space Press Releases, News Stories

by DANIEL PRUZIN, Geneva correspondent, A. M. Best Company, Inc.

One major consequence of the protocol for insurers is that parties liable for shipments would have to be covered by insurance, bonds or other financial guarantees.

But key provisions remain to be concluded concerning the scope and designation of liability, monetary caps on compensation claims, and whether an international fund should be established to compensate for accidents where the liable party is unknown or unable to cover costs.

J. Thomas Wolfe, vice president with the environmental consultancy Capital Environmental LLC and a representative at the talks for the International Chamber of Commerce, said fears that the protocol would become an international version of Superfund--the tough 1980 U.S. legislation covering liability for hazardous waste--have largely been mollified under the latest draft text. Nevertheless, "it remains to be seen whether the governments of the nations involved can reach a consensus on a liability regime that is predictable enough to make insurance possible and reasonable enough to make that insurance affordable to those who buy and sell recyclable material," he argued. Wolfe noted that the latest draft avoids Superfund-like provisions such as retroactive liability (covering accidents that took place before the effective date of the protocol), and unending liability (covering "after care" issues such as the proper maintenance of disposal sites).

The text also avoids imposing joint and several liability on all parties to a waste purchase or transaction--the generator, exporter, broker, transporter, importer, and recycler--which can give rise to unending legal battles over degrees of responsibility.

On the negative side for insurers, a growing consensus is emerging that strict liability should be channeled to the exporter and not the individual or organization with operational control over the material at the time of a damage-causing incident.

"This removes the largest incentive for the party handling the material to exercise due care," Wolfe argued. "This provision could become operationally difficult to administer where many shipments are placed in one vessel, the ship operator behaves negligently and all exporters are jointly and severally liable for the results, independent of the hazard of their material. This is the current case with our Superfund and it causes great inequity." An insurance industry representative, who asked not to be identified, said the industry was unhappy that provisions for both strict liability and fault-based liability apparently would remain in the final text, with the strict liability provisions allowing two or more parties to be deemed liable--in effect, a conditional joint/several liability scheme. "If insurers have to cover the liability of a whole range of people, their capacity gets used up and the amount of insurance available is much lower," he warned.

Another potential headache for the industry is an agreement to allow claims for accidents to be made as much as five years after the claimant becomes aware of damage from an accident.

"This poses a problem in terms of assessing long-tail risk," the industry representative declared.

Kevin Stairs of Greenpeace International said environmentalists were happy to see the obligatory insurance requirements, as they would help to ensure that only responsible operators engage in the waste trade. But he criticized the current draft for failing to address "after-care" issues as well as ensuring that waste generators always are assigned liability.

"Generators should always be liable," Stairs declared. "They are the central player--they should have cradle-to-grave responsibility for their waste." Although the text wasn't finalized at last month's meeting, participants said they were confident an agreement could be reached early next fall. This would allow the protocol to be formally adopted next December when Basel Convention states meet in Basel, Switzerland to mark the agreement's 10th anniversary.

More than 120 countries are parties to the convention, which restricts the types of hazardous waste that can be shipped abroad, particularly from industrialized to developing countries.

An agreement was reached in 1989 to negotiate the follow-up protocol on liability for such waste shipments, and talks began in 1993. The United States has signed the Basel Convention but so far hasn't ratified it. Nevertheless, U.S. officials have participated actively in the liability protocol talks.