We like to keep you informed of developments at the office.
Safety and Events Conference 30 november 2016
Andre Gaastra will speak about legal liability related to fatal incidents occurring at large scale public events at the ‘Safety and Events Conference’ that will take place at The Hague Security Delta Campus (www. sbo.nl/veiligevenement). He will cover the aspects of legal liability, the responsible party, the damages that could be claimed and the question of whether and how legal liability could be prevented or limited.
Who's Who Legal recognition 18 december 2015
Andre Gaastra is recognised as one of the leading environmental law specialists in the Netherlands. He highlighted the recent developments in Dutch environmental law in the latest edition of Who’s Who Environment.
Administrative sanction 18 august 2015
The financial robustness of the parent company can, under circumstances, be a factor in the determination of the financial capacity when setting the amount of the administrative penalty to be imposed on the subsidiary. This follows from a recent verdict of the Administrative Court of the Council of State.
In the Netherlands, an administrative punitive sanction can be imposed in the case of violation of, amongst others, the Working Conditions Act, the Decree on the Prevention of Major Accidents, the Working Hours Act, the Commodities Act and the Foreign Workers (Employment) Act. Such punitive sanction can be imposed by the Minister of Social Affairs and Employment. The legal framework has the character of both administrative law and punitive law.
An administrative punitive sanction is imposed on the one who has perpetrated the law. The amount must be proportional to the seriousness of the violation and the degree to which the perpetrator can be reproached. The circumstances under which the violation has taken place must be taken into account. A hardship clause softens the consequences in the case of a statutory fixed sanction if the perpetrator can demonstrate that the fixed sanction is too high in view of special circumstances.
In a legal structure with one or more subsidiaries and a holding company, it is mostly the subsidiary that conducts the activities. The subsidiary usually has the contracts, the real estate, the installations and the personnel. The holding company usually only manages the profits and conducts no other activities. Next to tax considerations, the legal structure is often based on considerations related to the prevention of liability.
Ring fencing does not seem to work under all circumstances, as follows from a verdict of the Administrative Court of the Council of State of 8 July 2015, in a case in which the subsidiary acted in violation of the Foreign Workers (Employment) Act. In this case, the Inspectorate of the Ministry of Social Affairs and Employment established that a number of foreigners of Chinese nationality had performed promotional work on behalf of a subsidiary without the required permit. According to an earlier judgment of the Administrative Court of the Council of State, it is the responsibility of the employer to ensure that the requirements of this Act are fulfilled prior to commencement of the work.
The employer (the subsidiary company) pointed out its poor financial circumstances and stated that the statutory penalty should be replaced by a warning or, at least, be limited to a symbolic penalty. The principle of proportionality requires the Minister to limit the administrative penalty if it would be disproportionate in relation to the financial situation of the employer. According to the District Court, the financial situation of the subsidiary was reason to cut the penalty back by 50%. The fact that the subsidiary and the parent company form a fiscal unity, according to the District Court, would not mean that the subsidiary would not be disproportionally affected. The construction, according to the court, would not mean that the subsidiary and the parent company would be liable for each other’s payment obligations, and would not lead to the conclusion that there is a financial entanglement to the extent that such should be the case. Furthermore, the court was of the opinion that there was no misuse of a holding construction.
The Minister of Social Affairs and Employment did not see any reason to mitigate the statutory penalty, partly because he deemed the financial position of the parent company relevant. The Minister pointed out the economic ties between the subsidiary and the parent company to the effect that the subsidiary company was not an autonomous entity. Given that the parent company had sufficient funds it could, according to the Minister, pay the statutory penalty of EUR 90,000 (for its subsidiary).
The Administrative Court of the Council of State concurred with the Minister and ruled against the employer. According to the Administrative Court, the financial situation of the parent company can be taken into account in the determination of the financial strength of the perpetrating subsidiary. Factors taken into consideration by the Administrative Court were that the parent company was the sole shareholder and director of the subsidiary, that it employed no personnel and that it simply engaged in holding activities. Furthermore, the Administrative Court deemed it of specific importance that there was a current account overdraft facility between the parent company and the subsidiary. According to the Administrative Court, the parent and the subsidiary could in fact be regarded as one entity on the basis of which, the financial situation of the parent company can be taken into account in the determination of the amount of the punitive (financial) penalty that was to be imposed on the subsidiary.
The question is whether this would be different if the holding company did have personnel, other activities and if there were no overdraft facility between the parent company and the subsidiary. Under the same circumstances, a piercing of the corporate veil would not readily be applied in civil law outside of bankruptcy. Of course, this case is not a matter of piercing the corporate veil, but it will naturally also have an indirect effect on the financial position of the parent company. It seems advisable not to just look at the tax and civil liability aspects, but also at the aspects following from administrative sanctions law when setting up a corporate structure.
Seveso industries 18 august 2015
The Netherlands government has issued a legislative proposal with respect to the recovery of inspection and enforcement costs. It entails an amendment of the Working Conditions Act (Arbeidsomstandighedenwet), introducing the possibility to recover the costs of inspections from the facilities that are subject to the Decree on the Prevention of Major Accidents 2015 (Besluit risico’s zware ongevallen 2015: Brzo).
The legislature aims to place these costs ‘where these belong’ and to minimize the expenses at the account of the general State funds.
We see that the so-called Seveso companies in the Netherlands are experiencing quite a burden when it comes to compliance with the rules on the prevention of major accidents and government inspections and enforcement. The view of the legislature is that this regulatory and enforcement activity is necessary where large quantities of hazardous substances are processed and where the consequences of major accidents could be serious. This forms the basis of this legislative proposal. It points out a number of major accidents that have occurred in recent years. Is also points out that specialist knowledge is required in these inspections, thereby increasing the costs. This should justify charging part of these costs to the Seveso companies. Furthermore, implicit reference is made to the ‘polluter pays’ principle where it states that only the costs directly related to the internal safety of the company will be charged because the company has a direct interest in this.
The parts of the inspections that focus on compliance with the Environmental Control Act (Wet milieubeheer) and the Safety Districts Act (Wet veiligheidsregio’s) are related to the external safety of the community and therefore, considered services of general interest. The cost of these inspections, according to the proposal, will therefore remain for the account of the community and be paid from the general funds.
In the Netherlands, the recovery of inspection costs is a matter of custom in the financial sector (by the Authority for the Financial Markets (AFM) and the Dutch Central Bank (Nederlandsche Bank), but not yet in the area of health and safety law. That is different elsewhere in Europe albeit with a wide divergence of systems. The United Kingdom recovers the costs connected with enforcement activities from operators of COMAH installations (subject to the Control of Major Accident Regulations 1999). The costs incurred by the competent authority in connection with inspectors exercising powers to enforce the COMAH regulations, including the power to render such examination and investigation necessary, are recovered from the operator. Where the competent authority takes formal enforcement action, the associated costs are also recoverable. France enacted the ‘Taxe Générale sur les activités polluantes’ (TGAP) including the variant of a levy charged to the operator of an industrial site where, as a result of the nature and extent of the activities, specific environmental risks come into play. French environmental lawyers perceive this as a tax that relates to the relatively higher costs of inspections and enforcement connected to these types of industries. Belgium charges levies on Seveso companies for the benefit of two funds for the prevention of major accidents, which funds are partly used to cover the costs of the prevention of major accidents and certain preventive tasks. Germany recovers the costs of inspection and enforcement from the industry on the basis of the German Chemicals Act (Chemikaliengesetz). Austria also charges the costs of enforcement on the basis of their Chemicals Act (Chemikaliengesetz 1996) and their Waste Substances Act (Abfallwirtschaftsgesetz 2002), in brief, in the case of the criminal prosecution or the imposition of an administrative fine. In such cases, the costs of enforcement and the specialists engaged by the enforcement agency can be recovered from the perpetrator.
It is our view that the costs of inspections and enforcement should be covered by the general funds. After all, these costs typically relate to the public interest of an enforcing government. Furthermore, it is the government who takes the initiative to conduct enforcement activities and chooses the modality and the extent of the inspection and enforcement efforts. If the legislature, nevertheless, wishes to charge specific costs of inspections and enforcement, we are of the view that this may be based in part on the English and Austrian models, given that these systems seem to be beneficial to companies with a better environmental performance.
Revision PGS15 18 august 2015
The draft of the new PGS15 guideline (version 0.1, dated June 2015) was available for public comments until 11 August 2015. Gaastra attorneys-at-law has filed their comments on the new PGS15 guideline further to consultation with a number of clients.
The revised issue of PGS15 introduces new protection levels. Level 2 is replaced by new protection level 2a and a new protection level 4 is as added for inflammable and non-fire supporting substances. The latter introduces requirements deviating from the Building Decree (Bouwbesluit) with respect to the resistance of a storage facility against fire breakthrough and fire flash-over (de weerstand tegen branddoorslag en brandoverslag), given that the fire properties of stored hazardous substances differ from those of building and construction materials or the normal inventory of buildings to which the Building Decree applies.
Furthermore, some thresholds and criteria for the determination of the applicable protection levels have been changed. The comments on the new draft guideline we have filed concern, amongst others, a desired transitory rule for the storage facilities that were built under the existing or older versions of the guideline, the definition of working stock (that is allowed to be present in the production area), the application of the principles of equality and motivated deviations from the guideline, the requirement of power-free wrapping machines in the storage area if there is no personnel at the location, the change of the standard for fluid resistant floors and floor finishing and the requirement to capture and treat storm water that has been in contact with closed packaging. We will send you a copy of our comprehensive comments upon request.
Comments on PGS15 12 august 2015
Gaastra attorneys at law has filed their comments on the new draft guideline PGS15 on the storage of hazardous materials in packaging. A summary of the comments in English can be found here.
illegal waste conciliator 06 may 2015
In January 2011, Gaastra attorneys at law has requested enforcement action against an illegal conciliator in waste substances who disturbed the waste trading market, on behalf of a waste handling company. This conciliator denied that it qualifies as conciliator in the sense of the applicable regulation. By judgement of 8 April 2015, the Administrative Court of the Council of State has ruled that the State Secretary of Infrastructure and the Environment had the right to take enforcement measures, that penalties were forfeited and that these could be claimed from the illegal conciliator.
Seveso III Directive 1 June 10 april 2015
On 1 June 2015, the Seveso III Directive will enter into force in the Netherlands. On that date the Directive will be implemented in the Major Accidents Decree (Besluit Risico Zware Ongevallen: 'BRZO'). The BRZO 1999 will be renamed to BRZO 2015. For businesses which operate with hazardous substances, the most radical consequence will be the application of the Classification, Labelling and Packaging Regulation (hereafter: the 'CLP Regulation') within the ambit of the BRZO.
Whether a company does or does not fall under the BRZO is determined on the basis of the threshold values with regard to the volume of hazardous substances permitted. In the BRZO, a distinction is drawn between the light category and the heavy category. Companies which belong to the light category are required to be availed of a Major Accidents Prevention Policy and a Safety Management System. Companies which belong to the heavy category are furthermore required to draw up a Safety Report (Veiligheidsrapportage).
The concept underlying the Seveso III Regulation is mainly to have the classification systematic for hazardous substances harmonise with the CLP Regulation. That immediately renders it the most significant amendment. Under the current BRZO, a classification method is used which is based on the now repealed Chemical Substances Act (Wet milieugevaarlijke stoffen). The classification and the allocation under the new BRZO are to take place on the basis of the EU CLP Regulation.
This can have the consequence for businesses, in principle, that under the current regime they are not designated as BRZO company but that they will be so designated under the new regime. Furthermore, a company which is classified in the light category under the current BRZO could be classified in the heavy category under the new BRZO. In that case, supplementary requirements must be satisfied. We are not yet quite clear as to how many facilities this will affect.
Another amendment which will be the consequence of the implementation of the Seveso III Regulation is the obligation for facilities which are obliged to draw up Safety Reports not only to take into account the risks of their own activities, but also the risks of neighbouring facilities which could have influence on the cause or exacerbation of a major incident. Furthermore, risks from a natural cause should also be mapped out. This can be considered an expansion of the Safety Report obligation.
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