Environmental liability deal leaves compulsory insurance out of the picture

The agreement reached in conciliation between Parliament and Council has left it to the Commission to propose compulsory insurance schemes for companies six years after the directive enters into force.

Disagreements between the Parliament and the Council were ironed out in conciliation committee. The most serious related to the question of whether or not to impose mandatory insurance schemes to companies, as was requested by Parliament. It was finally agreed that they would take an insurance scheme only on a voluntary basis. In return, the Council agreed to an amendment requiring the Commission to issue a report on developing a possible mandatory insurance scheme six years after the entry into force of the directive. It could then submit a proposal on a harmonised system of financial security that would set a ceiling for compensation and exclude low risk activities. In the meantime, Member States are required to encourage insurance companies to develop such security instruments and operators to use them.

On another sensitive issue, that of finding ways to treat the damage after it has been made (the so-called remedies), it was agreed that they would be be carried out by the authorities only as a means of last resort.

An innovative feature of the directive is that it allows public interest groups such as NGOs to require public authorities to act or to challenge their decisions before the courts.


Toine Manders MEP(VVD/NL), the Parliament's rapporteur on the directive, expressed his satisfaction about the unexpectedly smooth adoption of this proposal in the conciliation negotiations between Council and Parliament: "My initial goal was to accomplish workable and reasonable legislation with an emphasis on prevention, safeguarding at the same time a level playing field for companies in the EU. Looking at the outcome, I see that these objectives have largely been reached. I am particularly pleased that agreement has been reached before the enlargement of the EU."

Greenpeaceexpressed dissatisfaction with the agreement reached in conciliation. In a statement, it said the deal does not give enough edge to the directive and qualified it as weak overall. It said the agreement "fails to shift the financial burden of environmental repair from the public purse to the companies responsible" because it does not impose mandatory financial guarantees to operators.

Environment CommissionerMargot Wallströmsaid the introduction of the polluter pays principle is a cornerstone in the EU's environmental policy. She declared that she was particularly proud to deliver on this dossier as it was one of her big commitments when she joined the Commission in 1999.

European insurersassociation CEA, said they fundamentally opposed compulsory insurance schemes as evaluating the economic cost of damage (such as the disappearance of species of birds) was impossible at present.


A deal was finally struck on the environmental liability directive after Council and Parliament reached an agreement in conciliation committee. The directive enshrines the 'polluter pays principle' that makes companies liable for the environmental damage they may cause. Legally speaking, the directive will tackle damage made to land, water and biodiversity but will not cover the economic losses resulting from those damages. The conciliation committee was convened in January after a Parliament vote in second reading made it obvious that its views differed too widely from that of the Council (seeEurActv, 18 December 2003).


The Parliament and the Council now have six weeks to formally ratify the agreement. Member States will have three years to implement the directive after it is published in the Official Journal.



Life Terra

Funded by the LIFE Programme of the EU

The content of this publication represents the views of the author only and is his/her sole responsibility. The Agency does not accept any responsibility for use that may be made of the information it contains.

Subscribe to our newsletters