COMMENTS BY


I.   INTRODUCTION ___________________________________________3


III. THE APPLICABLE LAW ______________________________________5

1.   Basic Principles and examples________________________________5

2.   A preferred approach_______________________________________6
     A.   The law favouring the injured party (Günstigkeitsprinzip) _____________ 6
     B.   The law of the place of the damage (lex damni) vs the Günstigkeitsprinzip 8

3.   Party autonomy __________________________________________10

4.   Potential victims _________________________________________10

5.   Scope of the applicable law _________________________________10
     A.   Multiple Party liability ________________________________________ 11
     B.   Liability of a parent company for acts of subsidiaries/branches ________ 11
     C.   Liability of a company for acts of its organs _______________________ 12

6.   Rules of conduct and safety_________________________________12
     A.   In general _________________________________________________ 12
     B.   The effects of an administrative authorisation abroad _______________ 13

7.   Effect of insurance policies _________________________________14

8.   Renvoi _________________________________________________15

9.   Mandatory rules__________________________________________15

IV. CONCLUDING COMMENTS __________________________________15

I.      Introduction

The Permanent Bureau of the Hague Conference on Private International Law would
like to submit the following comments in response to the invitation by the European
Commission for consultation on a preliminary draft proposal for a Council
Regulation on the law applicable to non-contractual obligations.1 These comments
relate exclusively to the conflict of laws issues in the field of environmental liability
and do not prejudice the position the Permanent Bureau might take on other issues
dealt with in the Draft regulation.

At the outset, the Permanent Bureau wishes to underline the importance of a sound
conflict of laws regime for cross-border environmental damage and welcomes the
Commission’s initiative to address this specific issue in the Draft Regulation.                           It
remains, however, significantly important that such legislation at the regional level
does not prevent further unification at a global level in this area through a more
detailed international instrument.

Also, the Permanent Bureau has previously embarked on work in the field of civil
liability resulting from transfrontier environmental damage.                     In 1992, it was first
proposed by the Permanent Bureau that this topic be included on the Conference’s
agenda.        Since that time, the Permanent Bureau has continued to carry out
activities in this field2 and at the Conference’s Eighteenth Session in 1996 it was
emphasised           that       the       Permanent          Bureau         should         continue       to
“monitor/study/encourage” work in the area of environmental law. In this context,
attention should be drawn to a Note published by the Permanent Bureau in April
2000, which examines in depth the need and importance of a possible international

     The following comments are based on the Preliminary draft proposal for a Council Regulation on the
     Law Applicable to Non-Contractual Obligations (hereinafter: Draft Regulation), as published on the
     Justice and Home Affairs’ website (date of downloading: 02/09/2002).
     A report on these activities was drawn up by the Permanent Bureau in 1995; Preliminary Document
     No. 3 of April 1995, for the attention of the Special Commission of June 1995 on general affairs and
     policy of the Conference, in Proceedings of the Eighteenth Session (1996), Tome I, Miscellaneous
     Matters, The Hague 1999, pp. 73-89. These activities included first, in 1994 the participation in the
     organisation of a colloquium at Osnabrück in 1994 entitled “Towards a Convention on the Private
     International Law of Environmental Damage” (see CHRISTIAN VON BAR (ed.), Internationales
     Umwelthaftungsrecht I – Auf dem Wege zu einer Konvention über Fragen des Internationalen
     Umwelthaftungsrechts, Osnabrücker Rechtswissenschaftliche Abhandlungen, vol. 48, Cologne 1995).
     Secondly, in 1995, at the request of the Secretariat of the Basel Convention on the Control of
     Transboundary Movements of Hazardous Wastes and Their Disposal, the Permanent Bureau
     participated as an observer in the negotiation of a protocol on liability and indemnification in case of
     damage resulting from transboundary movements and from the disposal of hazardous waste.
     Proceedings of the Eighteenth Session (1996), Tome I, Miscellaneous Matters, The Hague 1999,
     p. 109.

instrument on this topic.4 The Note examines how the substantive laws of various
legal systems deal with civil liability resulting from environmental damage. It also
analyses     the   principal    international    instruments      providing    unified    rules   of
substantive law in this field and the degree of divergence that can be identified
among them. As for the conflict of laws issue in particular, the Note clearly reveals
that there are a number of different connecting factors which are used by national
and international legislators and which all could serve, at least theoretically, as a
basis for establishing an international framework in this field.

II.    Interaction with other international instruments

Article 24 makes clear that the Draft Regulation will not affect the application of
pre-existing international conventions to which the Member States are parties at
the time of the adoption of the Regulation. This is a critical provision, which is to be
welcomed. As mentioned above, it is also important that the Draft Regulation does
not hinder future developments at the global level in this area. Prima facie, it seems
that Article 23(1) of the Draft Regulation ensures that such future unification of the
conflict of laws regime for cross-border environmental damage is not prevented.
Pursuant to that provision, the Draft Regulation does not prejudice the application
of provisions which are or will be contained in “acts of the institutions of the
European Communities which […] in relation to particular matters, lay down choice
of law rules relating to non-contractual obligations”. It is the Permanent Bureau’s
understanding that the reference to the “acts” of the European Communities also
covers situations where the Community, pursuant to its competence,5 becomes a
party to an international instrument which addresses the issue of conflict of laws
relating to civil liability for environmental damage. If this is in fact the correct
understanding of Article 23(1), then such an approach is certainly to be saluted. It
would be helpful to have confirmation from the Commission that this is indeed the
correct interpretation and if so, the Permanent Bureau would like to stress the
importance that a provision along the lines of Article 23(1) be kept in the final text
of the Regulation.

    C. BERNASCONI, “Civil liability resulting from transfrontier environmental damage: A case for the
    Hague Conference?”, Preliminary Document No. 8 of April 2000 for the attention of the Special
    Commission of May 2000 on general affairs and policy of the Conference. The following comments
    are largely based on this Note. The Note also contains a full summary of previous work undertaken
    by the Hague Conference in this field.
    Arts 61 and 65 of the Treaty of Amsterdam.

Nevertheless, in light of the work already undertaken by the Hague Conference in
this field, there are some provisions in the Draft Regulation, which require closer

III. The Applicable Law

1.      Basic Principles and examples

Pursuant to Article 8 of the Draft Regulation, the law applicable to questions of
liability for violations of the environment is the law of the place in whose territory
the damage occurs. Thus, the Draft Regulation incorporates the principle of the law
of the place of the injury, the lex damni.6

As the Commission is well aware, currently, there are both specific7 and general
international instruments, as well as domestic private international laws, which
incorporate divergent principles in determining the applicable law to liability actions
for torts caused to the environment.                   The fact that national and international
legislators     use     a   wide    range     of   different     connecting      factors     for   different
environmental tort issues makes the selection of the most appropriate connecting
factor in a general provision such as Article 8 of the Draft Regulation a difficult and
delicate endeavour.

For example, in the area of nuclear matters, Article 11 of the Paris Convention of
1960 on Third Party Liability in the Field of Nuclear Energy, provides that where a
question is not answered under that Convention, the court addressed is to apply its
own substantive law, i.e. the lex fori.8

The London Convention for the Prevention of Pollution from Ships incorporates the
principle of lex loci actus – the law of the place of the dangerous activity (the State
of the emission).           Under this Convention, the applicable law is the law of the
Administration of the ship concerned (Art. 4(1)), unless the violation is committed
within the jurisdiction of a Party to the Convention, in which case it is the law of
that State (Art. 4(2)). The lex loci actus rule is, at least in principle, also accepted

     Article 8 – Violation of the environment – reads as follows: “The law applicable to a non-contractual
     obligation arising from a violation of the environment shall be the law of the country in whose
     territory the damage occurs or threatens to occur.” See also infra, p. 8 for further comments on the
     lex damni principle.
     Most instruments dealing with a specific activity do not contain conflict of laws rules as they have
     unified substantive law, resulting in conflict rules becoming fairly obsolete. However, there are some
     exceptions, which adopt divergent solutions. See BERNASCONI, op. cit. (footnote 4), p. 27.
     Similarly, under Article 4 of the Agreement of 22 October 1986 between the Swiss Confederation and
     the Federal Republic of Germany on civil liability in nuclear matters, courts with jurisdiction are those
     of the State on the territory of which the harmful event occurred and they apply their own law.

as general connecting factor in tort matters in various domestic regimes (in
particular in Austria, the Netherlands, Denmark, Finland and Sweden). It should
however be emphasized that these systems permit in general the application of the
law of another State, with which the litigation (or the parties) have closer

In the US, many States take the approach of the law of the place with the most
significant relationship, i.e. the State which has the greatest link to the case, often
with reference to certain connecting factors.10           Interestingly, the result is usually
that of the lex fori.11

2.      A preferred approach

All of the above mentioned approaches may create a degree of certainty and ease
of application. However, with a view to providing the injured party with adequate
protection, ensuring an appropriate compensation and favouring a preventive
scheme, a reference to a law more closely connected with the victim may be
preferable.       By referring to the lex damni, the Draft Regulation incorporates one
such approach. Following is a brief overview of other methods which also favour a
more victim-oriented approach.

A.      The law favouring the injured party (the Günstigkeitsprinzip)

The general notion of the Günstigkeitsprinzip, i.e. the law favouring the injured
party, has its roots in German decisions of the Reichsgericht.12 Subsequently, the
principle has, for example, been incorporated in Article 4(3) of the Bilateral
Agreement of 19 December 1967 Germany/Austria on effects of the establishment
and operation of the Salzburg Airport on the territory of Germany; according to this
provision, the applicable law is explicitly stated to be the law most favourable to the
injured party (lex favour laesi).            Under a more general instrument, the Nordic
Convention of 1974 on the Protection of the Environment, the applicable law is
chosen through private international law rules of the forum (which is the State from
which the pollution emanates), but then the court must compare the result with

     See BERNASCONI, op. cit. (footnote 4), p. 36.
     Ibid., at pp. 36-37.
     Sutherland v. Kennington Truck Segice Ltd, 562 N.W. 2d 466, 467-470 (Mich. 1997); see
     BERNASCONI, op. cit. (footnote 4), p. 37, footnote 192 and accompanying text.
     See decisions of the Reichsgericht of 20 November 1888, RGZ 23, 305; OLG Saarbrücken NJW 1958,
     p. 752; OLG Saarbrücken IPRspr. 1962-1963 Nr. 38; BGH NJW 1987, p. 1323; see BERNASCONI, op.
     cit. (footnote 4), p. 32, footnote 149.

that which would be obtained under the law of the State where the activity was
exercised and if that is more favourable, to apply that law.

Another approach, which, in principle, should favour the injured party, is where
unilaterally the choice of applicable law is that of the injured party. Article 138 of
the Swiss Federal Law on Private International Law (LPIL) provides an interesting
example for cases involving harmful emissions coming from immovable property
(e.g. smoke or gas emissions from an industrial installation; air traffic from
airports). Under that provision, the interest of the injured party prevails: he or she
may chose between the law of the State in which the property is located and the
law of the State in which the result was produced, creating a unilateral choice
between the lex loci actus and lex damni.

In principle, this approach seems attractive as it certainly benefits the victim.
However, it also creates a degree of uncertainty. First, one would not want to risk
that it is interpreted to mean that the injured party can vary his or her choice as a
function of the claim invoked or according to the legal issue in question as this
would have very complex and unforeseeable legal consequences for the defendant.
Thus, it would need to be clear that the injured party must subject their claim, to
the extent that it flows from a single occurrence, to a single law. Secondly, what
law applies where the injured party makes no choice is unclear under Swiss law.13

Nevertheless, the general principle of the Günstigkeitsprinzip is commonly accepted
as particularly useful in matters of transfrontier pollution.14                  Most importantly, it
means that polluting countries cannot unduly limit the liability of their industries to
the detriment of potential victims in neighbouring States.15 This would completely
undermine the notion of “polluter pays”.16 On the other hand, the possibility of the
country from where the pollution originates having adopted severe and strict
provisions, which might be found to be advantageous for the victim(s), should not
be completely excluded.17               The Günstigkeitsprinzip provides a halfway point.                A
further advantage of this approach is that it more effectively serves the goal of

     See BERNASCONI, op. cit. (footnote 4), pp. 30-31.
     Ibid., p. 33, referring to GEORGES DROZ, Regards sur le droit international privé compare, Recueil des
     cours de l’Académie de droit international, Tome 229 (1991-IV), no. 300; H.U. JESSERUN D’OLIVEIRA, Le
     Bassin du Rhin, sa pollution et le droit international privé, in La reparation des dommages
     catastrophiques – Les risques technologiques majeurs en droit international et en droit
     communitaire, Travaux des XIIIes Journées d’études juridiques Jean Dabin, Brussels 1990, pp. 165-
     166, as well as pp. 167-168; HEIN, Das Günstigkeitsprinzip im Internationalen Deliktsrecht, Tübingen
     1999, pp. 121-126.
     See BERNASCONI, op. cit. (footnote 4), p. 33, P.R. BEAUMONT, Private International Law of the
     Environment, Judicial Law Review 1995, pp. 35-36.
     BERNASCONI, op. cit. (footnote 4), p. 33.
     DROZ,   op. cit. (footnote 14), no. 300.

prevention of injuries to the environment. The idea that the law will be that which
favours the victim should indeed dissuade a polluting enterprise situated near a
frontier from preferring profitability to good maintenance of their installations.18

Admittedly, the principle of the Günstigkeitsprinzip may be somewhat problematic
in its practical application.        For approaches where the injured party may chose a
preferred applicable law, the envisaged advantages will only be enjoyed where the
injured party has a good knowledge of competing provisions and their judicial
interpretations.19 Moreover, it is not unusual for a law to be more favourable on
one point, but less on another.             For example, one law might provide for liability
based simply on causation, while the other would impose on the injured party the
burden of proving fault on the part of the polluter; yet this latter law might provide
on the other hand for unlimited liability, contrary to the former which, in this case,
would have set a (monetary) ceiling on liability. Thus, even where it is the court,
which must decide which law is more favourable, there are difficulties involved. In
the framework of a regional or worldwide Convention, the adoption of a system
leading to the application of the law most favourable to the injured party would
require a system of efficient co-operation between States, guaranteeing a rapid and
precise exchange of information on the content and application of the different
laws.20 Such a system, one would think, could be more easily achieved at the
regional level than in a global system, where additional difficulties might have to be

B.      The law of the place of the damage (lex damni) vs the Günstigkeitsprinzip

Under the Draft Regulation, the applicable law is the law of the place of the injury
(lex damni). This principle is expounded in a variety of national law regimes,
including France, the United Kingdom, Spain, Japan,21 Switzerland22, Romania,
Turkey and Quebec.23

It is true that like the Günstigkeitsprinzip, the lex damni, can be protective of the
plaintiff’s interests in that it will often correspond to the place of his or her

     BERNASCONI, op. cit. (footnote 4), p. 34; P. BOUREL, Un nouveau champ d’exploration pour le droit
     international privé conventionnel: les dommages causes à l’environnement, in L’Internationalisation
     du droit, Mélanges en l’honneur de Yvon Loussouarn, Paris 1994, pp. 93-108, at p. 103.
     BERNASCONI, op. cit. (footnote 4), p. 34.
     Ibid., at p. 34.
     Ibid., at pp. 31-32.
     See, however, supra, p. 7 (Günstigkeitsprinzip for specific environmental issues).
     BERNASCONI, op. cit. (footnote 4), at pp. 34-36.

residence and to the place where any damaged property is located. It may also be
justified by the fact that the principal function of liability law is the reparation of an
injury and not the punishment of a fault, especially in the case of the environment
where strict liability plays a strong role.24 It also does provide a more simple and
certain approach to choosing the applicable law than does the Günstigkeitsprinzip.

However, the lex damni approach means that the victim will not benefit from the
situation where there is a more stringent regime over environmental violations in
the polluting State.          This, in turn means that the level of deterrence is not as
strong.       Moreover, the Günstigkeitsprinzip is more widespread than might have
been thought at first sight: it is now codified in the German private international
law on torts,25 and is found in varying forms in Greece, Italy, Hungary, Slovakia,
Czech      Republic,        Former    Yugoslavia,   Estonia,   Tunisia   and   Venezuela   and.26
Furthermore, in the specific field of transfrontier pollution, the Günstigkeitsprinzip is
favoured in doctrine even by those experts who otherwise reject it as a general rule
for determining the law applicable in tort matters.27 Finally, the injurious effects of
environmental pollution are often felt in several States.                 Under the lex damni
approach, victims of the same incident may be subject to different laws, therefore
receiving varying degrees of legal protection.                 This “mosaic” effect28 may be
considerably lessened through the principle of the Günstigkeitsprinzip, which, at
least in some cases, might lead to the same choice of law for injured parties in
various jurisdictions.

Obviously, if the principle of the Günstigkeitsprinzip were included in a Community
instrument or indeed any international convention, there would also need to be
included explicit rules on the precise conditions and modes tied to the option
offered (deadlines for the choice, the role of the judge, consequences in case of
failure to make a choice, etc.).29

Against this background, the Hague Conference would submit that the inclusion of
an approach consistent with the Günstigkeitsprinzip in the Draft Regulation be
further considered by the European Commission.

     Ibid., at p. 34.
     Ibid., at p. 32, footnote 150.
     Ibid., at pp. 32-33.
     Ibid., at p. 38.
     Ibid., at p. 38.
     Ibid., at p. 34.

3.      Party autonomy

Article 11 of the Draft Regulation allows the parties to choose the applicable law
through an agreement. Such a provision is not uncommon, and is expressly
provided for under various European States’ domestic laws.30 The choice must be
made expressly, which increases the level of certainty and is therefore a positive

Although not stated explicitly, this clearly means that parties may choose the law
subsequent to the occurrence giving rise to the claim, as it simply states that the
parties may choose the law applicable to “a non-contractual” obligation.                 In this
regard, a welcomed aspect of this provision is that the parties’ choice “shall not
adversely affect the rights of third parties.” The Hague Conference would suggest
that there be reference in the Draft Regulation, that the parties’ agreement is
subject to the classic rules of validity relating to the defects of consent (mistake,
duress, fraud). This is required in order to protect the victim in particular where he
or she has made a mistake in the understanding of the rights offered to him/her by
the law which has been set aside.31

4.      Potential victims

Article 8 of the Draft Regulation applies not only where the damage has already
occurred but also where it threatens to occur (as in the Proposal by the European
Group on Private International Law for a European Convention on the Law
Applicable to Torts32).        This is certainly a positive inclusion to the benefit of
potential victims and facilitates preventative measures.

5.      Scope of the applicable law

Under the Draft Regulation, the scope of the applicable law is expressly defined.
Article 9 lists a catalogue of issues to be submitted to the lex damni. This list is in
substance almost identical to Article 5 of the European Group on PIL Proposal33 and
is inspired by Article 8 of each of the Hague Conventions on the law applicable to

     Ibid., at p. 37.
     Ibid., at p. 38.
     Hereinafter, “The European Group on PIL Proposal”. The French text was adopted at the Eighth
     Annual Meeting of the Group held at Luxembourg 25 – 28 September 1998, reproduced in RCDIP
     1998, pp. 802 – 807.
     See supra, footnote 32.

traffic accidents of 197134 and the law applicable to products liability of 197335. It
includes the basis and extent of liability; who is liable; grounds for exemption,
limitation and division of liability; the existence and kind of damage which may be
compensated; measure of compensation; who is entitled to compensation; whether
a right to compensation may be assigned or inherited; liability for acts of another
person; and the rules of prescription and limitation.

However, contrary to the European Group on PIL Proposal, the Draft Regulation
does not include within Article 9 rules which, determine burden of proof or raise
presumptions of law. On the other hand, Article 17 notes that the law applicable
under the Draft Regulation applies “to the extent” that it contains such rules. At
first glance, it does not seem clear what exactly the advantages are in dealing with
this aspect of scope in a separate provision. Furthermore, the question arises as to
what the result is where the law applicable does not, for example, raise
presumptions of law: as currently drafted, it seems to provide a qualification to the
applicable law and that therefore the lex damni could no longer apply.                         Further
clarification on this point may be required.

A.      Multiple Party liability

An important issue in the context of liability for environmental damage is that of
multiple party liability. It is not always obvious who has caused the damage or to
what extent, for example, where several factories in neighbouring States may have
all contributed to air pollution. The Draft Regulation does not expressly address the
situation where there are multiple parties liable for a particular injury, however, it is
our understanding that the reference within the scope provision to “extent of
liability” includes the extent of liability for joint tortfeasors.36

B.      Liability of a parent company for acts of subsidiaries/branches

The question of liability of a legal entity for torts committed within a corporate
group is undoubtedly a very important issue in the context of environmental
liability.    This is not specifically addressed in the Draft Regulation.                However, it
seems desirable that the same law should apply to determine the liability of both

     Hague Convention of 4 May 1971 on the Law Applicable to Traffic Accidents [hereinafter: “Hague
     Convention on Traffic Accidents”].
     Hague Convention of 2 October 1973 on the Law Applicable to Products Liability [hereinafter: “Hague
     Convention on Products Liability”].
     Art. 9(1) of the Draft Regulation.

the person who did the act and the person who is claimed to be vicariously liable for
the act.      Under the Hague Convention on Products Liability, the law applicable
governs the liability of a principal for its agent and employers for their employees.
As made clear in the Explanatory Report to this Convention, this provision is
intended to cover issues of vicarious liability, including that of a parent company for
its subsidiary.37      The Draft Regulation in fact provides a broader scope for the
applicable law in this regard, without specifying for relationships of agency or
employment, but merely referring to “liability for the acts of another person”.
Thus, prima facie, under the Draft Regulation, the liability of parent companies for
their affiliates seems to fall within the scope of Article 8. However, the result under
the current Draft Regulation remains a little unclear. In light of the importance of
such a situation in the context of liability for environmental damage, it is
recommended that specific mention of this issue be made within the text of the
Draft Regulation.

C.      Liability of a company for acts of its organs

Very important in the context of company liability for environmental damage is the
issue of the law applicable to acts of its organs (e.g. board members). In a number
of legal systems it is disputed whether these acts are subject to the lex delicti (law
of the place of the tort) or the lex societas (law governing the company).38 The
Draft Regulation does not expressly address this question and may therefore
require further clarification such that this issue will also be clearly governed by the
lex damni.

6.      Rules of conduct and safety

A.      In general

Pursuant to Article 13 of the Draft Regulation, when determining liability, courts are
to take into account the rules of conduct and safety, which were in force at the
place and time of the act giving rise to the liability.               This would include rules
intended to establish a minimum standard of security through mandatory prescripts
in a particular area, e.g. limits on levels of emissions. Normally, these rules are of
great importance in the context of establishing the elements of liability for a tort, in

     W.L.M. Reese, Explanatory Report on the Convention on the Law Applicable to Products Liability,
     Actes et Documents of the Twelfth Session (1972), Tome III, offprint, p. 252 at p. 266, offprint
     p. 22.

particular for questions of illegality and fault. Where the rules in the place of the
damage differ from that of the place of the activity, it may be difficult to determine
which rules ought to be taken into consideration. This issue arises, for example,
when a factory located near a frontier, which stays within the levels for emissions of
the State on the territory of which it is situated, but its emissions cause damage in
the neighbouring State, which has more restrictive levels.

If rules of security and of conduct of the place of the activity were imposed in an
absolute and systematic way under the Draft Regulation, it would lead to the
undesirable result that potentially injurious activities are transferred into countries
where the standards of security are the lowest.39                      For this reason, the more
balanced approach of simply taking these rules into account, under the Draft
Regulation is certainly welcome and seems preferable to more rigid connections
provided in other laws.40

B.      The effects of an administrative authorisation abroad

A more specific but related issue is the impact on a judicial action involving
transfrontier environmental damage that may arise from a foreign administrative
authorisation, which excludes or somehow limits certain civil law claims.41                           The
principle of territoriality, which holds that the laws of each state have authority
within its own frontiers, but not beyond, would make clear that such an
authorisation could not prevent a claim in another State.42                           However, under
Article 13 of the Draft Regulation, there is certainly scope for any type of foreign
authorisation to be taken into account. This is inline with well-known decisions of
Dutch and German Courts43 and, again, is to be welcomed. Moreover, Article 16 of

     BERNASCONI, op. cit. (footnote 4), pp. 39-40.
     Ibid., at p. 33.
     For example, § 33, para.1 of Hungarian Decree-Law No. 13/1979 of 31 May 1979; see BERNASCONI,
     op. cit. (footnote 4), p. 40.
     Ibid., at p. 41.
     Ibid., at pp. 41-42.
     In the case of the Mines de Potasse d’Alsace, the Rotterdam Court stated the law as follows: “in
     examining the acts of the defendants, the fact that they had the benefit of French permits is not in
     itself without importance”; Judgment of 16 December 1983: see Ned. Jur. 1984, No. 341, under
     point 8.7); for an English translation of the decision, see Netherlands Yearbook on International Law
     1984, 471 et seq.; for a German translation, see RabelsZ 1985, p. 741 et seq. Although the Court in
     the end did not accept the defence based on the French permits, this was for the sole reason that the
     permits themselves expressly preserved the rights of third parties (as do all administrative
     authorisations issued under French law). In its decision of 15 January 1987, the Superior Court
     (Oberlandesgericht) of Linz explicitly took into account an operating permit delivered by the German
     authorities; öJBl. 1987, p. 577, decision confirmed by the Austrian Supreme Court on 20 December
     1988: see öJBl. 1989, p. 239. The court set out three conditions for such a taking into consideration:
     firstly, the emissions coming from the plant should not be contrary to public international law;

Draft Regulation states that unilateral acts intending to have a legal affect are
formally valid if they are so under the applicable law or under the law of the
country in which the act was done. This would have the affect that the validity of a
permit may be determined by the law of the State that issued it. This seems to be
inline with general thinking among legal writers.44

However, in principle, an authorisation which absolutely excludes claims still creates
an unbalanced situation: why should victims of a violation of the environment in
their own State be prevented from bringing a claim, when plaintiffs abroad may still
be able to sue for the same violation? This is an issue, which may require further
consideration in the context of the current Draft Regulation.45

7.      Effect of insurance policies

Article 14 of the Draft Regulation, expressly states that injured persons may bring a
direct action against an insurer of a liable person, if they have such a right under
the applicable law. Moreover, Article 14(2) extends the ability to directly sue the
insurer to cases where although the applicable law does not provide the right, it is
provided by the law governing the contract of insurance.

This provision is similar to Article 7 of the Hague Convention on Traffic Accidents,46
however provides a narrower scope for bringing direct actions against insurers. The
drafters of the Hague Convention on Traffic Accidents had wanted to allow those
suffering damage to bring an action directly against an insurer to the greatest
extent possible and avoid such rights being abolished due to the effect of the
Convention.47        Thus, where the law applicable does not provide for a right to a
direct action, it may be used if it exists in the lex loci actus (the place where the
accident occurred). Only then, if that law does not provide the right, will the court
look to the law governing the contract of insurance.

As the Draft Regulation does not allow the court to look to the law of the place of
the accident (unless, of course it is the same as the governing law of the contract of

     secondly, the obtaining of the foreign (German) authorisation should be subject to conditions similar
     to those imposed by the (Austrian) law of the forum; thirdly, the foreign authorisation should not
     have been delivered without the Austrian landowners concerned by the incoming emissions having
     had the possibility to be heard; see BERNASCONI, op. cit. (footnote 4), p. 42.
     BERNASCONI, op. cit. (footnote 4), p. 41.
     A possible Hague Convention unifying the substantive law in the area of transfrontier pollution may
     provide an answer to this problem. Obviously, however, such a system would depend highly on co-
     operation between States concerned.
     Hague Traffic Accidents Convention, see supra footnote 34.
     See E.W. Essén, Explanatory Report of the Convention on the Law Applicable to Traffic Accidents,
     Acts and Documents of the Eleventh Session (1968), Tome III, offprint, p. 35.

insurance or the lex damni), it may put unnecessary limitations on the right of
direct action against the insurer.                 Consideration might be made to drafting the
provision to be more flexible as under the Hague Convention on Traffic Accidents.

8.      Renvoi

Under Art. 19 of the Draft Regulation, renvoi is excluded. This is a preferable
approach when trying to create certainty and clarity.

9.      Mandatory rules

Under Article 12 of the Draft Regulation, mandatory rules of the law of the forum
will never be restricted, irrespective of the law applicable.              Moreover, where the
parties have chosen the applicable law, pursuant to Article 11(1), this choice shall
not restrict the application of the mandatory rules of a country other than that of
the law chosen, if at the time when the obligation arises, all other elements of the
situation were located in that country.48               However, it seems that this provision is
almost obsolete in the context of environmental damage as under the Draft
Regulation, the law applicable is the law of the place of the damage and therefore
should constitute an element of the situation.

More interesting is that the parties’ choice cannot restrict mandatory provisions of
Community law where the other elements of the situation were located in one
Member State at the time the obligation came into being. This provision seems a
little unclear – unlike the above mentioned provision, it refers only to “the other
elements”, not “all”; how many “other elements” need to be located in another
Member State for this provision to apply?

IV.     Concluding Comments

In sum, the proposed structure of the Draft Regulation in the field of liability for
environmental         damage       is   to    be    welcomed.     Many   provisions   incorporate
approaches, which have already been considered in depth at the Hague Conference.
However, there remain some uncertainties as outlined above, which the Permanent
Bureau would recommend be clarified. In light of the work already carried out by
the Hague Conference in this field, the Permanent Bureau is at the disposal of the

     Article 11(2) of the Draft Regulation.

Commission for further discussion or consultation on the Draft Regulation and
remains ready to co-operate with the relevant European institutions.

                                                   The Hague, 18 September 2002

Contact Person:

Christophe Bernasconi
First Secretary

Permanent Bureau
Hague Conference on private international law
6, Scheveningensweg
tel.: +31 (70) 363 33 03
fax: +31 (70) 360 48 76

To top