ENVIRONMENTAL LIABILITY IN GREECE

THE LEGAL FRAMEWORK & THE ROLE OF FINANCIAL GUARANTEES/ INSURANCE PRODUCTS TO COVER OPERATORS’ RESPONSIBILITIES UNDER DIRECTIVE 2004/35/EC

George D. KonstantinopoulosAttorney at the Supreme Court – Senior EU Legal Expert

Directive 2004/35/EC on the environmental liability with regard to the prevention and remedying of environmental damage (ELD)

Objective

To prevent (Art. 5 and 8) and remedy (art. 6, 7, 8 and Annex II) environmental damage by establishing a framework on environmental liability based on the Polluter Pays Principle.

Operators causing environmental damage or imminent threat of damage have to prevent and remedy the damage and to bear the necessary costs.

Liability Regime – When are operators liable?

Request for Action

Article 14 – Financial Security

1. Member States shall take measures to encourage the development of financial security instruments and markets by the appropriate economic and financial operators, including financial mechanisms in case of insolvency, with the aim of enabling operators to use financial guarantees to cover their responsibilities under this Directive.

2. The Commission, before 30 April 2010 shall present a report on the effectiveness of the Directive in terms of actual remediation of environmental damages, on the availability at reasonable costs and on conditions of insurance and other types of financial security for the activities covered by Annex III. The report shall also consider in relation to financial security the following aspects: a gradual approach, a ceiling for the financial guarantee and the exclusion of low-risk activities.

Article 14 – Financial Security

In the light of that report, and of an extended impact assessment, including a cost-benefit analysis, the Commission shall, if appropriate, submit proposals for a system of harmonised mandatory financial security.

Transposition in Greece – PD 148/2009

By 30 April 2007, only 4 Member States had transposed the Directive in their national legal order

Commission started infringement procedures against 23 MS The European Court of Justice gave judgment against seven

Member States in 2008 and 2009 Greece transposed the Directive in 2009, through Presidential

Decree 148/2009

PD 148/2009 – Article 14

The operators, in order to cover their responsibilities, may make use of financial securities (insurance or other type of financial guarantees), including financial mechanisms in case of insolvency.

In these cases, the operator shall take care that the insurance conditions ensure at a reasonable cost the most integrated coverage of the remediation costs of potential environmental damages.

As of 1st May 2010, the activities listed under Annex III shall be subject to mandatory financial security, through a Decision issued by the Minister of Environment.

Law 4014/2011 postponed the adoption of this Decision to a later deadline (31/12/2012– not adopted until today).

Mandatory Insurance Regime for Hazardous Waste

A mandatory insurance regime has been introduced already since 2006 (Article 7 of JMD 13588) regarding hazardous waste management

Every company that manages or transports hazardous waste, is obliged to submit an insurance policy regarding restoration of environmental damage to the competent authority

The policy constitutes a prerequisite for the issuance of the relative administrative license of the activity

Experience gained from the application of the mandatory insurance regime regarding HW

There is a growing market in the insurance sector in Greece, providing competitive and reliable environmental liability insurance policies at relatively reasonable costs

Problems related to the insurance policies

Large discrepancies exist between the insurance policies available, mainly regarding:

The amount of the deductible

The exclusions (for example asbestos, lead)

Liability limitations (exclusion of biodiversity damage)

The coverage or not of gradual pollution

The duration of the extended reporting period

The provision of additional coverage (third party claims for bodily injury and property damage)

Obligatory conduction of an environmental audit

Problems related to the Insured

The majority of operators maintain low awareness and knowledge regarding environmental liability insurance policies.

The amount of the premium to be paid constitutes the main – if not the only – selection criterion.

The compliance level of a significant percentage of operators remains low. Thus, many operators consider the policy as a substitute for compliance.

Problems related to the Administration

Enforcement of environmental law is low, due also to the ongoing financial crisis

There is lack of information regarding the actual condition of the environment. (baseline information)

Environmental inspections are not performed on a regular basis

There is lack of dynamic monitoring systems of environmental parameters (for example, continuous measurements in all river basins as provided for by the WFD)

Open issues and Challenges

Developing understanding in EL insurance policies

Insurability of Operators Pre-audits / Risk assessment /

measurement of loss Taylor-made policies for each MS Claims management Ceilings of financial guarantees Co-operation with national

authorities

Financial security: optional or mandatory?

Clarity and precision in the rules on restoration of environmental damage and of the relevant insurance regime

Intensification of environmental inspections

Systematic monitoring of environmental parameters

Co-operation with industry & insurance sector

Fishing the small fish or the big fish? Which is which?

INSURERS & INSURED GOVERNMENT

THANK YOU

Hellenic Environmental Law SocietyHellenic Environmental Law Society

Dr. Ioanna KoufakiDr. Ioanna KoufakiAttorney at the Supreme Court, President Attorney at the Supreme Court, President

George KonstantinopoulosGeorge KonstantinopoulosAttorney at the Supreme Court, MemberAttorney at the Supreme Court, Member