7.02  This aspect of the Commission’s Proposal initially met with a mixed reaction from the Member State delegations in the Council’s Rome II Committee.² Some supported the choice offered to the victim,³ while others argued for the deletion of the rule, or expressed concerns, on the grounds that it was unnecessary and/or that it was too onerous.⁴ The European Parliament, on the recommendation of its JURI Committee,⁵ (p. 431) deleted the special rule at its first reading stage.⁶ That position was not accepted, however, by either the Commission⁷ or the Council’s Rome II Committee, whose member delegations were slowly being persuaded by the merits of the rule.⁸ That momentum was carried forward into the Council’s Common Position, the wording of which is mirrored in Art 7 of the Regulation in its final form. The recommendation of the EP JURI Committee to delete this rule on second reading⁹ was defeated in the plenary session.¹⁰ The only issue remaining in the conciliation process was the Parliament’s proposal to insert a recital defining the concept ‘environmental damage’ by reference to Art 2 of the Environmental Liability Directive.¹¹ This move, although not accepted by the Council, led to the compromise text now to be found in Recital (24).¹²

7.03  Like the other rules in the Rome II Regulation, Art 7 applies only to ‘civil or commercial matters’.¹³ This concept in Art 1(1), which also appears in the Brussels I Regime and Rome I Regulation, covers not only claims between private parties, but also claims by non-public bodies to enforce, for example, laws for the protection of consumers.¹⁴ On the other hand, it excludes from the scope of the Regulation claims by or against States or other public bodies acting in the exercise of their public powers.¹⁵ In Netherlands State v Rüffer, a claim by the State, as the authority responsible (p. 432) for policing inland waterways, to recover the costs of removing a wreck was held not to constitute a civil matter within the Brussels Convention. On this basis, a claim by a public authority to recover its costs of remedying a pollution incident from the person responsible for that incident would also fall outside the scope of the Rome II Regulation if that action was based on a provision enabling it recover the costs of exercising its public powers.¹⁶ The Regulation would, however, apply (for example) if the public authority based its claim on a right to compensation for damage suffered by it as the owner of land¹⁷ or as transferee, by subrogation or otherwise, of the private law rights of an injured person.¹⁸

7.04  In relation to matters of jurisdiction and the enforcement of Member State judgments under the Brussels I Regime, Gerrit Betlem and Christophe Bernasconi have argued for a ‘green’ interpretation of the concept of ‘civil and commercial matters’ so as to cover claims by public authorities acting in the exercise of their public powers to ensure compliance with environmental law.¹⁹ This argument is based on the objectives for environmental protection listed in Art 174 of the EC Treaty.²⁰ The authors note that in Verein für Konsumentinformation v Henkel,²¹ the ECJ referred to the Unfair Terms in Consumer Contracts Directive²² to support a broad construction of the connecting factor in Art 5(3) of the Brussels Convention (matters relating to tort, delict, or quasi-delict),²³ and suggest that the Environmental Liability Directive may require a similar approach to be taken to the concept of ‘civil and commercial matters’ in Art 1(1) of the Brussels I Regulation insofar as the civil enforcement of environmental protection measures are concerned.

7.05  With respect, this argument cannot be accepted, whether in relation to the Brussels I Regime or the Rome II Regulation. In Henkel, the claim before the Court had been brought by a consumer organization under the Austrian regulations implementing the Unfair Terms Directive, which in turn specifically contemplates that court proceedings may be taken by organizations of this kind to enforce the terms of the Directive.²⁴ It was the (p. 433) claimant’s status as a consumer organization, and the fact that it was not exercising public powers, and not the fact that it was pursuing an action to enforce EC law, that brought the claim within the concept of ‘civil and commercial matters’ under the Brussels Convention.²⁵ The Environmental Liability Directive, on the other hand, excludes any intention to affect civil liability regimes²⁶ and achieves its objectives by conferring enforcement powers on the Member States’ designated competent authorities.²⁷ Natural or legal parties may request the competent authority to act,²⁸ and must be given access to a court or other independent and impartial body to review the competent authority’s decisions, acts, or failure to act under the Directive.²⁹ The Directive does not, however, confer a direct right of action against the polluter on individuals or representative groups. Further, the Directive disclaims any intention to affect rules of private international law.³⁰ The Directive thus leaves the law applicable to non-contractual obligations arising out of environmental damage to be determined by reference to the rules of applicable law contained in the Rome II Regulation (principally, but not exclusively,³¹ Art 7), subject to any overriding mandatory rules of the law of the forum³² and to any international convention prescribing rules of applicable law.³³ It does not purport to affect the scope or content of that instrument or the Brussels I Regulation.

7.06  Against this background, the right of a Member State’s competent authority to recover the costs of taking preventative and remedial measures under the Directive,³⁴ and the exercise of any similar right conferred on it under national law,³⁵ should be seen as being based on the exercise of (p. 434) powers of a public nature conferred exclusively on it, and as falling outside the Brussels I Regime and the Rome II Regulation. The cross-border recovery by Member State authorities of clean up costs involves mutual legal assistance,³⁶ which is properly the subject of a Community measure under Art 175 of the EC Treaty. It is not appropriate for it to be shoehorned into instruments dealing with private international law rules adopted under Arts 61 and 65. Nor, in the case of the Art 7 of the Rome II Regulation, can it be said that the objectives set out in Art 174 of the EC Treaty have not been taken into account, as they are specifically referred to in Recital (25) as justifying the adoption of a rule favourable to the person sustaining the damage.³⁷ Accordingly, the concept of ‘civil and commercial matters’ in Art 1(1) of the Regulation should not be given a broader interpretation for matters falling within Art 7 than for matters falling within the other rules of applicable law in Chapters II and III.

7.07  Art 7 applies to ‘environmental damage or damage sustained by persons or property as a result of such damage’.

7.09  This broad and concise definition may be compared with the more detailed, and narrower,³⁸ definition contained in the Environmental Liability Directive, as follows:³⁹

1. 1. ‘environmental damage’ means:

   1. (a)  damage to protected species and natural habitats,⁴⁰ which is any damage that has significant adverse effects on reaching or maintaining the favourable (p. 435) conservation status⁴¹ of such habitats or species. The significance of such effects is to be assessed with reference to the baseline condition, taking account of the criteria set out in Annex I;

      Damage to protected species and natural habitats does not include previously identified adverse effects which result from an act by an operator which was expressly authorised by the relevant authorities in accordance with provisions implementing Article 6(3) and (4) or Article 16 of Directive 92/43/EEC⁴² or Article 9 of Directive 79/409/EEC⁴³ or, in the case of habitats and species not covered by Community law, in accordance with equivalent provisions of national law on nature conservation.

   2. (b)  water damage, which is any damage that significantly adversely affects the ecological, chemical and/or quantitative status and/or ecological potential, as defined in Directive 2000/60/EC,⁴⁴ of the waters⁴⁵ concerned, with the exception of adverse effects where Article 4(7) of that Directive applies;

   3. (c)  land damage, which is any land contamination that creates a significant risk of human health being adversely affected as a result of the direct or indirect introduction, in, on or under land, of substances, preparations, organisms or micro-organisms;

2. 2. ‘damage’ means a measurable adverse change in a natural resource⁴⁶ or measurable impairment of a natural resource service⁴⁷ which may occur directly or indirectly.

7.10  The Environmental Liability Directive applies to (a) environmental damage caused by any of the occupational activities listed in Annex III to the Directive, and (b) damage to protected species and natural habitats caused by other occupational activities through the fault or negligence of the operator, as well as to any imminent threat of such damage occurring by reason of such activities.⁴⁸ Certain matters are also specifically excluded from the scope of the Directive.⁴⁹ The definition of ‘environmental damage’ in Recital (24) of the Rome II Regulation is not subject to these restrictions, although nuclear damage is excluded from the scope of the Regulation by Art 1(2)(f).⁵⁰

7.11  Without prejudice to relevant national legislation, the Environmental Liability Directive accords no right of compensation to private parties as a consequence of environmental damage or of an imminent threat of such damage.⁵¹ Nor does the Directive apply to cases of personal injury, to damage to private property, or to any economic loss; nor does it affect any right regarding these types of damages.⁵²

7.12  Art 7 of the Regulation, on the other hand, expressly extends to ‘damage sustained by persons or property’ as a result of environmental damage. These words, initially suggested by the Belgian delegation,⁵³ were no doubt intended to emphasize that Art 7, unlike the Environmental Liability Directive,⁵⁴ applied to claims for personal injury and property damage resulting from environmental damage. Although the English language version is not as clear as it might be,⁵⁵ it may appear that liability for economic loss resulting from environmental damage, but not itself consequential on personal injury or property damage, falls outside Art 7, and within the general rule in Art 4. That impression is supported by Recital (14) to the Environmental Liability Directive⁵⁶ which refers to ‘economic loss’ alongside personal injury and damage to private property as a matter excluded from the scope of the Directive.

7.13  Against this view, it can be argued that the addition of the specific reference to ‘damage sustained by persons or property’ serves only to emphasize that personal injury or property damage must not be treated as ‘indirect consequences’ of the environmental damage from which they arise when applying the rule of applicable law in Art 4(1), to which Art 7 refers.⁵⁷ On this view, a claim to recover ‘pure’ economic loss consequential upon environmental damage may still fall within Art 7, although its location will not be a relevant factor in determining the law applicable under Art 4(1).⁵⁸ This seems the better view, as it avoids unnecessary (p. 437) splitting of the applicable law between claims for environmental damage and economic loss flowing from it and is consistent with the objectives underlying Art 7, set out in Recital (25).⁵⁹

7.14  In characterizing a claim as falling within or outside Art 7, it is the consequences of the event giving rise to damage and not the event giving rise to damage itself that must be analysed. If the obligation in question concerns the responsibility of the defendant or a person for whose acts the defendant is liable for environmental damage or its consequences, Art 7 will apply whether that responsibility is strict or fault-based. Under English law,⁶⁰ the provision will accommodate many claims based on the tort of nuisance⁶¹ or the related principle originating in the nineteenth century case of Rylands v Fletcher⁶² as well, for example, as some cases of tortious negligence and breach of statutory duty.

7.15  Art 7 provides that the law applicable to a non-contractual obligation arising out of environmental damage or damage sustained by persons or property as a result of such damage shall be determined in accordance with Art 4(1), resulting in the application of the law of the country in which the damage occurred. The person seeking compensation for damage may, however, choose instead to base his or her claim on the law of the country in which the event giving rise to the damage occurred.

7.17  As a starting point, the law applicable to non-contractual obligations falling within the scope of Art 7 is determined by the provisions of Art 4(1), pointing towards application of the law of the country in which the damage occurred (or is likely to occur).⁶⁴ Art 7 does not cross-refer to Arts 4(2) or 4(3), allowing displacement of the law of the country of damage on the basis of a common habitual residence or manifestly closer connection to another country.⁶⁵ Nor is it a relevant consideration that the defendant could not have foreseen that damage would occur in the country in question.⁶⁶

7.19  The structure of Art 7 suggests that the location of the environmental damage and the location of resulting damage sustained by persons or property must be determined separately for the purposes of determining the basic applicable law, although it may be doubted whether this will make any material difference to the outcome of the enquiry.⁶⁷ For personal injury or damage to property, Recital (17) provides that the country in (p. 439) which the damage occurs should be the country where the injury was sustained or the property was damaged respectively. For environmental damage, the wording of Recital (24)⁶⁸ suggests that the damage will occur in any place in which there is an 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 (as applicable).

7.20  In the case of water or air pollution, in particular, the change may spread itself over a wide area. In principle, damage must be considered to have occurred in every country in which there is an adverse change to water or air quality, even if this results from the diffusion of pollutants from their original source due, for example, to the flow of a river⁶⁹ or wind. If the claim relates to environmental damage in more than one country, the laws of those countries must be applied on a distributive basis.⁷⁰

7.21  Economic loss consequential upon damage to persons or property or, if within the scope of Art 7,⁷¹ environmental damage must be considered to be an indirect consequence of the environmental damage and left out of account in determining the law applicable under Art 4(1).⁷²

7.22  The person seeking compensation, who will not necessarily be the same as the person who originally sustained the damage, may elect that the law of the country in which the event giving rise to damage occurred should be applied instead of the law or laws to which Art 4(1) points. For this purpose, the ‘event giving rise to the damage’ should be taken as the event for which the defendant is alleged to be responsible, whether or not it consists of his own act or omission.⁷³

7.24  If the claimant elects to have applied the law of the country in which the event giving rise to damage occurred, that law will displace the law or laws otherwise applicable by reference to Art 4(1) for all purposes. The claimant may not, for example, seek to apply one law to the question of the defendant’s liability and another to the question of available remedies. There is no room for dépeçage‎.⁷⁵

7.25  Recital (25) provides that ‘the question of when the person seeking compensation can make the choice of the law applicable should be determined in accordance with the law of the Member State in which the court is seised’. For example, under the pre-existing German law, which recognized a similar right of election for torts generally,⁷⁶ the election (Bestimmungsrecht‎) must be made before the end of the first hearing or written pre-trial proceeding⁷⁷ in the court of first instance. A similar rule is proposed in Art 46a of the German draft law to adopt the Rome II Regulation.⁷⁸

7.26  Under current English procedural law, a party wishing to assert that a foreign law applies to the case must plead and prove (by expert evidence) that foreign law to the satisfaction of the judge.⁷⁹ Otherwise English law will usually be applied even in cross-border cases.⁸⁰ These rules, and their (p. 441) relationship to the rules of applicable law in the Regulation, are examined more closely in Chapter 14 below.⁸¹ In this connection, however, and subject to compliance with the relevant rules of procedure and to the court’s discretion in case management matters, it remains open to a party to seek to amend his statement of case⁸² and to adduce additional evidence⁸³ at any point up to and, in limited circumstances, following judgment or on appeal.⁸⁴ ‘Decisions as to the form of the pleadings and the relief to be sought are not an election against reliance on other allegations of fact or law, or other claims, and a party may change his position subject to obtaining leave’.⁸⁵ Accordingly, in the absence of a specific procedural rule for the exercise of the right of a claimant before the English courts to choose that the law of the country in which the event giving rise to the damage occurred should apply to a claim under Art 7, it would appear to remain open to him to make that choice at any time, subject to the court’s discretion as to whether to allow any amendment of his statement of case or additional evidence required for this purpose.

7.29  With respect to Art 7, if the claimant chooses to base his claim on the law of the country in which the event giving rise to damage occurred or if the damage also occurred in that country leading to the application of its law in any event, the defendant may rely (for example) on the fact that he complied with local emissions standards or on the terms of a public licence to undertake certain activity, if those facts constitute a defence under that law. If, on the other hand, the damage occurred in a country other than that in which the defendant acted, and the claimant does not exercise his right of election under Art 7, the defendant’s compliance with regulatory standards or the terms of a licence granted by the authorities for the place where the defendant acted will assist him only if, having regard the law of the country of damage, it is appropriate to take them into account under Art 17 in assessing the defendant’s fault (if liability is fault based) or if that law recognizes his compliance as having equivalent effect to compliance with its own regulatory requirements or to a public licence granted under its own law and as providing him with a defence. Questions as to the recognition of a foreign licence, being a matter concerning the grounds of exemption from liability, are governed solely by the law applicable under the Regulation.⁹⁰ Art 17 does not extend this far.

(p. 443) 7.30  In the well-known case of Bier v Mines de potasse d’Alsace, following reference to the ECJ on the question of jurisdiction,⁹¹ the French defendant raised in its defence the fact that it had been authorized to carry out its activities by permits granted under French law. That defence was rejected both at trial and subsequently on appeal on the ground that the permits expressly preserved the rights of third parties.⁹² The Dutch first instance court acknowledged, however, that the existence of the French permits was ‘not without importance to the question of liability’.⁹³

7.31  Cross-border activities causing environmental damage are increasingly regulated by international agreements.⁹⁴ Among other matters, some conventions regulate civil liability of those responsible for pollution or the causes of pollution, particularly in relation to the marine environment.⁹⁵ Typically, these conventions do not contain rules concerning the law applicable to civil claims.⁹⁶ Instead, they regulate substantive law and require State parties to give effect to their provisions in all situations to which they apply. Accordingly, if the Member State in which proceedings are brought is a party to a relevant civil liability convention, the provisions of that convention will likely take precedence as overriding mandatory provisions of (p. 444) the law of the forum State under Art 16 of the Rome II Regulation, whether directly or through the measures taken by that State to implement the convention. If the Member State in which proceedings are brought is not a party to a relevant civil liability convention, then the convention will probably have effect only if the State whose law applies to the non-contractual obligation under Art 7 is a party and if the matters regulated by the convention fall within the scope of the law applicable, as defined in Chapter III of the Regulation,⁹⁷ excluding matters of evidence and procedure.⁹⁸

7.32  Arguably, the most important of the conventions in force dealing with civil liability for environmental damage are the 1969 Convention on civil liability for oil pollution⁹⁹ and the 2001 Convention on civil liability for bunker oil pollution damage.¹⁰⁰ These contain detailed rules governing the liability of shipowners and related persons for pollution damage caused by the escape of oil from ships. All Member States with the exception of Austria, Czech Republic, Romania, and Slovakia are Contracting States under the Oil Pollution Convention.¹⁰¹ Twelve Member States are States Parties under the Bunker Oil Pollution Convention.¹⁰²

7.33  The Oil Pollution Convention in its amended form applies to oil pollution caused in the territory of a Contracting State, including in its territorial sea, or in a Contracting State’s exclusive economic zone established under (p. 445) international law.¹⁰³ The Convention provides for the liability of the shipowner at the time of the pollution incident, excludes the liability of others,¹⁰⁴ permits the shipowner to limit his liability by establishing a limitation fund in a Contracting State court,¹⁰⁵ and protects shipowners who have taken this step.¹⁰⁶ The Convention also requires oil-carrying ships registered in a Contracting State to take out insurance, and provides for a right of direct action against the insurer.¹⁰⁷ The Bunker Oil Pollution Convention, which has the same territorial scope,¹⁰⁸ is modelled along similar lines.¹⁰⁹ Both Conventions contain rules on jurisdiction and the recognition and the enforcement of judgments, but not as to the law applicable to matters not expressly regulated by the Convention.¹¹⁰

7.34  Neither Convention applies to oil pollution damage caused in a non- Contracting State or on the high seas. The law applicable to claims with respect to such damage in a Member State court must be determined in accordance with Art 7 of the Rome II Regulation.¹¹¹(p. 446)