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LIABILITY SUB-GROUP MEETING held on TUESDAY, 5TH NOVEMBER, 2002 at THE ROYAL HORTICULTURAL HALLS CONFERENCE CENTRE, GREYCOAT STREET, LONDON SW1 ____________ EVIDENCE-TAKING MEETING ____________ Transcript provided by Harry Counsell & Co. Cliffords Inn, Fetter Lane, London EC4A 1LD Telephone: 0207-242-9346 JUSTINE THORNTON: Today is an evidence-taking session. We’ve called, as it were, witnesses before us, although it is not as formal as that sounds. We have before us three lawyers to start the day, and they are Stephen Tromans, who is a barrister from 39 Essex Street, Chambers of Nigel Pleming QC; Professor Richard Macrory, who is a Professor of Law at University College, London; and Phil Michaels, who is a solicitor at Friends of the Earth. The idea is that we will ask each of them to make a ten-minute presentation to us, and then we will focus questions on each of them for about twenty minutes, and then we will finish with the half-an-hour session for a discussion involving the three of them. The session today is being recorded, which is why we have got the sound system. The idea is that a transcript will be made, and this will be posted on the web. The witnesses will have a chance to review the transcript before it is posted on the web and that that is in addition to a note of the meeting that will be made by the Secretariat, which will also be on the web. I hope you have got an Agenda, all those in the audience, to see how the rest of the day is planned out, but, as I say, we are starting with our three lawyers. I would like to ask - unless anybody else from the sub-group would like to add anything? SUE MAYER: Would you like us to introduce ourselves at all, for the record? JUSTINE THORNTON: Good idea. Perhaps if we start with Phil. PHIL DALE: I am Phil Dale, a Research Scientist at the John Innes Centre in Norwich, involved in essentially the safety of GM products within the environment. JOHN GILLILAND: I am John Gilliland. I am a farmer from Northern Ireland. MATTHEW FREEMAN: I am Matthew Freeman. I am with the Medical Research Council in Cambridge. SUE MAYER: I am Sue Mayer. I am a Director of Genewatch UK. ANNE PACKER: I am Anne Packer from the Commission Secretariat. ROGER TURNER: Roger Turner, Chief Exec for the British Society of Plant Breeders. JUSTINE THORNTON: Justine Thornton, Environmental Lawyer at Allen & Overy. DEREK LANGSLOW: Derek Langslow, Environmental scientist. JUSTINE THORNTON: Well, Richard, we thought we would start with you. PROF RICHARD MACRORY: Right. Well, thank you very much for the invitation. Can I start by saying that I am going to be speaking in my personal capacity, but I do wear a number of other hats. I am a Member of the Royal Commission on Environmental Pollution, and we are currently studying chemicals in the environment. In that context, we are ourselves exploring certain aspects of civil liability - interplay with the regulatory system. I am also a Board Member of the Environment Agency and, of course, in that capacity, we are very interested in the outcome of the European Community Environmental Liability directive, because, clearly, that is going to have implications for public bodies such as that. I also worked in the European Commission a number of years ago for a very brief period, but it was just at the time when the first thoughts on environmental liability were being proposed. I should also say I am not an expert in GMO law or technology. I think some of you are going to be far more expert on the details than I am. However, five years ago I was asked by the then Department of the Environment to be the rapporteur of the National Biotechnology Conference at Lancaster House, under the chairmanship of Lord Selborne. I deliberately, produced a very, very succinct report, which I hoped then would be read by ministers and not just civil servants. Although, in some respects, I think it was an early experiment in engaging wider interests, it now seems a kind of eon ago, but I did read it today, in preparation, just to see whether it had anything of relevance, and there were two passages which I thought were useful. First of all, there was a real need to develop a more clearly articulated set of underlying principles concerning the use of GMOs, but our current regulatory machinery was not the right mechanism for doing so. Secondly, the current regulatory machinery did not appear to deal adequately with the wider impact of GMO modified crops on the natural environment; and, in particular, the extent to which food webs and bio diversity could be affected - which, I suppose, is really where your Committee comes in. Now, civil liability issues were not raised at that particular conference, but, as I am sure again you are aware, the Royal Commission on Environmental Pollution in its 1989 report on GMOs had some discussion passages on civil liability, and explored the possible application of traditional common law remedies and the Consumer Protection Act, which I know you have been doing. Now, the passages in that commission report I think are almost as succinct as my biotechnology conference report, but they were based on quite wide research, and it concluded, which I am sure you are going to conclude today, that there were considerable uncertainties of the state of the common law, and recommended that strict liability principles should apply but, interestingly, only to anybody who released the GMO without a licence. So the Royal Commission then - I mean, I was not a member of it - very much tied in their strict liability principles with the licence. Now, that is quite a controversial issue now, actually, under the European Commission's proposals. Although the government, in fact, did put into effect most of the Royal Commission's recommendations concerning the need for a discrete regulatory machine, the recommendations about civil liability were, essentially, put on ice and, as often happens, they said: "Well, let's wait for a test case, and then see what happens". So, in considering any civil liability issues - and just to be clear, because again you will be aware that at community law level there has been a lot of muddle about what is meant by "civil liability", I am talking in the context, which I think you are, of party-party disputes; I mean, this is what we are essentially concerned with - I think really it is fundamental to decide what the main policy motive behind your regime is, or why you are doing it. Some fifteen years or so ago, at the height of the then Conservative government's concern with easing red tape, and so on, there was rumoured - although I never actually saw it myself – to be a paper put before a cabinet sub-committee, which argued, quite forcibly, that we could do away with all environmental and health & safety regulation, and simply reply upon the courts and common law concepts of nuisance and negligence to actually provide effective and, if you like, privatised machinery for inducing good behaviour; and in many areas what would, in fact, happen was that insurers for public liability would become the shadow regulator. Now, that, superficially, is quite an attractive argument, if you are going that way, and regulatory reform is, clearly, very much on the political agenda now. Certainly, I think, part of the original motivation behind the original EC thinking on the issue of civil liability was a concern that traditional regulatory approaches just cannot cope with contemporary environmental pressure, and if you crank up, if you like, the civil liability regime, that might do some of the job. It is also very consistent with what German lawyers describe - I cannot do the German for it - but they describe it as "reflexive law", which are, essentially, legal principles that are designed to make the operator or the producer, or whatever, really think about what they are doing, and therefore change behaviour accordingly. But, in practice, I think that approach, taken to extremes, is fraught with problematical issues, and indeed - I am sure Justine would have told the non lawyers - if you are looking at the way environmental law has developed in the UK, one can go back to the very first serious regulatory machinery, which was the Alkali Act 1863, and that resulted from a Parliamentary inquiry into crop damage - interestingly enough - caused by air emissions from local factories. The inquiry, when they looked into it, was faced with a paradox, that here there was clearly damage being caused - no problem about causation. It was possible to abate it with current technology, and in fact there were very powerful civil remedies available to the farmers (mainly, then, the civil law of nuisance) which, in theory, should have worked and should have been invoked, and should have deterred the behaviour. But, in practice, they hadn't - a whole number of factors: cost risk of litigation; the sheer distraction - anybody who has been involved in litigation will know that it just eats you up and you can't actually do your present job, particularly if you are a farmer - the problem of multiple defendants, and the fact also that farmers were often leasing land from the factory owners, and there were conditions and leases which prevented them taking action. That still happens today sometimes. Essentially all those issues are with us today. In addition, of course, civil law remedies are not good at preventative action. It is very difficult to get injunctions before damage occurs. Now, I think I might have been able to design a civil law liability system - principles, and so on - that might, effectively, replace the regulatory machinery, but I think it would require a lot more than just introducing strict liability. In one of last year's issues of the journal of Environmental Law, the distinguished Australian tort lawyer, Peter Cane, made what I thought was a very powerful case against tampering with civil liability principles for public policy purposes in respect of environment harm. Now, he does not deny the need to develop suitable policies and laws for the environment, but what he is saying is: do not use traditional civil liability for public policy purposes. In his view, the main purpose of any civil liability system should be to develop a fair and efficient system for compensating for harm, and that compensation goal should not be made more complex by introducing other motivating factors. That is, of course, a very traditional tort lawyer's view, but I have to say that it is one overall that I have considerable sympathy with. Certainly, if we look at the application of existing liability principles to GMO type situations, from the perspective of would they provide a reasonable system of compensation in terms of some of the scenarios that you have identified, there clearly are difficulties, and I am sure that others are going to expand further, but let me just summarise. I think I have got five, what I think are problematical areas: First of all - and I think mainly the examples I have got are farmers who suffer damage to their crops, or whatever - For a farmer who suffers damage from a GMO release on neighbouring property, would strict liability principles under Rylands & Fletcher apply? Would it fall within that concept? I should say that none of the three lawyers here have co-ordinated our responses, so you are quite likely to get three different views, being lawyers. But would strict liability principles apply? I think if you look at the Judgment in the Cambridge Water Company case on that, it does suggest that the courts today would take a rather more generous interpretation of what are considered ultra hazardous activities, and so it might well apply. Secondly, if a nuisance action were invoked - and, I think, again, people feel that Rylands & Fletcher are in the form of nuisance, but I might come back to that - to what extent could the defendant (i.e. the farmer who has released the GMO) argue that, say, an organic farmer, who is operating under very strict standards imposed by a private body, such as the Soil Association, was, in law, an over sensitive plaintiff? There are some well-known cases about people who use their property in what is considered to be a sensitive way, and to quote from a well-known case: "A man [or a woman] cannot increase the liabilities of his neighbour by applying his property to special uses, whether for business or pleasure." So I think that could be raised in a case. Thirdly, the Consumer Protection Act, of course, imposes strict liability, with some defences, for products, and was extended in 2000 to agricultural produce, and I see no reason, in principle, why - I mean, that would not apply to a GMO product which caused damage, in the context of the directive - but I cannot see it would apply to a neighbouring farmer, because it is a good defence that the product wasn't supplied to another or, in the words of the directive, was not put into circulation. This would apply to once the product is on the market and then maybe causes some damage, or whatever, but I cannot see that drifting from the place of production is what the Consumer Protection Act was designed to do. Fourthly, civil law liability systems - and I know you want to come back to this - do tend to restrict claims where pure economic damage is concerned, and that approach has been confirmed in recent case law concerning marine oil pollution. So while I think, as I say, the neighbouring farmer who suffered damage to his crops from a GMO contamination, if he was also then suffering economic losses from that because he lost out on contracts, he would have a good claim, I think, for instance, the shop seller of the organic produce down the line, who then missed out on his contracts, or could not get supplies, that would be considered pure economic loss and he would not have a claim. Then, of course, civil liability concepts really apply only to personal injury or property injury which is deemed capable of private ownership, and that means that certain types of environmental damage - such as damage to wild animals - effectively fall outside the system, and one has to look at statutory remedies. Finally, I would notice, again as I am sure you are fully aware, that the proposed EC directive on environmental damage, in the form that it has emerged, is really not concerned, I think, at all with private liability, in this context. It is concerned with, essentially, public liability or people's liability to public bodies to mediate and compensate for damage that they have done. That confusion between understanding what is meant by liability has actually dogged the debate in Europe, and when you talk to people, some people were talking about private liability, and some about liability to public authorities. I think the present outcome, which is essentially concerned with the powers and the responsibilities of public bodies, where damage has been done to certain aspects of the environment, at least that clarifies the situation. That is my twelve minutes. JUSTINE THORNTON: Thank you very much. I think you have certainly given us a lot to think about. Perhaps if we can start with questions. Perhaps I could kick off, and I am slightly thinking on my feet, because you have given us a lot to think about. It seems to me that you have pointed out a number of problems. You have also queried whether, in fact, civil liability is the answer to some of the issues. Query - are you saying we should look to a more regulatory focus? But then you say you did not go further and say what that regulatory focus might be. RICHARD MACRORY: I think, in a sense, I am going to leave it to you. I think you have to decide what the problems are, in a way, and what I am saying is that the civil liability system - and, I think, whenever we use "civil liability" I mean private - is important and it is useful, but it has got a very limited use, and I just feel that if you think this is going to be the answer to ensuring good standards of behaviour, or ensuring that mistakes do not happen, there is a lot of counter evidence on that. To give you another example - and I cannot give you the reference to it, I am afraid - about three years ago I was external examiner for a PhD thesis, written by a lawyer in the nuclear industry, which was looking at the extent to which the very strict civil liability regime in the nuclear industry affect the behaviour of the companies. It is something people are conscious of. Now, the nuclear is, of course, a statutory liability scheme; it is strict; there are upper financial limits, which are something you may have to think about. But the conclusion of that thesis was, in fact, the civil liability system and the need for insurance really was not what counted; what counted was the regulatory system, with the inspectors coming in, and so on, and the civil liability thing was very back in the mind. So I think what I am really saying is that if some of your motivation is that this is, if you like, good for the person being regulated, then I would be a bit suspicious. If, on the other hand, you are concerned about compensation for individuals who may get damaged, and so on, I think you have got another problem. I think one can look at the existing principles, and one can say, well, in certain situations it may work, and presume - and this is where your technology comes in - that in problems of causation, and so on, which is always a problem, there are things like gene markers, and so on, which could help trace causation. But, even then, there are things like pure economic damage, and I think you have then got to bring a very good case why, if you want to change that, is the GMO technology or industry really different from other types. I am sure Phil is going to tell us, yes, it is. I am not sure in the civil liability system it is, and I think there are just some limitations on civil liability. DEREK LANGSLOW: I think it was point number 2 that you talked about essentially a sector ---- RICHARD MACRORY: Over sensitivity. DEREK LANGSLOW: Yes. Where a sector can determine its own sensitivity and thereby influence the freedom of others that operate. PROF RICHARD MACRORY: Yes. MR DEREK LANGSLOW: It would be helpful, for me anyway, to just talk around that a little bit more. I mean, who has the right to determine that? PROF RICHARD MACRORY: This is going into the classic law of nuisance principles, and I am looking to my left and my right to make sure I get this right. I mean, the law of nuisance has essentially been concerned with balancing what are called reasonable interests - you know, what people can do - and the law has always, I mean for a long time, said that somebody who is considered to be over sensitive, whether personally - you know, I may have an acute sense of smell, and some people do, which is much more sensitive than anybody else round here, but the law would say that does not entitle me to impose those standards on you; I can only impose what a standard sense of smell is, and there are case laws about very sensitive technologies, and it is really where the risk falls, if you like; almost, I think, it is a kind of risk apportioning thing. It gets quite complicated, because the courts would not say - okay, I am operating a sensitive industry; you cause some damage - the courts would not say: "You are not entitled to anything". They would say: "Well, you are entitled to what a reasonable person operating a reasonable industry would be", if that makes sense. So it gets quite complicated. I have a feeling - it is very difficult - I mean, I think, you could argue that organic farming now is so widespread that it would not be considered ultra sensitive any more. On the other hand, I think I would be prepared to argue in court, if I was acting for the defendant, that if these were to incredibly strict standards - and it is interesting that the standards are not statutory standards; they are being, if you like, laid down by private bodies for registration - I think I would be prepared to argue that this is imposing too much. I don't know whether Stephen - I mean, am I allowed to bring in others on this point? JUSTINE THORNTON: Yes. DEREK LANGSLOW: Can I just ask: where does the accommodation of diversity, in this case in agriculture, fit in with that? Is that sort of part of the decision of what is reasonable? RICHARD MACRORY: Yes. I think it is related. I turn to the other principal in Rylands & Fletcher about what are considered to be ultra hazardous industries, and there is a certain kind of relationship with that; that if, in fact, you are considered to be an industry which is not ultra hazardous, in that sense, then the liability principle is much more ordinary, because, again, this is considered to be a reasonable thing to be doing, if you like. That is from the defendant's perspective. This is almost the other reversal from the plaintiff's. I mean, you get the same issue: supposing I was a night worker in a block of flats, I was the only night worker there, and I wanted to sleep all day in absolute peace, I would not be entitled to bring a nuisance action against my neighbours for doing what ordinary people are allowed to do during the daytime. On the other hand, if there comes a point where the majority of those particular flats happened to be night workers, that would change the standard. So that is where you begin to see that if more and more people are doing organic farming to a certain standard, then I think they stop being ultra sensitive, in that sense. So it is a matter of scale and judgement. PROFESSOR STEPHEN TROMANS: Well, the principle goes back to a case called Robinson v Kilvert, which is a well-known case involving someone who stored brown paper, which they manufactured on an upper floor of a warehouse, and the defendant produced heat from his industrial processes below, which, because of the nature of the brown paper, caused it to be injured - it shrivelled it up, or affected it in some way that would not have affected ordinary paper; nor was the heat such that it would have made the upper floors unusable for normal purposes, and the court basically said that because the activity below would not have been a nuisance for a normally sensitive type of use, in the words of the judge, "a man who carries on an exceptionally delicate trade cannot complain because it was injured by his neighbour doing something which would not injure anything but an exceptionally delicate trade". So if your injury flows only from the fact you are carrying out an exceptionally delicate trade, then that principle may preclude you having any remedy. However, you have got to distinguish that from a situation where someone does something which would cause injury to someone of an average sensitivity, but happens to cause your injury to the plaintiff or claimant because of the nature of their activities. There is another case called McKinnon Industries v Walker, where someone was growing flowers to sell commercially - orchids, I think - and there was some atmospheric fallout which affected the orchids, and the defendant tried to rely on the principle in Robinson v Kilvert, but could not rely on it because the activity would have affected flowers normally; it just happened to affect his flowers more severely and the effect was not too remote. So I think if you have got a situation where an organic crop producer is able to say: "Well, this would have injured a normal crop producer's crops, but it has affected me in a worse position", they would not necessarily there be precluded from an action, but if their injury arises purely and simply from the nature of their own particular activities, then there may be a defence. I think the difficulty is - and this, of course, is where having a liability regime may be helpful in sorting out, as it were, in advance, these issues of law, so people know where they stand without having to mitigate it - one would not know, under the common law, until you got into the court and argued it out, which way the court would go in relation to organic produce. RICHARD MACRORY: We keep talking about GMO damage. Now, it is quite interesting what we mean by "damage", because it is a very unusual form of damage. I mean, the normal damage is, you know, your product - or your home or your property - is made useless. Well, it is useless for some purposes, assuming it is no longer organic, in the sense that you could sell it, but presumably what is happening, your crop is still growing, in a way. I mean, that would be a bit of an argument in court. I think it would still be counted as damage to your particular interests, although it is a sort of transformation rather than damage. This is the problem why it is rather important, because you could only probably claim for the economic damage if it already flows from some, what is described as, physical damage, so I might have to get over that first hurdle. I think I could argue that a transformation - I call it that in shorthand - is damage. But I would notice again - and this is where I think one has to be very careful not viewing civil liability regimes as deterrent things - I assume that if I was a farmer and my crops were transformed in that way, and I had a claim, I would still be under a duty to mitigate my losses. So if I could sell the crops to non organic buyers, you know, I might end up - it is quite difficult to know what losses could be quantified. So that would all come into it. I would not get damages just for the insult; I would have to show real quantifiable damage. JUSTINE THORNTON: Phil, I think you just wanted to come in there. PHIL MICHAELS: Just a couple of points on the over sensitivity issue - which perhaps Peter Melchett will talk about later in relation to organic crops - that although there has been very little case law, there was the judicial review in the case of Watson two years ago, and in that case, although it was not determinative of the issues, Mr Justice Buxton did say: "The complaint sounds like one of private nuisance. If it were to be pursued in that jurisdiction, difficult questions would arise as to the extent to which the applicant was seeking to impose limitations on NIAB in a farming area by the introduction of special or especially sensitive crops". Those were purely in relation to organic crops that Mr Watson was growing. So I think we have got some indication of the way that the judiciary might look at this type of issue. Just one other point in relation to accommodation of diversity, and whether that would be part of the reasonable use of the land question. I think that is something, subject to what Richard and Stephen have to say, that the courts would take into account. But it is also something that they would be very nervous about ruling on, because it is really straying into a policy area. It is something that they specifically do not like to do. They would be having to rule, in effect, on policy issues of coexistence. JUSTINE THORNTON: Roger. ROGER TURNER: I just wanted to follow up the point you made. I mean, you used exactly the right word - a "transformation" event can be made. I mean, what happens in law, then, if I do one using GMO techniques and one using conventional techniques? You get the same gene sequence in the plant. What is the difference there between the two of them? RICHARD MACRORY: Well, you know, from a pure legal claim, I do not think there is any difference. Whether that causes damage, in legal terms, to me, as a plaintiff, depends on what sort of crops I am selling and what their standards are. You know, it could be crops which I am selling to shops and they have certain standards, and they could be transformed by a neighbour by non GMO techniques, and that could still cause me damage if that has actually ruined my specifications. So, in a sense, I do not actually see, in terms of analysis, any difference from that, you have got the same problems, and I would still have to sell my transformed things, if I could, to mitigate my losses. Again, you would get exactly the same issues if the standards to which I am growing my crops are considered to be so sensitive; you know, I can still find my own claim might be difficult. So I do not actually see - I am sort of looking at Justine, because you have thought about this a lot more than I have - I do not see, as a matter of principle, there is any difference in that. JUSTINE THORNTON: Sue. SUE MAYER: Well, I was going to ask about the sensitive issue a bit more, because I am finding it difficult, when it is a matter of sort of public policy and government policy, and to fund farmers to convert to organic at the moment - and there is a rather large investment in that - to argue that it can be a particularly sensitive use. So I would be interested in your opinion on that, and also this issue of being able to mitigate and taking steps to sell, which is one problem, but obviously with the GM issue there is this potential for contamination and multiplication of seeds remaining in land, and so on and so forth. Does that make it different in that sense? RICHARD MACRORY: If I was a judge having to deal with this - and as Phil has said, they are obviously alive to this as an issue - one would be looking at, you know, how many organic farmers are there? How many are there in this locality? You know, that would be quite relevant to tell me whether it would be over sensitive or not in that way. As you said, they are giving grants - I mean, what do they mean by organic, and all that? I just get a slight worry. We are in an odd area here, where, if you like, the standards are not imposed but have been determined by a private body, so there is not a public definition of the term. ? SUE: But there are European rules on ???? RICHARD MACRORY: But they are not the same as the Soil Association standards, are they? SUE MAYER: I don't know. Perhaps we will get to that later. (?): If I can chip in. European rules define that you cannot use GM technology to produce an organic crop, but I think it is silent on impurities. RICHARD MACRORY: Yes. So I just get a little bit twitchy about that one point. (?): Would it change the sensitivity if the organic issue was in statutory regulation, defining "organic"? RICHARD MACRORY: Well, I think it would help on that, and, picking up your point, if I was then the farmer, I would be saying: "Look, this isn't an over sensitive standard, because this is an industry being promoted by government and to standards set down by government", in a sense, and I think that could change the nature of that argument, or make it easier for a judge to cope with. STEPHEN TROMANS: I think it also helps probably to demonstrate that you have suffered damage, as opposed to pure economic loss, perhaps, if you have got some sort of binding standard like that. There is an analogy, in a way, in the context of ground water pollution, the well-known Cambridge Water Company case, where you had a tannery which contaminated a ground water source with solvents. Now, the evidence before the court was that the levels of solvents there would cause absolutely no harm whatsoever - you could drink it perfectly happily; you could supply it; it would not do you any harm - but the fact is that under EC law, with those levels of solvents present, one could not supply it under the drinking water directive, and therefore the borehole had to be closed down. I think, you know, there is an analogy to be drawn there perhaps. RICHARD MACRORY: Yes. So, in a sense, that would be a useful recommendation which we would, I think probably all three, suggest; to have some sort of standard laid down in law would be helpful to clarify these sorts of issues. If you think the main purpose is to provide a reasonable system of compensation - which does not mean an absolute system, or whatever - this would actually be a sensible way forward and probably would help the courts. JUSTINE THORNTON: Matt. MATTHEW FREEMAN: I guess it leads on a bit from the Cambridge Water Company stuff, but it seems to me that there are two kind of contentious defences that seem to sort of arise in this thing: one is the issue of foreseeability, and the other one is one that you mentioned of regulatory compliance with respect to the EC directorate, and I was just wondering if you could speak to those a little bit. It seems to me that with foreseeability you have a sort of issue of fairness about, you know, if you are a producer and you have done everything you can and, as far as you can tell, everything is fine, and then fifteen years down the road there is a problem. Is it fair that you should be liable? On the other hand, if you are the victim fifteen years down the road, is it fair that you do not have any redress because it was not foreseeable? Similarly with regulatory compliance: if you have done everything you have been told to do, is it fair that you should be held liable? But, in exactly the same way, if you suffer fifteen years down the road, is it fair that you should not have any redress? It seems to me that both of those are really hard problems that sort of surround these issues, and I was just wondering if you could speak to those? RICHARD MACRORY: Well, I think, underneath you have identified often one of the dilemmas for the legal system devising any form of compensation, that, you know, somebody always loses out, and it could be either side, and it is never completely fair, you know, when you analyse it. I think, on the regulatory compliance side, the traditional approach, certainly in nuisance cases, is that the fact that you have complied with a particular regulation is not relevant, because the regulation, if you like, is imposed for public policy purposes, and it is not to do with private civil liability. If negligence is involved - and we have assumed that, I think, negligence is not necessary here maybe, but if it is - then, clearly, the fact that you have complied with a regulation is relevant, but it is not going to be determinative on that. As you know, at the moment the EC proposal does actually talk about compliance with statutory controls. Now, I have to say (and my environmental lawyer friends on my left and right will probably shoot me for saying this) I think that now this civil liability regime in Europe is a public liability regime - it is to do with where the government can force you to do something - I think there is actually some logic in saying: "Well, if we are complying with a standard which government has imposed, why should we then be made to compensate?". I mean, you can see the argument. I think it is less excusable in a civil liability regime, because I think the two are separate, and it is just a bit tough. I would say - which I quite like myself as a model, but I think it is going to be too complicated for Britain - in the German legislation on the environmental liability what they have done, essentially there is a reverse burden of proof. So if you are operating certain industries, it is up to you to show that it was not your emission which caused the problem. But if you can show that you were complying with a discharge consent, or an emissions consent, the burden of proof reverses back to the plaintiff, which has a certain sort of logic to it, because it is saying: well, if the statutory body, the environment agency, says this is your limit, I can make a sort of assumption that it will not cause damage; you know, this will be a good thing to do. But what the German system does not do is to say that that is an absolute defence. It goes back on the plaintiff to prove that actually it was that emission which caused the damage. That actually, to me, has got a certain sort of logic to it, if it makes sense. It is a little bit complex, and heaven knows whether it works in practice, but I could see that as a way of resolving that particular problem. On the foreseeability: again, in one sense, there is a kind of, as it has always struck me, a slight lack of logic in saying - but this goes against all recent case law; "recent" means the last forty years or so - that if you are strictly liable for something, so there is no fault involved, you can still say: "I am only liable for what was reasonably foreseeable. You know, that is still a test that has to be passed, which is a sort of fault based. I mean, it is asking what could people foresee at the time; whereas I think that is appropriate for negligence, I have never quite understood - I mean, the House of Lords in Wagon v Mound in the 1960s said that the remoteness of damage test for nuisance and negligence and strict liability was the same all the way through. I have always felt that was slightly - I could never quite understand the logic of that, but it will be another hurdle to pass for the farmer. Again, in the Cambridge Water Company case, it was quite clear that one had to - to a certain extent one was asking: well, what did people think at the time? That was the critical question. JUSTINE THORNTON: Okay. We are running rapidly out of time, Richard, so Sue, and then John, and then I propose we move on. RICHARD MACRORY: Are you coming back to the economic loss, or is that for later JUSTINE THORNTON: I would speak now, otherwise you might risk losing it. RICHARD MACRORY: Okay. Just on the question of pure economic loss. As we have identified, one problem for the neighbouring farmer is that he has to show there is basically some physical damage to his property that followed, and then the economic losses of the consequential, I think, are alright. I think one can get round that. I think for other people, who, from this particular incident, or whatever, suffer pure economic loss, they have got a real problem, and, basically, I mean, nearly all legal systems of civil liability have imposed some restraints on, what you might call, intangible losses, and there is no question of fairness for the plaintiff in this, because, you know, it is a very real loss for them. As far as one can see in all the cases - and the judges are becoming, I think, a bit more honest about it - it is simply a question of practicability and limiting claims, otherwise one would never know where one stops. Certainly if you look at the United States, at the case law - although the different states tend to differ a bit - but, I mean, you get two cases in 1985, one where the court, in the case of a chemical spill from a ship, clearly said that any pure economic damages are not claimable; it is only if you have suffered physical damage. Whereas, in another case, concerning an air terminal which had to suspend operations because of a threat from a neighbouring property, but no actual physical damage, there the court said they did not like this rule, they thought it was unfair, and they had a test of “particularly foreseeable” - which is a nice new one, but if it is something that you can sort of particularly anticipate - that might be acceptable. My feeling at the moment - and there are exceptions where economic loss is allowed, for things like negligent mis-statements - the courts are tending to be drawing a rather harder line, and they are being a bit clearer, and twenty years ago they seemed to be going down this route. I think the recent cases, and particularly the marine oil pollution cases, are saying: well, there just has to be a limit for public policy purposes. Although, interestingly, if you go back to the Tilbury case, the oil pollution case - which concerned a secondary supplier who could not get the whelks, and therefore it was pure economic loss, he had no claim; and this was under statutory Oil Pollution Act, but it was the basic same principles - they accepted that the fishermen could almost certainly claim under the Act, even though they did not actually own the whelks, and their damage - and it was not to do with private waters or private fishing interests; it was public waters - but they accepted: well, that was a kind of direct interference with your livelihood. So it is a little bit pushing the boundaries on that, but I think it would still be very difficult, pure economic losses, and the only way to get round that, if you think that is a problem, is to have a statutory legislation, where there are examples of statutes which allow for compensation for interference with businesses, but you have to do it in very explicit terms; and then you are faced with this problem that why is GMO different from other forms of pollution or contamination or interferences with businesses, which occur daily. JUSTINE THORNTON: Thank you. Can I suggest we perhaps save your questions until the plenary session, unless you think they are particularly relevant. Is that okay? Thank you very much, Richard. Can we turn perhaps to Stephen now. PROFESSOR STEPHEN TROMANS: Okay. I will try and be fairly brief. As Justine said, in introducing me, I am by profession a barrister, and before that I was a solicitor ... (TAPE CHANGE) ... future, but] The key question seems to me is whether and, if so, why there is any special liability regime needed for GM crops. It seems to me that some of the scenarios that you have put forward in your documents are essentially based on contractual relationships, and, in my view, where you have an issue arising in contractual relationships, that is a matter purely and simply for risk appraisal and allocation of risk by the parties in that contractual context, bearing in mind the product liability rules. So I do not really see that probably the law has too much to say about that. The more difficult issue, it seems to me, is the law of tort, and I think there are perhaps two major facets to what might make GM crops different potentially. One, I suppose, is the wide-ranging and interactive and irreversible nature, potentially, of their affects. If one reads Recital 4 to the Deliberate Release Directive 2001/18, we see that certainly the European Community takes the view that they are special because "living organisms", it says, "whether released into the environment in large or small amounts, for experimental purposes or as commercial products, may be produced in the environment and cross national frontiers, thereby affecting other member states. The affects of such releases on the environment may be irreversible". So I think we see the nub of it there: they can replicate; they are autonomous; they are mobile, and their affects may be irreversible. That is not to say that one cannot have other things that are released into the environment that have widespread persistent affects, but I think it is that autonomy and potential irreversibility which maybe makes GM require particular consideration. The other aspect, it seems to me, is the very detailed regulatory regime. There cannot be many activities, I would have thought, that are subject to such stringent regulatory regime as GM crops under the directive. It seems to me that the whole basis of Directive 90/220 is risk assessment. If one reads the relevant provisions in Annex 2, "Principles for Risk Assessment", we see that the competent authorities are required to identify precisely what types of problems may flow from the release of GM, and we see there that many of the things which you refer to in your scenarios are precisely those matters which are required to be considered and taken into account on a risk assessment. So, for instance, affects on the dynamics of populations of species; compromising prophylactical therapeutic or plant protection treatments; affects on biogeochemistry; adverse affects through mechanisms, including the spread of GMOs in the environment. So, quite clearly, one has that detailed risk assessment which is required before GMOs can be released into the environment. One asks: "Well, how is it that then harm may come about as a result?", and it seems to me that harm can come about in those circumstances in, essentially, one of three instances. First of all, it can come about because the regulator has considered a risk, and has judged that risk to be acceptable, and that risk gives rise to harm. So if the regulator, knowing that there was a risk that these organisms could not be contained and would have these effects on producers of organic crops, well, they would be taking a public policy decision to allow release in those circumstances, and that harm then is entirely foreseeable. The second situation is that the risk assessment is carried out, and then the harm occurs because of some failure in relation to required conditions on containment or conditions of use; in other words, something has gone wrong because somebody, to put it crudely, has cocked up in the release of the mechanism - they have not complied with the conditions which were set. It seems to me that is an entirely different situation when one is considering liability. The third situation is: there is full compliance, but something occurs which was never considered in the risk assessment - it is completely unforeseen to anyone. So I think those, to my mind, are really the three main scenarios that harm could occur under, and I think, in that context, if we look at the underlying common law - as Richard has said, it is really negligence and nuisance, with Rylands & Fletcher subsumed, I would say, as a sub-set of rules on nuisance. Negligence, essentially now, according to the House of Lords, involves three things as conditions for someone being liable under the tort of negligence. First of all, foreseeability of harm; that is an essential requirement. Secondly, a relationship of proximity between the parties; in other words, were the claimant and the defendant in some relationship of proximity which gave rise to a duty of care? Thirdly - and particularly importantly, it seems to me - considerations according to the court of fairness, justice and reasonableness. It is fair, just and reasonable to impose a duty of care giving rise to liability? But, of course, one might say that fairness, justice and reasonableness are precisely those considerations which should inform any statutory liability regime which is set down. I think we see those factors in operation in the case which Richard mentioned, the "Sea Empress" case; the case brought by R J Tilbury & Sons, who were processors (not fishers) of whelks, I think, from Tenby and Saundersfoot. There was a particular fondness for these shell fish in the Far East, and that is where they made their money. Interestingly, the problems occurred, not directly because of damage to shell fish, but because as a result of the "Sea Empress" spill, and, under the Food & Environmental Protection Act, an order was placed preventing harvesting shell fish. So it was indirect, clearly, in that sense; there was no actual harm to shell fish, but there was a restriction of the use of the shell fish, which then fed through into a loss of profit for those processing it. The judge - and it is also worth bearing in mind that this was under a statutory liability scheme; not under common law, but the judge clearly applied common law principles to it and said that all the way down the supply chain loss was clearly foreseeable. You could show that there was foreseeable loss of profit by the fishermen, by the processors, by those who would then import the processed whelks into Korea, and indeed by the Korean restaurateurs themselves, who would otherwise have sold them. So foreseeability was no problem whatsoever. But where the claimants fell over was in terms of the rules on remoteness. The court said it is entirely separate to foreseeability; there are rules which govern remoteness, and this loss which was suffered is indirect relational pure economic loss, which, on those principles, is not recoverable, and they said that these principles are so well entrenched as part of the common law, that it would require very clear statutory words to exclude them from any statutory regime. It seems to me that nuisance, in terms of that, is moving closer and closer to negligence. Many of the principles are the same now as full negligence, in terms of, essentially, a duty of care analysis, and there is a large policy element, it seems to me, in the underlying case law there. So one would say then: "Well, we could leave it up to the courts to deal with all this on a case by case basis, and to apply those principles, which should involve fairness, justice and reasonableness - all those factors we would wish to see - and why would we want to pre-empt that process of adjudication on the actual facts by seeking to lay down our rules?". Well, it seems to me there are two main reasons, potentially, for that. One is a wish to protect those who may be affected. One then says: "Well, why does one wish to put those who are affected by GM problems in any different position to anyone whose personal property is affected by other aspects of modern industrial activity?"; and certainly if one has rules laid down for that basis, one still has the difficult task of saying just how remote the affects are going to be which fall within that liability network, so one is not necessarily solving the problem and affording protection to everyone by laying down those rules. The second possible reason, I suppose, that one might wish to have a liability regime, is actually to promote conditions in which the industry can flourish, and I think the analogy there is with the nuclear industry in the 1950s and 60s. It was clear, when nuclear power stations were being built, that there was great concern by those operating and financing them, and by those contractors who were building them or providing engineering components for them, that the loss they might suffer, in terms of liability, were one of these installations to go wrong, was such as perhaps to make the nuclear industry unviable, and therefore, both at international and domestic level, liability regimes which were produced which struck a bargain, and which said: "Basically we will have a regime which is strict liability, which channels liability to a particular person, so there is no argument that a contractor, for instance, could be liable; we know precisely who is going to be liable", and there is an upper financial limit on terms of their liability, so they know, if they are going into this, precisely how much they are in for. Without that clear liability framework, the nuclear industry probably would not have got off the ground. Whether one says that is a good thing or a bad thing obviously is up to one's individual views. But I think that that is the other reason why one might wish to consider some sort of liability regime, to lay down clear rules within which the industry can operate, so it knows where it stands and it can judge whether those maximum risks are acceptable or not, because, quite clearly, if one had a regime where there was unrestricted liability for things like economic loss, one would query whether anyone sensible would actually take those risks of releasing GM organisms into the environment. JUSTINE THORNTON: Thank you. MATTHEW FREEMAN(?): Sorry, this is a bit of an old chestnut - it is one that we have already had this morning, and I expect we will again - but one of the reasons that you thought there might be a distinction that would allow for a liability regime for GMs was that of an irreversible and replicative wide-ranging nature. The comparisons you were making were with kind of, say, chemical emission, or something like that, but if one compares them to other agricultural processes - so, for instance, I mean, Roger mentioned the possibility that you would produce a crop that had the same trade but not by a GM route, but by just normal breeding techniques - that would seem to me to largely cause that distinction to evaporate. I just wondered whether you think that is true. STEPHEN TROMANS: Or, I suppose, indeed, if someone brought in a non native species. (?): For example. I mean, there are, no doubt, precedents - I am not aware of what they are, because I am not a specialist, but no doubt there are precedents - and one can certainly imagine that, not everything but many of the things one could produce by GM you might be able to produce by conventional crop breeding. So then I wonder whether there is a logical distinction between GMs and conventional crops, or whether that is more of a sort of political construct than based on any kind of - I am rambling now. I will leave it to you. STEPHEN TROMANS: This may be something which Phil will perhaps major on a little more. I can certainly see your point: where is the logical distinction? I think the problem is, of course, that we are addressing now something which represents a bit of a change in terms of the application of that technology. One, logically, perhaps, is not doing anything different to what has been done by other means for centuries, but what I suppose one has got is the potentially common and widespread application of a technology on a much more rapid basis, which I suppose could, therefore, be seen to have greater immediate potential consequences, partly because they could occur quite suddenly, whereas, with normal breeding processes it has occurred over a very long period of time and, as it were, people have adjusted to it. I am not an expert on the science of it, so that may not be correct, but it does seem to me that it is perhaps not so much the logic of the distinction but more the political context and the scientific and commercial context in which this change is coming about; that is the difference, rather than the purely logical one. JUSTINE THORNTON: Phil. PHILIP DALE: Maybe, essentially on the topic of (inaudible) with conventional breeding you could do some quite significant things, in terms of environment impact, so that the genie out of the bottle part you could (inaudible), and then go back to the product process question. But if you look at invasive species over the generations, the ones imported for agricultural use have been the ones that have really made an impact; 10% of the things we import establish well, and 10% of those tend to go crazy - you know, like the rhododendron, and so on. So, according to this rule 1% will become a problem, and it is very difficult to think of crops that have been introduced that have really created a problem. So my question really is that context, and how relevant all of that analysis is in making a judgement that GM crops are unique. STEPHEN TROMANS: I think the difficulty is, isn't it, that, like it or not, they are perceived as being unique, and that is why one has this huge EU regulatory regime governing it. One does not have anything equivalent in relation to the importation of plants, in terms of this very detailed type of risk assessment. PHILIP DALE: () policeability. You know, you can bring seeds in in your turn-ups, and people, when they go on holiday, do it all the time, and so it is unpoliceable. Whereas here we are dealing with technology that is potentially policeable. So is that (????). STEPHEN TROMANS: I think there is an element of that to it, although, of course, one could have people, in principle, importing crops on a commercial basis, but not, clearly, on the major commercial scale that one is looking at potentially quite soon in relation to GMs. JUSTINE THORNTON: John. JOHN GILLILAND: Can I go back. You talked about harm, and the instances that we may see harm occurring, and you mentioned the role of the regulator. STEPHEN TROMANS: Yes. JOHN GILLILAND: How important is, though, the regulator in deciding on liability and where harm lies, and the issue of unforeseen problems, where, you know, properties are approved - the regulator has approved it, and whatever. I mean, if GM is taken up, where everyone meets full compliance but there is an unforeseeable problem. In that scenario, how do you apportion liability there when it has been done by approval of a regulator? STEPHEN TROMANS: Well, I think, in any scenario, it comes down at the end of the day to a policy choice really. I agree with what Richard said, that if one is looking at a liability regime which is not to do with party and party civil liability but which is to do with clean up, then probably it arises in a much more stark way, because one could say: well, it is for the regulator to decide whether the potential effects on bio diversity are acceptable or not, and if they judge that those effects are acceptable, and it turns out then that some sort of clean up of the mediation operation is required, there is a very respectable case for saying it is the State regulator who has judged that to be acceptable who should pay, rather than the regulated party. It is more debatable, I think, where you are dealing with essentially allocated risk between private individuals, which is what we are doing under a civil liability regime, but I think there certainly is, in principle, the same argument to be made that if a regulator has carried out a risk assessment, which has specifically considered a kind of risk - for example, the risk to organic growers of crops - and has said: "We are prepared to take that risk, as society, by authorising you to release under certain conditions", and you comply with those conditions and that foreseeable harm occurs, there is a respectable case for saying: well, it is then society which should pick up the tab. In the second scenario, where the harm occurs because of a breach of condition, I would have no difficulty there in saying: well, clearly, there should be liability on the person who broke the condition. In the third one, where something entirely unforeseen has happened, I think that is perhaps the most difficult one of all. I think, at the end of the day, it comes down to a pure policy choice. Quite clearly, under civil law as it is at the moment, if it is totally unforeseeable, and could not even have been foreseen by the risk assessment process, well, clearly, one is not going to have any chance of establishing civil liability, because, as I have said, foreseeability is an absolutely essential component of that, whether in negligence or in nuisance. So one would have to have a pretty fundamental change to liability rules to create liability in those circumstances; and we come back, I suppose, to all the old arguments about: well, who has, as it were, the property right, from which is your starting point? How do you apply the polluter pays principle, and so on? At the end of the day, it is nothing more or less than a policy and a political choice, it seems to me. RICHARD MACRORY: Just on that, as Stephen said, I think the risk assessment that was done by the regulator, again if I was acting for the defendant, I would say: "Well, that is a good starting point for what was reasonably foreseeable at the time". As the plaintiff, if I could argue: "Well, the risk assessment was done for certain purposes and it did not actually deal with other things which would have been reasonably foreseeable by somebody if they had asked the question", then I can get round that. But it is a very good starting point, and must be good evidence for what is reasonably foreseeable at that particular time. DEREK LANGSLOW: Stephen, could I ask you to elaborate on one of your points, as to why GM crops are different - and you elaborated irreversibility, wide-ranging? Well, precisely the same could be said about organo chlorides, for example, and I do not follow why you argue, therefore, that these are sort of intrinsically different to some other features such as that. There are clearly some things they are different from, I accept that, but why are they different from something like that, do you think? STEPHEN TROMANS: I was not, I suppose, particularly seeking to make the case that they are different. I was sort of saying that these are arguments which could be put forward as to why they might be at organo chlorines going into the environment. They share many of the characteristics of GMOs - they are, to an extent, mobile; they are persistent - but I think, in general, it seems to me that if one has organic chlorines going into ground water, let us say, okay they may be extremely difficult to deal with, and it may take a long time, but, in principle, one can clean up that ground water. It may be very expensive, and it may take a very long time. But if one has GMOs released into the wider environment, and they are totally uncontained, and they thereupon interact with other elements of the natural environment, I do not see how that can very readily be remedied. I mean, there may be technical fixes that I am not aware of which could put it right, but it seems to me that that is the key aspect. Once some of these organisms, anyway, are out there, one cannot call them back or readily control them, whereas with organic chlorines one can, in principle - although, as I say, it is difficult - call them back and control them. ROGER TURNER: I would actually challenge that. I think my view is that crops need protection, in the sense of an agronomy management and the inputs you put into them, irrespective of whether you are a GM conventional or organic farmer. The moment you take away those input regimes, they are then exposed to nature and they go away, and the science evidence shows that: you know, the current range of crops do not persist; they do not have an irreversible aspect to them. STEPHEN TROMANS: Well, I suppose, if that is the case, that would clearly be one of the matters which would be taken into account on the risk assessment, wouldn't it? (?): Yes, and I do (??????) part of that project. JUSTINE THORNTON: Sue, and then Matt. SUSAN MAYER: My feeling is that, you know, we are in a bit of a dilemma with this, because the one issue around some of the hazards of GMOs, and probably other technologies as well, that people have is that there will be unanticipated impacts - so they are anticipating that there will be unanticipated impacts - and driving some of the underlying concerns is that there seems to be, you know: "We can't deal with this. Nobody can take responsibility for this". That is the sort of dilemma that we face. So I would like to get your responses to that, as to how we can deal with it, because, clearly, people are demanding some accountability and some recognition that something unanticipated is probably the most likely thing to happen - to go wrong. But also this issue about difference, which I do not necessarily think that anybody would not expect liabilities - say environmental liabilities - to be more broadly affecting, but we seem to be at a particular time or perhaps - just to get your response to this argument - on the verge of commercialisation, commercial use, where there may be a pressure from the public for that major step not to be taken without liability. Now, maybe that should be applied in every other circumstance as well. We are at a particular time with GMOs. So it was to try and get your comments really to those. STEPHEN TROMANS: Well, it is very curious, isn't it, in a way, the situation we are in, because I suppose one could say: well, what if there had been a similar committee to this, sitting round a table decades ago considering the widespread commercial use of agricultural pesticides or fertilizers, or back in the early years of the century considering the commercial use of asbestos? What decisions would they have come up with. Would they have decided there should be some sort of special liability regime? I rather doubt it, but perhaps, with retrospect, they should have said they were. SUSAN MAYER: Well, I am just wondering whether we have learnt from some of those. I am just thinking about what is driving some of the public concern around the issues, in terms of what we need to respond to and take into account when we are thinking that unanticipated affects is an important issue in the public's mind around GMOs, for example, and wanting to be assured that there is responsibility taken for that in some way or another. Maybe it is that liability - and we will say liability laws - cannot deal with that at all, but it is just to discuss with you, I suppose, that particular problem that we face. RICHARD MACRORY: I am sorry, I know you are doing this sequentially. I think you are absolutely right to raise that dilemma, and I think what we have demonstrated so far - and this may lead very neatly on to the next presentation - is that the existing liability principles, and the way they are likely to be handled by the courts, are not really appropriate enough. They will deal with some things, and they will deal with it fine. It may well be, in fact, that the people who would most want to have some sort of statutory system of liability are, in fact, the industry. I mean, they may feel, just as Stephen pointed out, the nuclear industry would not have got going if there had not been a statutory scheme which helped the insurance - it helped everything - and it was a bargain, and it was struck between, basically, the industry and the government, and the government saying: "Well, we will pick up any liability beyond a certain amount. You can still sue in negligence". It was quite a complicated bargain. I mean, another good example, if you like, of a bargain - which may be coming unstuck now a bit - is the civil aviation, where, you know, private nuisance actions were taken away by statute, because, essentially, we would not have had any existing principles that applied. Now, that has suddenly bumped up against the Human Rights Act and whether that is now permissible - there are some quite complicated things about that - but there are examples of where actually it is the industry who needs the statutory position, which then there are a whole lot of ways that you can handle that: you know, you can have claims for straight causation, interference with businesses. I suspect that if you did that, you know, you are getting rid of the reasonable foreseeability and other sort of limiting tests. You would then be up against some financial limit. You know, you have to have the bargain one way or the other, and you put some financial limit on that, which, you know, it would not be the farmers; it would be the industry who would indemnify that in that way. [] What does this mean???? MS JUSTINE THORNTON: Can I just say by way of comment, though, that I think this comes back to what you were saying about the Peter Cane article. I mean, if I have got an asbestos related disease, at the end of the day I would rather not have it than get the money, and all that liability can do is compensate after the event, whereas Stephen is talking about looking back to the risk assessment to preventing this happening. So I think we need to consider what might be the best solution. But, anyway, Matt. I think, again, we are sort of moving to last questions for this section. MR MATTHEW FREEMAN: Okay. It follows on quite nicely. I was quite taken by the idea of a liability regime as an aid to a developing industry, and a limit on the cap. I just wondered, in practice, how is the limit set, and what sort of size is it? Is it the size that sort of puts a company under, or is not a size that puts a company under; because, obviously, the sort of damage that some people might foresee is well beyond the scale of any company. So where do you set it? I mean, obviously, that is a wide question, but has it been set in the past at a limit that would destroy individual companies or not? STEPHEN TROMANS: Not, I think, under the nuclear regime anyway. It was setting it by reference to a particular incident. So if, to put it crudely, a nuclear power station blew up, from that incident there would be a maximum cap. RICHARD MACRORY: And it is actually pretty small. MATTHEW FREEMAN: It is quite small, is it. STEPHEN TROMANS: And it has stayed unchanged for many years. I think it was changed in about the mid 1980s and put up to a slightly more realistic level, but it is certainly not a level which is going to cause a company to go under. MATTHEW FREEMAN: Right. Okay. Thank you. JUSTINE THORNTON: Okay. Thank you very much, Stephen. Turning now to Phil. MR PHIL MICHAELS: Well, you can see I am going to throw myself into the lion's den a bit, by trying to answer this first question. I should say that I am coming at this presentation not just as a lawyer, which I am, but also from Friends of the Earth, looking at it from the policy perspective, which involves certain value judgements, which will be obvious as we go through this presentation. I think that is important as well. Even these nitty-gritty issues of liability and risk allocation, they are not issues that should be left to lawyers, however valuable the contribution of lawyers is, and I think that is something that this Committee recognises. The question: are GMs different in such a way as to require a specific liability regime? We say "Yes", they are, partly for the reasons that Stephen mentioned, and as they are highlighted in Recital 4 of 2001/18. The damage that they can give rise to is irreversible. They are living organisms, and they represent, therefore, an entirely new class of environmental risk, on the basis that they are able to replicate themselves, which is different, we say, from organic phosphates or other similar chemical risks. I think another issue that came up, and that I will respond to now, is the question of whether or not other agricultural products that are created by non GM technologies should have a similar liability regime attached to them. I would say that our response to that would be, in part, that that question - although it is interesting legally - is something of a red herring, because, in the first place, many of the technologies that we are concerned about can only be, or are only being, produced by GM methods, and there are very, very few forms of conventional agricultural novel technologies - sort of novel agricultural products - that have been bred by non GM technologies that give rise to the sorts of concerns that we and other people have. Other small issues that we would take into account in responding to this question, we would say this is a relatively immature industry, and we are already, in comparison with other industries at similar levels of immaturity, aware of far greater concerns and warning signs. The issue that Sue raised about us being concerned about dangers that we cannot actually foresee in detail, that is something that has to be taken into account when deciding whether or not a specific liability regime should be in place. In addition, the impact that GM technology - GM agricultural - can have on other types of farming. Although that is part of a coexistence rather than a liability debate, it is an important factor to weigh into this question. Adding on to that, one thing that we would say is that even if we were to accept that GMs are not fundamentally different, in such a way as to give rise to a new liability regime, we would say that there is a particular political and social window of opportunity here. There are particular concerns, and this issue of perception is an important one that should not be ignored. What this group might want to consider is whether, in fact, the GM - the biotec industry - should be in the vanguard, in terms of a new liability regime that could, at a later stage, be extended to either to novel agricultural technologies or to other forms of environmental risk and hazard. Friends of the Earth has been looking at the issue of legal liability for quite some time. In 2000 we commissioned a legal opinion from a barrister about whether or not those who suffered damage could obtain redress under the common law, and, in common with much of what Richard and Stephen and many other legal commentators said, we found that there were very serious problems of uncertainty, and certainly no real clarity about whether somebody who was going to law would be able to obtain redress. I will not go into that. I would rather talk now about what we think is the answer. It is worth referring again to this point, which I mentioned briefly before, which is that some people say: well, let the common law develop, even if it is not at the stage now where it can provide the level of redress that people want or need, then maybe in the future it can develop organically, as it were. As this quote from the House of Lords shows, there is a serious and an understandable reluctance by the judiciary to develop the common law in these types of areas to provide a stricter liability regime. What the judges have done in this case, and others, is effectively throw the decision back at the policy makers, and said: "This is a decision for you. You need to decide on the allocation of risk in society, and to see who should bear that risk". I should also say that even if the common law were to develop, it is an iterative and slow process, certainly not quick enough to respond to the pressing agenda of commercialisation, which may be in the next few months or years. So what is the answer? And this is what the rest of this talk will be about. We say the answer is a new statutory liability regime. We say that identifying problems in the common law is actually the easy part. These are some of the things that we think a statutory liability regime should do. The first one is to provide incentives for risk minimisation. That was something that I know Richard said specifically he did not think a civil liability regime should do, as I understood it, and it is effectively [???] RICHARD MACRORY: [(Inaudible)] the main driver. PHIL MICHAELS: No, it is not the main driver; it is one factor. Perhaps the main driver, and the most important, listed number 2: it is to provide compensation for those who do suffer damage, which the common law at the moment simply does not do. The fourth point there is to be clearly comprehensible. I think that does go very much to the issue of a liability regime being of benefit to the industry - something that Stephen raised. People, whether it is the biotec industry or those who are concerned about damage they might suffer, or who do suffer damage, should be able to be quite clear about what the state of the law means for them; what redress they would be likely to obtain, and what, for the biotec industry, their liability would actually be. Finally, as a point of principle, we say that any liability regime should broadly internalise the costs of any risks or hazards actually arising, and I will come on to why we say that is the case. AEBC MEMBER: What does that mean? PHIL MICHAELS: That means that we think if a particular hazard arises, then if liability is to be met by the government or to fall where it lies, to be unmet, then the damage is, in effect, socialised; the costs of the damage are being paid for either by the government or by those who suffer the damage. What we are saying is that any liability regime must specifically, on a policy level, try to make sure that the costs of any risks actually materialising are borne primarily by the industry itself. I can come back to that, if you want to ask me again about that afterwards. The answer, therefore, for us is a statutory liability regime. Something along the lines of what we would suggest has actually been put forward in a Private Members' Bill on two or three occasions in the last Parliament by Alan Simpson, and that is the Genetically Modified Food & Producer Liability Bill. The first point then - and this goes back to the internalisation of costs issues - who should be liable? We are looking here at liability for damage caused by releases under the consent regime - we are not looking at the criminal issues of damage caused by releases outside the regime - and we say that the most obvious target for liability should be the consent holders themselves, for a number of reasons. In the first place, they are the one party that is always identifiable. Where you have got a very complex causation pattern, where it is not easy to determine from which particular release the damage arose, then the consent holder is the one person to whom you can always trace the damage. The other point is that the consent holders are the people with the most to gain, by far and away, and they are the ones to whom the benefit of this technology will, in large part, accrue, rather than to society; and rather than, more to the point, to the farmers. There is also another issue here, which is that even taking into account the positive developments in risk assessment under 2001/18, it is the consent holders that have, by far and away, the best understanding of the science that underpins these technologies. Therefore, when we deal with issues like foreseeability - which I am sure you will ask me questions about later - they are the ones who are in the best position to determine what actual risks are foreseeable. One other feature of the Simpson Bill that is interesting, is we specifically tried to avoid the problem of farmers, or others, becoming liable for damage arising from GM releases, and the Simpson Bill provides for an indemnity system, whereby the consent holders indemnify farmers, or others, who could be on the receiving end of a civil action. The next point is the thorny issue of strict liability, and what we mean by "strict liability" here is simply in contrast to fault-based liability, so it requires that a claimant can recover damages, even in the absence of fault or carelessness or negligence. We also mean it - and I agree entirely with what Richard said concerning the lack of logic, in terms of foreseeability and fault - we mean strict liability in terms of absence of foreseeability. I think that is particularly important, again for the reason that Sue raised, that although many people are concerned about the types of damage that could arise, we are completely unclear, and that is one of the public's concerns about precisely what damage would actually arise. There is also an issue in foreseeability of "whose best science"? There is so much debate at the moment about what the science actually means - what damage will actually arise from these technologies, if any - that to have a foreseeability requirement would, in fact, reduce the strict liability to a fault-based one. On a policy level, we say the reason for strict liability is that where a person is carrying out an inherently hazardous activity of this type - as is recognised in 2001/18, and previously in 90/220 - then they should bear the risk of any hazards arising, regardless of whether they actually carry out the release with due care or not. There are a couple of other advantages of strict liability. One is that it relieves the judiciary of the burden of having to make decisions about fault, negligence and due care. Another, which is important from our perspective, is that it reduces the costs of the claimants - those who actually suffer damage. Richard referred to a study of the nuclear industry a couple of years ago, which said that the regulatory regimes were actually acting as a deterrent for those who were running nuclear companies, rather than a civil liability regime. I think that is probably the case, and that is one reason by the Simpson Bill puts in this rather robust clause concerning personal liability for directors, except for in certain circumstances. That is certainly worth focusing the minds of those who make these decisions. What types of loss are covered? The Bill tries to cover, and we suggest it must cover, all these types of loss: traditional loss; personal injury and property damage; plus economic loss, which is a major gap in the common law system at the moment - that is highlighted by a number of the scenarios that this Committee has put out - and, in addition, environmental damage. So it tries, at least, to deal with all of those types of loss and damage. The point made earlier is that the White Paper for the European Civil Liability Directive effectively deals with environmental damage, and it says specifically that issues of civil liability must be dealt with by the main estate, and that is quite explicit in the guidance notes to that Paper; and at the moment we say that civil liability is not properly addressed in the UK. Another feature of this regime is - and this would not be unique to this country; there is a similar system both in the German Environmental Liability Act and the Austrian Gene Technology Act, and also, I believe, in Norway and Denmark, and possibly in Finland, although I am less certain about that - some form of alleviation and reversal of the burden of proof. Richard referred to this, again, earlier I think. If we were to do this, then, in effect, this strict liability regime would ultimately be, or could be, considerably less strict than many other fault-based liability regimes, and claimants who suffer damage would be left without a real remedy, because they may be unable to prove causation. There are a number of ways of doing this - which Richard referred to - some of them are simple and some are more complex. But that particular idea I had not heard of, and I think that is .... (TAPE CHANGE) .... discuss. I will not go into it in too much detail, but a real problem with so many liability regimes, including the European-wide proposal, is the enormous breadth of the defences, including, notably, the state of the art defence and the compliance with a permit defence. We think there is absolutely no good reason to include either of those defences in a strict liability regime to deal with these particular types of hazards, and that the only permissible defences should be force majeure or a compulsory order of the State. Again it is notable that this is the position, as I understand it anyway, in other countries that have specific GMO liability regimes, including both Denmark and Norway, and I understand there is something similar in the Austrian and German regimes, although they do not go quite as far as this. It is worth noting as well that there is a general move - and I am sure Stephen and Richard will correct me if I am wrong - towards limitation of defences in areas of strict liability environmental regimes, both throughout Europe and elsewhere. Insurance and compensation. This is the final slide really. One of the problems with any environmental liability regime is ensuring that sufficient resources are ultimately available to pay for any damage that arises, and, in the absence of any specific provision, then a liability regime would give rise to socialisation of that damage by default - and I mean socialisation of damage, in contrast to what I was talking about, internalisation of damage and risk. The problem exists on three separate levels here. The first is where the original consent holder can no longer be found, and some people might think that this is a particular problem in a relatively immature and new industry, where we are not sure whether those companies that are around now promoting this industry will be there in 20/25 years' time when the damage arises. The second issue - and, again, a particular issue for a relatively new industry - is whether those companies have sufficient funds to meet any claim that arises, or damages that are awarded. The third issue - more complicated - is whether or not the damage can be identified as being caused by any individual release of GM crops, rather than by another GM crop generally interacting in a complex fashion. Our suggested solution for this - and there are a number of different solutions, some of which you have all seen in the New Zealand Law Commission Report - our solution is double headed, as it were: it is both compulsory insurance, and then, in addition, a mandatory compensation fund, into which, perhaps, consent holders would make payment upon receipt or application for a consent, and which could be used to pay out, at the discretion perhaps of the Secretary of State or the courts. Again, similar provisions to this exist in both Austria and Germany, and in Australia there is something similar, although it is based around the option of the regulator ordering compulsory insurance at the time of consent; and I believe that is what the New Zealand authorities are looking most closely at. It is also something that is set out in the Lugano Convention, which of course does not apply in this country. In conclusion, very briefly, the current system is inadequate, in terms of the common law, for all the reasons that I have set out, and which both Richard and Stephen, and other legal commentators, have set out. There are specific challenges and specific risks that arise from GMOs, and we say that those give rise to the need for a specific statutory liability regime in the terms set out. Finally, too many lawyers. I think there is a real need for us, as lawyers, not to take centre stage on this discussion. Allocations of risk must be considered - as the AEBC is doing, and as the government is proposing to do in the big debate - by society generally, and we must not focus too much on the truths in this case. JUSTINE THORNTON: Thank you very much. Matt. MATTHEW FREEMAN: I think you have been brave, because, unlike the other two, you have come up with some very specific suggestions, which is much easier to discuss and debate than a more general discussion. But the thing I would like to focus on a bit is your notion about internalising the cost. I guess that implies, regarding our previous conversation, that you would not allow for a cap on the liability, or am I wrong about that? PHIL MICHAELS: I would not specifically exclude a cap on the liability, no. It is not something that is included in the Alan Simpson Bill, but I can see there are certain advantages to it, both in terms of persuading the industry that a form of liability regime is something that is in their interest, and also in terms, politically, of moving this ahead. The important point is to establish a statutory liability regime; to add, though, that if there were to be a cap, then that cap must be set at a realistically high level. I think there are concerns that, in the nuclear industry, the cap is actually extremely low, and that is in the process of negotiation. MATTHEW FREEMAN: But if those things that you fear were to come about, can you imagine that there would be an amount of money that could solve it? Because if you are talking about internalising the costs, that is how you define internalising the costs. But the sort of damage that I think you are most concerned about seems to me to be almost, by its nature, unquantifiably large, in terms of bio diversity and large scale environmental damage, and stuff like that. PHIL MICHAELS: Well, there is a big debate about whether a damage to bio diversity is comprehensible, and there is also a serious issue about whether or not any liability regime at all can tackle catastrophic damage and catastrophic loss, and I would say that probably it cannot, and I think we have to accept that. In terms of internalising costs, yes, we say that you do need to internalise costs, but you also need to recommend. But even if you do - even if you have an insurance regime - there is likely to be a cap on the level of the insurance. There needs to be some method above and beyond the internalisation limit for those who suffer damage, or for society as a whole, to recoup that damage, and that is why there is a compensation fund. MATTHEW FREEMAN: Just one other thing, and this goes with it, I think, which is: we have talked to insurance people, and there is this notion that they are a rather reactionary industry; they are very reluctant to insure things that they have not got a risk history of, and it is not their business, as they see it. So I wonder how you see the chicken and egg problem of setting up a compulsory insurance system when there is no insurance market for this; and, also, a secondary issue along the same lines, if you have compulsory insurance, does that not turn the insurance companies into sort of de facto regulators, because, in a sense, it is within their gift whether a company should be allowed to do something or not, because they set a premium? PHIL MICHAELS: I will deal with the first point first. The fact that there is, at the moment, no easy availability of insurance for this, in fact, provides, I think, a pretty good market test of what the risks involved are. The insurance industry is not prepared to take on board these risks, as I understand at the moment, for any premium. MATTHEW FREEMAN: Well, what they have said to us - sorry, just to clarify what they said to us - it did not seem to be along those lines; it was more to do with just the simple lack of a history. So they do not see it as their business, as I understand it, to try and define these things in advance. They are a very kind of conservative lot, and they just say: "Well, in the past this has been the premium we would need to set; this has been the risk, and therefore we do it". So I do not think it is fair to say that their lack of setting premiums so far is to do with their perception of the degree of risk; it is more that they are just not prepared to sort of be in the vanguard. PHIL MICHAELS: Right. I have not spoken to the people in the UK that you have taken evidence from, but my understanding, from reading the evidence in New Zealand, is that the industry was concerned specifically about the level of risk, and the level of damage that could materialise, and, therefore, it does place a certain useful market test on these risks. I am sorry, what was the second part of the question? MATTHEW FREEMAN: Whether they became the regulators de facto, because it is within their gift whether a company can be underwritten or not, and whether they are the right people to be regulators - the insurance people? PHIL MICHAELS: No, absolutely they are not the right people to be the regulators, and regulation plays a quite different role to civil liability, which is something that both the other witnesses have said, I believe. I do not think that the requirement for compulsory insurance would mean that the insurance industry became the regulators. The regulators would decide whether or not any particular release could go ahead, subject to conditions set down in a consent; and one of those conditions - whether an individual consent or, as we suggest, by statute - would be that insurance must be provided, if the consent holder, or if the proposed consent holder, is unable to obtain that insurance, then simply they cannot go ahead. I do not think that makes them, de facto, a regulator. DEREK LANGSLOW: You said some forms of environmental damage cannot be compensated for. Would you like to give me some examples of what sorts of environmental damage you think could be compensated for? PHIL MICHAELS: There is a fairly wide (???). I think perhaps Richard might be better off, or Stephen, answering this than me. DEREK LANGSLOW: Well, I would like your answer, because you said it was in ---- MR PHIL MICHAELS: Of course. Certain types of environmental damage can be compensated, in the sense that compensatory payments can be paid in order to restore the environment to the state it was in before it was damaged. That is the broad sense in which I mean it, but other forms of damage - catastrophic damage - I do not think could be at a compensatory level. DEREK LANGSLOW: But I am still unclear as to what the difference is between the catastrophic and the other forms of damage. That is why I was interested to hear you elaborate a bit more as to what you envisaged in this draft bill as "environmental damage". JUSTINE THORNTON: Maybe I could just move the question slightly. It seemed to me, on the same point - I am sorry to jump in - that, in a way, including environmental damage within this type of Bill is not the best way of protecting the environment, and there is a difference between your economic loss on an individual farmer, say, where you can rely on somebody who has losses or damage to be motivated to take some legal action, albeit how difficult it is. But when you have got an environment that is damaged, people do not have that same motivation, and, therefore, it seems to me, that perhaps the kind of clean-up regimes that we are starting to see the European unions grappling with is perhaps a better way, albeit that they come with their own problems - and I know people like Stephen are sceptical as to whether these will work. PHIL MICHAELS: I think there is something fundamentally right about that argument. The Bill was drafted before the Europe-wide liability directive. The problem with the Europe-wide liability directive, aside from the defence issues that we have looked at, is that it does not deal with the vast majority of Europe's land mass; it only deals with about 11 or 12% of the land mass of Europe, and therefore we do need some other method - and this is going much wider than the GM debate, in fact; it is something that needs to be considered, specifically in this context, to address environmental damage for the wider territory; and it may be right that the best place to deal with it is not in the civil liability bill here. In that case, it would need some other method of approach. MALCOLM GRANT: Possibly, if I might develop that. Are you, in your draft bill, drawing a distinction between compensation for environmental damage and the cost of remediation? PHIL MICHAELS: No. MALCOLM GRANT: They are the same thing? PHIL MICHAELS: Sorry, no, they are not the same thing, but they are not specifically delineated within the bill. They are addressed under one head, as environmental damage. MALCOLM GRANT: But you are envisaging in the bill that this is a private liability regime, as opposed to a State mediation driven regime? PHIL MICHAELS: That's right. JUSTINE THORNTON: Phil, John and (inaudible). PHIL DALE: I was interested in your comment that you see this as a window of opportunity. If you look at the GM crops that are around now, and those which are in the pipeline, you can find conventional breeding parallels which raise many of the same issues: there are gene (?????), thresholds, and so on. As I say, you describe it as "a window of opportunity" - an opportunity for what? PHIL MICHAELS: I think what I was referring to then was similar to what Stephen referred to earlier, when he said that if a group like this had been sitting around earlier in the century looking at asbestos, and deciding whether or not there should be a strict liability regime for asbestos or for organic phosphates, they may well have decided - I don't know - that that would have been appropriate. At the moment there is a very powerful commercial and political drive towards commercialisation in this country, and there is a short time frame, which this Committee is well aware of, in order to decide what the liability regime should be. That is the political window of opportunity I am talking about - now, before commercialisation starts. PHIL DALE: So the things you have said are irrelevant to conventionally bred products? PHIL MICHAELS: No, they are not irrelevant, but the Bill, as it is drafted, and what we are concerned with here, only addresses genetically modified agricultural products, not conventionally bred products. As I have said, perhaps this liability regime, if it was enacted, would then be used to develop to other areas of novel agricultural products, or perhaps even wider, to deal with other environmental risks. PHIL DALE: You see, one of the potential problems is that if we essentially brick-wall this method of breeding, then the breeders will go and find another method to produce very, very similar products. We are saying: "Right, we have a procedure to [block the declarification from GM to normal], or even the whole technology, yet we are not really" - if we are genuinely concerned about the environmental impact of agricultural, and presumably that is one of the major (????), then shouldn't we really be casting the net wider, and just argue it, as well, as just a future risk definitely, but accept that there are regulatory procedures that make it easier. So, in that sense, I can see it is a window of opportunity, but surely it is very short-sighted. We should stand back and ask general questions about environmental impact on agricultural. PHIL MICHAELS: I would delighted, in a sense, to go along, as I understand, with the Canadian model, looking at novel agricultural products as a group, and that makes a great deal of sense. But, realistically, there is no real drive towards that at the moment; there is no great discussion about it. Furthermore, I think it is unrealistic to say - I am no scientist ---- PHIL DALE: But shouldn't you be driving the discussion, rather than saying: "Well, no, we are just concerned about it"? PHIL MICHAELS: Absolutely. Starting with this type of regime as a baseline, then we would absolutely drive that discussion forwards, but this then becomes a policy question. The important point is to start at a realistic level. But just coming back to the first point, which was that you said breeders would find other methods to produce similar crops to those produced by GM technology. I am not a scientist - I am only instructed by scientists - but that is very much not the understanding that I have of the qualitative shift in technology that GM represents, and the entirely new types of crops that GM can give rise to but are not currently out. PHIL DALE: I can give you examples. PHIL MICHAELS: I am aware of one or two examples - I have been given them. But it seems to me that there is this qualitative distinction, plus, furthermore, the opportunity for developing new technologies. PHIL DALE: This is my last point. One of the basic problems is accommodating different forms of agricultural, and if we have a liability arrangement for one kind of crop, then what is to stop John's neighbour suing him for weed seeds going over the fence? And one can apply the same molecular precision - forensic DNA fingerprinting precision - to prove that his neighbour is supplying thistles. So, you know, the whole thing could break down; we would have anarchy. PHIL MICHAELS: I think "anarchy", perhaps, is too strong a word, but I think we do have very serious problems, and that is precisely why we think the common law system as it is does not work; it is sufficiently unclear. Those questions that you have just posed, they are real questions that could come before the courts at any time, and I suspect that the judiciary would be very reluctant to rule on many of those questions in a way that gave anybody satisfaction, because they engage difficult policy questions about coexistence, and it is for precisely that reason - both for us, who are perhaps GM sceptic, and for the industry - that a regime needs to be put in place that gives clarity to all parties. That may well be something that I would have thought you want to talk Peter Melchett about when he gives evidence later today. JUSTINE THORNTON: We have just got a few minutes. Sue, I think, just wants to come in on Phil's point, and then John, and then Roger. SUE MAYER: It was to ask you: presumably your Bill is to cover all GMOs. I mean, we have got rather trapped into thinking it is just GMOs that are going to be () in conventional agricultural practice. Presumably you want it to cover all GMOs; that must be the intention. The reason I ask the question is that I have been looking at what is going on in the United States at the moment, and already there are four, well, drugs, compounds - new compounds - produced commercially from GM maize, which actually would not have been able to have been produced by conventional breeds, and it is already there and in the field. Presumably the regime has to cover those kinds of eventualities as well, and also releases from laboratories, for example, or fish or insects, which seem to me we have to bear in mind. So, in other words, we must not get stuck too much on this just being crops at the moment. It has to be sufficient to encompass some of those other very different things that would affect or might have environmental or economic harm as well. Is that your intention? PHIL MICHAELS: Absolutely. I agree. I am talking about crops because of the remit of this group. SUE MAYER: Well, we also talk about environmental harm, so those other things can have environmental impact - the insects, the fish, or whatever. PHIL MICHAELS: Absolutely. It is wider than just crops. JUSTINE THORNTON: John. JOHN GILLILAND: Can I just go back on one of the issues. You said: "Who should be liable?", and you said, very firmly: "Consent holders". But you also said that consent holders were people with most to gain. If, in the future, there are products that are developed that have significant benefit to consumers and (), does that mean, in your thought process, that they should also bear some of the burden if something goes wrong in that scenario? PHIL MICHAELS: I am not sure if that is a philosophical question. The point is to try and establish, from the outset, which party is likely to gain the most benefit from this technology, and to set down a clear system of allocating risk on the basis of what we can see from this vantage point, and, at this stage, it would appear, clearly, that the party with the most to gain is the party who has spent the years researching, producing, and is now intending to release the product to market. JOHN GILLILAND: But if you take that one step further, at the end of the day they only bring a product to market if there is a consumer to consume it. PHIL MICHAELS: Yes. JOHN GILLILAND: Now, it just so happens that the first generation of products the consumers do not want to consume it, but that is not to say that in years to come that there will be products like that, that consumers do want to consume, and that they create a demand for it, and there is a tangible benefit to society at large, and not just to the development of technology. Now, in that scenario, society has gained, and the company that has developed it has gained. Should society pay part of - you know, if there is an accountable benefit there? PHIL MICHAELS: I think I am going to be slightly repeating myself. It is a matter of allocating risk from this point. The consent holder, it would seem to me - and I don't know what you are saying goes against this - is the one who is going to gain the most; certainly that is their intention. RICHARD MACRORY: Can I just say: one answer to that is that, in terms of whether you have channelled liability on the producer, or maybe the wholesaler, but the consumer does pay - there will a price premium of some sort, if that is reflecting insurance. So, in a sense, the consumer does pick up the tab of that. I mean, that would be the economist's argument. JOHN GILLILAND: Or it might even be a price reduction. All I am saying is: I accept at the moment, as we see, there are many consumers who are not interested in purchasing, you know, the product as it is today, but that is not to say that in future years technology may bring up something that gives nutritious benefit, or something else, and the consumer says: "Actually, I do want to buy this", and they see a tangible benefit, and they buy it, and they create a demand, and that spirals the industry - a demand driven industry - then there must be a benefit to consumers because they are buying it. SUE MAYER: But it would be a bit like, you know, everyone bought asbestos at the beginning, thinking it gave a particular benefit, and then we are talking about at a later stage, perhaps or not, adverse impacts arise, but - I don't know; we must ask the lawyers - we wouldn't then think that the people who had got the benefit from using asbestos to line or to use on their ironing boards, or whatever, should be taking that liability, would we - no? JOHN GILLILAND: No, but there is an issue about society then. Society has a gain. I am not saying individual consumers (). What I am saying is: if society gets a benefit, and, you know, that creates a demand and encourages the industry, and such, it is the responsibility of society too, because they have shared in the benefit. JUSTINE THORNTON: I think that probably is met, as Richard said, by a price agreement, I suspect. RICHARD MACRORY: Or where you get the case, as we talked about the nuclear liability, where, if you like, the upper costs beyond the limit are picked up by society, and, if you like, there was a public policy choice being made then that, you know, society is going to benefit from this source of energy, but the only way to do it is for society to bear some of the potential costs. I mean, that is the policy bargain. JUSTINE THORNTON: Okay. Final question - Roger. ROGER TURNER: I was listening earlier to Richard and Stephen, and one of you used the words, I think, "fair, just and reasonable in law", and I don't think anything that you have proposed this morning meets that particular test. In fact, I would say that it is something out of Alice in Wonderland, where, at the end of the court case, a character says: "I'll be judge, I'll be jury - I'll try the whole lot and condemn you to death". If I could then go on a little bit and just say: most, again, the farmers will have a benefit in that, and you are actually giving them a "get out of jail free" card. No-one would release a variety that the farmer can abuse, when it then falls back on that person's shoulders. I mean, that just sounds illogical. Finally, what is your definition of an "immature industry"? I first got involved in GMs 20 plus years ago, when I was a sort of up-and-coming young executive; now I am an old aged pensioner. I do not regard that as an immature industry. Plant breeding is as old as mankind itself. It is enshrined in international legislation. It fails considerably on the test of being fair, just and reasonable. PHIL MICHAELS: I am not sure what the question was? ROGER TURNER: What is an "immature industry"? PHIL MICHAELS: It is relative, and I think I said "a relatively immature industry", so, if we were to be slightly glib, relative to other areas of the plant breeding industry it is certainly immature. But let us say it is a new industry, in the sense that it is developing very rapidly, and the types of technology that are proposed for release in the next few years are extremely new, and I do not think there is any real debate about that. JUSTINE THORNTON: Malcolm. MALCOLM GRANT: I just wanted to develop the first part of Roger's question. Let me put it another way: if you allocate all the risks to the consent holder/producer, what safeguard have you got against a user using it otherwise than in accordance with the producer's instructions? PHIL MICHAELS: You mean, because, in effect, the farmer then sees it ---- MALCOLM GRANT: It is like pesticides, when the farmer uses them otherwise than in accordance with the label. PHIL MICHAELS: That particular clause in the Bill was inserted because of concerns that any strict or statutory liability regime would turn farmer against farmer, as it were, and this was designed to avoid that. It was also designed, again, to try and place the vast majority of the risk in one easily identifiable defendant. MR MALCOLM GRANT: But you would not prevent that defendant from laying off the risk to the user - sort of contractual negligence? MS (?): That would be the way of doing it. PHIL MICHAELS: That makes sense. Just on that point: this Bill, it is certainly not a final position. I do not think anybody treats it like that. It sets out a number of important principles about what we consider should be included in a statutory liability regime, but it certainly does not have all of the answers, and it can be developed. STEPHEN TROMANS: Surely the answer to Malcolm's question depends on how one looks at it and what one is trying to achieve, because, clearly, you are never going to achieve total certainty as to who ends up picking up the tab, because it is always going to be possible for commercial arrangements to be made outside any regime which will affect that. But your point was, surely, it is channelling, in the sense that the "victim", as you put it, has got a very clear defendant in their sights, and there is no great confusion as to who they should be going against. So it is looking at it from the victim's point of view, rather than trying to make some god-like decision as to where the liability ----lies RICHARD MACRORY: I mean, it is rather similar to the siutation - which I mentioned at the very beginning - the Royal Commission is looking at chemicals and liability, where as I am sure you know, under the Consumer Protection Act, it is the producer who is strictly liable under the European directive. That is a way of channelling strict liability onto a particular source. If you look at the United States, for a similar product, strict liability is also placed on the wholesaler and the retailer as well. It is up to them to sort it out, but the liability has been spread all around; and one of the things we are interested in, if you did that, is how would that change the relationship between the wholesaler and the producer, which might be similar to your farmer and the user. MALCOLM GRANT: I think the other difficult issue, which we clearly have not got time to address and we have not talked about, is that this is, in regulatory terms, a (inaudible) European regime, isn't it, because risk allocation decisions are made at community level. Once a product is able to be put onto the market, then it can be put onto the market throughout the community, so in what sense can one have differing liability regimes anyway within member States without creating all sorts of problems? MALCOLM GRANT: Because, as a question of law, it would be proper, and you would expect member States could introduce enhanced liability rating, over and above whatever baseline is established (inaudible). JUSTINE THORNTON: Phil. PHIL MICHAELS: Very briefly, in response to the Alice in Wonderland point. It is worth bearing in mind that these types of regimes, although not specifically this regime, do exist in other countries, both European and outside. ROGER TURNER: The list you gave me, I wouldn't regard Norway and Sweden and others as major agricultural countries, with respect. SUE MAYER: I do want to come back to this point that, you know, we must not think that we are dealing with just strict agricultural issues. We are looking ---- ROGER TURNER: I thought we were dealing with agricultural and environmental issues. SUE MAYER: I don't know, maybe it is something we have got to come back to, but it is not just crops. ROGER TURNER: No, no, I agree with that, that it is crops and agricultural. SUE MAYER: That is one part of it, yes. PHIL MICHAELS: Have we run out of time? JUSTINE THORNTON: We have, but I don't want anybody to feel they haven't had a final word. I am now going to draw the proceedings to a halt, and thank our three lawyers very much for what was a really interesting morning. (Luncheon adjournment) JUSTINE THORNTON: I would like to introduce Claire Marris, who is going to be giving evidence to us first, and Claire is from the National Institute for Agronomy Research (INRA), and, again, we also have Professor Richard Macrory, who makes a return appearance this afternoon. So perhaps if I start with Claire. CLAIRE MARRIS: Thank you for inviting me. I just want to go back to what was actually asked of me in the notes sent by the sub-group on what you would like to hear from me, and there were these three things: How are liabilities being treated in debate consultations in France? How are liabilities being treated involving regulations in France? The results of a study on public perceptions of agricultural biotechnologies in Europe that I was involved in. Now, that is quite a few different things, and also, quite legitimately, because I am coming from France, you want to know more about what is going on in France. But in the time I have been given I am going to try and focus more on my experience as a sociologist, science, and public perceptions - what we can learn from the studies of public perceptions for liability issues - and a little bit about what the evolutions and debates are in France, and what the key issues are. I presume you do not want to go into the intricacies of French law, and also I am not a lawyer; it is not my domain of expertise. I did consult a few colleagues and friends in preparation of this on the legal aspects, so if ever you want to know about French law in these things, Christine Noiville, who is a researcher at Seine House in Paris University, works exactly on these issues, and she briefed me. There has also been, as I will mention later, several - not to say many - official reports and consultations on GMOs in the last few years, all of which had considered liability, and stopped to some extent, so I went back and looked at those reports just to see what they said. So the main relevant points from the PABE study that I want to pick on - I mean, I could easily have been speaking twenty minutes or more just on the PABE study, but I will just pick the points which seem to me relevant for liability. You have all been given a copy of the report - there are a few copies there for members of the public, and if there is not enough I will send you one - and there is also a short summary available. It was a study funded by the European Commission, with five European teams. The UK team was from Lancaster University; I was the French team; there were teams also from Italy, Spain and Germany. So the key points, I think, which were key results from the study, and seem most relevant to liability, was that the public - (?????), I should say, was focused research with what we call "ordinary members of the public", meaning people who are not involved in debate and do not have any prize stake in the debate; have not particularly thought about it before. We also did lots of interviews with the stakeholders, using different methods. I will be talking mostly here about what came out of the focus groups with ordinary members of the public. So these focus group participants were mostly concerned about what I am calling here "unknown bits", meaning unintended - in the language that was being used this morning - unforeseen affects in the long term, which can occur in indirect and diffuse ways due to multiple causes, and which can be irreversible. That was what they were most concerned about. Secondly, that the public does not react so much to risk, as such, but institutional behaviour. The third one is that the public is not demanding zero risk, as one often hears, but rather zero arrogance. So I will be going through all these points, and I hope you will see why we have come to those conclusions. So unknown risks. For the focus group participants, they recognised and accepted that uncertainty occurs. It was fairly obvious to them that it is impossible to anticipate and predict all the harmful, or indeed the beneficial, impacts of a new product or technology. That is not unusual; it is not shocking for them; it is not something that seems new to them. What they do not accept, and reacted negatively to, is a denial of this uncertainty - so that people pretend that they can anticipate or predict all consequences. When they talk about these things they found that the discussion focuses on all their previous experiences, so we are asking them to talk about GMOs, and they will talk to us about BSE and ???DTT?? or asbestos. They will use all these other previous experiences to say what they have learnt about unknown risks and how you cannot predict or anticipate all harmful consequences in advance - and that is normal. They assume that short term chronic risks, especially to health, for example, are adequately taken into account by risk evaluation procedures that take place before a product is put on the market, but they feel the unknown risks are not so well dealt with by risk evaluation processes. In the face of this uncertainty, they do not demand that innovation be stopped because it has unintended, unforeseen, unknown risks. What they do demand is that this uncertainty be recognised and taken into account in decision making. So what do they mean by "taken into account in decision making"? They make an immediate link with demonstrating social need. What is it for? Why do we need it? Since we know that there is going to be unforeseen impacts, we need to think about is it needed; you know, there needs to be some balance with need. I use the word "need" because it is the word that comes up most for them, and also to distinguish it very much from "benefits", and the way benefits is used in the debates, and by economists in particular. They are not talking about individual benefits as measured usually, often, in cross benefit analysis, and I will come back to that. They also mean that since we do not know all the potential harmful affects, we need to monitor; we need to be watching; we need to be watching for things that we might have [??hypothesis??] about, and also we have to have systems that can measure or notice if there are some completely unforseen impacts, you know, that might be low level, or might be diffuse, and are quite complicated; they are worried, if that is quite complicated, to have ways of observing these affects, and they make a link with labelling and traceability on those issues: how can you possibly be monitoring for harmful affects if the products are not labelled and not traceable? And that you should have a plan of action ready for remedy in case harm is realised: you know, you should have some idea of what you are going to do if some harmful impact occurs. As I say at the bottom there: "Social need does not mean individual benefits to farmers or consumers, as in reduced costs or increased profit to farmers". The report goes into this in much more detail, and I will not do it now, but we often hear this idea | |||||||||||||||||||||||||||||||||||||||||
