Skip to main content
SpringerLink
Log in
Book cover

Varieties of European Economic Law and Regulation pp 735–755Cite as

Towards a Rapid Claims Settlement Mechanism for Disasters?

  • Chapter
  • First Online:

  • 1863 Accesses

Part of the book series: Studies in European Economic Law and Regulation ((SEELR,volume 3))

Abstract

The starting point of this contribution is the necessity to speedily compensate victims of an accident, which in reality is often not the case. We look at the term accident in a broad manner, referring to disasters that affect many people rather than only one person. The main obstacles to a fast compensation may be found in lengthy mass litigation. The necessity to proceed quickly is, for instance, crucial because it can prevent further damage, for example the local industry from facing insolvencies after an oil spill. We discuss some real-life examples of such rapid claims settlement mechanisms, the Belgian compensation fund for technological incidents and the American Gulf Coast Claims Facility. Both examples show some strengths and weaknesses, which lead us to conclude that speed cautiously has to be balanced against the requirements of due process and the need to make the tortfeasor face the total costs of an accident to induce deterrence. We give some guidance as to how such a mechanism could be designed in practice.

We are grateful to Marianne Breijer (Rotterdam) for editorial review of an earlier version of this contribution.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   189.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   249.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   249.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    See inter alia H-W Micklitz, Brauchen Konsumenten und Unternehmer eine neue Architektur des Verbraucherrechts? Gutachten A zum 69. Juristentag (Munich, CH Beck, 2012), H-W Micklitz, ‘Zukunft des Verbraucherrechts—Plädoyer für ein bewegliches System’ (2012) Neue Juristische Wochenschrift 77; F Cafaggi and H-W Micklitz, New Frontiers of Consumer Protection—The Interplay between Private and Public Enforcement (Antwerp, Intersentia, 2009).

  2. 2.

    Often the example of the Exxon Valdez litigation in the US is quoted. The incident happened in 1989 and litigation would only have been concluded after 2010, hence taking more than 20 years.

  3. 3.

    See inter alia MG Faure and T Hartlief, ‘Compensation Funds versus Liability and Insurance for Remedying Environmental Damage’ (1996) 5 Review of European Community and International Environmental Law 321.

  4. 4.

    MG Faure and F Weber, ‘Security Mechanisms for Insolvencies in the Package Travel Sector: an Economic Analysis’ (2013) 36 Journal of Consumer Policy 425.

  5. 5.

    Faure and Weber, ‘Security Mechanisms for Insolvencies in the Package Travel Sector’.

  6. 6.

    See MG Faure and J Liu, ‘The Tsunami of March 2011 and the Subsequent Nuclear Incident at Fukushima: Who Compensates the Victims?’ (2012) 37 William & Mary Environmental Law & Policy Review 129, 154.

  7. 7.

    See IC Durant, ‘Belgium’ in MG Faure and T Hartlief (eds), Financial Compensation for Victims of Catastrophes. A Comparative Legal Approach (Vienna, Springer, 2006) 72 f.

  8. 8.

    See D Hinghofer-Szalskay and BA Koch, ‘Austria’ in Faure and Hartlief (eds), Financial Compensation for Victims of Catastrophes, 12–26.

  9. 9.

    This is obviously an argument only in case of technological (man-made) disasters where there is a liable injurer that can be sued. With most natural disasters that will be much more problematic.

  10. 10.

    See TR Tyler and H Thorisdottir, ‘A Psychological Perspective on Compensation for Harm: Examining the 9/11 Victim Compensation Fund’ (2003) 53 DePaul Law Review 355.

  11. 11.

    So V Bruggeman, Compensating Catastrophe Victims. A Comparative Law and Economics Approach (The Hague, Kluwer Law International, 2010) 474.

  12. 12.

    See further Faure and Liu, ‘The Tsunami of March 2011’, 195 f.

  13. 13.

    ibid, 199 f.

  14. 14.

    Moniteur Belge, 24 February 2012. For commentaries see C Coune, ‘Wet van 13 november 2011 betreffende de vergoeding van de lichamelijke en morele schade ingevolge een technologisch ongeval’ (2012) 5 Tijdschrift voor Belgisch Handelsrecht 5 and E Verjans, ‘Nieuwe wettelijke regeling voor de vergoeding van slachtoffers van grote technologische rampen’ (2012–2013) 27 Rechtskundig Weekblad 1076.

  15. 15.

    This means that the victims cannot be compensated via civil liability as long as the criminal procedure is on-going.

  16. 16.

    Art 16 para 5 of the Act of 13 November 2011.

  17. 17.

    Art 9 para 4 of the Act of 13 November 2011.

  18. 18.

    As Art 10 of the Act of 13 November 2011 stipulates: ‘Conformément aux règles de droit commun, en tenant compte du caractère exceptionnel du dommage’.

  19. 19.

    Faure and Weber, ‘Security Mechanisms for Insolvencies in the Package Travel Sector’.

  20. 20.

    For a discussion of these regimes see H Wang, Civil liability for marine oil pollution damage. A comparative and economic study of the international, US and Chinese compensation regimes (Alphen a/d Rijn, Kluwer Law International, 2011) 53–97 and 212–219.

  21. 21.

    The International Convention on Civil Liability for Oil Pollution Damage 1969.

  22. 22.

    The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971.

  23. 23.

    The reason is that those Conventions have particular characteristics, so as preemption of state law, low liability limits and channelling liability to shipowners, which were unacceptable to the US. For details see H Wang and MG Faure, ‘Civil Liability and Compensation for Marine Pollution—Lessons to be Learned for Offshore Oil Spills’ (2010) 8:3 Oil, Gas, Energy Law Intelligence 1, 3.

  24. 24.

    For a summary of the US OPA regime see C de la Rue and CB Anderson, Shipping and the Environment: Law and Practice (London, LLP, 2009) and R Force, M Davies and JS Force, ‘Deepwater Horizon: Removal Costs, Civil Damages, Crimes, Civil Penalties, and State Remedies in Oil Spill Cases’ (2011) 85 Tulane Law Review 889.

  25. 25.

    Claims Manual, International Oil Pollution Compensation Fund 1992, December 2008 ed, 20, available at www.iopcfunds.org/uploads/tx_iopcpublications/2008_claims_manual_e.pdf.

  26. 26.

    Ibid.

  27. 27.

    Guidelines for Presenting Claims in the Fisheries, Mariculture and Fish Processing Sector, International Oil Pollution Compensation Fund 1992, December 2008 ed.

  28. 28.

    In the interview with representatives of the International Group of P&I Clubs in London on 1/5/2013.

  29. 29.

    Ibid.

  30. 30.

    Ibid.

  31. 31.

    33 USC§ 2714. The responsible party or guarantor has 5 days to deny its designation as a responsible party, and upon its failure to do so, must advertise the designation and procedures by which claims may be presented to it within 15 days of the designation. If the responsible party does not advertise, the President is responsible, at the expense of the responsible party or the guarantor, for advertising the designation and procedures by which claims may be presented to the responsible party. The advertisement must continue for no fewer than 30 days. 33 USC§ 2714(b)(1). Sec 2714(b)(2) provides that the advertisement ‘shall state that a claimant may present a claim for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled and that payment of such a claim shall not preclude recovery for damages not reflected in the paid or settled partial claim’. Under sec 2714(c), if (1) during the 5 day period both the designated responsible party and the guarantor deny the designation, (2) the source of the discharge or threat was a public vessel, or (3) the President cannot designate the source, then ‘the President shall advertise or otherwise notify potential claimants of the procedures by which claims may be presented to the Fund.’

    It should be noted that OPA does not impose a mandatory duty on the President to designate a responsible party, but instead, only requires the President to designate a responsible party ‘where possible and appropriate’.

  32. 32.

    For a detailed discussion on the claims procedure, see Force, Davies and Force, Deepwater Horizon, 949 ff.

  33. 33.

    Force, Davies and Force, Deepwater Horizon, 950.

  34. 34.

    S Issacharoff and DT Rave, ‘The BP Oil Spill Settlement and the Paradox of Public Litigation’ (2013) 13–20 NYU Law and Economics Research Paper 3.

  35. 35.

    US Department of Homeland Security United States Coast Guard Report on Implementation of the Oil Pollution Act of 1990 (2004) 6.

  36. 36.

    www.bp.com/sectiongenericarticle800.do?categoryId=9048917&contentId=7082602; see also the Claims and Government Payments Public Report (31/3/2013), www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/gom_2012/STAGING/local_assets/downloads_pdfs/Public_Report_March_2013.pdf.

  37. 37.

    So Dr Philipp Wassenberg, representative of Munch Re, interview on 6/5/2013.

  38. 38.

    http://www.bizjournals.com/stlouis/stories/2010/10/18/focus3.html?page=all.

  39. 39.

    Interview with Kent Syverud in Saint-Louis on 5/3/2013.

  40. 40.

    J Ramseur, ‘Liability and Compensation Issues Raised by the 2010 Gulf Oil Spill’ (2011) CRS Report for Congress, 11/3/2011, Congressional Research Service, R41679, 15. See also BP Press Release, 23/8/2010, http://www.bp.com/genericarticle.do?categoryId=2012968&content Id=7064597.

  41. 41.

    Gulf Coast Claims Facility Protocol for Emergency Advance Payments, Gulf Coast Claims Facility, section II (F), 23/8/2010.

  42. 42.

    For an analysis of the function of GCCF, see Force, Davies and Force, Deepwater Horizon, 936 f.

  43. 43.

    BDO Consulting (commissioned by the US Department of Justice), Independent Evaluation of the Gulf Coast Claims Facility: Report of Findings and Observations, 5/6/2012. The study is available at www.justice.gov/opa/documents/gccf-rpt-find-obs.pdf. This study defines the compensation process of GCCF into two phases: Phase I starts from August 2010, and Phase II starts from February 2011. The findings of the study show that the claims filed during phase II were subject to more stringent documentation requirements than those filed during phase I, whereas meanwhile it expanded the types of businesses that would be potentially eligible for compensation and granted automatic eligibility to claimants located on the Gulf shore who were involved in businesses that were particularly reliant on Gulf resources.

  44. 44.

    BDO Consulting (2012) 62.

  45. 45.

    www.bp.com/sectiongenericarticle800.do?categoryId=9048917&contentId=7082602.

  46. 46.

    www.bp.com/sectiongenericarticle800.do?categoryId=9048911&contentId=7082592.

  47. 47.

    Interview with Kenneth Feinberg, special administrator of the GCCF in Haifa on 16/6/2013.

  48. 48.

    For a discussion on various mechanisms used in mass tort claims, see DE Greenspan and MA Neuburger, ‘Settle or Sue? The Use and Structure of Alternative Compensation Programs in the Mass Claims Context’ (2012) 17 Roger Williams University Law Review 97.

  49. 49.

    Greenspan and Neuburger, ‘Settle or Sue’, 99.

  50. 50.

    Ibid.

  51. 51.

    Interview with Kent Syverud in Saint-Louis on 5/3/2013.

  52. 52.

    Interview with Kenneth Feinberg, special administrator of the GCCF in Haifa on 16/6/2013.

  53. 53.

    Ibid.

  54. 54.

    Ibid.

  55. 55.

    Interview with Kent Syverud in Saint Louis on 5/3/2013.

  56. 56.

    There are also more critical views on the GCCF. It is, for instance, being argued that the gains achieved by the fund solution have not been distributed to the polluters and the victims alike. The victims arguably would have been better off in court litigation, see Issacharoff and Rave, ‘The BP Oil Spill Settlement’.

  57. 57.

    See e.g. Issacharoff and Rave, ‘The BP Oil Spill Settlement’.

  58. 58.

    Interview in London on 1/5/2013.

  59. 59.

    See further on this case JZ Hu, ‘Legal Issues from the Hebei Spirit Oil Spill Incident’ in MG Faure, L Han and H Shan (eds), Marine Pollution Liability and Policy. China, Europe and the US (Alphen a/d Rijn, Kluwer Law International, 2010).

  60. 60.

    See on the right of entry in maritime ports for ships in distress E Somers, ‘Marine Pollution and the Right of Entry in Maritime Ports for Ships in Distress’ in Faure, Han and Shan (eds), Marine Pollution Liability and Policy.

  61. 61.

    So representatives of the International Group of P&I Clubs, interview in London on 1/5/2013.

  62. 62.

    See Faure and Weber, ‘Security Mechanisms for Insolvencies in the Package Travel Sector’.

  63. 63.

    This reasoning is analogous to that stipulated for administrative vs. criminal law procedures and their differences; for those findings, see AI Ogus, MG Faure and NJ Philipsen, ‘Best Practices for Consumer Policy: Report on the Effectiveness of Enforcement Regimes’, Report prepared for the UK Department of Trade and Industry and OECD (2006) 47.

  64. 64.

    RA Posner, Economic Analysis of Law, 8th ed (New York, Aspen Publishers, 2011) 787.

  65. 65.

    F Weber, The Law and Economics of Enforcing European Consumer Law—A Comparative Analysis of Package Travel and Misleading Advertising (Aldershot, Ashgate, 2014).

  66. 66.

    See A Shleifer et al., ‘Courts’ (2003) 118 Quarterly Journal of Economics 453 f; RA Posner, ‘The Theories of Economic Regulation’ (1974) 5 The Bell Journal of Economics and Management Science 335, 351 ff. For criminal law judges, see R Bowles, MG Faure and N Garoupa, ‘The Scope of Criminal Law and Criminal Sanctions: An Economic View and Policy Implications’ (2008) 35 Journal of Law and Society 389, 392 ff.

References

  • BDO Consulting (commissioned by the US Department of Justice), Independent Evaluation of the Gulf Coast Claims Facility: Report of Findings and Observations (2012).

    Google Scholar 

  • Bowles, R, Faure, MG and Garoupa, N, ‘The Scope of Criminal Law and Criminal Sanctions: An Economic View and Policy Implications’ (2008) 35 Journal of Law and Society 389.

    Google Scholar 

  • Bruggeman, V, Compensating Catastrophe Victims. A Comparative Law and Economics Approach (The Hague, Kluwer Law International, 2010).

    Google Scholar 

  • Cafaggi, F and Micklitz, H-W (eds), New Frontiers of Consumer Protection—The Interplay between Private and Public Enforcement (Antwerp, Intersentia, 2009).

    Google Scholar 

  • Coune, C, ‘Wet van 13 november 2011 betreffende de vergoeding van de lichamelijke en morele schade ingevolge een technologisch ongeval’ (2012) 5 Tijdschrift voor Belgisch Handelsrecht 5.

    Google Scholar 

  • De La Rue, C and Anderson, CB, Shipping and the Environment: Law and Practice (London, LLP, 2009).

    Google Scholar 

  • Durant, IC, ‘Belgium’ in MG Faure and T Hartlief (eds), Financial Compensation for Victims of Catastrophes. A Comparative Legal Approach (Vienna, Springer, 2006) 37.

    Google Scholar 

  • Faure, MG and Hartlief, T, ‘Compensation Funds versus Liability and Insurance for Remedying Environmental Damage’ (1996) 5 Review of European Community and International Environmental Law 321.

    Google Scholar 

  • Faure, MG and Liu, J, ‘The Tsunami of March 2011 and the Subsequent Nuclear Incident at Fukushima: Who Compensates the Victims?’ (2012) 37 William & Mary Environmental Law & Policy Review 129.

    Google Scholar 

  • Faure MG and Weber F, ‘Security Mechanisms for Insolvencies in the Package Travel Sector: an Economic Analysis’ (2013) 36 Journal of Consumer Policy 425.

    Google Scholar 

  • Force, R, Davies, M and Force, JS, ‘Deepwater Horizon: Removal Costs, Civil Damages, Crimes, Civil Penalties, and State Remedies in Oil Spill Cases’ (2011) 85 Tulane Law Review 889.

    Google Scholar 

  • Greenspan, DE and Neuburger, MA, ‘Settle or Sue? The Use and Structure of Alternative Compensation Programs in the Mass Claims Context’ (2012) 17 Roger Williams University Law Review 97.

    Google Scholar 

  • Hinghofer-Szalskay, D and Koch, BA, ‘Austria’ in MG Faure and T Hartlief (eds), Financial Compensation for Victims of Catastrophes. A Comparative Legal Approach (Vienna, Springer, 2006) 7.

    Google Scholar 

  • Hu, JZ, ‘Legal Issues from the Hebei Spirit Oil Spill Incident’ in MG Faure, L Han and H Shan (eds), Marine Pollution Liability and Policy. China, Europe and the US (Alphen a/d Rijn, Kluwer Law International, 2010) 399.

    Google Scholar 

  • Issacharoff, S and Rave, DT ‘The BP Oil Spill Settlement and the Paradox of Public Litigation’ (2013) 13-20 NYU Law and Economics Research Paper.

    Google Scholar 

  • Micklitz, H-W, Brauchen Konsumenten und Unternehmer eine neue Architektur des Verbraucherrechts? Gutachten A zum 69. Juristentag (Munich, CH Beck, 2012).

    Google Scholar 

  • Micklitz‚ H-W, ‘Zukunft des Verbraucherrechts—Plädoyer für ein bewegliches System’ (2012) Neue Juristische Wochenschrift 77.

    Google Scholar 

  • Ogus, AI, Faure, MG and Philipsen, NJ, ‘Best Practices for Consumer Policy: Report on the Effectiveness of Enforcement Regimes’, Report prepared for the UK Department of Trade and Industry and OECD (2006).

    Google Scholar 

  • Posner, RA, ‘The Theories of Economic Regulation’ (1974) 5 The Bell Journal of Economics and Management Science 335.

    Google Scholar 

  • Posner, RA, Economic Analysis of Law, 8th ed (New York, Aspen Publishers, 2011).

    Google Scholar 

  • Ramseur, J, ‘Liability and Compensation Issues Raised by the 2010 Gulf Oil Spill’, CRS Report for Congress, 11/3/2011, Congressional Research Service, R41679.

    Google Scholar 

  • Shleifer, A et al, ‘Courts’ (2003) 118 Quarterly Journal of Economics 453.

    Google Scholar 

  • Somers, E, ‘Marine Pollution and the Right of Entry in Maritime Ports for Ships in Distress’ in MG Faure, L Han and H Shan (eds), Marine Pollution Liability and Policy. China, Europe and the US (Alphen a/d Rijn, Kluwer Law International, 2010) 41.

    Google Scholar 

  • Tyler, TR and Thorisdottir, H, ‘A Psychological Perspective on Compensation for Harm: Examining the 9/11 Victim Compensation Fund’ (2003) 53 DePaul Law Review 355.

    Google Scholar 

  • US Department of Homeland Security United States Coast Guard Report on Implementation of the Oil Pollution Act of 1990 (2004).

    Google Scholar 

  • Verjans, E, ‘Nieuwe wettelijke regeling voor de vergoeding van slachtoffers van grote technologische rampen’ (2012–2013) 27 Rechtskundig Weekblad 1076.

    Google Scholar 

  • Wang, H, Civil liability for marine oil pollution damage. A comparative and economic study of the international, US and Chinese compensation regimes (Alphen a/d Rijn, Kluwer Law International, 2011).

    Google Scholar 

  • Wang, H and Faure, MG, ‘Civil Liability and Compensation for Marine Pollution—Lessons to be Learned for Offshore Oil Spills’ (2010) 8:3 Oil, Gas, Energy Law Intelligence 1.

    Google Scholar 

  • Weber, F, The Law and Economics of Enforcing European Consumer Law—A Comparative Analysis of Package Travel and Misleading Advertising (Aldershot, Ashgate, 2014).

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Law, Rotterdam Institute of Law and Economics (RILE), PO Box 616, NL-6200, Maastricht, MD, The Netherlands

    Michael Faure

  2. Ius Commune Research School, Maastricht University, Maastricht, The Netherlands

    Michael Faure

  3. Institute of Law and Economics, University of Hamburg, Johnsallee 35, 20148, Hamburg, Germany

    Franziska Weber

Authors
  1. Michael Faure
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Franziska Weber
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Michael Faure .

Editor information

Editors and Affiliations

  1. Law and Governance Group, Faculty of Law, Wageningen University, Erasmus University of Rotterdam, The Netherlands

    Kai Purnhagen

  2. Faculty of Law, University of Copenhagen, Copenhagen, Denmark

    Peter Rott

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer International Publishing Switzerland

About this chapter

Cite this chapter

Faure, M., Weber, F. (2014). Towards a Rapid Claims Settlement Mechanism for Disasters?. In: Purnhagen, K., Rott, P. (eds) Varieties of European Economic Law and Regulation. Studies in European Economic Law and Regulation, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-04903-8_36

Download citation

Publish with us

Policies and ethics

Search

Navigation