Environmental justice and International law: What is new with Rome II Regulation?

Environmental justice and International law: What is new with Rome II Regulation? Marc-Antoine Carreira da Cruz Scientific advisor Perelman Center for Legal Philosophy Université Libre de Bruxelles Environmental damage European Law Polluter-pays principle Applicable law Abstract: By establishing rules about the law applicable to non-contractual obligations resulting from environmental damage, the new European Regulation Rome II brings a new tool to face complex environmental cases. Indeed, Rome II s environmental rule completes the numerous material legal instruments focusing on public authorities intervention. Created in the line of the polluters pay principle, indirectly encouraging a cross-borders elevation of environmental standards, opening the door of choice for the claimer, Rome II rule on environmental damage could also be considered as a unsuspected Pandora box of material rules, rekindling the debate of its legislative birth on its problematic hybrid nature. 1. INTRODUCTION With the adoption of European regulation No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (very often called «Rome II»), a new leaf on transnational environmental damages has been turned. Indeed, the Rome II regulation brings important precisions on the issue of the non-contractual obligations resulting from environmental damage, as article 7 of Rome II is dedicated to determining the applicable law in case of a conflict of law around non-contractual obligations resulting from environmental damage. However, an analysis of the article 7 genesis reveals how thin the line between conflict of laws instrument and material instrument is in the field of environmental damage. At stake with this new rule is the unsuspected potential for a never-ending debate on the nature of article 7. The situation previous to Rome II Regulation Before expanding on technical considerations in the context of this article, it is necessary to examine the situation that existed before Rome II. Prior to the adoption of the regulation, the way of dealing with transnational damages depended on various instruments. These instruments were numerous, but they mainly focused on questions of substantive law or international jurisdiction rather than on the conflict rules of harmonisation. A second common disadvantage can be seen in the fact that their scope only covered some categories of cross-border pollution. Prior to Rome II, a range of varied conflict rules solutions amongst member states legislation existed: Marc-Antoine Carreira da Cruz, 2012 Do not quote without permission Page 1

the law of the place where the loss is sustained or one of the variants of the principle of the law that is most favourable to the victim, the lex fori, as well as the law of the place where the dangerous activity is exercised. The last significant problem lies in the fact that major differences existed in determining the damage giving rise to compensation, limitation periods, indemnity and insurance rules, the right of associations to bring actions and the amounts of compensation. The guide-rule and the rule on environmental damage To understand all the implications of article 7 of Rome II, it is necessary to firstly draw an overview of the guide-rule of the new Regulation. The general rule provided by Rome II states that the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs 1 ; this rule is irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur. Regarding environmental damage, the Regulation adds different ways for the claimer faced with these situations to deal with them: indeed, the law applicable to a noncontractual obligation arising out of environmental damage or damage sustained by persons or property as a result of such damage shall be the law determined pursuant to the general rule of the regulation, unless the person seeking compensation for damage chooses to base his or her claim on the law of the country in which the event giving rise to the damage occurred. 2 The European Commission s first draft proposal clearly supported the idea of a solution indirectly contributing to raising the general level of environmental protection. Indeed, article 7 first part of the solution leads to a policy of prevention, by indirectly compelling operators established in countries with a low level of protection to abide by the higher levels of protection in neighbouring countries. This particular technique removes the incentive for an operator to opt for low-protection countries. 3 However, limiting the applicable law to the law of the country in which the damage occurs would have been problematic in the case of a country with weak environmental laws. The European Commission was aware of this danger: applying exclusively the law of the place where the damage is sustained could give an operator an incentive to establish its facilities at a border point, so as to discharge toxic substances into natural elements, such as a river, and enjoy the benefit of the neighbouring country's laxer rules. This solution would be opposed to the underlying philosophy of the European substantive law of the environment and to the polluter pays principle. By allowing the victim to make a claim on the basis of the law of the country in which the event giving rise to the damage occurred, the European Commission s proposal avoids this danger and is consistent with the following philosophy: the victim's legitimate interests by the creation of a legislative policy 1 REGULATION (ECC) No 864/2007 OF THE EUROPEAN PARLIAMENT AND THE COUNCIL of 11 Jul. 2007 on the law applicable to non-contractual obligations (Rome II), art. 4 2 Ibid., art. 7 3 COMMISSION OF THE EUROPEAN COMMUNITIES Proposal COM(2003) 427 final 2003/0168 (COD) of the 22 Jul. 2003 for a Regulation of the European parliament and the Council, on the Law Applicable to Non-contractual Obligations («Rome II») Marc-Antoine Carreira da Cruz, 2012 Do not quote without permission Page 2

contributing to a raise in the general level of environmental protection. Moreover, this disposition enjoys the the universal nature of the Regulation (and therefore all its articles) 4. It means that the applicable law is on application either if it is a non-eu member state law. That can be very interesting if the law of the country in which the event giving rise to the damage occurred, is a law from a non-member state that has a strong environmental regulation (for example Switzerland, Norway). Nevertheless, it is necessary to keep in mind that the applicable law issue cannot be dealt separately of jurisdiction issue, the other traditional pillar of the international private law. 5 So, a close eye on the rules of the Regulation n 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (also called the Brussels I Regulation) is useful. Indeed, there are a wide range of consequences on the procedure of the applicable law choice if taking account with the reality of the jurisdiction possibilities. General provisions of Brussels I Regulation states that, in civil or commercial matters, the persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. The persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State. 6 Interesting fact in case of environmental damage is the special provision of the Regulation stating that a person domiciled in a Member State may, in another Member State, be sued in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur. 7 Things can be harder if the defendant is not domiciled in a Member State, in this case the jurisdiction of the courts of each Member State shall be determined by the law of that Member State. 8 The choice of the applicable law will, as we see, be preceded a complex procedure. It is easy to understand how deep this procedure (working out the jurisdiction) can affect the procedure of choice of law (Rome II). Obstacles and the overriding mandatory provisions The close link between civil liability for violations of the environment with the publiclaw rules governing the operator's conduct and the safety rules that he is required to comply with constitute obstacles that a judge would potentially have to face. As numerous private activities related with environment are subject to public authorities specific authorization, for example in the field of micro-organisms industrial dispersal effects notably genetically modified organisms (a trouble spot in European environmental policies). The European Commission was aware since the beginning of the redaction process of Rome II that activities with different legal statues in member states would be a possible case faced by judges. Taking the example of the European Commission what about the consequences of an activity that is fully allowed in State A (let s say some level of toxic emissions) but causes damage to be sustained in State B, where it is prohibited (and exceeding the authorized level). The 4 REGULATION (ECC) No 864/2007 OF THE EUROPEAN PARLIAMENT AND THE COUNCIL of 11 Jul. 2007 on the law applicable to non-contractual obligations (Rome II), art. 3 5 REGULATION (ECC) No 44/2001 OF THE EUROPEAN PARLIAMENT AND THE COUNCIL of 22 Dec. 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 6 ibid., art. 2.1 and 2.2 7 ibid., art. 5.3 8 ibid., art. 4.1 Marc-Antoine Carreira da Cruz, 2012 Do not quote without permission Page 3

Rome II final version try to overcome this obstacle. Indeed, the article 17 specifies that in assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability 9. The idea was that the court must then be able to have regard to the fact that the perpetrator has complied with the rules in force in the country in which he is in business. Nevertheless, article 17 sounds strange at the light of the overriding mandatory provisions. Globally, Overriding mandatory provisions are provisions (initially national provisions) the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organization, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable the case. Overriding mandatory provisions have been defined by the European Court of Justice 10 and by the Regulation No 593/2008 on the law applicable to contractual obligations (Rome I Regulation). 11 This kind of provisions is a crucial point in International private law and in environmental law. In Rome II Regulation, the article 16 states that nothing in the Rome II Regulation shall restrict the application of the provisions of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the non-contractual obligation. There is a paradox between articles 16 and 17. Environmental law focuses on the damage rather than on the fault and the precautions. Indeed, whatever will be the determination of the precautions that have been taken, if the damage is present and the causality link with the activity established, the case is done. With article 17 of Rome II, it is difficult to see what will happen about the objective responsibility (responsibility without fault). Keeping in mind the article 16, does the article 17 will really be able to play a strong role? It is not so obvious. Between conflict of laws rule and substantive rule The hybrid nature of article 7 balancing between conflict of laws rule and substantive rule had been a constant stumbling block between the European Commission and the European Parliament during the adoption procedure, from July 2003 until July 2007. Firstly mentioned in the opinion of the European Economic and Social Committee in September 2004 12, the crystallisation described above would begin with the first Reading of the Parliament in June 2005. Rejecting recital n 13 of Commission proposal justifying the double choice for the person sustaining the damage on the basis of environmental principles of Article 174 of the Treaty, European parliament has unequivocally warned that it considered the general rule of Rome II totally sufficient for dealing with environmental violations, and that Rome II should only focus on the issue of applicable law, not without substantive law on 9 REGULATION (ECC) No 864/2007 OF THE EUROPEAN PARLIAMENT AND THE COUNCIL of 11 Jul. 2007 on the law applicable to non-contractual obligations (Rome II), art. 17 10 CJEC, Joined Cases C-369/96 and C-376/96, Judgement of the Court in preliminary ruling in the criminal proceedings against Jean-Claude Arblade and Arblade & Fils SARL and Bernard Leloup, Serge Leloup, Sofrage SARL, 23 Nov. 1999 11 REGULATION (ECC) No 593/2008 OF THE EUROPEAN PARLIAMENT AND THE COUNCIL of 17 Jun. 2008 on the law applicable to contractual obligations (Rome I), art. 9.1 12 Opinion of the European Economic and Social Committee of the 28 Sept. 2004 on the proposal COM(2003) 427 final 2003/0168 (COD) for a Regulation of the European parliament and the Council, on the Law Applicable to Non-contractual Obligations («Rome II») Marc-Antoine Carreira da Cruz, 2012 Do not quote without permission Page 4

environmental liability. 13 In its second proposal, the European Commission would reject this amendment, meaning that the proposed rules reflect the polluters pay principle promoted by the Community and already applied in several Member states, and underlying political division of the Parliament. 14 After the Common position adopted by the Council on September 2006, the Parliament would repeat the same amendment and justification in its second reading recommendation position of December 2006 15 but would finally integrate it at the end of the second Reading in January 2007. 16 The definition of the environmental damage The other and logically complementary significant issue at stake in article 7 is the definition of environmental damage. This being a crucial point, the admissibility of some claim related to compensation for environmental damage depends on the definition used in Rome II. There have also been some disagreements between the Commission and the Parliament on this particular issue. The Parliament indeed proposed in its second Reading that environmental damage cover damage to protected species and natural habitats, water damage and land damage following the definitions of article 2 of Directive 2004/35/EC on environmental liability with regards to the prevention and remedying of environmental damage. 17 The European Commission s opinion on this amendment focused on the concern for a restrictive scope of the definition, fearing that by confining the scope the rule would not apply to some specific types of pollution not covered by the scope. 18 As the Council declared that it could not accept all of the Parliament s amendments (and environmental damage was precisely one of the stumbling blocks), a conciliation procedure became unavoidable. It was opened on 15 May 2007 and allowed the European Commission and the European Parliament to reach a final agreement on the definition of the purpose of the Regulation. 19 In its final version, Rome II states that environmental damage should be understood as meaning adverse change in a natural resource, such as water, land or air, impairment of a function performed by that resource for the benefit of another natural resource or the public, or impairment of the variability among living organisms. 20 As this definition is quite wide, important debates could 13 EUROPEAN PARLIAMENT Legislative resolution of 27 Jun. 2005 on the proposal A6-0211/2005 for a Regulation of the European parliament and the Council, on the Law Applicable to Non-contractual Obligations («Rome II»), first reading 14 COMMISSION OF THE EUROPEAN COMMUNITIES Amended Proposal COM(2006) 83 final 2003/0168 (COD) of the 21 Feb. 2006 for a Regulation of the European parliament and the Council, on the Law Applicable to Non-contractual Obligations («Rome II») 15 EUROPEAN PARLIAMENT Recommendation for second reading (9751/7/2006 C6-0317/2006 2003/0168(COD)) of the 22 Dec. 2006 on the Council common position for adopting a regulation of the European Parliament and of the Council on the law applicable to non-contractual obligations ("ROME II") 16 EUROPEAN PARLIAMENT Position P6_TC2-COD(2003)0168 adopted at second reading on 18 Jan. 2007 with a view to the adoption of Regulation (EC) No.../2007 of the European Parliament and of the Council on the law applicable to non-contractual obligations ("ROME II") 17 ibid. 18 COMMISSION OF THE EUROPEAN COMMUNITIES Opinion COM(2007) 126 final 2003/0168 (COD) of the 14 March 2007 in accordance with point (c) of the third subparagraph of Article 251(2) of the EC Treaty on the European Parliament s amendments to the Council common position on the proposal for a Regulation of the European Parliament and of the Council on the law applicable to non-contractual obligations ("ROME II") 19 COUCIL OF THE EUROPEAN UNION Parliament-Council Conciliation Committee 9713/07 C/07/111 of 16 May 2007: Agreement on Regulation on the law applicable to non-contractual obligations ("ROME II") 20 REGULATION (ECC) No 864/2007 OF THE EUROPEAN PARLIAMENT AND THE COUNCIL of 11 Jul. 2007 on the law applicable to non-contractual obligations (Rome II), regarding n 24 Marc-Antoine Carreira da Cruz, 2012 Do not quote without permission Page 5

happen around the admissibility of some claim related to compensation for environmental damage. Faced with this debate, the judge could naturally look at the preparatory works of the Regulation, but above all using interlocutory question to the European Court of Justice. 21 As mentioned previously, the preparatory work clearly states the role of Directive 2004/35/EC on environmental liability with regards to the prevention and remedying of environmental damage. This last one strongly goes into detail, refining the definition scope used in Rome II. Nevertheless, as defining environmental damage involves defining a wide range of concepts, Article 2 of Directive 2004/35/EC does not really close the chapter of the damage concept. Indeed, Article 2 is structured around a big scaffolding of definitions and sub-definitions, some of them defined by reference to other European instruments. Relevant examples can be found in the cases of water damage with the Directive 2000/60/EC, protected species and natural habitats with the Directive 79/409/EEC and 92/43/EEC. Moreover, this scaffolding of sub-definitions, as complete as it may be, is not exempt of surprises: the most explanatory example is probably the absence of connection with other European instruments for definitions using concepts such as organisms and micro-organisms. As the judge, following article 2, will consider damage as a measurable adverse change in natural resource of measurable impairment of a natural resource service which may occur directly or indirectly, and considering environmental damage has any damage having a significant adverse on reaching or maintaining the favourable conservation of natural habitats or protected species 22, he will necessarily open the doors to the sub-definitions developed in article 2 and discover the unsuspected stock of quiddities regarding specific sub-definitions affecting the main definition of damage. 2. CONCLUSION Rome II rule on environmental damage is a new step in the European and International legal framework of environmental damage. The article 7 rule completes some of the already existing material legal instruments focusing on public authorities intervention in this field. Fully in the line of the polluters pay principle and of the trend of improving cross-borders elevation of environmental standards, this regulation open new perspectives for claimer facing environmental damage. But this new instrument needs some clarifications for its full use: First, the exact articulation of the overriding mandatory provisions in the framework of the article 7 is not clear at this point. Secondly, as an indirect impact on Rome II can be noted, the admissibility of some claim will depend on the concept of environmental damage as built upriver of Rome II. The unavoidable substantive law aspect of this conflict laws disposition sneaks in indirectly. The only sure thing we really wait is the development of jurisprudence to see how extensive the damage definition can be, and thus open the door to various claims, allowing, maybe, unsuspected potential for environmental justice. 21 TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION of the 1 Dec. 2009, art. 267 22 DIRECTIVE 2004/35/EC OF THE EUROPEAN PARLIAMENT AND THE COUNCIL of 21 Apr. 2004 on environmental liability with regard to the prevention and remedying of environmental damage, art. 2 Marc-Antoine Carreira da Cruz, 2012 Do not quote without permission Page 6