposal for a Council 
Directive on civil liability for damage caused by waste.*15) This 
proposes a no-fault liability regime. As regards the channel Iing of 
IiabiIity the Directive states that the producer of waste shall be 
strictly liable for damage and impairment of the environment caused by 
waste. The party bringing the action must demonstrate the causal link 
between the waste and the damage. The draft Directive extends the 
notion of damage to "impairment of the environment" as set out in 
section 2.1.7 above. This definition of impairment is capable of 
including cases where the environment is affected in a continuing 
manner. Regarding the question of insurance the draft Directive 
requires the producer and eliminator of waste to be covered by 
insurance or other financial security. Article 3(2) of the proposed 
Directive states that the producer must include in his annual report 
the name of his insurers for civil liability purposes. The draft 
Directive also authorizes the Commission to study the feasibility of 
setting up a compensation fund for damage and impairment to the 
environment caused by waste in cases where the person liable cannot be 
identified or is insolvent. The initial proposal for a Directive has 
been amended to incorporate proposals made by the Par Iiament,(16> and 
is under consideration by the Council. 
In the Commission proposal for a Council Directive on the Landfill of 
Waste Article 14 provides that "the operator shall be liable under 
civil law for the damage and impairment of the environment caused by 
the landfI I led waste, irrespective of fault on his part."*17) 
(13) Resolution of the Council and of the representatives of the 
Governments of the Member States, meeting within the Council of 
19 October 1987, on the continuation and implementation of a 
European Community policy and action programme on the 
environment (1987-1992), OJ No C 328, 7.12.87, p. 15, paragraph 
2.5.5. 
(14) SEC (89) 2091 final - SYN 131, 6.12.89. 
(15) OJ No C 251, 4.10.89, p. 3. 
(16) OJ No C 192, 23.07.91, p. 6. 
(17) OJ N* C 190 22.07.91, p. 1 
- 20 -
3.0 Remedying environmental damage through joint compensation systems 
Joint compensation systems are financial structures based on charges or 
contributions. They are insurance-1 ike, in that the funds collected 
are designated for a specific purpose, such as cleaning up or restoring 
the environment. The principle of liability for particular acts is 
expanded into a principle of shared responsibility for the impact of 
multiple acts. Joint compensation systems sustained by contributions 
from the economic sectors most closely linked to the type of damage 
needing restoration would be concrete applications of the "polluter 
pays" principle. Inter alia these systems enable the problems outlined 
in section 2.1.5 above ( damage from chronic pollution, authorised 
pollution and past pollution) to be resolved. 
The cost of damage linked to the aggregate impact of a sector's 
activities becomes apportioned among the individual enterprises, and 
thereby internalized. 
There are several other important advantages to the compensation system 
approach in view of the specific features of environmental damage. 
First, the ability to act quickly may be essential in some instances of 
environmental damage. In contrast to civil liability, which requires a 
lengthy legal process before obtaining compensation, joint compensation 
systems can gather funds in advance. Financing could thus be readily 
available for emergency remedial action or to reimburse early 
restoration work. Moreover, the burden of damage may be more easily 
shouldered by collective rather than individual action. Finally, if 
the cost of cleaning up a particular incident is high, it may not be 
possible to recover all the costs from a liable party with limited 
financial resources. A joint compensation system would help provide 
the additional resources needed for carrying out the restoration. 
There are however certain difficulties in the establishment and 
operation of such systems: 
3.1 The problems raised 
3.1.1 Requiring restoration as the remedy. 
To meet an obligation of restoring environmental damage, what level of 
environmental restoration is to be sought, what is to be done where 
restoration to the state before is not feasible and what costs are 
reasonable? 
How can monitoring of the restoration works to ensure quality control 
be incorporated into the system? 
Who is to be responsible for ensuring the quality of the restoration 
work? 
- 21 -
3.1.2 Allocating the cost of restoration. 
The "polluter pays" principle requires that, wherever possible, costs 
of restoration are recovered from the parties responsible for causing 
the damage. If the particular party cannot be identified or is not 
liable, it could be possible, in certain cases, to trace the cause of 
the damage to the activities of a particular economic sector. In such 
a case, should a joint compensation system allocate the cost of 
restoration among all members of that sector? 
The need to undertake restoration would have to be balanced against 
the burden on the enterprises sharing the costs, of course. If the 
financial burden of a joint compensation system became too great for 
its contributors, costs of restoring particular damage might be shared 
more broadly, with other sectors or by taxpayers in general. In order 
to respect the "polluter pays" principle to the greatest degree 
possible, should not the burden rest upon the sector or sectors most 
specifically responsible? 
3.1.3 Maintaining a preventative effect. 
If Joint compensation systems are established, should the concept of 
individual liability still be retained so as to have a preventative 
effect? Linking the likelihood of damage to the amount of charges to be 
paid would provide a mechanism by which the preventative effect could 
be maintained and would maintain the incentive for effective risk 
management. How could such a system of differentiated charges be 
designed and by what means could the administration of such an approach 
be achieved? 
The experience gained on the national and international level can 
provide useful guidance for designing compensation structures to cover 
the costs of restoration within the Community. 
3.2 Solutions adopted at national and international levels 
A number of Member States and other countries have already established 
forms of joint compensation to deal with specific problems of 
environmental damage. These act as important precedents. 
3.2.1 International Schemes 
For instance, there are special compensation funds for damage caused by 
industries posing a particular risk of damage. This type of fund 
supplements the compensation which can be obtained from the polluters 
themselves and their insurers. They are used to redress accidental 
pollution by helping to provide more complete and timely compensation 
for injured part ies. 
The oil industry in particular has set up a number of funds to finance 
clean-up measures and to compensate injured parties. Most notable is 
the International Fund for Compensation for Oil Pollution Damage, 
established in 1971 via the International Convention on the 
Establishment of an International Fund for Compensation for Oil 
Pollution Damage. This fund complements the 1969 Brussels Convention 
which imposes strict liability on the shipowner but allows liability to 
- 22 -
be limited if there was no fault. Contributors are private members of 
the oil industry, not governments. The fund makes payments where the 
shipowner is not liable under the Convention, is insolvent, or when the 
damages exceed the shipowner's liability limit. The fund compensates 
for personal injuries and property damage, and for measures actually 
taken to reinstate the environment. Several parallel financial 
structures, known as T0VAL0P,(18> CRISTAL,<19> and OPOL,<20> have 
been formed privately by the oil industry. It should be noted that, in 
view of the recent oil-spills off Corunna and the Shetland Islands, a 
Community action programme is being prepared which aims to ensure 
strict convergence in the implementation of international rules 
throughout the Community and to encourage the adoption of appropriate 
regulations and standards by the IMO. The role of the Community and 
Member States in drawing up international standards on safety and 
pollution prevention is spelt out in a draft Commission Communication 
on a common policy for safety at sea. 
3.2.2 National Schemes 
Other funds have been created to finance actual restoration of damage. 
The United States' Super fund is an example of this type of financial 
instrument. Established in order to finance the clean-up of hazardous 
waste sites, Superfund is funded by taxes on crude oil and chemical 
feedstocks, as well as a general environmental tax on American 
corporations. The U.S. Environmental Protection Agency (EPA) uses 
Superfund monies to respond to short-term emergencies, such as 
accidental spills of hazardous substances, and to clean up sites 
contaminated in the past. Civil liability is used to recover costs 
when potentially liable parties can be identified for particular sites. 
The compensation system set up by Sweden under its 1986 Environmental 
Damage Act should also be mentioned. It provides compensation for 
personal injury and damage to property where the damage cannot be 
traced to an identifiable source, the liable party is insolvent, or the 
liability is statute-barred. Every enterprise requiring an 
environmental permit must contribute an amount fixed according to the 
type of enterprise and its size. In addition, enterprises must maintain 
insurance to cover any liability resulting directly from their own 
activities. The system does not cover environmental damage unless it 
can be considered damage to property "for which a natural person would 
be entitled to compensât ion."(21) 
The French Fund for noise should be mentioned, which compensates 
persons living around Paris airports for being exposed to excessive 
noise levels. The fund was created by decree in 1973; it is financed 
(18) Tankers Owners Voluntary Agreement Concerning Liability for Oil 
Pollution reimburses governments for expenses incurred in 
protecting and cleaning up coastlines (1969; updated 1978). 
(19) Contract Regarding Interim Supplement to Tanker Liability for 
Oil Pollution provides compensation above TOVALOP's limits 
(1971; updated 1978). 
(20) The Offshore Pollution Liability Agreement guarantees 
compensation for pollution damage caused by offshore oil 
exploration or exploitation installations (1974). 
(21) Annex B to the Government Decision of 25 May 1989, No. 37. 
- 23 -
by charges paid by all companies using the airports in question. 
Similarly, the Netherlands created, by a Law of 1972, a Fund on damage 
from air pollution. The fund intervenes where the polluter cannot be 
identified. It may also pay compensation where identification of the 
polluter might delay payment to the victim, if victims cede "their 
rights" against the polluter to the Fund. 
3.2.3 Proposals at a Community level 
In the amended proposal for a Council Directive on civil liability for 
damage caused by waste, Article 11 provides that "the Commission shall 
study the feasibility of the establishment of a European fund for 
compensation for damage and impairment of the environment caused by 
waste" to cover those cases where the person liable cannot be 
identified or is incapable of providing full compensât ion(22>. 
Similarly, the proposal for a Council Directive on the landfill of 
waste provides in Article 18 that Member States shall ensure the 
establishment of one or more "Landfill aftercare funds" whose purpose 
is to cover the normal costs of aftercare of closed landfills and 
expenses caused by necessary operations to prevent or cure damage from 
waste disposal not otherwise recoverable. The fund is to be 
constituted by contributions from operators of landfills based upon the 
type of landfill operated and the tonnage of waste deposited^23). 
4.0 Possible directions for Community action: 
Civil liability as a compensation mechanism is based on the existence 
of damage resulting in an economic loss. 
In the case of damage to the environment, economic loss does not occur 
unless there is a diminution in economic value or a restoration 
result ing in costs. 
The purpose of this Green Paper is to stimulate discussion on whether 
and how requirements to remedy environmental damage might be introduced 
appropriately and effectively within the Community to recover the costs 
of such restoration. 
4.1 A horizontal approach towards civil liability for damage to the 
env i ronment 
Civil liability could have an important role to play in a comprehensive 
environmental protection programme. 
As the Member States develop the policies and programmes for 
maintaining and restoring their environments to meet Community quality 
standards, civil liability could be used for recovering the costs of 
the required restoration. 
(22) OJ N* C 192, 23.07.91, p. 15 
(23) OJ N' C 190, 22.07.91 
- 24 -
Civil liability can contribute towards implementing the "polluter pays" 
principle. Its usefulness is limited, however, to specific incidents 
of damage involving identifiable liable parties. 
As is shown in Figure 1, for reparation of environmental damage to be 
effective each component has to meet certain conditions. Thus where 
there is no identifiable liable party, the principle of civil liability 
is not effective in securing restoration of the damaged environment. It 
is for these reasons that consideration has to be given to the type of 
civil liability mechanism (fault based or strict) and other mechanisms 
(compensation systems) to ensure that environmental restoration will 
take place. 
Figure I: ApplicablIity of CiviI Liability 
in Instances of Environmental Damage 
Measurable and < > Unbounded or latent 
immediate damage damage 
Finite act or < > Cumulative acts or 
incident incidents 
Identifiable liable < > Unidentifiable liable 
parties parties 
Liability (fault- < > No basis for liability 
based or str ict) 
Causa I I i nk < > No causa I I i nk 
established determinable 
Party with legal < > No party with legal 
interest who can interest to bring 
br ing act ion act ion 
Civil liability 
action possible Civil liability 
not usefuI ; 
joint compensation 
mechanism needed 
- 25 -
4.1.1 Fault-based liability 
Although this regime would appear to be an appropriate mechanism for 
promoting compliance with environmental legislation, is it sufficient 
to apply fault-based liability alone to environmental damage? 
This system does not appear to be the best approach in every case since 
it contains certain disadvantages. The desired objectives cannot be 
achieved fully unless certain conditions are met. 
A system of fault-based liability implies that fault has to be proven. 
Doing so in the case of damage to the environment is difficult, if not 
impossible in certain cases. A system of fault-based liability 
requires the injured party to prove and demonstrate that the person 
responsible for the damage committed a wrongful act, i.e. that he was 
guilty of negligence or an otherwise unlawful act that caused damage. 
A finding of fault depends on whether the party had a duty to behave 
according to a certain standard of care or rule of law, and breached 
that duty. 
The standards and the procedures set down in environmental legislation 
can provide guidance for determining whether a party's actions were 
reasonable or negligent under the circumstances. It is not always 
possible, however, to decide on this because of gaps in environment 
law. Certain circumstances pertaining to damage could not be evaluated 
on the basis of standards or procedures. Hence it would be difficult 
to judge whether the party responsible for damage had acted wrongfully 
or not, even if mechanisms were added to a fault-based liability system 
to simplify aspects such as the burden of proof. 
In spite of the advantages of fault-based liability in maximising the 
important preventative effect of civil liability, the trend visible 
throughout national legislation and international instruments regarding 
environmental damage is towards a strict liability regime for certain 
activities dangerous to the environment. 
4.1.2 Strict liability 
At this point it is appropriate to look at the role of a strict, or no-
fault, liability regime. Could the objective of repairing 
environmental damage be achieved fully and properly by implementing 
some type of no-fault liability regime? 
Strict liability appears to be particularly suited to the specific 
features of repairing environmental damage. 
Compared with fault-based liability, strict liability eases the burden 
of attaching liability because fault need not be established. However, 
the injured party must still prove that the damage was caused by 
someone's act. 
The advantages of such a system can be summarized as follows. A strict 
liability regime can increase incentives for better risk management and 
provide legal certainty for those economic enterprises subject to such 
- 26 -
a regime. It can also help implement the "polluter pays" principle for 
certain types of economic activities. It means that this system 
guarantees that the cost of damage caused by an economic activity is 
borne by the operator. 
A strict liability regime can only achieve its objective if a number of 
important questions are settled before the decision is taken to opt for 
that regime. For it to work effectively, the elements of the scheme 
must be defined precisely. The choices to be made are important 
because they will determine the scope of the liability regime, and the 
issues to be settled are set out below. 
An extremely extensive strict liability regime could pose too great a 
burden to be borne by certain sectors which could lead to greater 
disruption of the economy.<24) 
A - What definition of damage should be adopted? 
As has already been pointed out, the legal definition of environmental 
damage assumes particular significance insofar as it affects decisions 
regarding the type and extent of restoration measures needed and 
therefore the costs which can be recovered via civil liability. This 
problem involves other underlying questions such as the definition of 
environment, and the degree of impairment which constitutes damage. 
B - To which activities should a strict liability regime be applied? 
Several approaches can be considered. As stated above with regard to 
past experiences, too broad a system, i.e. covering a large number of 
activities, may have adverse consequences for economic operators and 
create legal uncertainty, thereby becoming impossible to implement. 
How does such a regime take account of a sector such as transport which 
is characterised by, in particular, its mobile nature and the variation 
in risk according to the mode of transport? 
The question of the scope of strict liability is linked to the 
underlying problem of what is meant by "dangerous". What criteria 
should be used to decide whether certain activities are dangerous and 
therefore to be covered by a strict liability regime? No-fault 
liability regimes relating to dangerous activities must be based on a 
common understanding of what is deemed "dangerous". 
C - What shall constitute a liable party? 
This question raises the issue of channelling no-fault liability so 
that costs are distributed fairly and effectively. 
Should liability be channelled to the party with the technical know-
how, resources and operational control of the activity? 
Establishing a no-fault liability regime also raises issues such as the 
burden of proof, limitation of liability and what a financial guarantee 
system should consist of. 
(24) See Annex II for details of USA experience. 
- 27 -
Further problems need to be solved to ensure the proper implementation 
of a strict liability regime, with its associated benefits for the 
environment. Lessons must be learned from national and international 
precedents in strict liability and the disadvantages and implications 
for the scope and structure of such a regime must be foreseen (how 
lenders and financial institutions will be affected, for example). A 
strict liability regime must only have the result intended, namely the 
restoration of environmental damage. 
To settle all the points raised by the issue of establishing a civil 
liability regime with particular regard to environmental damage, one of 
the options facing the Community would be to adopt the approach laid 
down by the Council of Europe Convention on civil liability for damage 
resulting from activities dangerous to the environment and then 
consider signing the Convention. 
If the Council of Europe Convention is adopted as a solution for a 
strict liability regime to be applied throughout the Community, special 
importance should be attached to the provisions of the Convention which 
allow contracting parties complete flexibility for laying down 
implementing conditions. This could be the case particularly with the 
compulsory financial guarantee system provided for by the Convention. 
Alternatively, the Council of Europe Convention could be the starting 
point for a Community initiative regarding environmental damage. 
Elements of that Convention could provide the answers to the main 
issues set out above, namely what constitutes environmental damage, 
defining the liable party, and determining which activities should be 
covered by a no-fault liability regime. 
4.2 A horizontal approach towards joint compensation systems 
Civil liability is a useful legal instrument for recovering the costs 
of restoring environmental damage as well as for its prevention and 
enforcement functions. 
Effective as it is, there are limits to its effectiveness. Civil 
liability can apply only when certain conditions are met. For example, 
if the causal link between the damage and the liable party cannot be 
established, the liability mechanism cannot operate. The question of 
who is then responsible for restoring the damaged environment and 
bearing the costs involved also remains unsolved. 
If recovery of costs is impossible via a liability action, other 
mechanisms would eventually be needed to assign responsibility for the 
costs of restoring damaged environments. Consideration therefore has 
to be given to how to cope with the limits inherent in a civil 
liability regime. A possible solution is to have joint compensation 
mechanisms to cover the costs of environmental restoration. This would 
enable responsibility for costs to be shared fairly within the economic 
sector most closely connected to the presumed source of the damage. 
One solution could therefore consist of combining the strengths of a 
liability regime with the advantages of compensation systems. 
- 28 -
On a practical level, this integrated "environmental" liability regime 
could take the form of the following alternatives: 
In the event of damage attributable to the action of a single 
liable party, compensation would be sought via civil liability. 
If the damage could not be attributed to the activities of a liable 
party (i.e. the liable party could not be identified), joint 
compensation mechanisms, as decentralized as possible, could be 
used. The costs of restoration would be divided between a number 
of economic sectors. 
In the light of this could one consider an approach where the 
strengths of civil liability would come into play and its limitations 
would be made up for by the advantages of compensation mechanisms? 
4.3 Looking Ahead 
On the basis of the possible directions set out above the Commission 
proposes to stimulate Community-wide discussion, among ail parties with 
an interest in the issues canvassed in this Communication, according to 
the following timetable: Comments are to be received before 1 October 
1993. 

- 1 -
ANNEX I 
Trends at Member State level 
The characteristic of this legislation is that liability may be 
established without fault. By way of illustration: 
Belgian Law of 22 February 1974 on toxic waste, which holds the 
generator of toxic waste strictly liable for damage caused by that 
waste; 
Belgian Royal Decree of 16 October 1981 on the control of organisms 
harmful to plants and plant products, which holds the owner of the 
land on which such organisms originate liable for any damage caused 
by their spread; 
French Law of 15 July 1975 on waste, which states that any party 
transferring certain waste elsewhere than to the operator of an 
authorized disposal plant shall be strictly liable for any damage 
caused by that waste; 
Greek Framework Law no. 1650 of 1986 on environmental protection 
which provides that any natural person who or legal person which 
causes pollution or deterioration to the environment shall be 
strictly liable for that damage; 
United Kingdom Environmental Protection Act 1990 which lays down 
strict liability rules for damage resulting from the illegal 
disposal of waste; 
Portuguese Basic Law on the Environment no. 11/1987 which provides 
for strict liability for significant damage to the environment 
caused by a dangerous activity; 
German Water Resources Act 1960 which holds the author of an 
unauthorized pollution of water strictly liable for any damage 
caused; 
German Law on Environmental Liability 1990 which provides for a 
comprehensive system of strict liability for the operation of 
Industrial facilities which present a risk to the environment. 
2? 
- 2 -
ANNEX I I 
Situation in non-Member States: Japan and the United States 
Under Japanese law, liability for environmental damage is based on the 
Civil Code and certain laws concerning pollution, which determine 
civil, criminal and administrative liability. The large number of 
cases of damage caused to persons and property have resulted in 
Japanese judges interpreting the laws in favour of the injured parties. 
The laws concerning air and water pollution have been amended with the 
result that the polluter is liable for any damage even in cases where 
it is not his fault. This principle of strict liability applies in 
Japan only as regards bodily harm. In other cases, the fault of the 
polluter has to be proven. 
In order to improve the position of the injured party, Japanese law has 
developed two theories: the theory of tolerance limits and the 
probability theory. According to the first theory, there are certain 
nuisances which must be tolerated by people. If those nuisances exceed 
the limit of what is tolerable, the injured party may take legal 
action. The limits are determined according to the nature of the 
damage. This may be bodily harm, damage to property or nervous shock. 
According to the second theory, the injured party only has to show the 
possibility of the existence of the causal link between the wrongful 
act and the damage itself. 
In cases of pollution where the polluters are not identifiable, there 
is a compensation fund which gives immediate assistance to a I I parties 
who have suffered bodily injury. 
Under the Japanese law of 5 October 1973 on compensation for bodily 
injury resulting from pollution, any injured party suffering damage to 
health caused by water or air pollution receives compensation, after 
examination by a board, without having to identify the person 
responsible or prove any fault. The fund is constituted from levies on 
pollutant emissions and from a proportion of the tax on motor vehicles. 
Compensation is automatic, however, only in major risk areas and for 
spec i f i caI I y Ii sted illnesses. 
It should be noted that Japan is currently drafting a law on product 
liability. Different draft laws have been drawn up by various groups. 
In general, all the proposals recognize no-fault liability and 
establish a presumption on defects in products. The proposals cover 
all sectors of industrial activity. Liability applies to both 
manufacturers and importers. 
In the United States, civil liability for damage to the environment is 
based on both the Common Law and strict civil liability from statute 
law. 
The Common Law uses concepts such as "nuisance", "trespass", 
"negligence" and "ultra-hazardous activity" to enable victims to take 
legal action against polluters. 
>> 
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A federal law entitled CERCLA (Comprehensive Environmental Response 
Compensation Liability Act) was enacted in 1980. It set up the 
Superfund, a federal fund financing environmental clean-up measures, 
thereby enabling the government to take prompt action to remove any 
threat to human health and to minimize risks which heavily polluted 
sites might pose in the future. 
This law has thus established a strict liability regime under which the 
government can recover the cost of restoration of the environment from 
"potentially responsible parties" or PRPs. 
The law states that firms may be held responsible for discharges they 
made in the past, even if the latter were not illegal at the time. The 
liability defined In CERCLA Is both strict - I.e. irrespective of 
whether fault or negligence has been committed or not - and Joint and 
several. 
Under the National Emergency Program, a list must be drawn up and 
revised annually in order to identify priority sites and installations 
throughout the United States. In 1989, this national list ("Superfund 
National Priorities List" or NPL) contained 981 sites to which the 
provisions on immediate clean-up applied. 
Clean-up measures are funded by the Superfund, which pays for removal 
and restoration operations. Congress increased the Superfund budget by 
USD 8.5 billion for the 1986-91 period. 
Federal action on listed sites is limited to those cases where the 
responsible parties cannot be identified or fail to take the necessary 
action. It is thus secondary to action to be taken by potentially 
responsible private parties. The Environmental Protection Agency is 
the authority responsible for implementation of this law. First, it 
classifies sites in need of restoration. Second, it identifies, from 
the potentially responsible parties (PRPs), those who are deemed to be 
liable and therefore required to repair the damage caused. The 
Environment Protection Agency takes "aggressive" legal action against 
PRPs to recover clean-up costs. It bases its arguments particularly on 
several liability and on the definition of PRPs. 
According to the terms of the law, a large number of persons may be 
considered "potentially responsible parties". They include the current 
owner of the site, the owner at the time it was polluted, the 
industrial operator generating the waste, the transporter of the waste 
and the waste dealer. In practice, even credit institutions such as 
banks may be deemed liable if they have taken possession of 
contaminated land under mortgage. 
Parties held liable for discharges of hazardous substances are required 
by law to effect clean-up operations, carry out full restoration and 
thus bear the (very high) costs of repairing the damage. The average 
cost of restoration of a polluted site is put at US$ 29-35 million. 
n 
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The courts have devised wide-ranging regulations covering liability. 
The liability regime arising from CERCLA heavily favours government 
actions for recovery of damages, thus leaving PRPs exposed to the 
threat of heavy expenditure. 
However, hazardous waste has turned out to be a bigger problem than was 
originally expected, and clean-up costs have proved to be very high. 
This policy and the inadequate level of financial resources at the 
Superfund's disposal has resulted in a large number of court actions 
involving persons identified as liable, their insurers, their bankers 
and the Environmental Protection Agency. The number of persons 
currently involved in litigation by virtue of CERCLA is put at 14 000. 
In one single case the number of insurers involved as a result of the 
Environmental Protection Agency action was well over 400. The number 
of court cases and proceedings initiated, accounts for about 30-60% of 
the financial expenditure of the Environmental Protection Agency, 
operators and insurers concerned. Consequently proceedings have become 
extremely long and complicated. 
Equally, the way the system works has led insurers operating in the 
American market to change their thinking with regard to cover for 
environmental risks. Apart from an increase in premiums, current 
policies in this market exclude a large number of risks. In a number 
of cases cover against pollution is not available, as insurers have 
deemed certain activities non-insurable. 
As far as credit institutions are concerned, there has been a 
tightening up of the criteria for the granting of loans to owners or 
operators of waste dumps. 
The CERCLA system has come in for sharp criticism since one of its 
objectives, namely full and prompt restoration of polluted sites, has 
proved impossible to achieve in practice. The CERCLA system is said to 
be having a "perverse effect". Proposals for major amendments to the 
system and the way it operates have been made by the various parties 
concerned (the authorities, industry, insurers, academics, etc.). 
The proponents of CERCLA argue that the merit of this legislation lies 
in the fact that it has changed the behaviour of firms and their 
approach to environmental issues. They maintain that because of the 
law it has been necessary to undertake studies or environmental audits 
before embarking on any commercial transaction. 
Despite amendments to CERCLA made by the Superfund Amendments and 
Reauthorization Act 1986 (SARA), which have toned down the extremely 
harsh character of this system of liability by providing for the 
concept of the "innocent landowner" who is entitled to preferential 
treatment if he can prove that he did not and could not have known that 
his land was contaminated, the criticisms and problems continue. 
r]2 
- 5 -
ANNEX I I I 
Trends at international level 
Table I : International Conventions on 
Civil Liability and Compensation 
(partial list) 
Nuclear energy 
1960 Paris Convention on Third Party Liability in the Field of Nuclear 
Energy, as amended by the 1964 Additional Protocol 
(in force) (B, DE, DK, ES, F, GR, IT, NL, P, UK) 
1963 Brussels Convention establishing a supplementary compensation 
system for damage caused by nuclear incidents 
(in force) (B, DE, DK, ES, F, IT, NL, UK) 
1963 Vienna Convention on Civil Liability for Nuclear Damage 
(in force) 
1988 Vienna Joint Protocol Relating to the Application of the Vienna 
Convention and the Paris Convention 
(not yet in force) 
OiI pollut ion 
1969 Brussels Convention on Civil Liability for Oil Pollution Damage, 
as amended 
(in force) (B, DE, DK, ES, F, GR, IR, IT, NL, P, UK) 
1971 Brussels Convention on the Establishment of an International Fund 
for Compensation for Oil Pollution Damage, as amended 
(in force) (DE, DK, ES, F, GR, IT, NL, P, UK) 
1977 London Convention on Civil Liability for Oil Pollution Damage 
Resulting from Exploration for and Exploitation of Seabed Mineral 
Resources 
(not yet in force) 
Carriage of dangerous materials and other dangerous activities 
1971 Brussels Convention Relating to Civil Liability in the Field of 
Maritime Carriage of Nuclear Material 
(in force) (DE, DK, ES, F, IT) 
1989 Geneva Convention on Civil Liability for Damage Caused During 
Carriage of Dangerous Goods by Road, Rail and Inland Navigation Vessels 
(not yet In force) 
Convention on Liability and Compensation in Connection with the 
Carriage of Hazardous and Noxious Substances by Sea 
11 
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(being drafted) 
Council of Europe Convention on Civil Liability for Damage Resulting 
from Activities Dangerous to the Environment 
(not yet in force) 
Table II : International Conventions Containing 
a Provision on Civil Liability 
(partial list) 
Marine Protection 
1972 London Convention on the Prevention of Marine Pollution by Dumping 
of Wastes and Other Matter, as amended (Art. 10) 
(in force) (B, DE. DK, ES, F, GR, IR, IT. NL, P. UK) 
1976 Barcelona Convention for the Protection of the Mediterranean Sea 
Against Pollution (Art. 12) 
(in force) (ES, F, GR, IT, EEC) 
1982 United Nations Convention on the Law of the Sea (Art. 279) 
(not yet in force) 
1983 Cartagena Convention for the Protection and Development of the 
Marine Environment of the Wider Caribbean Region (Art. 14) 
(in force) (F, NL, UK) 
1985 Nairobi Convention for the Protection, Management and Development 
of the Marine and Coastal Environment of the Eastern African Region 
(Art. 15) 
(not yet in force) 
Fifth Barcelona Protocol for the Protection of the Mediterranean Sea 
Against Pollution Resulting from Exploration and Exploitation of the 
Continental Shelf and the Sea-Bed and its Sub-Soil (Art.27) 
(being drafted) 
Antarctic Protection 
1988 Wellington Convention on the Regulation of Antarctic Mineral 
Resource Activities (Art. 8) 
(not yet in force) 
Transboundary Pollution 
1989 Basel Convention on the Control of Transboundary Movements of 
Hazardous Wastes and Their Disposal (Art. 12) 
[ECE-UN] Convention on the Protection and Use of Transboundary 
Watercourses and International Lakes (Art. 7) 
[ECE-UN] Convention on the Transboundary Impacts of Industrial 
Accidents (Art. 18) 
'h 
- 7 -
ANNEX IV 
The System created by the Council of Europe Convention 
In the last five years the Council of Europe has been drafting a 
Convention on civil liability for damage resulting from activities 
dangerous to the environment, containing a more general approach than 
the abovementioned international Conventions. 
On 26 March 1992 the Council granted the Commission a negotiating 
mandate^) for the areas within Community competence with regard to 
the Convent ion. 
Apart from the European Community and the Member States, the EFTA 
countries and a growing number of Central and Eastern European 
countries have participated in the negotiations. The Convention 
provides for the possibility of non-members of the Council of Europe 
becoming party to the Convention. 
The aim and objective of the Convention is to provide adequate 
compensation for damage resulting from activities dangerous to the 
environment. The Convention also puts forward measures for damage 
prevention and restoration of the environment. 
The concept of damage covers damage resulting from impairment of the 
environment, damage caused to persons and property and the cost of 
protective measures, i.e. measures taken to prevent or alleviate 
damage. Damage may be the result of a single action or a chronic 
process of pollution. It should be noted that the definition of 
"environment" in the Council of Europe Convention is widely drafted 
(see point 2.3 of the main report) 
In order to achieve the objective of repairing environmental damage 
adequately, the Convention introduces a strict liability regime. 
According to the Convention, the person liable is the operator, i.e. 
the person supervising the dangerous activity at the time the incident 
occurs or, in the specific case of permanent waste storage sites, at 
the time the damage becomes known. 
In the Convention, the term "dangerous activity" refers to a 
professional activity involving dangerous substances, genetically 
modified organisms or micro-organisms. The concept also covers the 
operation of waste installations or sites, including permanent waste 
storage si tes.(See further section 2.2 of this Annex as regards the 
definition of the scope of liability in the Convention, section 2.5 
concerning the burden of proof and section 2.7 concerning insurance and 
financial security under the Convention). 
(1) Commission mandate concerning the negotiations for an international 
convention on damage resulting from activities dangerous to the 
environment (Council of Europe) 
SEC(91) 750 final. 
V 
- 8 -
The Convention does give environmental associations and foundations the 
right to take court action to secure the implementation of preventive 
or restorative measures. 
The Convention states that the above-mentioned organizations may bring 
an action in court requesting "the prohibition of a dangerous activity 
which is unlawful and poses a grave threat of damage to the 
environment"; or an order to the operator "to take measures to prevent 
an incident or damage"; or an order to the operator "to take measures 
to prevent damage after an incident has taken place"; or an order to 
the operator "to take measures of reinstatement". 
The Convention makes provision for accession by the European Economic 
Community. The Community has voting rights, within the Standing 
Committee responsible for monitoring problems of interpretation and 
implementation raised by the Convention, which it may exercise in its 
areas of competence. 
The Convention was adopted on 8 March 1993 and will be open for 
signature from 21 June 1993. It will enter into force after the third 
rat if icat ion. 
The Committee of Experts of the Council of Europe, which has drawn up 
the Convention, has decided that the next step will be to look at other 
forms of reparation for environmental damage, in particular 
compensation funds. 
\C 

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