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EXPERTS WARN EU OF WEAK OFFSHORE LIABILITY LAW

Source: Europe DAILY, Monday 18 August 2014

The application of the polluter pays principle to offshore oil and gas operations is "extremely limited" across Europe, with many claims likely to fail in the event of a major accident, according to a major study for the European Commission.

Many EU member states do not have systems to handle compensation payments, or rules to ensure operators would have the financial assets to meet such claims, say consultancy Deloitte and law firm Stevens & Bolton.

The biggest issue is the lack of recognition in many countries for "pure economic loss", which means claims other than those for bodily injury or damage to property would be unlikely to succeed. That poses a serious risk to the fishing and tourism industries in the event of a major pollution incident.

The report will feed into the Commission's work on the effectiveness of member states' liability regimes. This may see the Commission bring forward a legislative proposal by July next year. It will also underpin its research on compensation claims for offshore accidents, which could also be accompanied by a proposal.

The Commission is mandated to investigate these issues by the 2013 directive http://www.endseurope.com/32444/?referrer=bulletin&DCMP=EMC-ENDS-EUROPE-DAILY on offshore oil and gas safety. The directive, drafted in the wake of the Deepwater Horizon disaster in the US, aims to prevent accidents and to ensure a prompt response to any incident, including through ascribing sole responsibility to offshore licensees.

But while EU law applies the polluter pays principle to the costs of preventing and remedying damage, it fails to apply the principle to the costs of personal compensation claims, the experts found. They also found the same deficiency in national laws.

In effect, a "quasi-subsidy exists for offshore oil and gas operators because the public purse would bear the costs of compensation for traditional damage from pollution caused by the operators", the report warns.

It is also unclear whether many countries' tort law - civil law that provides a remedy for a person who suffers harm - applies in the sea.

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Link to Report - http://ec.europa.eu/energy/oil/offshore/doc/201408_offshore_oil_and_gas_activities.pdf

Other: http://boe.es/boe/dias/2014/08/13/pdfs/BOE-A-2014-8694.pdf in Spain's official gazette

 

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