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EU Court Ruling Increases Risk of Environmental Liability

Source: Marsh

Posted on 23 Mar 2010

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A recent ruling in the European Court of Justice (ECJ) held that the European Union (EU) regulatory authorities can require a company to ameliorate polluted areas even without "absolute proof" that the company was responsible for the pollution or for making it worse.

The ruling — one of the first with respect to the EU Environmental Liability Directive — states that "authorities do not have to provide absolute proof of responsibility for environmental damage before requiring an installation (company) to clean up a polluted area." The ruling also applies to sites that companies "inherit" as part of acquisitions or mergers.

"This leaves clients, that may not have been liable otherwise, vulnerable to pollution lawsuits," said Chris Smy, Global Environmental Practice Leader.

"Environmental insurers have products that can assist clients with addressing the potential liabilities they might face in light of this ruling," Smy added.