Recent Developments Affecting European Asbestos Claims

The subject of this paper is recent legal decisions which have affected the prospects of asbestos claims succeeding in France, the Netherlands and the UK. The case brought in the English courts by South African asbestos victims against Cape PLC will also be discussed. For convenience, all currencies have been converted to US dollars.

2. France

Parts of the French law governing compensation for occupational diseases date from 1919. For years, asbestos victims did not pursue claims as the compensation system was long-winded, difficult and very much biased against the claimants. Since ANDEVA, the French national asbestos victims’ group, was set up in the mid-1990s, much has changed. Claims are facilitated by local groups throughout France which are members of the national ANDEVA network.

2.1 Compensation Claims Against Government Bodies

While compensation claims are brought against employers, cases can also proceed against government bodies. In March 1999 Michel Drouet, a 53 year old mesothelioma patient from Cherbourg, became the first applicant to win damages from the Criminal Compensation Commission, a panel more used to hearing appeals from victims of terrorism or road accidents. Having reviewed evidence of 18 years of occupational exposure in the French Navy, the three Commissioners awarded the former mechanic $163,000. Although this decision was appealed by the Fund of Guarantee, a government panel, it was upheld by the Court of Appeal. Most of those seeking compensation by this route, military personnel, government officials, etc., are barred from making a claim to Social Security Tribunals.

An compensation fund established by the Government in 2000 has proved a disappointment. As of June 1, 2002 no asbestos victims had received compensation from this body which would, so it had been promised, provide compensation in a relatively short time: under six months. Asbestos victims can apply for compensation but accepting a sum from this source means they give up the right to bring a court case for "faute inexcusable" (inexcusable fault). Should they decide to refuse the offer, they could initiate a legal action. The majority of the financial backing for this scheme comes from a tax on all employers with "guilty" employers paying the same as "innocent" employers. The rest of the money comes from French taxpayers, who are thus subsidising the negligent behaviour of asbestos defendants.

2.2 Cases Against Employers

Although complicated and time-consuming, personal injury cases against former employers seem to produce higher payouts. The floodgates for thousands of asbestos cases were opened on April 16, 1999, when retired workers or their estates won an action before the Social Security Tribunal in Melun. Everite, the former employer of the twenty-two plaintiffs, was found guilty of "faute inexcusable". Evidence that even the most basic preventative measures had not been taken was accepted. The verdict of "faute inexcusable" more than doubled the size of the sums awarded.

Verdicts of "faute inexcusable" were also upheld by the French Supreme Court in a landmark judgment issued on February 28, 2002. The Supreme Court (Cour de Cassation), had been asked to consider whether or not the lower courts had ruled correctly in twenty-nine cases brought by asbestos victims. The defendants in these cases included: companies linked to asbestos multinationals such as Eternit (part of the Belgian-owned Etex Group), Everite (Saint Gobain), S. A. Valeo (the company which took over Ferodo Ltd., previously a wholly-owned subsidiary of the UK Turner & Newall Group) and companies utilising asbestos like Ascométal.

In a resounding victory for the claimants, the Supreme Court confirmed the plaintiffs’ rulings. According to ANDEVA: "After 50 years of lies, the companies which manufactured and processed asbestos have finally been brought to justice and asbestos victims have received the judicial recognition and compensation they deserve." Another important conclusion of the Supreme Court is that compensation claims survive the death of injured workers; this means that the surviving family will benefit from the claimant’s legal entitlements. It has been estimated that the Supreme Court ruling could cost French insurers $6.68 billion over twenty years.

Jean-Philippe Thierry, Chairman of Assurances Generales de France, criticised the Supreme Court which, he said, extended the law into new realms by widening the definition of inexcusable fault: "it is a modification fundamental in doctrine." Dr Annie Thebaud-Mony, one of the founding members of ANDEVA, says: "The Supreme Court decision places the responsibility for prevention squarely on employers’ shoulders. Unless these obligations are met and every preventative measure is taken, companies could find themselves facing legal actions for inexcusable fault."

3. The Netherlands

Many Dutch asbestos victims remained uncompensated until fairly recently because there were no national compensation schemes and a strict limitation rule statute-barred personal injury claims for diseases with latency periods longer than thirty years.

3.1 Civil cases

Since 1994, the number of asbestos cases has escalated. Asbestos specialist Bob Ruers has handled more than one thousand cases in the last eight years. He says that these days Dutch employers and insurance companies prefer to settle most asbestos claims with only 10-15% proceeding to court. The availability of more and better information has led to a significant rise in the size of pain and suffering awards ($50,000-$80,000).

Prior to 1997, the date of knowledge in mesothelioma cases was accepted as 1969. This date was pushed back by the 1997 verdict in the case of a Dutch joiner who died from mesothelioma. His family was awarded $75,800 after the Court found that the company which had employed him from 1949-1967, had not taken adequate precautionary measures in light of the known dangers of asbestos. The Court ruled that: "The measures that were required at the time and recommended in specialist literature were: limiting the use of asbestos as much as possible, purifying the air and issuing personal protective devices." National borders should not have prevented the company from seeking out necessary information, even if that information originated in a foreign country: i.e. Great Britain. On October 2, 1998, an appeal to the Supreme Court of Holland upheld the plaintiff’s verdict.

Litigation prospects for people with asbestos-related lung cancer improved in 1999 with a Dutch verdict that awarded damages to a former smoker. Since that decision, defendants and insurance companies appear more willing to settle these claims.

3.2 Eternit

One of the reasons for the high incidence of asbestos-related diseases in the Netherlands is the operations of Eternit. Since the 1920s, Eternit has been one of the world’s leading asbestos companies. It has subsidiaries throughout the world, some of which still use asbestos in their production processes. Eternit-linked companies exist under many names; Eternit owns some of them outright, has majority shares in others and minority interests in the rest. The Swiss and Belgian Eternit Groups, although now independent, still cooperate to further their mutual interests. With or without asbestos production, these groups remain powerful and important. Eternit and its subsidiaries are well-known in Brazil.

There are various types of asbestos victims in Holland:

1. Eternit employees;

2. Members of workers’ families who were exposed to asbestos fibres brought home on overalls;

A 32 year old client of Bob Ruers was exposed to asbestos fibres brought home on his father’s work clothes. The father worked for Eternit. The son became ill and although Eternit fought the case, they eventually recognised their liability and paid compensation in 1999 of $58,650¹.

3. People who lived near Eternit factories and received environmental exposure to asbestos;

4. People who handled or were exposed to Eternit asbestos waste used to pave farmyards and roads.

Asbestos-containing waste produced by Eternit factories was disposed of in the cheapest way possible. Between 1945-1980, blue and white asbestos waste was given away or dumped. People who as children played and lived in these areas have contracted mesothelioma.

Mrs. Volkerink was born in 1961 and died of mesothelioma in 1999. She was 38 years old. During her childhood she lived on a farm near an asbestos factory owned by Eternit. The roads near the farm were paved with asbestos waste which had been given away by Eternit. The claimant rode her bicycle on these roads everyday. Eternit paid her $37,850 compensation while she was still alive. After she died, a new claim was brought on behalf of her husband and their four young children (ranging from 6 to 16 years old). This claim is pending.

Ms. Heuten was born in 1955 and was diagnosed with mesothelioma in 1999. Until she was twenty-nine years old, she lived in a house near an Eternit factory. She cycled on the roads paved with asbestos waste. A case has been instigated and the decision is expected in June, 2002.

All her life, Ms. Jansen lived on a farm near an Eternit factory. She died of mesothelioma in 2000, aged 62. Over a period of fifteen years, Ms. Jansen and her husband went to the Eternit factory 12 times a year to get free asbestos waste to pave their farmyard. Her case is pending.

3.3 Government Compensation Schemes

While civil claims are an option for Dutch mesothelioma patients, the legal process, as elsewhere, is slow. To streamline the compensation process, the Institute of Asbestos Victims (IAV) was set up on January 26, 2000 after lengthy negotiations with the Dutch Committee of Asbestos Victims, employers, insurers and the Government. Only mesothelioma patients with traceable employers/insurers whose exposure occurred within the thirty year limitation period can apply to the IAV. The IAV aims to resolve claims within four months; to bring a claim before the IAV, individuals must renounce the right to bring a civil action. The IAV is incapable of dealing with all Holland’s asbestos victims as its rules bar asbestosis, lung cancer and the 30% of mesothelioma patients whose exposure took place more than thirty years ago.

Mesothelioma victims disqualified from making an IAV claim, can apply to the Government Asbestos Institute (GAI), a Government body which administers a national compensation scheme. There is a huge discrepancy in the levels of compensation available from the two sources with average settlements of $45-$50,000 being awarded by the IAV and $17,700 by the GAI. By comparison, compensation from a civil case could be somewhere in the region of $68,000. Like the IAV, the GAI will not compensate asbestosis or lung cancer victims.

Plans are being considered for a new Government fund which would pay damages in advance to all mesothelioma sufferers including:

plaintiffs with mesothelioma claims not recognised or permitted by the legal system (such as people who were exposed more than 30 years ago);
those whose former employers have gone out of business;
and those who experienced para-occupational (from a relatives’ work clothes) exposure.

If this revolutionary scheme is adopted - and it is widely supported in the Dutch Parliament - the Government would have the responsibility to compensate mesothelioma sufferers in the first instance. Once the injured had received their compensation, it would be up to government representatives to ascertain whether there were viable defendants from whom to recoup the sums paid out.

4. United Kingdom

In he UK, there are 3500-4500 asbestos-related deaths a year; approximately,1600 are from mesothelioma. In the past, asbestos victims were reluctant to bring legal claims against former employers. This reluctance has decreased over recent years and the number of personal injury claims for asbestos diseases has risen. Unlike in the U.S. where most claims are brought against the manufacturers of asbestos products, in the UK, most civil claims are brought against former employers. As the mobilisation of victims has grown, employers and insurers have become increasingly determined to find ways of escaping their asbestos liabilities.

The last 18 months have been a traumatic time for asbestos victims:

on January 10, 2001, the UK’s biggest insurer of industrial risks was declared insolvent². This jeopardised insurance cover for asbestos victims who had worked at shipyards, chemical factories and steel works;

on February 1, 2001 the High Court issued a judgment in the case of Arthur Fairchild which had the potential to bar most mesothelioma claims;
on October 1, 2001 T&N Ltd., formerly Britain’s largest asbestos group, was put into administration. One of the results of this financial manoeuvre was to freeze all court actions, including compensation claims, against the company and its many subsidiaries;
on December 11, 2001 the Court of Appeal upheld the Fairchild decision and denied leave to appeal to the House of Lords.

Because of the importance of the Fairchild precedent, I would like to spend some time discussing this case before proceeding. The facts behind this case were these:

Arthur Fairchild, a carpenter, worked for several employers over a long career;
Arthur Fairchild died from mesothelioma;
two former employers admitted exposing him to "substantial quantities" of asbestos debris and dust;
the High Court and Court of Appeal judges could not establish which employer had exposed him to the "guilty fibre," that is the asbestos fibre or fibres which caused the mesothelioma;
thus, although both employers were guilty of exposing Mr. Fairchild to asbestos, neither was liable.

This case had massive implications for mesothelioma claimants who had worked for more than one employer. The ruling could also be used by employers to contest other claims. The employers could point out that environmental exposure to asbestos could take place in the underground or even on the street. How could any judge be certain that the asbestos fibre which caused the cancer had originated at the workplace? What if the claimant had a shed or a workshop with an asbestos roof? Insurers were also happy about this precedent because they could foresee its usefulness in contesting claims for other occupational cancers. Asbestos victims throughout the UK were appalled by the Fairchild judgments; solicitors, barristers, politicians were also outraged. One solicitor said: "If two thugs attacked and killed someone in the street, it is inconceivable that they would both get off the hook just because it could not be established which of them had delivered the fatal kick!" According to an article in one insurance journal, the Fairchild Court of Appeal decision was one of "the most significant decisions in the history of insurance law." As would be expected, the defendants used their considerable financial resources to employ some of the most experienced barristers and solicitors in Britain. No expense was to be spared in preserving the Court of Appeal decision.

After the Court of Appeal denied leave to appeal, petitions were nevertheless submitted to the House of Lords. At the end of January, 2002, the House of Lords granted leave to appeal to Mrs Fox, Mr Matthews and Mrs Fairchild. An expedited hearing, original scheduled for April 22-24, was postponed until May 7-9 after a "sordid attempt to manipulate the judicial process" took place. On May 16, the House of Lords announced that the claimants’ appeals had succeeded by unanimous consent. The full judgment will be published in a few weeks. The Association of British Insurers has estimated that this decision could cost the insurance industry up to $350 million a year in mesothelioma compensation claims

5. The Cape Case

5.1 The Case

This case was brought against an English multinational by South African asbestos claimants. The aim was to secure compensation for South Africans whose asbestos-related diseases were caused by occupational or environmental exposure to asbestos produced by the Cape Asbestos Co. Ltd. Because of a lack of funding in South Africa, the case could not be brought in that jurisdiction. The availability of legal aid in the UK meant that the case could be brought in England. Leigh, Day & Co. and John Pickering & Associates, English law firms experienced in class actions and asbestos litigation, acted for the claimants. The case was widely regarded as a test case not only for asbestos victims but for all foreigners injured by the double standards of multinationals. Because of the serious threat to business interests, the case attracted an unusual amount of media attention in the UK and in South Africa.

5.2 The Defendant

Cape, formerly the UK’s second biggest asbestos group, and its subsidiaries had mining, milling and manufacturing operations in the South African provinces of the Northern Cape, the Northern Province and Gauteng. According to a government report of 1915: "the history of the asbestos industry in the Cape has been...practically that of the Cape Asbestos Company." For over 50 years, Cape’s crocidolite (blue asbestos) mine at Koegas and mill at Prieska in the Northern Cape Province employed local people. In 1925, Cape acquired the Penge amosite mine and mill in the Northern Transvaal. The company’s factory in Benoni, near Johannesburg, manufactured asbestos products from 1940.

At its peak, Cape’s operations were world-wide, making it a major force in the asbestos industry. In the mid-1970s, the company boasted that it was "one of the principal producers of crocidolite and the world’s chief producer of amosite asbestos." Cape and its subsidiaries had holdings in South Africa, Italy, France and Germany. In 1979 when Cape sold its South African operations and left its former workers to fend for themselves, no settlement was made, no trust set up, no medical scheme was put in place. Cape did not pay compensation to any of its South African workers nor did it pay for the decontamination of the asbestos dumps, industrial sites and derelict mines it left behind.

5.3 The Claim

Although Cape’s corporate structure was changed in 1948, the plaintiffs alleged that control of the South African operations was exerted by the parent company which "knowing (so it is said) that exposure to asbestos was gravely injurious to health, failed to take proper steps to ensure that proper working practices were followed and proper safety precautions observed throughout the group. In this way, it was alleged, the defendant breached a duty of care which it owed to those working for its subsidiaries or living in the area of their operations (with the result that the plaintiffs thereby suffered personal injury and loss)." According to Solicitor Richard Meeran: "Central to the Cape case was the principle that multinational companies undertaking hazardous operations overseas, should be held legally accountable for resultant injuries. The largest multinationals are wealthier than many nations, yet unlike states they are not subject to international law."

The obstacles faced by the South African claimants were huge; they included problems arising from funding, jurisdictional issues and difficulties arising from the necessity of piercing the corporate veil. In 1997, the English court denied the five original plaintiffs permission to proceed; on appeal, this decision was reversed. On December 16, 1998, following a counter-appeal by Cape, the House of Lords confirmed that the cases of Rachel Lubbe et al could indeed proceed. One month later, the plaintiffs’ lawyers sought to enlarge the group of plaintiffs to include Hendrik Afrika, Cupido Adams and 1,537 others suffering from disease allegedly related to occupational or environmental exposure to asbestos. Cape responded by again seeking to stay proceedings "so that the claims could be returned to South Africa as a group action." This manoeuvre succeeded.

The plaintiffs appealed to the House of Lords. The South African government took the unusual step of making a submission directly to the Lords. The South African government noted: "The allegations against Cape did not take place in a legitimate legal system and the new South African Government cannot afford to determine every wrong of the old regime through its judicial system. The discriminatory health and safety laws, which left South African workers unprotected, or significantly, underrepresented, against known risks as a matter of South African law were against the law of humanity." On July 20, 2000, the House of Lords unanimously ruled that the action against Cape brought by 3,000 South African asbestos victims could proceed in the UK. The five Law Lords concluded that if the action had been sent back to South Africa: "the probability is that the plaintiffs would have no means of obtaining the professional representation and the expert evidence which would be essential if these claims were to be justly decided. This would amount to a denial of justice."

5.4 What happened next?

After jurisdiction had been established, many people hoped that Cape would begin serious negotiations with the claimants. They didn’t. Instead, Cape’s solicitors insisted on a re-examination of the medical evidence in each case. A fresh analysis of the first 650 cases found that asbestos-related diseases were present in 85% of the claimants. Cape was still not satisfied and insisted that more cases be re-examined. Once again 85% of the cases were confirmed.

The company’s lawyers had, over the years of the case, adopted an entrenched and defensive attitude. Serious negotiations only became possible after the November 1, 2001 shake-up in corporate ownership of Cape. Paul Sellars, the new Chairman, approached the case with a fresh perspective and opened a dialogue with the claimants’ lawyers. Sellars was no philanthropist; he knew that a comprehensive settlement of the South African case would impact positively on the company’s share value. The plaintiffs’ solicitors having studied the company’s financial position realized that unless they scaled down their demands, Cape would simply go out of business. In the run-up to Christmas, the prospects for a settlement came and went. As late as December 19, court proceedings to approve the agreed settlement were adjourned to deal with last minute hitches.

On December 21, 2001, a London court approved plans for a $31.5 million settlement. If all goes according to plan, Cape will pay $16.5 million to a Trust Fund by 30 June, 2002; the remaining $15 million will be paid to the Trust at the rate of $1.5 million a year. Although the sums to be paid to individual victims seem low in comparison to European and North American levels, senior officials of the South African Government believe that these sums will be welcomed by the injured workers and local residents in the Northern Cape and Northern Province. Awards will be made to the 7,500 claimants according to the severity of their disease: a maximum of $8,000 for mesothelioma, $4,875 for asbestosis, $3,750 for pleural thickening and $1,200 for pleural plaques.

5.5 Implications

If the money is not received by June 30, 2002, the plaintiffs retain the right to go back to court. As this settlement is clearly in the best interests of the company, the payment of the $16.5 million is anticipated.

This case sends out a clear warning to multinationals: the export of discredited and dangerous technologies from the developed to the developing world must stop. If corporate behaviour based on double standards persists, legal avenues now exist to expose and punish this misconduct.

6. European Parliament

In March, 2002, the Committee on Employment and Social Affairs of the European Parliament considered amendments to Council Directive 83/477/EEC on the Protection of Workers from the Risks Related to Exposure to Asbestos at Work. The draft legislative resolution adopted by a vote of 32 to 3 (with 2 abstentions) could, through a technical instrument, be incorporated into European Union law as early as this Autumn. Described below are several of the amendments which are significant in the context of this paper.

Amendments:

(2) Recognises the importance of victims’ associations in monitoring compliance with European and national asbestos legislation.

"In the light of Directive 83/477/EEC, Member States, through the proper official authorities and authorities serving the public interest, from civil protection services, factories inspectorates. Local authorities, employers’ organisations in the industries most directly concerned, trade unions, victims’ associations, and any bodies that might wish to intervene, are urged to ensure full compliance with European and national legislation by every means available, because asbestos-related diseases will otherwise claim a further death toll in the future."

(5) Sets a 2003 deadline for research into the groups of people suffering asbestos-related diseases contracted through environmental or para-occupational exposure.

"The Commission will examine which groups have suffered or may suffer from non-occupational exposure and will, on the basis of this work, make proposals before 31.12.2003 as to the compensation and protection of these groups."

(10) Urges harmonisation of European compensation payments for occupational disease and acceptance by negligent employers of their asbestos-related liabilities.

"The Commission should begin the discussion with the Member States with a view to adopting a common position to update the scales of financial compensation for occupational disease and oblige an employer to accept liability for the pain and suffering caused to a victim where the employer has acted with malice because he was seriously negligent in fulfilling his obligations regarding risk prevention and the organisation of work."

(37) Backs plans for national registers of all cases of asbestos-related disease.

"Member States shall keep a register of recognised cases of asbestosis, mesothelioma and other asbestos-related cancers. This register shall be comprehensive, thorough and kept up-to-date. The register shall form part of a national health monitoring system for persons who may have been exposed to asbestos."

(38) Suggests broadening the definition of asbestos-related diseases and shifting the burden of proof from the employee to the employer.

"Current knowledge indicates that exposure to free asbestos fibres can give rise namely to the following diseases:

- asbestosis,

- mesothelioma,

- bronchial carcinoma,

- gastro-intestinal carcinoma,

In addition, any pathology caused by occupational exposure to asbestos should be considered an occupational disease. Where there is doubt, the burden of proof shall lie with the employer."

7. Conclusion

Asbestos victims in France, the Netherlands and the UK, have created powerful groups capable of improving the national treatment of victims. By working together, asbestos victims and their legal advisors have made a difference. The victory of the asbestos victims in the French Supreme Court in February, 2002 was cited as justification for amending the European Asbestos Directive.

The victory of the South African claimants over Cape plc is a warning to multinationals; people in the developing world are entitled to work and live in a safe environment. The existence of double standards will no longer be tolerated. Through international cooperation and monitoring, we can strive to reach our goals of justice for asbestos sufferers and a global ban on asbestos. The struggle continues.

Presented at the Asbestos Seminar: Work, Health and the Environment in Salvador, Bahia, Brazil on June 20, 2002.

_______

¹ $37,850 for pain and suffering and $20,800 for material damages and costs.

² Chester Street Insurance Holdings Ltd., formerly Iron Trades Holdings Ltd., had issued Employer's Liability policies to many shipbuilding and manufacturing companies including British Shipbuilders, Corus UK (formerly British Steel plc), GKN plc and Harland and Wolff Holdings plc.

Home | Site Info | Site Map | About | Top↑