Friday, October 21, 2005

Part VI – Responsibility of parent companies - After-treatment measure responsibility under the Swedish Environmental Code

  • A much debated question in Sweden – probably only among environmental lawyers - is to what extent a shareholder or a parent company could be considered to be as an operator and thus could be held responsible for clean-up and after-treatment measures.

  • The Swedish Environmental Code defines operators as “persons who pursue or have pursued an activity or taken a measure that is a contributory cause of the pollution”.

  • It has been forcefully argued that this should be interpreted to include a parent company in the group of operators if the activities of a subsidiary constitutes a natural part of the parents group of companies and if the parent has exercised a legal and factual substantial control over the activities of the subsidiary. Against this has been argued, equally forceful, that such an interpretation is much too wide and not in line with the language of the Code.

  • Chapter 10 of the Swedish Environmental Code is intended to fulfil the obligations of Sweden under the European Union directive 96/61/EC (the IPPC directive). This directive states clearly that an operator is “any natural or legal person who operates or controls the installation or, where this is provided for in national legislation, to whom decisive economic power over the technical functioning of the installation has been delegated.

  • However, a complication is that the translation into Swedish – if translated back to English – does not use the expression “who operates or controls” but “who operates or holds”. There is an obvious difference between controlling an installation, on the one hand, and holding an installation, on the other. It has, been argued that, unless the Swedish courts adopt the wider interpretation and includes parent companies as operators under certain circumstances; Sweden will be in breach of the IPPC directive.

  • Until a ruling is made by the Supreme Court of Sweden, it is impossible to say whether a parent company may be responsible for the clean-up and after-treatment measures of a subsidiary.

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