AGRICULTURE
AND ENVIRONMENT BIOTECHNOLOGY COMMISSION
LIABILITY SUB-GROUP
MEETING AT 10.00AM ON THURSDAY 20
DECEMBER 2001 AT
ALBANY HOUSE, LONDON SW1
Note:
These are the views of the group, and not necessarily of the full Commission
Present:
Phil Dale
Matthew
Freeman
John Gilliland
Malcolm Grant
Derek Langslow
Sue Mayer
Justine
Thornton (Convenor)
Roger Turner
Anne Packer
(Secretariat)
1.
Justine Thornton explained that Victoria Beale (a lawyer from
Freshfields) was unfortunately not able to attend, but had offered to meet the
group at a later date. In place of the
planned briefing, Malcolm Grant would give an introduction to liability rules
and Justine would cover product liability and would pose some questions to
consider in deciding whether or not GMOs should be separately regulated. Copies of the briefing notes are attached as
annexes.
2.
Members discussed Malcolm Grant’s briefing note, which he
introduced. He explained that the
description was of the current position – the group would want to move on at a
later stage to what was needed in future.
This discussion would centre on tort, which deals with ‘horizontal’
relationships between individuals over harm, whereas the state was involved with
criminal liabilities which are ‘vertical’ between the state and individuals,
and also intervenes – by statute - in cases deemed necessary eg over
contaminated land. Contract law covers
a range of agreements eg indemnity to reduce liability, and tort can be
modified by contracts and by statute.
3.
Members agreed that the AEBC liability report would need a
chapter to address the wider fundamental issues to liability such as where risk
should be apportioned between for example consumers, taxpayers, entrepreneurs
and industry. This would set out and
discuss the principles underpinning liability issues. For example, taking as given that for any deliberate release of
GMOs there would be regulation in accordance with the current understanding of
risks, would that be sufficient? In
addition, was a liability regime needed to establish who bears the risk if the
unforeseeable happened? If so, how
should that be done?
4.
In discussion, members thought that when considering the
future there might be some parallels between GMOs (which might cause harm to
another person) and aquifers – these are not privately owned and may need state
protection. The state might want to
define its own non-criminal rights eg for biodiversity where no individual may
have appropriate rights.
5.
Members discussed Justine Thornton’s notes, which she
introduced. The note on product
liability set out the current law in the UK and EU – which is different for
environmental liability. Members noted
that the EU environmental liability draft Directive was still at an early stage
and was based on a restoration rather than a damages regime. DEFRA had usefully identified several
elements in liability. A shortfall in contract
law was the potential for unilateral exclusion from liability – with statutory
provision needed to overcome inequality of bargaining power.
6.
Members discussed whether there might be parallels to
explore between conventional selective breeding and GM technology. The issue of impact and liability needed to
be set in the context of other agricultural systems (examples might include
autumn sowing, and ploughing, which had significant effects on biodiversity) -
the group would need to think through what were the key issues to assess. Elements might include unforeseeable risks
and the position if these became foreseeable; the foreseeable risks of
conventional farming; trends/links which might or might not be causal. The Secretariat would look at the executive
summary of the Phillips report on BSE to see whether/how foreseeability was
discussed in the report. Action:
Secretariat
7.
Justine Thornton welcomed Tim Humphreys from the Association
of British Insurers (ABI) to informal discussions. She explained the background to the AEBC liability group’s work,
including its current series of briefing discussions.
8.
Tim Humphreys has been with the ABI for 10 years, and for
the past 5 years has been focussing on legal liability insurances across the
board and following the progress of the draft EU directive on environmental
liability. There was relatively limited
scientific knowledge in the insurance industry, and views have been influenced
by bad experience with the Superfund regime in the USA. As a result, clauses have been included in
most policies to limit insurance liability to a single policy year, and only to
cover sudden events.
9.
There is currently a niche market covering environmental
damage including from GMOs - a market which is gradually developing. Large companies tend to employ risk managers
and to cover some risks by insurance in the market, some through their own
specific companies and carry some by the company itself.
10.
At present, Tim Humphreys understood that for the Farm Scale
Evaluations, the biotechnology companies took responsibility for any damage
through contractual liability. The
framers should not be liable for damage.
The insurance position would be very different if the UK moved from research
to commercial growing of GMOs, as this would no longer be a niche insurance
market but potentially a substantial one; insurance would require a larger
re-insurance market. For GM crops,
members said that risks would vary substantially from crop to crop, and there
could be a greater possibility of economic loss to conventional non-GM farmers
eg those growing oil seed rape, than to organic farmers.
11.
In response to a question, Tim Humphreys said he would make
enquiries and let the group know whether insurance was currently available
against loss of organic status. The
group also discussed whether there was relevant experience from the US and
Europe. Tim Humphreys thought
compulsory insurance had been introduced for some US sectors but this was not
GM specific, and he would let the group know about insurance solutions in the US
and Europe. Action: Tim Humphreys.
12.
Tim Humphreys considered that in future there would be a
growth of packages of risk management services, legal advice and insurance
services. GMOs were not well understood
in insurance terms. As with any new market,
insurers would need to commit some capital initially. To get a track record in assessment of risks, the parameters
would need to be set initially to limit liability. Experience in assessing risks would build up over time. The insurance market can move fairly quickly
into new markets.
13.
ABI is strongly of the view that an insurance regime in
respect of the European Directive proposals should be voluntary, not
compulsory. Some reasons for this were
the limited insurance capacity in a field where many people might need
insurance; Government would want specific provisions which would tie
insurers. Compulsory insurance has
always been introduced in mature not new markets, and is likely to be more
feasible at a later stage. Insurers
would inevitably seek to limit their exposure, and this might not be in line
with requirements of public policy. ABI
have doubts about the history of US compulsory insurance being successful,
though the EU might consider it so.
14.
There was discussion about mutual, compensation schemes eg
for marine spillage and insurance.
Mutual schemes tend to be private sector schemes. A Government pool for money over a certain
limit eg for terrorist damage also shared risks - between state and insurers -,
while compensation for foot and mouth gave farmers access to Government
compensation money.
15.
There was discussion of a paper by re-insurer Thomas
Epprecht, on potential alternative risk strategies and hedging
instruments. Tim Humphreys said there
were a number of new ideas such as this, which have developed significantly
over the past five years. The business
of professional risk management was moving into financial as well as physical
risk. For GMOs, members suggested that
what was needed was a mechanism which would not stifle innovation, and would
have an emphasis on testing, but would pick up costs if they occurred.
16.
Tim Humphreys thought the start of any GM commercial growing
might suit a brokered scheme, though it would be difficult to predict whether insurers
would back it. A fairly conventional
package would be:
17.
Members agreed that it would be useful to invite someone
from an insurance company with agricultural experience to meet the group. Action: Secretariat.
18.
Members discussed the Cambridge Water Company case and the
relevance of whether or not outcomes were foreseeable. It was noted that not allowing defence for
state of the art precautions seemed counter to natural justice. Tensions between liability and trade rules
eg in the WTO might be explored further at a later stage. The Cartagena protocol might be relevant for
liability issues. Central issues were
where the costs of dealing with unforeseeable risks should lie, and whether /in
what ways GMOs might need specific liability provisions. The AEBC liability report would extend
beyond plant crops and would include issues relevant to GM fish for
example.
19. Before the next meeting, the secretariat
would write a paper drawing together the strands of the work the group had done
so far. The next meeting was in
Brussels on 17-18 January. After that,
the group would need a deliberative session to identify possible emerging
outline conclusions - this would probably then identify further issues to
explore. Action: Secretariat.
20. Dates for
group meetings in London were confirmed as 28 February, 19 March and 25
April.
21. The group
would travel to Brussels on 17 January, with informal discussions on the
journey, and with meetings all day on 18 January. The secretariat would arrange travel from London and
accommodation. Action: Secretariat.
January 2002
