France Pollution Verdict Increases Business Litigation Risk – Sylvie Gallage-Alwis

By Sylvie Gallage-Alwis

Partner Sylvie Gallage-Alwis examines the recent European Court of Justice’s decision against France in relation to breaches of air pollution thresholds and how this may impact corporates in the continent.

Sylvie’s article was first published in Law360, 18 November 2019, and can be read here.

A version of Sylvie’s article was also published in Air Quality News, 20 November 2019, and can be found here.

48,000; 70,000; more than 100,000: these are examples of figures that circulate in the media as the alleged number of deaths that would be linked to air pollution in France. The European Court of Auditors mentioned in its report on the topic dated 11 September 2018: 400,000 premature deaths in the European Union (EU). Air pollution has become one of the most talked about issues these past years and is at the heart of a number of claims around the world on the ground of climate change.

The decision rendered by the European Court of Justice on 24 October 2019 is one evidence of this trend to have States condemned because of air pollution. Its straightforward recognition of France’s liability, as it did against Bulgaria and Poland in 2017 and 2018, shows that the European Court and authorities will strictly interpret legislation and consider that the protection of environment supersedes all other rights.

The European Commission is at the centre of the claim launched against France on 11 October 2018 on the grounds of the breach of Directive 96/62/EC of 27 September 1996 on ambient air quality assessment and management and of Directive 2008/50/EC of 21 May 2008 on ambient air quality and cleaner air for Europe. More specifically, the Commission notably alleged that France breached, repeatedly, since 2010, Article 13 of the latter Directive which provides that “Member States shall ensure that, throughout their zones and agglomerations, levels of sulphur dioxide, PM10, lead, and carbon monoxide in ambient air do not exceed the limit values laid down in Annex XI”.

The European Commission had warned the French Government several times and sent it a formal notice in June 2015 ordering it to have the levels of carbon dioxide reduced and ensure that any breach of threshold be as short in time as possible. The Commission, not satisfied by the answers sent by France, has decided to file a claim against it. In its press statement dated 17 May 2018, the Commission explained that “the Commission is today referring France, Germany, Hungary, Italy, Romania and the United Kingdom to the Court of Justice of the EU for failing to respect agreed air quality limit values and for failing to take appropriate measures to keep exceedance periods as short as possible”.

The decision against France is the very first decision rendered by the European Court of Justice in a case of breach of carbon dioxide levels.

Breach of pollution thresholds = objective liability with no possible defence from the State

France had put forward a number of defence arguments to try to convince the Court that even if EU legislation provides for rules that have to be complied with, their implementation in practice require time and generally sacrifices for the population. As such, France argued that putting restrictions on some categories of vehicles would breach the free movement of people and goods. It also explained that measures that are requested will immediately result in a tax increase which is a very sensitive topic that would cause public disorder. France even stated that “the efficiency of the measures implemented depends on the behaviour of the population and the evolution of mentalities”, implying that the French population is not ready for the change that the European Commission is expecting. France also stated that the levels of carbon dioxide were not systematically breached, that it faces structural difficulties and that the measures it has already implemented and plans to implement should be taken into account by the Court.

The Court ruled that any air monitoring result which exceeds the thresholds provided for by EU regulation is tantamount to a breach of regulation. It stated that the objective finding of a breach by a Member State of its obligations is sufficient and that whether the State was negligent or whether the breach is linked to technical or structural difficulties is completely irrelevant. The Court therefore dismissed France’s view that structural difficulties and national specificities could be a valid defence.

The Court also ruled that whether the thresholds were almost complied with, or whether the gap between the legal thresholds and the reality was huge, is not relevant. The same was ruled concerning the evidence filed by France that the levels of pollution were decreasing, dismissing, once more, one of the French arguments. In this respect, the Court referred to the decision it handed down against Poland on 22 February 2018 concerning air pollution with particulate matter (PM10). It indeed ruled that “a possible partial downward trend highlighted by the data collected, which does not, however, result in compliance by that Member State with the limit values which it is obliged to respect, cannot invalidate the finding of failure to fulfil obligations attributable to the Republic of Poland in that regard”.

This summary highlights the fact that the European Court of Justice took the position that as soon as there is an air monitoring result which exceeds the legal threshold, there is a breach of regulation. All defences by the State (and tomorrow by a corporation or an industry) will be dismissed as the Court even ruled that a measure that aims at having only some vehicles authorised “is needed to guarantee that the objective of environment protection is reached and therefore justifies a hindrance to the free movement of goods”.

This is therefore a strict liability regime. The question is therefore whether this approach will encourage Member States and/or companies to invest and take measures to try to reach, at some point, the goals that the European authorities have set. Indeed, if neither the level of breach or the behaviour of the State is relevant, why struggle to comply?

This question is even more relevant when looking at the second part of the decision which relates to the analysis of whether or not the measures taken by the French Government were appropriate.

Measures implemented will never be enough

The second argument raised by the European Commission against France is that the latter has breached Article 23 of the Directive 2008/50 for not having implemented quality plans that set out appropriate measures, so that any exceedance period can be kept as short as possible.

Here, the European Court of Justice, referring to its decisions rendered against Bulgaria and Poland in the scope of PM10 pollution, ruled that the mere fact that there has been a breach of the legal thresholds is not sufficient to conclude that a State breached Article 23. It therefore agreed with the European Commission that a case by case analysis is necessary.

France argued that the following factors need to be taken into account in order to analyse the quality plans it has established: the magnitude of structural transformations needed, the financial burden they represent, the increase in the number of vehicles in France linked to the increasing number of the population, the time needed to modernise the vehicle fleet, the sensitivity of public opinion when it comes to a tax increase and the fact that French people like moving by car.

Even if the Court admits that these could be valid explanations to justify why a quality plan takes a direction or not, it ruled that these are too high level elements and that France should have issued specific quality plans for each of the twelve zones identified by the European Commission, highlighting all local specificities. The Court further ruled that France took measures, but too late, and that these new measures show that it could have achieved better results had it implemented such measures earlier, this being sufficient evidence that its quality plans were not adapted.

The lesson learnt here is that States (and tomorrow corporations) need to be very specific when drafting quality plans. More peculiar, if the State demonstrates that it is trying to change, this will be used as evidence against it that it could have done more in the past.

When applying this ruling to a corporation, one immediately thinks about the environment compliance programs or Climate Policies of corporations. We can only advise that they be as specific as possible. They should not be general statements about how the corporation cares about the environment. This being said, the more specific you are, the more accountable you will be. However, in light of the strict liability regime mentioned above, being specific and trying to enforce specific measures within the corporation can only have a positive impact later on. This being said, when implementing new measures, it looks like it is now crucial to demonstrate that taking them before was not feasible for specific reasons, or these new measures will become evidence of a prior breach.

What next?

France’s liability is recognised. This being said, France is not condemned to any damages. To be condemned to damages, the European Commission would have to launch new proceedings to demonstrate that France is consistently not taking appropriate measures designed to comply with the two above-mentioned Directives. Many criticise this process, mentioning that France will not end up paying any fine. Others argue that paying a fine will not help financing measures at the national level.

Given how the European Court of Justice referred to its decisions against Bulgaria and Poland in its decision against France, we can anticipate that the other States that have been sued by the European Commission have small chances of success. As a product liability and toxic tort lawyer, such State liability recognition feels like the first step of large scale litigation launched against corporations. Indeed, asbestos-related litigation started in France with the French State being recognised liable for not having implemented sufficiently stringent legislation early enough.

The consequence of such decisions was not that the State started to be condemned to pay damages to workers or people exposed to asbestos. The consequence was that workers and more generally the population started to sue corporations who had used asbestos, while it was legal, mentioning that such use necessarily created a health risk as the State had been condemned for not having regulated differently to protect environment & health. In other words, the strict liability regime applied to the State resulted in evidence of the existence of a risk for the population. As a mere risk, with no breach of regulation, this should not be compensable. As a matter of principle, French Courts have developed a specific regime whereby the exposure to a risk (even legally) could be compensable. This highly controversial case law is however a trend and is being referred to by a number of NGOs now that some EU Member States have been recognised liable in the scope of air pollution.

Therefore, even if this decision has been rendered against a State, corporations should pay close attention to the next decisions to be rendered, for instance, against Germany, Italy or the United Kingdom and to the population’s reaction to negative rulings.

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