Environmental liability: Applying the 'polluter pays' principle


Successive man-made disasters have seen the EU adopt rules to enforce the 'polluter pays principle' on companies responsible for major environmental damage. 

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The 'polluter pays' principle is enshrined in Article 130(2) of the EU Treaty and serves as the basis of the Environmental Liability Directive, based on the precautionary principle.

The directive was approved by the European Parliament and the Council of Ministers, which represents EU member states, in February 2004 after a conciliation committee had ironed out persisting disagreements between the two EU lawmaking institutions. These included remedies, the harmonisation of financial security and maritime claims.

On 12 October 2010, the Commission backed down on proposals to introduce a mandatory EU-wide financial liability scheme forcing companies to pay for environmental damage, saying that it should be up to member states to decide whether or not to impose their own schemes.

It also reported that lack of awareness was a major problem and was preventing the directive from being effectively applied.