1. Gesetz über die Umwelthaftung(Environmental Liability Act) (enacted on November 7,1990 and effective as of January 1, 1991) [hereinafter ELA or the Act].

2. See Kloepfer, M., Umweltschutz, Textsammlung des Umweltrechts der Bundesrepublik Deutschland(1989) (collecting texts and pertinent provisions from over 100 separate pieces of German legislation regulating and providing liability for activities harmful to the environment)Google Scholar.

3. Kloepfer, op. cit. n. 2; see also infrasection 2.1 of this Article.

4. See infra sections 2.2–2.5 of this Article.

5. Germany's piecemeal approach to environmental law is evident from a look at the individual federal laws regulating such disparate activities as construction, mining, railroads, streets, hunting, hotels, x-rays, and the removal of animal bodies, each containing restrictions deemed appropriate to curb pollution with respect to the particular activity. Thus, approximately 30 separate federal laws regulate water pollution arising from different sources and activities. See Kloepfer, op. cit. n. 2.

6. A draft General Part of a single environmental code bringing together private and administrative (but not criminal) law provisions is now complete. See Pressemitteilung, Bundesminister für Umwelt, Naturschutz undReaktorsicherheit (September 25,1990). But a single comprehensive law providing for strict liability, enforcement power and penalties, and compensation and recovery of response costs, cf., Comprehensive Environmental Response Compensation and Liability Act (CERCLA), 42 U.S.C. 9601 et seq. (1986), does not exist.

7. See infra section 3 of this Article.

8. See generally Schmitt, A., Haftungs- und Versicherungsfragen bei Umweltrisiken(1990) pp. 50–53Google Scholar..

9. Ibid. p. 58..

10. Bürgerliches Gesetzbuch section 906 (enacted in 1896 and effective as of January 1, 1900) (1989) [hereinafter BGB or Civil Code].

11. See BGB s. 906, para. 1. Generally, a landowner may recover damages under s. 906 only if ‘unweighable materials’ (unwägbare Stoffe), such as airborne substances, vibration, noise, or similar emissions from another parcel cause an impact which ‘not insubstantially impairs’ (nicht unwesentlich beeinträchtigt)the use of the land. Idem..

12. BGB s. 906, para. 2, sent. 1.

13. Personal injury or personal property damage cannot give rise to a claim under s. 906. Seethe Kupolofencase, BGHZ 92 s. 143, 1/2 Neue Juristische Wochenschrift(1985) p. 47 (the German High Court held that an industrial landowner could not be held liable under s. 906 for damage which airborne ashes emitted by its facility caused to the paint of cars parked on neighboring industrial property).

14. See generally Schirmer, H., ‘Die Haftung im Umweltschutz’, 1/2Zeitschriftfur die Gesamte Versicherungswissenschaft(1990) pp. 137, 155–165CrossRefGoogle Scholar.

15. BGB s. 823.

16. Traditionally the burden of proof is on the claimant with respect to each element of a tort claim under s. 823. However, in 198S the German High Court held that the burden of proof under s. 823 falls on the defendant in cases based on emissions. The court held that if, under s. 823, the defendant raises the defense that the emissions were within legal limits, then the burden of proof on the issue of the legality of the conduct is on the defendant. Kupolofen case, 92 BGHZ143, 1/2 Neue Juristische Wochenschrift(1985) at p. 48.

17. Wasserhaushaltsgesetz s. 22(1) (Water Resources Act) (enacted in 1957 and effective as of March 1, 1960) [hereinafter WRA]. Kloepfer, , op. cit. n. 2, at p. 200. The WRA does not limit liability to specific types of damage. Thus, the WRA provides for recovery for bodily injury, property damage, and even for pure economic loss, e.g., for a fisherman whose catch has been harmed by a change in the water composition. This goes a good deal further than s. 1. of the ELA, infran. 26 and accompanying text, which is limited to personal injury and property damageGoogle Scholar.

18. WRA s. 22(1).

19. See 57 BGHZ 257, 264 (1971). This presumption applies, however, only if the claimant names multiple possible polluters; if only a single defendant is named, then the claimant bears the full burden of proving causation. Schirmer, , loc. cit. n. 14, at pp. 167–168Google Scholar.

20. See supran. 17.

21. Schirmer, , loc. cit. n. 14, at p. 186Google Scholar. See also Landsberg, G. and Lülling, W., ‘Das neue Umwelthaftungsgesetz’, 44 Wirtschaftsrecht(1990) pp. 2205, 2211. But see ‘Bundesrat plädiert fur scharfere Umwelthaftung’, SüddeutscheZeitung(15 October 1990) (successes of WRA. in deterring water pollution lauded by German Upper House in debating ELA expansion of strict liability to damages caused by air and soil pollution)Google Scholar.

22. Bundesberggesetz s. 114 (effective as of January 1, 1982); Kloepfer, , op. cit. n. 2, p. 970Google Scholar.

23. Atomgesetz s. 25 et seq. (1976); Kloepfer, , op. cit. n. 2, p. 900Google Scholar.

24. Haftpflichtgesetzs. 2 (1871, as amended 1978). See Schönfelder, H., Deutsche Gesetze, Textsammlung(1989) p. 33Google Scholar.

25. Bundes- Immissionsschutzgesetz s. 14 (effective as of April 1, 1974) (Federal Emissions Protections Act) [hereinafter BImSchG] and Verordnungen(administrative orders thereunder) [hereinafter BImSchG], in Kloepfer, , op. cit. n. 2, pp. 600, 654Google Scholar. This law parallels BGB s. 906 insofar as it imposes liability for damage caused by air pollution, light, heat, and rays.

26. ELA s. 1 (author's translation).

27. The ELA draft bill initially limited multiple defendants to their pro rata share of liability, thereby excluding joint and several liability from the ELA. See ELA draft at s. 8. This draft was passed by the Lower House of the German Parliament in October 1990, but the Upper House effectively blocked the bill as then written. One of the provisions that was unacceptable for the Upper House was s. 8, which was deleted from the ELA as enacted. Accordingly, multiple ELA defendants are subject to general tort principles, including joint and several liability under BGB s. 840.

28. ELA s. 4.

29. This exclusion applies only if the facility has ‘operated properly’, i.e., according to all applicable regulations and no interruption of operations has occurred. ELA s. 5 (author's translation).

30. ELA Art. 5 (ELA effective as of January 1, 1991).

31. ELA s. IS. The maximum liabilities for personal injury and for property damage are fixed at DM 160 million each, insofar as these damages are from the same case. Multiple cases against a single defendant would require a pro rata reduction. See idem..

32. In this regard the ELA is unlike Germany's new Products Liability Act. See Gesetz über die Haftung für fehlerhafte Produkte (effective as of January 1, 1990) s. 1, para. (2). See also EC Directive on Product Liability and Implementing Legislation in a Nutshell(The Cologne Re's Casualty Circular) (1990); European Community Product Liability Law (Schriftenreihe der Kölnischen Rück, 1991).

The controversy surrounding an exclusion of liability for development risks (also known as the ‘state of the art’ defense) illustrates very well the special interest pressures on the legislature that passed the ELA. Industry lobbied intensely for a development risk exclusion or, in the alternative, for an exclusion of liability based on compliance with applicable regulations. The legislature found these proposals to be irreconcilable with the concept of strict liability. What ultimately emerged in the ELA is a highly diluted form of the lobbied-for exclusion. Instead of an exclusion of liability, industry must content itself with a provision excluding the claimant's presumption of causation on the basis of compliance with statutory norms. See infra nn. 45–48 and accompanying text.

33. ELA s. 1. See supran. 26 and accompanying text.

34. ELA s.2.

35. ELA s. 3(2) (author's translation).

36. ELA s. 3(3) (author's translation).

37. See ELA, Appendix (Anhang)1. Appendix 1 groups 96 types of facilities into ten categories and includes industries engaged in: (1) mining, energy and heat production; (2) the manufacture of products from stone, earth, glass, ceramic, and other construction materials; (3) the processing and manufacture of steel, iron, and other metals; (4) the manufacture of chemical, pharmaceutical, or petroleum products or their further processing; (5) treatment with organic materials and the manufacture of artificial materials; (6) the processing of wood and wood pulp; (7) the production of food, feed, and agricultural products; (8) the treatment of waste; (9) the storage and disposal of certain materials; and (10) other facilities, including paint, printing ink, asphalt, etc., production. Idem..

38. Compare Appendix to BImSchV, supra n. 25.

39. ELA s. 3(1) (author's translation).

40. As noted, supran. 17, WRA s. 22(1) permits recovery for pure economic loss as well as for personal injury and property damage, while only the latter are recoverable under ELA s. 1. Thus, the ELA does not completely subsume the WRA as a remedy for losses resulting from water pollution.

41. See, e.g., Diederichsen, U., ‘Industriegefährdung durch Umweltgefahrdungshaftung?’, in Reform des Umwelthaftungsrechts, Beiträge zur 12. Kölnischen Runde 5 (Schriftenreihe der Kölnischen Rück, 1990) p. 19Google Scholar.

42. See supra n. 32.

43. This presumption has its origin in judge-made law under the WRA. See supra n. 19 and accompanying text. The ELA provides in s. 6(1):

‘(1) If a facility is inherently suited under the circumstances to cause the resulting damage, then it shall be presumed that this facility caused the damage. Inherent suitedness in a particular case is determined on the basis of the course of business, the structures used, the nature and concentration of the materials used and released, the weather conditions, the time and place of the commencement of the damage, as well as all other conditions which speak for or against a finding of causation.’ Idem (author's translation).

44. Unlike its predecessor in the WRA, see supra n. 19 and accompanying text, the presumption of causation under s. 6(1) of the ELA applies in cases against single facilities. Idem..

45. ELA s. 6, subsections (2), (3), and (4) provide:

(2) Paragraph 1 shall not apply if the facility has been properly operated. A properly operated facility is present if the special operational duties have been complied with and no disruption of the business has occurred.

(3) Special operational duties are those duties imposed by administrative permits, orders, and mandatory ordinances and regulations, insofar as their purpose is to prevent the kind of environmental impacts that could be considered to be the cause of the damage.

(4) If controls are prescribed in the permit, in orders, in mandatory ordinances or in regulations requiring the observance of a special operational duty, men compliance with mis operational duty shall be presumed, if

1. the controls were carried out during the time period in which the environmental impact in question may have emitted from the facility, and these controls give rise to no inference of a violation of the operational duty, or

2. at the time the claim for compensation is made, more than ten years have passed since the environmental impact occurred.’ Idem(author's translation).

46. ELA s. 6(2). See supra n. 45.

47. ELA s. 6(3). See supra n. 45.

48. ELA s. 6(4). See supra n. 45.

49. ELA s. 7.

50. With a little imagination, a clever defendant might easily point to facts raising an issue as to whether another ‘circumstance’ satisfies a broadly construed ‘inherent suitedness’ test. However, as the language ‘multiple facilities’ in s. 7 makes clear, in no case can another defendant facility be the other ‘circumstance’ justifying the exclusion. Thus, s. 7 prevents multiple defendants from using each other to deflect use of the presumption.

51. See Langbein, J., ‘The German Advantage in Civil Procedure’, 52 Univ. Chicago LR (1985) pp. 823, 824Google Scholar.

52. ELA ss. 8, 9. The claimant must show facts that ‘justify the assumption’ that a facility has caused the damage. If this showing is made, then the court may order the defendant or administrative agency to provide information about a facility, the substances used, their concentration, and other emissions.

53. ELA s. 10. The defendant may compel the claimant, the owner of another facility, or an administrative agency to produce information ‘insofar as this is necessary to establish the scope of liability to the claimant or of liability from the other facility’ (author's translation).

54. ELA ss. 8(2), 9, 10(2). Query, how far German banking secrecy, trade secret, patent, copyright, personal data protection and other secrecy laws will operate to preclude discovery.

55. Zivilprozessordnung(Code of Civil Procedure) s. 32 (1981). Section 32 provides that the proper court is the court of the district ‘in which the tort was committed.’ See idem (‘Für Klagen aus unerlaubten Handlungen ist das Gericht zuständig, in dessen Bezirk die Handlung begangen ist’.).

56. This result is reached by the German courts in domestic and international cases under s. 32 of the Code of Civil Procedure, see 1 Baumbach, ZPO s. 32 at 81 (1981), as well as in those international cases in which the EC Convention, see the 1968 European Community Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters, Title n, Ch. 2, Art. 5(3), is applicable.

57. ELA Art. 2.

58. Idem..

59. Einführungsgesetz zum Bürgerlichen Gesetzbuch(Introductory Law to the Civil Code) s. 2.

60. Enterprises in the Netherlands, Belgium, Luxembourg, France, Switzerland, Austria, Hungary, Czechoslovakia, Poland, and Denmark which fall into this category might wish to consult counsel on the potential significance of the ELA for their businesses.

61. See Breining, W., ‘Umwelthaftung und Umweltversicherung’, 1/2Zeitschriftfūur die Gesamte Versicherungswissenschaft(1990) pp.193CrossRefGoogle Scholar, 197; Kirk, D., ‘Gennan Law Stiffens Pollution Liability’, Business Insurance(11 19, 1990)Google Scholar; Küpper, G., ‘Macht das neue Umwelthaftungsgesetz eine Anpassung des Versicherungsschutzes erfarderlich?’, 10 Die Versicherungs-praxis (1990) pp. 181, 185Google Scholar; Landsberg, and Lüulling, , loc. cit. n. 21, at p. 2205Google Scholar; Wagner, G., Umwelthaftung und Versicherung, pp. 19–20 (paper presented to Gesellschaft für Versicherungswissenschqfton October 23, 1990); ‘Haftung ohne Verschulden bei Umweltschäden’, Frankfurter Allgemeine Zeitung(December 28, 1990); ‘Umwelthaftung’, Handelsblatt(November 11, 1990)Google Scholar. But see Diederichsen, , loc. cit. n. 41, at p. 31 (arguing that the ELA does not place industry before any new liability problems)Google Scholar.

62. See suprann. 17–21 and accompanying text.

63. ELA s. 19, Appendix 2. Appendix 2 of the ELA lists three categories of faculties; (1) facilities subject to the Accident Law of 1980 (Störfall-Verordnung), see Kloepfer, , op. cit. n. 2, at p. 654Google Scholar; (2) waste-burning facilities; and (3) facilities engaged in the manufacture of paints or printing inks from cellulose nitrate.

64. ELA s. 19(2).

65. The duty to buy insurance or obtain a guarantee from the appropriate entity does not take effect until the federal government issues an order establishing the particulars of this duty. Thus, Appendix 2 faculties are liable today pursuant to s. 1 of the ELA, but their duty to comply with s.19 will arise only at some unknown point in the future. The ELA itself contains no deadline for the promulgation of such an order, which will have to pass both houses of the legislature. Given the extreme difficulty of the economic and insurance problems associated with ELA insurance, it would be unrealistic to expect that the federal government will issue the order before the end of 1991, and it may take even longer.

66. ELA, Appendix 1; see also suprann. 34–38 and accompanying text.

67. See Comitée Europeen des Assurances, Summary of Replies to Questionnaire CJ-EN18813 by the Expert Committee of the Council of Europe on Compensation of Damage to the Environment (1989) p. 3.

68. See, e.g., Küpper, , loc. cit. n. 61, at p. 185Google Scholar.

69. Schmitt, , op. cit. n. 8, at pp. 67–68Google Scholar.

70. See idem at pp. 110–115; Wagner, , op. cit. n. 61, at pp. 2–3Google Scholar.

71. The General Conditions for Liability Insurance contain no general exclusion of ‘gradual pollution’. The most that can be said is that the General Conditions exclude from property coverage all damage resulting from the ‘gradual’ impact of a narrowly enumerated list of substances, which includes ‘smoke, soot, dust, and the like’. See Allgemeine Versicherungsbedingungen für die HaftpflichtversicherungI, ss. 4, 5.

72. See generally Zeller, W., ‘Environmental Impairment Liability Insurance—An International Comparison’, Japan Ins. News (11/12 1990) p. 38Google Scholar, reprinted in Reform des UmweltHaftungsrechts, Beiträge zur 12. Kölnischen Runde (Schriftenreihe der Kölnischen Rück, 1990) p. 61. See also Souter, G., ‘UK Insurers Ban Gradual Pollution Cover’, Business Insurance(02 4, 1991) p. 29Google Scholar.

73. Breining, , loc. cit. n. 61, at pp. 194–195Google Scholar.

74. Mr. Walter Breining, a director of Allianz Versicherung and Chairman of the German insurance industry's liability committee, stated upon the passage of the ELA: ‘We will discuss with the manufacturing industry how we can come together as closely as possible. But congruent cover will not be possible’.See ‘Germany Passes Environment Bill’, Lloyd's List(November 3, 1990) (emphasis added). See also Breining, , loc. cit. n. 61, at p. 197Google Scholar

In this connection, another writer has made it his thesis that insurers will exploit an opportunity that has arisen under the ELA to put pressure on policyholders to renegotiate EIL policy conditions on terms more favorable to insurers. Küpper, , loc. cit. n. 61, at pp. 181, 186Google Scholar.

75. Zeller, loc. cit. n. 72.