Liability for Others, Labour Law, and Stricter Forms of Liability

SECTION A. COMMENTARY

. §§

Select bibliography

Brüggemeier, “Organisationshaftung—Deliktische Aspekte innerorganisatorischer Funktionsdifferenzierung”, AcP ( ), ; Von Caemmerer, “Wandlungen des Deliktsrechts, Hundert Jahre deutsches Rechtsleben”, Festschrift zum jährigen Bestehen des Deutschen Juristentages

II ( ) , ff., reproduced in his Gesammelte Schriften ( ) ; idem, “Reformprobleme der Haftung für Hilfspersonen”, ZfRV ( ) ; Deutsch, “Die neuere Entwicklung der Rechtsprechung zum Haftungsrecht”, JZ , , ff.; Diederichsen, “Zum Entlastungsbeweis für Verrichtungsgehilfen”, ZRP ( ) ; Hassold, “Die Lehre vom Organisationsverschulden”, JuS, ; Helm, “Rechtsfortbildung und Reform bei der Haftung für Verrichtungsgehilfen”, AcP ( ) ; Hübner, “Zur Reform von Deliktsrecht und Gefährdungshaftung”, NJW , ; Jakobs,“Über die Notwendigkeit einer Reform der Geschäftsherrenhaftung”, VersR , ; Kiser, “Die Haftung des Fuhrparkhalters nach § BGB hinsichtlich Auswahl und Beauftragung des Fahrers”, VersR , ; Kupisch, “Die Haftung für Verrichtungsgehilfen (§ BGB)”, JuS ,; E. Schmidt, “Zur Dogmatik des § ”, AcP ( ) , ff.; Steindorff, “Repräsentan- ten-und Gehilfenversagen und Qualitätsregelungen in der Industrie”, AcP ( ) ; Weitnauer, “Aktuelle Fragen des Haftungsrechts”, VersR , , ff. For comparative discussions see Eörsi, in International Encyclopedia of Comparative Law XI, chap. ; Kötz, “Strict Liability in German Law”, In Memoriam Jean Limpeus ( ) ff.; Lawson and Markesinis, Tortious Liability for Unintentional Harm in the Common Law and the Civil Law ( ), I, ff.; Zweigert and Kötz,

An Introduction to Comparative Law ( ) para. , p. , with further references to English and French literature.

(a) General observations

Up to now we have been envisaging liability for one’s own acts or omissions. Its importance remains crucial in today’s world; and in fairly primitive or simple societies, with agrarian economies and a fairly elementary system of labour, it was the most crucial form of tort liability. But economic growth, industrialisation, the increase of commerce and of economic activity in general, necessitated the introduction of a more elaborate system of work which enabled one person or business entity to use the services of other persons in the furthering of their economic interests. Since these persons or entities—the masters as they were once called—derived the benefit from the services of those working for them—the “servants” or, nowadays, employees—it was only natural to think of making the former liable for the harmful conduct of the latter. Besides, the masters were often in

a position to take steps to prevent the harm or—at a later stage—to carry insurance against the risk. Such a way of looking at things also offered considerable advantages to the victim, for he was thus offered a person worth suing in the place of the often, impecunious servant who had actually caused him the harm. Arguments such as these led to the strengthening and extension of what Common lawyers call vicarious liability; subject to the points made below, they are to be found as much in German law as they are in the other systems.

But the urge to make the “master” liable instead of or in addition to the servant could be approached in two ways. The one most consistent with the reasons we gave above was to make the master liable strictly for the faults (or unlawful acts) of the servants. The master’s own liability, therefore, was strict in the sense that it did not depend on any fault on his part; but fault there had to be on the part of the servant. (But on this point, as well, note that German law presents a variant.) This is, indeed, the position taken by most of the legal systems of the world. But the German Civil Code opted for a weaker rule of “vicarious” liability: the master’s liability would be based on his own fault of bad selection or supervision of the servant but it would be rebuttable in accordance with what will be said very shortly. Liability of masters is thus one way of making a person liable for the harm caused by another—§ BGB being the other. (It is discussed below at pp. f.)

There are a number of reasons that account for this different approach taken by German law. An historical explanation lies in the fact that the nineteenth-century Pandectists had convinced themselves that the doctrine of culpa in eligendo, which they were introducing into § BGB, was the only one known to Roman law. That this was so in a number of individual factual situations is beyond doubt; but to develop from the casuistic Roman approach a generalised doctrine that the master could only be liable if he himself was at fault was incorrect. (For more details see Seiler, “Die deliktische Gehilfenhaftung in historischer Sicht” JZ , ; Kaser, Das römische Privatrecht ( ) I, ff., and, in English, Lawson and Markesinis, op. cit., I, – ; Zimmermann, Law of Obligations ( ) – .)

A more pragmatic objection to the introduction of the “true” notion of vicarious liability was the fear that it would bring in its wake unwanted economic consequences, and in particular, increased economic burdens for small industry. And it was the aspirations and interests of this small industry, populated by the rising middle class, which the Civil Code had at heart. Not for the first time, therefore, the Code was to give effect to these ideas, oblivious to the fact that in the wider industrial field the enactment of such statutes as the Imperial Liability Act of had imposed strict liability on railway companies and, in this context, completely overtaken the notion of fault. In the end, therefore, the Code chose, as we shall see in section A. , below, to leave the regulation of special matters to specialised legislation. Instead, it sanctioned as a general principle the idea that the master would be liable for the unlawful conduct of his servants only if fault could be imputed to him, the master, personally, in the choice and supervision of the servants. (If the master was a legal entity, the fault had to be imputed to its “duly” appointed representatives: § BGB.)

We shall discuss this subject under four headings (b)–(f ): (b) master–servant relationship; (c) damage in the course of employment; (d) unlawfulness; and (e) the master’s exculpatory proof. A concluding section (f ) will deal with the many ways devised to the unfortunate effects of § BGB.

(b) Master–servant relationship

For the master to be liable, the damage must have been caused by a person to whom the master had “entrusted the performance of a function” (zu einer Verrichtung bestellt). Who qualifies as a servant (Verrichtungsgehilfe) is a mixed question of law and fact for the court to determine. Often, one encounters the term “dependency” (Abhängigkeitsverhältnis. Thus, Esser/Weyers, op. cit. II , p. ); but like most of these terms, its utility depends on precise definition and this is not always possible. The most widely applied test, used to determine this relationship, is that of “direction and control” which means that salaried and wage-earning employees will, invariably, be classed as servants. (A classic formulation can be found in RGZ , , .) The limitations of this test, in a society with sophisticated labour and economic relations, have become apparent in Germany as they have elsewhere. The need was thus felt to widen the test so as to render, for example, hospitals liable for the wrongs of their surgeons, anaesthesiologists, and technical staff over whom, obviously, the master (hospital) had no direct and detailed control. Thus, it has on several occasions been stressed that the right to direct and control need not cover details. In one case (no. ) the court expressly said that the right to give instructions need not cover details. It is sufficient that the master has the right to limit the worker’s activity or withdraw it or circumscribe it as to time or circumstances. (BGH June , BGHZ , , . See, also, BGH February , BGHZ , .) The relaxed way in which the control test has been understood has thus allowed a hospital to be held liable for the harm caused by one of its doctors (BGH April , NJW , ) and a doctor for the harm caused by one of his locums. (BGH October , NJW , .) The onus of proving the requisite relationship is on the plaintiff. (BGH June , ZfS

, .)

Clearly, even this redefined test will not solve all difficulties, and borderline cases will always exist. So, for example, a problem area well known to Common lawyers can be found in cases dealing with “borrowed servants” (usually “let out” by their masters with complicated modern machinery). If they cause damage while operating this machinery, who will be held responsible—the permanent or temporary master? Much will depend on the facts of each case but as in England (see Mersey Docks and Harbour Board v. Coggins & Griffiths (Liverpool) Ltd. [ ] AC ), so in Germany (see BGH VersR , ), there is a certain tendency to retain the responsibility of the permanent master since he usually retains the greater degree of overall control. The solution adopted sometimes in the USA, to hold both employers liable to the employee and then let them sort the situation out among themselves (as in Strait v. Hale Constr. Co., Cal. App. d , Cal. Rptr. ( )), has thus not found favour. It will be noticed, however, that there is an increasing tendency to think in terms of the possibility of command and not, necessarily, actual command—a development which tends to extend the area of vicarious liability.

This trend is further reinforced by the fact that actual and not legal subordination will suffice to render the master liable (see Enneccerus, Kipp, and Wolff (Lehmann) ; cf. Restatement (Second) of Agency, ( ) § , which talks in terms of “control or right to control”). Moreover, the subordination need not be constant: a student working on a part-time basis may render his employer liable and this even if the services he is rendering to him are gratuitous.

Determining whether a person is an employee or, alternatively, what Common lawyers would call an independent contractor is essential, since, in principle, there will be no

liability for the wrongs committed by the latter category. To achieve this, German lawyers are increasingly following the Common law example and looking at the entire economic relationship, not merely enlarging or adapting the control and direction test. Thus, von Caemmerer has candidly suggested (“Reformprobleme der Haftung für Hilfspersonen” in Zeitschrift für Rechtsvergleichung , , ) that this enquiry should be directed towards such matters as which person is in a better position to carry the risk or is economically more suitable to take out insurance. Once again, though individual solutions may occasionally receive a different answer, the German approach is, on the whole, quite similar to that taken by Common law lawyers, so no further details need be given.

This similarity is also to be found in the exceptions to the rule that one is not, in principle, liable for the torts of independent contractors (Cf. §§ – Restatement (Second) of Tort.) However, here, too, German lawyers have felt the need experienced by their Common law colleagues to develop rules of responsibility analogous to our non-delegable duties. Thus, the master will be liable under § I BGB if he himself has negligently selected the independent contractor and, on occasion, also if he failed to control him in the exercise of his task. The extent and nature of this duty will vary from case to case, but in cases of large building works—especially when neighbouring buildings or their foundations are endangered—such additional obligations will readily be imposed on the employer of the independent contractor. The decision of the Bundesgerichtshof of October (JZ , ) provides another illustration, akin to the English notion of extra-hazardous activities. In that case, a chemical factory engaged a firm of specialist contractors to dispose of some very toxic waste for their benefit. The waste was improperly removed and the chemical factory was held responsible for this bad execution of the work. It will be noticed that, as in English law, these duties are stricter than the normal duties of care in so far as they impose a duty to see that care be taken; but that they do not actually impose truly strict liability. Some German writers, however, have advocated that a strict duty be imposed in such cases upon the employer (see Vollmer, JZ , ).

(c) The damage must have been inflicted by the servant “in the exercise of the function assigned to him” (in Ausführung der Verrichtung)

Behind this not very informative expression lies one of the most litigated aspects of the whole law of vicarious liability as Common lawyers who have grappled with the equivalent notion of “course of employment” will readily understand. To solve it the courts have used—as we shall note below—a variety of terms or notions. Perhaps we could attempt to simplify the problem by saying that in practice there is one rule. Either the servant is within the “course of employment” (and so if the other conditions are satisfied will render his master liable), or he is not (in which case there is no liability for the master). Whether he is in the course of his employment or not is really a question of fact. In a sense, the situation here is not dissimilar from that found when discussing the elements of negligence or carelessness. For there, as well, there is a simple rule: if a person has behaved carelessly, he is liable (subject to certain other conditions being fulfilled); if he was not careless, he is not liable. The question whether his behaviour was careless or not is, once again, one of fact. Just as there are guidelines (not rules) to help in determining carelessness, so there are guidelines, and no more, which help in determining “course of employment” (or the equivalent German expression). The decision is, therefore, often impressionistic. The only permissible generalisation is that the area of activity falling

within the “scope of employment” seems to be widening. This may be partly as a result of the increase in motor traffic (and the compulsory insurance schemes that go with it) and partly because the scope of acceptable risk has widened as legal entities have taken over from human beings the position of “master”.

However, one must immediately qualify the last sentence by pointing out that German law has consistently taken a stricter view on this matter than other systems have done (e.g. the French). It has thus excluded acts done by the servants merely because their employment provided them with the occasion or opportunity for performing these acts (Enneccerus, Kipp, and Wolff (Lehmann) ; Larenz I, § , viii, p. ; Larenz/Canaris II , § III, p. ; see, also, case , BGHZ , , below). Thus, if the wrong is something incidental to the work assigned (bei Gelegenheit der Verrichtung) to the worker, his master will not be “vicariously” liable (under § BGB) for it, unless it can be shown that he himself was at fault (§ I BGB) in introducing this risk. A practical joke played by one employee on another will therefore not justify the employer’s vicarious liability though it may attract his own personal liability if it can be shown that he was aware of the employee’s mischievous or irresponsible propensities. (For English law see Hudson v. Ridge Manufacturing Co. Ltd. [ ] QB (personal liability); Chapman v. Oakleigh Animal Products Ltd ( ) KIR (vicarious liability).) Once again, however, one can do little more than note the terms and underlying ideas; and then add that in practice one can always find examples where liability is imposed on the employer simply because the employment significantly enhanced the chance of the tort being committed. (Thus, see, BGH November , BGHZ , where it was said that a theft committed by an employee working in a building site could render his employer liable.)

On the other hand, the employer’s liability may be engaged even if the act accomplished by his employee is not exactly the one he was entrusted to perform. For this to happen, however, it must fall within the range of measures which can be properly linked to the exercise of the entrusted functions (see BGHZ , , ). Sometimes this idea is also expressed in causal language. This is so whenever the court speaks of an internal, direct connection between the function assigned to the servant and the activity that has caused the harm—(BGH NJW , ). In practice this means that if the servant’s act amounts to a bad way of performing the entrusted function (rather than doing something completely different), the master will—all other conditions being satisfied—be liable for the wrongful result. So, using a vehicle of the employer’s in a forbidden manner will not necessarily absolve the employer from all liability (see BGH VersR , ; BGH NJW, ). On the other hand, if the servant gives a free ride to the injured plaintiff in the employer’s car, despite the latter’s express prohibition, then the employer may not be liable (BGH NJW , ). (Compare and contrast the following English cases: Limpus v.

London General Omnibus Co. ( ) H. & C. ; ER and Conway v. George Wimpey & Co. Ltd. [ ] KB . More recent pronouncements can be found in Rose v. Plenty [ ] WLR .) The same is true of the so-called “deviation” cases where the servant while on duty deviates from the prescribed route or even goes off on a trip of his own and then causes damage. The answer here will largely depend on the extent of the deviation (see RG LZ , ).

The case law on this topic is, as one would expect, rich (see also RG DR , and cf. OLG Munich MDR , ) and, it is submitted, not all decisions can be reconciled with one another. On the other hand, as already noted, this is something which should not cause too much consternation; and the Common lawyer will again realise that this is

almost inevitable in this area of the law. (For a brief comparison with English (and Commonwealth) law see Fleming, Law of Torts, th (ed.) ( ), et seq., Markesinis and Deakin, Tort Law th edn. ( ), chapter ; for a summary of American law see Dobbs, The Law of Torts ( ), et seq.)

(d)“Unlawful” damage

§BGB further requires that the damage caused by the servant be inflicted “unlawfully”. The element of unlawfulness and the element of culpa (fault, which is not mentioned in § BGB) were discussed in chapter under the heading of § I BGB, but since they raise difficult problems in this context as well, they must be re-examined briefly.

It will be remembered that there exist two theories on the definition of “unlawfulness”. The traditional one looks at the result, and if this is an interference with one of the interests enumerated in § I BGB, then the element of unlawfulness is satisfied. The more modern theory looks at the conduct and treats as unlawful only those interferences with the enumerated interests, which also amount to a breach of one of the duties of care. It will be remembered also that we stressed that, according to the traditional theory, the element of culpa—fault—is only considered after the element of unlawfulness is satisfied in accordance with the above. On the other hand, according to the new theory, unlawfulness and culpa tend to be merged into the same phase of the enquiry. Finally, it will be remembered that we said that save in some exceptional circumstances the two theories will, almost certainly, produce the same practical results.

§BGB is one of those exceptional circumstances where the two theories could produce different results. This is because, § BGB, unlike § I BGB, makes no mention of culpa—and, apparently, only requires an unlawful infliction of damage on the part of the servant. (Contrast on this point French and English law which require fault on the part of the employee.) If unlawful is taken to mean a simple interference (even if committed without fault) with one of the enumerated interests, then the master will be presumed liable unless he can then adduce his exculpatory proof in accordance with what we shall say below under (e). To put it differently, a logical application of the traditional theory on unlawfulness would require the plaintiff/victim merely to prove that he had been injured, even by a non-faulty act of the servant. Then, and only then, would the presumption of fault (of the master) under § BGB come into play; and it would be for him to adduce the exculpatory proof envisaged by this provision.

The new theory on unlawfulness would look at things in a different way. An interference with one of the protected interests of the plaintiff is not, per se, unlawful; it will be so if, in addition, the servant does not attain the standard of care required in the circumstances. To put it differently, if the servant’s activity was in breach of one of the duties of care and also interfered with an enumerated interest, then and only then, would it be unlawful. Both these things are matters for the plaintiff/victim to prove and only if they are established will § BGB be invoked and the defendant/master will have to produce the required exculpatory proof.

The different distribution of the burden of proof, resulting from the application of one or other of the theories of unlawfulness, could have important practical consequences. A servant/driver, for example, who through no fault of his own, injures the plaintiff because black ice forces his car into a skid, will have acted unlawfully if the traditional theory is

applicable, but lawfully if the new theory is used to determine the nature of his conduct. Let us take another example from a case decided by the Bundesgerichtshof in . The plaintiff was injured by a telephone post, which collapsed due to a heavy storm. The interference with the plaintiff’s life and limb was clear, and according to the traditional view, the element of unlawfulness was satisfied. This means that § BGB should have been applicable, and the defendant/Post Office (owner of the post that had collapsed) should have been called upon to adduce the exculpatory proof envisaged by § BGB. The Bundesgerichtshof, however, felt that this stage had not been reached since the plaintiff had not shown that the accident was also due to a fault on the part of the team of employees responsible for the maintenance of the posts (BGH NJW , ). Unfortunately, the problem of who has to prove exactly what is not only linked with the view one takes on the notion of unlawfulness. In fact our last illustration reveals the kind of uncertainties and difficulties that persist in this field.

In a decision handed down in , the Great Senate of the Federal Supreme Court had to deal with the following problem (For fuller details, see the judgment reproduced below, case , BGHZ , ). The plaintiff was injured while getting into a tram due to the fact that the tram departed before the plaintiff had completed his entry. It could not be established whether the plaintiff’s injury was caused because he tried to jump onto the tram after it had started moving, or whether the accident was the result of the conductor giving the departure signal prematurely. If the old theory of unlawfulness was applied, then the servants of the defendant (tram) company had acted unlawfully and the burden of producing the exculpatory proof of § BGB would have shifted to the defendant company. If, on the other hand, the new theory applied, then the defendant would not have to be called to produce such evidence, since the plaintiff had not proved (nor, given the uncertainty we mentioned, could he prove) that the conductor had culpably and prematurely given the departure signal.

The Great Senate clearly opted for the new theory on unlawfulness and, as we have already noted, this has commended itself to most modern lawyers (but not to all lower courts). But when it came to applying it to the burden of proof it did not take the attitude that has been described above but chose, instead, a different manner of distributing the burden of proof. The injured party was thus merely obliged to prove an interference with one of his protected rights. It was then for the master to prove that the conduct of his servant was correct in the circumstances and thus not unlawful. If he did not do this (and, in the present case, given the uncertainty as to what had happened, he could not), then he would have to rebut the presumption of his own fault in accordance with § BGB.

The convoluted reasoning as well as the result has not been welcomed (except for the part of the judgment that sanctioned the new theory of unlawfulness). The reason is clear. As Professor Kötz has remarked (Deliktsrecht, no. ), “this decision has the absurd consequence that where the facts of the accident are not clear, the injured party will be in a more favourable position if his injuries have been caused by the servant, and not the master himself”. For if a pedestrian is run down by a van belonging to a pharmacist and it is not clear whether the accident could be attributed to the driver, the condition of the van, or the pedestrian himself, then the pedestrian’s claim may be rejected. This will be the case if the pharmacist (master) was at the wheel, himself, (since the action would then be based on § I BGB) and the plaintiff would have to prove the defendant’s fault. (Incidentally, for the reasons we shall give below, section A. (iii), the Road Traffic Act

might also not be applicable in this case.) If, on the other hand, the van was being driven by the pharmacist’s servant, then the victim would (by invoking § BGB) be able to see his claim succeed unless the pharmacist could produce the exculpatory proof provided by this paragraph.

(e) The master’s exculpatory proof

If all the above-mentioned conditions are satisfied, the defendant/master will be presumed at fault and will be made liable unless he shows one of two things. Thus, he must show that he was careful in the selection, instruction, and training of his servants and that he properly supplied them with the right kind of equipment. Alternatively he must show that the damage or injury would have occurred even if he (the master) had fulfilled the above-mentioned duties. Paragraph BGB thus establishes a simple presumption of responsibility. (Widerlegliche Vermutung)

Producing evidence that the servant was properly selected, instructed, and supervised has become an increasingly heavy burden for employers—especially in those cases where the accident is caused in the context of carriage of passengers by buses, trains, trams, and the like. Here, as the cases reproduced below (cases and ) show, the degree of supervision required is very high and can includes such things as random checks and regular warning notices. (See, for instance, BGH VersR , ; BGH VersR ,; KG NJW , . More recently, BGH VersR , , contains a good description of the master’s duties to select and supervise his employees carefully). When such accidents occur, and the action proceeds on § BGB, the attention of the court is thus switched away from the details surrounding the accident, which the victim could conceivably discover or reconstruct. Instead, it becomes focused on the kind of internal supervision system that the defendant/master had devised in order to avoid or minimise the chance of the accident. In these cases, however, the plaintiff/victim has little knowledge of what has gone wrong. So, often, rather than be faced with such uncertainties and the cost of prolonged litigation, he will settle for the lesser sums provided by the strict liability Acts such as the Road Traffic Act or the Strict Liability Act (discussed below, section A. (iii)).

Where large organisations are concerned, proof that every employee has been carefully selected or supervised is, of course, impossible. So the practice developed in Germany of allowing the master to show that “leading employees”, who stand in a hierarchically intermediate position (for example a foreman who had chosen and was supervising the “guilty” servant), had been properly chosen and supervised. This system of “decentralised exoneration” (dezentralisierter Entlastungsbeweis), which substitutes the intermediary employee for the “real” master and makes the former liable instead of the latter, is undesirable both economically and in terms of labour–management relations. Not surprisingly, it has thus not been followed by other systems such as the Swiss which, in this area of tort law, has otherwise closely followed the German model. (Oftinger, Schweizerisches Haftpflichtrecht II, I ( nd edn. ) , ). But German lawyers, as well, came to realise the unfortunate nature of this rule, and the Supreme Court itself discovered a way to neutralise it by finding fault in the real master for the way he has organised his business and thus made the accident possible. This creation of the Organisationspflicht, allowed the German courts to fall back on § I BGB and, in this way, provided a way of bypassing the unfortunate § BGB. (See BGHZ , , below, case . See also BGH VersR

, and BGH NJW , .)

(f) Methods developed in order to avoid the effect of § BGB

It will have been noticed that despite the fact that the German courts impose strict requirements for the exoneration of masters, the possibility of such proof being adduced is always there with the result that the victim can then only sue the usually penniless employee. This result is not only incompatible with the rationale of true vicarious liability; it is also economically unsound given the employer’s greater ability to insure and to spread the cost with a minimum of social dislocation. For some time now the courts have therefore been eager to discover ways to bypass § BGB and four of them will be discussed here.

The first device that neutralises the exculpatory proof available to the master under § BGB originates in labour law. If in the course of his employment an employee negligently causes loss to a third party he acquires, under certain circumstances, a right to an indemnity against his employer in respect of any claim which the victim may have against him, personally. So, in these cases the “innocent master” will shoulder the consequences of the employee’s negligence even though his careful selection and supervision of the employee should have, normally, exonerated him (the master) from all liability. The conditions under which the liability is transferred (back) to the employer are examined below in section (a). So here suffice to say that once it is established that the conduct of the tortfeasor is sufficiently linked to his employment the courts will be likely to grant the employee the right to an indemnity from his employer. (This is the reverse of a situation better known to the Common law (but also known to German law) and involving the master seeking contribution or a full indemnity from the employee for having been held liable towards a third party because of his employee’s fault. In English law this is, nowadays, covered by the so-called “gentlemen’s agreement” of by which employers’ insurers waived their entitlement to exercise subrogation rights against the “guilty” employee. It is discussed in ( ) MLR and in Morris v. Ford Motor Co [ ] QB . For Australia, see Insurance Contracts Act , section ; Employees Liability Act (NSW), section ( ).)

The second is particularly applicable to legal entities of a private (§ BGB) or a public law (§ BGB) character. (BGH NJW , .) The legal entity’s liability for the torts committed by its organs, i.e. members of its board, or other “duly appointed representatives”, is absolute without any possibility of exoneration so long as the tort was committed by the representative in the “carrying out of his duties”. The potential sphere of application of this provision was, initially, rather limited, but in more recent times it has been expanded considerably, especially by giving a very wide meaning to the phrase “duly appointed representative”. Consequently, the original requirement that this liability be applied only for the acts of organs who had a legal power to represent the legal entity in legal transactions was abandoned in favour of a wider definition. (See RG, Oct. , DR , ; BGHZ , , reprinted as case , below.) Representatives who have the right to make independent decisions in their own sphere of work, subject only to general instructions, will thus be included in the definition. This will be so even though they may not have the wider power of legal representation and their powers are not specifically defined in the articles of association. And the legal entity may also be liable for the torts of persons who have been authorised to act for it ad hoc in lieu of the person who should have acted in accordance with its articles (RGZ , , ff.). Liability of the entity for its own defective organisation, in accordance with what is said in the next paragraph, may also be invoked.

The third way round § BGB is by discovering a “defect in the structure of the enterprise” for which the master/entity is made liable. We are here talking of liability under

§I BGB and no longer of liability under § BGB. Two cases reproduced below ( and ) show how effective is this method of bypassing § BGB.

In the first case (BGH NJW , ; case ) the plaintiff was hurt while in the defendant’s hospital as a result of risks inherent in the treatment he was receiving but of which he had not been adequately warned. The defendant/hospital was successful in adducing the exculpatory proof required by § BGB but was found liable under § I BGB for its own culpable failure to guide its doctors as to how they should discharge their duties to warn and explain matters to patients. Similarly, in the second case (BGH NJW , ; case ) the defendant’s employees carelessly damaged an underground gas-pipe which caused an explosion which led to the destruction of the plaintiff’s house. The track record of the employees was perfect and the defendant was able to adduce the exculpatory proof imposed upon him by § BGB. The Supreme Court, however, was not interested in this line of reasoning and chose to hold the defendant liable for his own fault.

It should be noted that though the grounds of liability are distinct, there is no reason why in practice the result could not be based on both. A decision of the Supreme Court in (BGHZ , ) illustrates this. In that case, the Federal Railways used wagons to transport animal foodstuffs. The wagons had not been properly cleaned and the foodstuffs were contaminated, thereby causing serious damage to the plaintiff’s cows. Both the Court of Appeal and the Supreme Court had no difficulty in holding the defendant railway company liable on both grounds, i.e. liable for not properly inspecting their employees (§ BGB) and for their own failure to adopt a safe system of work (i.e. liability under § I BGB). The importance of this type of liability for defective organisation of an enterprise cannot be overstated since out of it grew the modern approach to product liability under the heading of Produzentenhaftung long before strict liability was imposed on manufacturers (and others) under the ProdHaftG. (See Brüggemeier

Prinzipien des Haftungsrechts ( ) pp. ff.)

The advantage of the heading “defective organisation of the enterprise” meant that liability could be based on the master’s fault (for failing to organise his business properly) independently from his servant’s negligence. It was a small step from there to hold the master liable by simply reversing the burden of proof for a deficient organisation of the production process where the injury was caused by a defective product. This heading of liability for faulty organisation of an enterprise emerged as a way of by-passing

§BGB. Having achieved this, it was then transplanted to liability for defective products. (This occurred in the famous chicken pest case in , BGHZ , , reproduced above, as case ). Shifting the burden of proof was prompted by the kind of considerations that also underlie the presumption of fault of § BGB. For it will be difficult if not impossible for the victim to prove that the organisation of the manufacturing process was defective and ascertain the cause of the product’s defect. As the BGH remarked in the “chicken pest” case the manufacturer “surveys the field of production, determines and organises the manufacturing process and the control of delivering the finished products.” As a consequence, the manufacturer needs to furnish the proof of exoneration. As in the instances of organisational fault outside the field of product liability, the courts allow the “master” to rely on a system of decentralised exoneration alluded to in the previous section.

. : §

The fourth way of evading § BGB is for comparative law purposes the most intriguing. In one sentence, it meant invoking the adaptable law of contract in order to remedy the deficiencies of the law of tort. This, of course, is not the first time a civil law system has had to turn to its law of contract in order to remedy the shortcomings of its law of tort. For example, we have already noted how the non-recognition of purely economic loss as a compensable type of harm under § I BGB forced German (and French) lawyers to “discover” contracts in the negligent misstatement cases which, in the Common law system, are resolved through the law of tort. The converse was true of the Common law systems: the doctrine of consideration—especially where it was taken rather seriously (e.g. in English Common law)—meant that contracts could not be discovered where the plaintiff had not “paid” for the information he received. The law of product liability is another example, for in this area as well, civil law has shown a tendency to extend the law of contract to do the work of the law of tort. We have noted (above, chapter , section A. (c)) how German law has moved away from this position. (Cf. French law where the ultimate purchaser’s rights in product liability cases are still in many instances viewed as an extension of the rights conferred by the law of sale to the immediate purchaser (Articles ff. French CC) though, in recent times, tort law has reasserted its position.) The problems posed by § BGB provided the third, though by no means least, important impetus to side-step tort law and have recourse to contract; § provided the much-needed escape provision.

§ BGB states that a “debtor”—which in the instances that concern us means the employer—“is responsible for the fault of his statutory agent and of persons whom he employs in fulfilling his obligation, to the same extent as for his own fault”. It thus imposes upon the debtor “strict” liability for faults of the persons he uses in the course of fulfilling his contractual obligations. The possibility of exoneration, which can be found in § BGB, is absent in this case. Moreover, the terms used in § BGB suggest that the debtor’s liability may cover the faults of persons whom he uses in the performance of these obligations, but who may not, strictly speaking, be “servants” (in the sense of § BGB). Both these points, and especially the first, make the plaintiff’s position more advantageous than it might otherwise be if his action were based on § BGB. There are other advantages for the plaintiff who can shift in this way the basis of his claim from tort to contract. It will suffice to mention three. First, pure economic loss is more easily recoverable in a contract action. Secondly, the contractual period of limitation used to be longer, though not always (see BGHZ , and § BGB). (For the recent reform see H P Mamsel, NJW , .) Finally, the burden of proof may be more favourable for the plaintiff if the action is based on § BGB (see § BGB and BGHZ , ; BGH NJW, , case , now § I BGB). But these advantages for the plaintiff are also bought at a price: § BGB will only apply in the fulfilment of a contractual obligation; and the range of remedies it may offer the victim/plaintiff may be more restricted than it would be if the action were based on tort. These two points require further elaboration.

Since § BGB requires a contract (or, more precisely, a Schuldverhältnis = a relationship creating obligations), in order to come into force, the courts set about discovering such contracts where none would be immediately obvious to a Common lawyer. This meant extending the contract to the pre-contractual phase and also extending its scope to include persons other than the immediate contracting parties. Eleven cases dealing

with these types of situations are reproduced below (section B. ) so here we shall limit our remarks to a few general points.

The famous linoleum case (RGZ , , case ) marks historically the first attempt to extend contractual remedies to the pre-contractual phase of negotiations through the concept of culpa in contrahendo. This doctrine was developed by the famous German jurist Rudolf von Jhering. (Culpa in contrahendo, Schadenersatz bei nichtigen oder nicht zur Perfektion gelangten Vertraegen, in Jahrbuecher für die Dogmatik des heutigen römischen und deutschen Privatrechts ( ).) (See now § II BGB.) It was extended from certain contractual situations to cases, such as the one before the Reichsgericht in , which were essentially delictual in nature. In that case, the prospective purchaser entered the store, asked to inspect some carpets and, while doing so, was injured by two rolls, which fell from the shelf. The court took the view that the demand to see the carpets and the fulfilment of this demand resulted in a relationship preliminary to the sale and similar to a contract and imposed duties of care with respect to the person and property of the parties. The wording of this judgment makes frequent references to the “prospective purchaser” and, therefore, makes it clear that this extension of the “contract” to the precontractual phase will not be attempted in all instances. The demarcation line is left for future courts to draw. (See also case .) Probably, the same contractual protection will be extended to cover not only the prospective purchaser who, for example, is queuing to pay for the goods he has already selected, but also the “potential purchaser” who enters the shop “to look around” but with as yet no fixed intention to purchase anything in particular. The shoplifter, on the other hand, who slips on spilt yoghurt, will not be protected in this way (BGH NJW , obiter). In between these “extremes”, one can envisage other possibilities, for example the citizen who seeks refuge in the store during a heavy storm. The solution and the casuistic approach of the German courts should neither surprise nor disturb the Common lawyer. Given the greater willingness to discover “duties of care” these days, the answer to our hypothetical problem should be sought in the law of delict and not the law of contract. And the disadvantage that this might create for the plaintiff—the return to § BGB—could be avoided by arguing that the store’s potential liability should be justified by reference to § I BGB. In other words, it should be based on the shop keeper’s own fault in the running of his business.

The expansion of the contract to the pre-contractual phase was not enough; the protective sphere of the contract had also to be expanded to cover persons other than the immediate contracting parties. In BGH NJW , (case ) the person injured was not the prospective purchaser but her young daughter who was accompanying her in order to help her with her shopping. In the court’s view, good faith required that the child should be included in the protective sphere of the contract (which was about to be concluded); indeed, the court felt that even mere “bystanders, who do not themselves participate in a contract”, should be included under the contract’s protective umbrella. This, of course, is precisely the kind of situation, which could not receive a satisfactory solution through the medium of § BGB. It thus forced the German courts to develop, under juristic guidance, the concept of contract with protective effects towards third parties, which was briefly described in chapter . (d) (iii) above. But resorting to § BGB provided a partial answer at best. For the drawback of § BGB lies precisely in the fact that the nature of the liability established by this provision is contractual. This means that the plaintiff’s damages in these cases will be limited to his economic loss alone. To put it differently, because of § BGB, the plaintiff who is basing his claim on § BGB will not be allowed to claim damages for pain and suffering. If, on the other hand,

the liability could be based on tort (in case a right listed in § BGB has been infringed), then such damages could be claimed (§ BGB establishing a specific exception to § BGB). A decision of the Supreme Court in brings this point out very clearly (BGHZ, , case ; see, also, RGZ , , case , below). In that case the plaintiff was referred to the defendant hospital as an outpatient for a minor ailment in his foot. The second defendant—who was the hospital’s chief doctor—administered a mild anaesthetic before attending to the patient’s foot but failed to make the plaintiff lie down properly on a couch and instead made him sit temporarily on a narrow kind of settee used for gynaecological examinations. As a result of the injection of the anaesthetic, the plaintiff temporarily lost consciousness and fell off the settee and severely injured his cervical column. He claimed his economic loss and compensation for pain and suffering from both defendants and the Court of Appeal granted him both these claims. The Supreme Court adopted a more nuanced approach. The contract of hospital treatment was between the hospital/first defendants and the plaintiff’s union, who had referred him to the hospital. Yet this was a contract in favour of third parties—with protective effects vis-à-vis third parties we would say today—and thus the hospital was liable to the plaintiff for the doctor’s careless behaviour under § BGB. This action could cover the plaintiff’s economic loss but not—because of § BGB—his claim for pain and suffering. But the plaintiff had a further cause of action against the second defendant—the doctor—and since this was delictual in nature, based on § I BGB, it could justify, under § BGB, a claim against the doctor (but not the hospital) for compensation for pain and suffering. Before we conclude it may be worth pausing for a moment to consider a possible consequence of the recent reform proposals. If damages for “pain and suffering” become available in contractual actions, it may well be that plaintiffs in cases such as the ones we have been discussing above will have even less of an incentive to base their case on § I BGB. For the contract route, with its more favourable § BGB, will then provide a means of obtaining full compensation, including damages for non-material harm.

.

Suggested reading

The reader will have a better appreciation of the debate sketched in the next few paragraphs if he consults some of the following works. Blomeyer, “Beschränkung der Arbeitnehmerhaftung bei nicht gefahrgeneigter Arbeit”, JuS , ; Brox and Walker, “Die Einschränkung der Arbeitnehmerhaftung gegenüber dem Arbeitgeber”, DB , ; Denck, “Zur betrieblichen Tätigkeit als Voraussetzung für die privilegierte Arbeitnehmerhaftung”, DB , ; Dütz, “Gefahrgeneigte Arbeit”, NJW , ; Pfeifer, “Neueste Entwicklungen zu Fragen der Arbeitnehmerhaftung im Betrieb”, ZfA , ; Richardi, “Abschied von der gefahrgeneigten Arbeit”, NZA , ; Schnauder, “Die Grundsätze der gefahrgeneigten Arbeit”, JuS , ; Seewald, “Gefahrgeneigte Arbeit bei allen Tätigkeiten des Arbeitslebens?” DB , .

Making the employer of the tortfeasor liable for the damage the latter has caused may provide compensation for the victim and, in that sense, largely fulfil the function of tort law as a system of compensation for accidents. Yet achieving this result will not mark the end of the problems that have to be faced by the law. Thus, further issues have to be resolved which are of interest to tort law and insurance law (should insurers have such subrogation actions? Is this not tantamount to their having their cake (i.e. collecting

premiums) and eating it (i.e. being given subrogation claims) unless, perhaps, someone can prove that by having such rights and exercising them they can (and do) keep premiums at lower levels?). But even more questions have to be answered. Should the actual wrongdoer—the employee—go scot-free because policy considerations related to the smooth functioning of labour relations demand this? Will such a solution lead to more accidents by making employees less careful? Is it economically advisable to place part of the risk on a worker who might be without personal insurance? These concerns of different parts of private law come together when one sees these cases in the context of increased industrial accidents, modern insurance practices, collective labour agreements, and an ever-increasing volume of litigation with the delays this phenomenon brings in its wake. Little wonder then that this problem of the employee’s liability towards his employer has given rise to considerable debate but little agreement in Germany. The revirement of the case law of the Bundesarbeitsgericht must be seen in this light. But its understanding will be made easier if we explain first the kind of factual configurations in which these problems arise. They can, in fact, be three.

The first will be easily recognisable to English lawyers. The employer is held liable (either under Common law principles of vicarious liability or under § BGB) for the harm caused to a third party by his employee and then seeks a contribution or an indemnity from the latter.

The second variant, mentioned earlier on, is more Germanic in its nature and stems from the possibility that is open to the employer to avoid liability by invoking the exculpatory proof contained in § BGB (careful selection/supervision of employee.) In this case, the employer may not be liable. But if the employee is sued by the victim and is made liable to him can he—the employee—then seek an indemnity from the employer? As stated, German labour law allows this to happen and, as a result, § BGB is, in practice, circumvented.

The final and in practice most important variant is where the employee negligently causes harm to his employer and, as a consequence is sued by the latter. For instance, the defendant/employee drives mini cabs owned by the plaintiff/employer. Because of the negligence of the defendant, a collision takes place with a third party in which the plaintiff’s car is also damaged. Can the plaintiff/employer seek damages from his employee/defendant? (See BAG NJW , . Currently, the governing decision can be found in case .) From the discussion that will follow it will be noticed that German law treats—with some measure of justification—all these three variants in the same manner for, in substance, in all three it sets out to alleviate the employees’ personal liability. The real question, thus, was how extensive should this “immunity” be? Moreover, a workable method had to be discovered that would distinguish those cases where the employee was liable to pay a contribution or a full indemnity from those where his potential liability could be engaged.

Since the decision of the Great Senate of September the BAG limited the employee’s liability towards his employer where the activity carried out was not “dangerprone”. Moreover, liability would follow provided further conditions were satisfied. Notably, it had to be shown that the employee had acted with “gross” negligence. (BAGE, . The first decision where the criterion of dangerous work was utilised to restrict a worker’s liability was ArbG Plauen ARS , from ).

The partial or total immunity granted to the employee was and still is difficult to reconcile with general principle. More precisely, the fundamental assumption of the rules on reparation and compensation (§§ ff. BGB) is that if the conditions of liabil-

ity are met (in particular if the tortfeasor is shown to have acted negligently) he will be held liable for all the loss caused by the wrong. The only express exception to this doctrine is found in § BGB: contributory negligence. However, in the line of cases examined here it is not contended that the employer contributed negligently to the loss of the third party. The damage is caused exclusively by the fault of the employee. Hence, in the BAG had to assert that there was in fact a “concealed” gap in the Code and that it was entitled to modify the rules applicable to the special relationship arising by reason of a labour contract (§ BGB).

The reason why German law (especially the BAG) has come to regard the employee’s full and unconditional liability as being contrary to equity (Billigkeit) is this. The employee acts at the instance and in the interest of the employer. The latter determines the production process or more generally how the company is organised. The employee’s pursuit of his job is directed by his integration into the business organisation and the actual conditions of the work process. The employee cannot influence the risk inherent to the activity assigned to him by the employer, and he cannot avoid these pre-determined conditions of work either factually or legally. Nor will his wages normally reflect or cover the risk if anything goes wrong. So, although the employee is under the general legal obligation of neminem laedere, German courts have argued, it is justified to limit his liability in specific circumstances.

However, as already suggested, this alleviation of the employee’s liability depended— until recently—on whether the employee could establish that his activity was “dangerprone”. This requirement was meant to “preserve” an area where the employee could be held accountable. But the criteria for this category became increasingly open-ended once the BAG no longer applied them in an abstract and typified way but took account of the specific circumstance of the individual case. Thus, in one case—case —the BAG did not regard the activity of supervising the driver of a bulldozer as dangerous, even though the activity of the driver of the machine was undoubtedly so. (Paradoxically, an earlier decision had treated such supervisory work as inherently dangerous. BAG AP § Haftung des Arbeitnehmers Nr. . That (earlier) case was distinguished on the basis that the construction site involved was large and more difficult to organise than the present.) The unworkable nature of the criterion of “danger-prone activity” was also revealed by the tragic case of BAG NZA , . There, an experienced nurse accidentally dropped a baby twelve days old. As a result of the fall, the baby suffered a scull fracture. In earlier proceedings the child had sued the nurse and her employer and had been held entitled to recover all losses resulting from the accident. In the case at hand, the nurse sought an indemnity from her employer in respect of the child’s claims. The BAG came to the conclusion that in the circumstances the activity of taking a baby out of its bed was not “danger-prone”. The consequence of such a determination would have been that the nurse would shoulder full responsibility—a result which was widely considered as unacceptable. (The case settled so we do not know what happened in the end.) In its decision of June , BAGE , (case ) the Great Senate of the BAG responded to this wide-spread criticism and decided that the time had come to abandon altogether the criterion of “danger-prone” activity. Since the BGH (in NZA , ) agreed as to the result, it was not—in the end—necessary for the Common Great Senate of the Supreme Courts to decide the issue. The case thus reproduced in the book reflects the current state of the law.

The criterion that replaces that of the dangerous character of the activity carried out by the employee is that of an intrinsic link between the activity and the duties assigned

to the employee. From a methodological point of view it is interesting to note that the BAG felt the need to assert once again its powers to change and develop the law in this area. The irony is that in its latest judgment the BAG was departing from its own jurisprudence and not the rules of the BGB. This is somewhat concealed behind general observations on the role of the judiciary.

Though by its decision the BAG, essentially widened the scope of the employee’s immunity, the other conditions of liability remained untouched. This should not, however be taken to indicate that the remaining conditions of liability have not generated their own problems. Evidence of this is provided by the tergiversations of the BAG. The pedigree of the present rules is reflected in the different editions of this book (thus see the decision on page of the second edition which was overruled by the decision on page of the third edition (annotated at pp. – ). The first of these decisions ( th Senate, NZA, ) confined the employee’s liability to gross negligence and intentional conduct. The second ( th Senate, NZA , ) restored orthodoxy and re-established the old threefold approach which hinges on the degree of fault of the employee. (The different forms of negligence are discussed in chapter , section (b).) The current position of the BAG, found in case , confirms the threefold approach.

In the case of gross negligence, the employee must, as a rule, bear the total loss alone. At the other end of the spectrum, in the case of the slightest negligence, he is not liable at all. For normal negligence, the loss is, as a rule, to be divided between the employer and the employee proportionately. In such cases, all the circumstances regarding the causing of the harm and its consequences are to be balanced against each other in a reasonable way and in accordance with the principles of fairness. In weighing up the circumstances of the individual case the following factors can, according to the Great Senate of the BAG, be taken into account. The danger involved in the activity. Whether the risk in question can be taken into account by the employer and covered by insurance. The position of the employee in the business is also important. As are the level of salary (i.e. whether the employee is paid a risk premium) and the personal circumstances of the employee. For instance, how long has he has been part of the business; his age; his family circumstances, as well as the employee’s conduct so far under his contract of employment. From these the insurability of the risk by the employer is certainly the most difficult to determine in practice (see Tschöpe and Henninge MDR , , ). In the case of gross negligence it will be decisive whether the remuneration of the employee is out of proportion to the risk of damages that has materialized as a result of the grossly negligent conduct. In BAGE , for instance a lorry driver caused an accident because he had ran a red light. His attention was distracted as he was speaking on the mobile phone installed in the cabin. The lorry was damaged and the court found that he had been grossly negligent. The court held him liable to the full extent of the loss because the loss was not out of proportion to his wage (it was less than the sum of three monthly gross wages, which amount is taken as a first indication).

Two further comments are desirable.

First, the theoretical basis of the limitations of the employee’s liability towards the employer is now explained by reference to § BGB (which is in fact applied by analogy only given that the employer is not “negligent”). The true basis for the exception can thus be found in the policy considerations outlined in the introductory comments of this section. It is thus quite puzzling that in its most recent pronouncement the BAG sought to justify the exception also by reference to the indirect (horizontal) effect (mittelbare Drittwirkung) of Article I GG (personality rights) and Article I GG (free exercise of

the employee’s vocation). To the extent that this construction is convincing, it can be seen as providing yet another illustration of the constitutionalisation of private law mentioned in the first chapter of this book. Yet this construction may not be without its flaws. For, while the radiating effect of these provisions of the Constitution into labour law is generally accepted, the consequences drawn by the BAG in applying these provisions to the case in point appear questionable. It suffices here to draw the reader’s attention to the following argument.

The BAG stated that unlimited liability for all negligently caused harm should not be imposed for otherwise the employee would be burdened with the risk of unreasonable financial burdens and in particular the danger to his economic existence. This would represent a disproportionate infringement of the above-mentioned constitutional rights. However, if the employee is to be protected from the danger to his economic existence, then liability ought to be restricted irrespective of the employee’s fault to the extent that this danger is imminent. This would be at least the natural consequence of this particular approach. But the BAG does not consider these potentially far-reaching implications of its stance. (The BAG’s derivation of the liability regime from the danger to the employee’s economic existence was expressly rejected by the BGH in NZA , ; see also Blomeyer op. cit. ; Richardi op. cit. ; Schnauder op. cit. .)

Secondly, the brief discussion of the German agonising over this issue also reveals German law to be true to reputed form: theoretical, un-necessarily nuanced, and, in its most recent pronouncements, of dubious wisdom in its attempt to make a difficult subject even more difficult by discovering in it a constitutional dimension. To these doctrinal objections we add one last thought. The obvious favouring of the helpless employee may have much to support it. But it has still to be demonstrated how much it has added to the productions costs of German industry thereby making it internationally less competitive. This is clearly a political and economic issue; yet it is raised here to demonstrate how legal rules, supportable by reasons of fairness or equity may also have political dimensions.

.

The Code provides for the reversal of the onus of proof in three more situations; § ; §§ – , and §§ – BGB. § BGB imposes an “equitable” obligation to pay compensation independent of culpability.

(i) § BGB makes those who are under a duty to supervise (Aufsichtspflichtige) other persons (minors, mentally or physically incapacitated adults, etc.) liable for the damage caused by these persons to third parties or to their property. The obligation to supervise may stem from the law (kraft Gesetzes). Persons under such duties include the parents of a child (§ I; § I BGB) and the legal guardian (§§ , BGB). Alternatively, the obligation to supervise may derive from contract (kraft Vertrages). This category usually includes those in charge of kindergardens, boarding schools (but not State schools, which are liable, if at all under § BGB: BGHZ , ), holiday camps, orphanages, private nursing-homes, and the like. (For doctors and nurses in psychiatric hospitals see: BGH NJW , ; BGH January , NJW , ). In yet other instances, difficult demarcation problems may arise (e.g. a grandparent or a neighbour looking after a child: is this always a purely factual situation or can it amount to a legal relationship

bringing into operation § BGB?) As for those doing an “apprenticeship”, the courts seem to distinguish between apprentices who are lodged with their masters and those who are not. In the first case, the master may be liable for all harm caused by his apprentice, while in the second the master’s liability may be engaged only if the harm occurred during working hours. (BGH June , VersR , .) (On all these points see Larenz/ Canaris, II , § IV, p. – with references. For further details on § see: Albilt, Haften Eltern für ihre Kinder? ( ); Rauscher, “Haftung der Eltern für ihre Kinder”, JuS , ; M. J. Schmid, “Die Aufsichtspflicht nach § BGB”, VersR ,

.)

The liability of the supervisor arises the moment the “tortfeasor” has realised the objective conditions of a particular rule of liability. If such an unlawful infliction of loss has occurred, the supervisor will be presumed to have culpably failed to discharge his own duty to supervise. He will then be liable to the victim, either solely or jointly with the “tortfeasor” depending on whether the latter is capable of some fault (§§ – BGB). The supervisor’s liability will be avoided only if he proves that he had exercised the requisite standard of care or if he can show that the harm would have occurred in any event.

The requisite standard of care in supervision obviously varies from case to case, the Reichsgericht having stated that it will depend on “the age, disposition, characteristics, development, education, and all other individual features of the minor” (RGZ , ). A “difficult” child will, thus, have to be kept under closer control (BGH July , NJW, ). The vagueness and flexibility of such phrases is deliberate but it should not conceal a discernible trend in recent cases to raise the standard of care expected of modern parents. Courts have taken a stern view in cases of damage caused by children playing with matches. (See: BGH May , NJW , ; OLG Karlsruhe VersR , ); in BGH VersR , the court held liable the parents of a seven-year-old child which started a fire having got hold of an easily accessible box of matches. (See, also, BGH May, NJW , .) But no “supervision” duty was imposed on the parents of a fifteen- year-old boy playing football (OLG Stuttgart NJW , ); and the courts demonstrate their reluctance to impose such duties as children approach majority and their supervision is accepted as being difficult if not impossible. (BGH November , NJW

, .)

If the supervisor succeeds in exculpating himself, and the “tortfeasor” is incapable of all fault according to §§ , BGB (and, therefore, not personally liable), the innocent victim might run the risk of being left without any compensation. This, in fact, was the solution adopted by French law until the Court of Cassation changed its case law in (Cass civ. ème déc. , D. , J. ). The German legislator, however, foresaw this eventuality and included a provision in the Code—§ BGB. This enables the judge to take into account the financial position of the parties (including the insurance situation) and to oblige the innocent tortfeasor to pay the equally innocent victim/plaintiff such compensation as equity demands. The factors that are to be taken into account in establishing that the minor is under an equitable obligation to pay compensation are the seriousness of the injury; how close the culpability of the minor was in relation to the threshold of § BGB; and, crucially, the economic situation of the defendant. Two things should be noted in this context.

(ii) § BGB can apply also in the reverse situation where the minor is the victim and where he is not culpable, i.e. contributory “negligent”, under § BGB. More important is the second observation. Although this section is often referred to as the “million-

aire provision” the minor, himself, need not be wealthy. The question is whether his liability insurance is a factor that can found his liability under § BGB. The role of insurance in the context of § BGB was considered and in principle accepted by the Federal Court in a number of decisions, BGHZ , ; BGH NJW , ; BGH NJW, but never relied on to establish liability. The most recent pronouncement of the BGH in this area, BGH NJW , , (reproduced below, case ) has clarified a number of controversial points and in particular states that liability can flow from the fact that the defendant was insured. There is, however, an important theoretical problem in imposing liability based on the fact that the defendant was insured.

The so-called Trennungsprinzip is a fundamental principle of tort law. Indemnity insurance follows liability but liability cannot flow from the fact that the tortfeasor is insured. Therefore, deriving the minor’s liability from his insurance amounts to an exception to this principle. The BGH acknowledged this in the recent decision. However, in its view the imposition of liability could be nevertheless justified by a number of considerations. Thus, first, the exception to the principle is confined to mandatory insurance as in the case of traffic accidents. It is noteworthy that the BGH stated that in this field the function of mandatory insurance has undergone a change, now serving mainly to protect the interest of the victim. (Sceptical, Kötz and Wagner, Deliktsrecht, no. .) Secondly, the insurance factor must not be the only one that points to liability. The situation must be such that in the particular circumstances it would be wholly unsatisfactory not to hold the minor liable. This means thirdly that to the extent that the victim can recover damages on the basis of strict liability imposed by the traffic statute (§ Road Traffic Act—StVG, as to which see below), the victim cannot rely on § BGB. In the present case the defendant was epileptic (which excluded in the circumstances his liability under § BGB according to § BGB but not his liability under the Road Traffic Act). Hence, § BGB will be relevant mainly in relation to damages for pain and suffering (§ BGB) and in cases where the defendant is not liable under the Road Traffic Act (this concerns minors). (See for the interrelations between §§ , BGB also below, chapter , section(c). According to recent reform proposals (discussed below, chapter section A (c)), the culpability of minors for traffic accidents (crucial in relation to § I BGB) is relaxed (starting at the age of ten compared to seven at present), which would suggest that § BGB becomes even more important.)

(iii) §§ – BGB impose a similar (compared to § BGB) presumption of fault in the context of damage or personal injury caused by collapsing buildings, or man-made structures (e.g. walls, fences, flag-poles etc.) (See, BGH WM , .) Responsibility here is placed on a number of persons meticulously defined in §§ – BGB. Thus, while the person usually liable will be the owner, liability may also be imposed on a mere possessor (§ I and III BGB), a former possessor (§ II BGB), or even a builder or constructor (§ BGB). At Common law some of the above would, for certain purposes, probably be treated as the occupier of the premises and be made liable accordingly.

These provisions, which derive in part from Roman law and can also be found in a less elaborate form in civil codes such as the French, do not impose risk-based liability. In reality, they widen the area of liability for unlawful omissions which is further intensified by a presumption of fault. Thus, the possessor will be held responsible for personal injury and/or property damage suffered by a third party as a result of the collapse of a building on his land. Such liability, however, will be avoided if the possessor proves that he took all necessary steps to avert the danger. Where a former possessor is being sued, he must prove that he took all necessary steps while he was the occupier of the premises or that

a later possessor could have avoided the danger by observing the appropriate standard of care. In any event, the liability of the former possessor is potentially limited to damage caused within one year after the termination of his possession (§ II BGB).

The wording of § BGB makes clear its potential limitations. The damage must be the result of the collapse of a building (or part thereof) or some other structure attached to land, and to the consequence of defective construction or inadequate maintenance, not otherwise. Thus, for example, the Federal Supreme Court has ruled that building material falling as a result of demolition work will not be included in the protective ambit of this provision (BGH VersR , ). In this case liability, if any, will be imposed on the demolition contractor and will be based either on the breach of some statutory duty or the violation of the general duties of care (§ I and II BGB). One must, therefore, be always alert to the in-built limitations of this provision and be prepared to consider the alternative or parallel application of the general rules of liability. All in all, however, the resulting intricate web of overlapping legal rules is not a feature unique to German law. English Common lawyers in particular have faced similar problems. And, they too, have had to combine different torts (like negligence or private or public nuisance) with statutory instruments (like the Occupiers’ Liability Act or the Defective Premises Act ) in order to solve the potential liability of owners, occupiers, possessors, or landlords of dangerous or defective premises towards, visitors, next-door neighbours, and users of adjoining public roads.

(iv) §§ – BGB are the last provisions to be discussed under this subheading. Here a distinction has to be made between § sentence and BGB. For the first imposes genuine risk-based liability (the only one to be found in the Code) for damage caused by certain kinds of animal—luxury animals (Luxustiere)—whereas the second merely establishes a rebuttable presumption of fault against the keeper of “domestic or useful animals” (Haustiere, Nutztiere). The term “domestic animals” refers not just to tame animals (or animals domesticated in Germany in the sense that the English Animals Act uses this notion) but tame animals that are used “to aid the business, the earnings, or the prosperity of the keeper”. Thus a gamekeeper’s dog, a farmer’s pigs, herd of cows, or working horses, a shepherd’s dog, will come under this category; but dogs (generally), cats, or birds, which simply provide for their owner’s pleasure, come under § sentenceBGB. In between one finds some doubtful cases. For example, there is some ambiguity as to which part of § should apply to a blind man’s guide-dog. On the other hand a policeman’s dog or horse, assisting him in the execution of his professional duties, have been brought under the second sentence of § BGB (RGZ , ). The privilege afforded to keepers of “useful animals” is no longer justified since a keeper might well be in a position to insure against the risk of being liable. However, the BGH in NJW ,could not bring itself to abolish the distinction and decided that it was the task of the legislator to make the correction. (Comparison with the Common law and the English Animals Act is fruitful and can reveal some interesting differences but cannot be attempted here. (For an amusing case of strict liability being imposed on the keeper of a dog which destroyed the plaintiff’s valuable carpet see LG Karlsruhe, March ,

MDR , .)

The liability provided by § BGB falls on the keeper (Halter) and that is the person who, irrespective of ownership, is in charge in a real and durable manner of the animal in question. Temporary loss of control will thus not transfer the quality of keeper to another person (BGH January , NJW–RR , ). It is, however, otherwise, in the case of theft when the thief is likely to be held as the animal’s keeper and thus liable

for any damage caused while it remains under his control. The keeper is liable for all damage caused by the animal through its own movement or volition (e.g. biting, kicking etc. The term used in German is that the damage must occur “through” the animal: durch ein Tier). The injury must be the result of the realisation of a risk specific to animals. In some instances this can be controversial. For instance, a driver attempts to avoid running over an animal that has strayed onto the highway. In the process of so doing, his car capsizes. Subsequently, a second car crashes into the capsized vehicle. The keeper of the animal would be strictly liable to the first car under § BGB; but does his liability under this section extend towards the driver of the second car? Is this risk still peculiar to the animal’s movement? (Example taken from Kötz and Wagner, no. ). But this provision of the Code is inapplicable where the harm was caused by a movement instigated by a human being in control of the animal at the relevant time. (BGH September , NJW, .) Liability in this case will have to be based on some other provision of the Code (typically, § I BGB.) This approach that requires that the damage can be linked to a risk peculiar to the animal is part of a broader concept of legal cause to which recourse is had in order to define and limit effectively the scope of strict liability; see next section(b)(iii). In the case of § sentence BGB (domestic or useful animals), the liability of the keeper is presumed, but he can avoid it by proving either he took all care necessary in the circumstances or showing that the harm complained of would have occurred in any event. This defence is, of course, not available to the keeper of a “luxury” animal where liability is strict (§ sentence BGB).

§ BGB imposes a similar liability on the person (Tierhüter) who, pursuant to a contract, undertakes to look after an animal on behalf of its keeper. The liability of such a person, however, is the same whatever kind of animal he may happen to be looking after. In this instance, therefore, no distinction is made between house and luxury animals.

For further detailed discussions see: Baumgärtel, “Neue Tendenzen der Beweislastverteilung bei der Tierhalterhaftung”, Jahre Karlsruher Forum, Sonderbeilage zu VersR ( ) ; Deutsch, “Die Haftung des Tierhalters”, JuS , ; idem, “Gefährdungshaftung für laborgezüchtete Mikroorganismen”, NJW , ; Dunz, “Reiter wider Pferd oder Versuch einer Ehrenrettung des Handelns auf eigene Gefahr”, JZ , ; Herrmann, “Die Entwicklung der Tierhalterhaftung nach § Satz in der modernen Judikatur und Literatur”, JR , ; Honsell, “Beweislastprobleme in der Tierhalterhaftung”, MDR , .)

.

Select bibliography

Bauer, “Erweiterung der Gefährdungshaftung durch Gesetzesanalogie”, Festschrift für Ballerstedt ( ) ; von Caemmerer, Reform der Gefährdungshaftung ( ); Deutsch, “Methode und Konzept der Gefährdungshaftung”, VersR , ; idem, “Gefährdungshaftung: Tatbestand und Schutzbereich”, JuS , ; idem, “Das Recht der Gefährdungshaftung”, Jura , ; idem, “Das neue System der Gefährdungshaftungen: Gefährdungshaftung, erweiterte Gefährdungshaftung und Kausal-Vermutungshaftung”, NJW , ; Dunz, “Gefährdungshaftung und Adäquanz in der neueren Rechtsprechung des BGH”, VersR , ; Esser, Grundlagen und Entwicklung der Gefährdungshaftung ( ); idem, “Die Zweispurigkeit unseres Haftpflichtrechts”, JZ , ; Filthaut, Haftpflichtgesetz, rd ed. ( ); Kötz, “Haftung für besondere Gefahr. Generalklausel für die Gefährdungshaftung”, AcP ( ) ; idem, “Empfiehlt sich eine Vereinheitlichung und

Zusammenfassung der gesetzlichen Vorschriften über die Gefährdungshaftung im BGB” Gutachten und Vorschläge zur Überarbeitung des Schuldrechts ( ) ; Medicus, “Gefährdungshaftung im Zivilrecht”, Jura , ; Stoll, “Nochmals: Gefährdungshaftung und Adäquanz in der neueren Rechtsprechung des BGH”, VersR , ; Ullmann, “Gefährdungshaftung in der Schiffahrt?”, VersR , . Will, Quellen erhöhter Gefahr ( , with complete comparative references). In English: Zweigert/Kötz, para. , ; Lawson and Markesinis, Tortious Liability for Unintentional Harm in the Common Law and the Civil Law ( ) I, ff. Finally, for the historical background see Bienenfeld, Die Haftung ohne Verschulden ( ); Ogorek, Untersuchungen zur Entwicklung der Gefährdungshaftung im . Jahrhundert ( ); Rümelin, “Culpahaftung und Causalhaftung”, AcP

( ) .

(a) General observations: the statutory method

Tort liability was in German law traditionally based on fault. This was certainly true of the lex Aquilia, in a sense the fons et origo of Roman law which, in its turn, became the basis of the Gemeines Recht that prevailed in a large part of central Germany during the pre-codification era. The Prussian Code, in force mainly in the north and the east of the country, had also based tort liability on fault; and so, of course, had the French Code which, as we have noted, had also been adopted by yet another group of German States in the Rhine region. Apart from history, logic also dictated—and dictates—that “bad” people must pay for the harm they cause and, usually, the greater the degree of their blameworthiness the greater the amount that they have to pay. (This correlation between degree of blameworthiness and legal consequences is characteristic of criminal law. But it is also used by some tort lawyers to deny tort liability in cases were the consequences are disproportionate to the defendant’s fault.) But during the nineteenth century—espe- cially in its latter half—the reverse of this proposition was also advocated by many lawyers: if there was no fault there should be no liability and the loss should be left to lie where it fell. The mixture of moralistic, economic, and other arguments that led to the adoption of this attitude are reviewed by Professor Tunc in his excellent introductory chapter to the tort volume of the Encyclopedia of International and Comparative Law. But, as Tunc has shown—and his observations though couched in broad comparative terms, also apply to German law—these arguments are hardly convincing.

It could, of course, be argued that it would be asking too much of the nineteenthcentury draftsmen of the German Civil Code to see the weaknesses of the proposition that there can be no liability where there is no fault. The nineteenth century was the century when the fault rule reigned supreme. Yet, interestingly enough, some courts did make limited attempts to introduce strict liability automatically by discovering fault in particular activities. (Much later, and in the context of liability towards guest passengers in cars, the French courts adopted the theory of faute virtuelle to achieve more or less the same result.) More importantly, during the latter part of the nineteenth century the German Parliament had enacted a number of specific but important statutes, which introduced risk liability (Gefährdungshaftung). So, if there was one national legislator in Europe at that time that had realized the limitations of the fault principle, it was the German. The problem of the foundation of tortious liability could thus have received a more unified and innovating treatment than was, in the end, actually accomplished. But legal tradition prevailed. Apart from one minor exception found in the Code (§ BGB) dealing with “luxury animals”, the Code refused to be moved from the principle that liability for fault was the only acceptable basis for any obligation to compensate the victim. The specific legislation alluded to above, was treated as exceptional and denied the moral

superiority attributed to provisions found in the Code itself. This approach had many consequences. Notable among them are two. First, it set the pattern of the future development of strict liability in German law and in this respect set it apart from other civil law systems, notably the French. Second, it created a dual regime of liability, partly to be found in the Code and partly in specific statutes, with resulting difficult problems of demarcation. The difficulties of demarcation, and the gaps that have resulted from this dual system of treating accidents, will be noted later on as particular aspects of these enactments are considered more closely. Here suffice it to note that the Janus-like nature of the German legislator, displaying a “social” outlook in his special legislation, while remaining strongly “individualistic” in his general Code, did not pass without criticism even at the time. An extract from Gierke’s scathing comments brings out clearly the inconsistencies and dangerous consequences of this approach. He wrote:

[I]t is a fatal error—an error committed by the draft of the German Civil Code—to think the social work can be left to special legislation so that the general private law can be shaped, without regard to the task that has thus been shifted, in a purely individualistic manner. There thus exist two systems ruled by completely different spirits: a system of the general civil law that contains the “pure” private law, and a mass of special laws in which a private law, tarnished by and blended with public law, governs. On the one side a living, popular, socially coloured law full of inner stimulus, on the other an abstract mould, romanistic, individualistic, ossified in dead dogmatics. The real and true private law can now develop in all its logical splendour oblivious of the heretical special laws . . . But the general law is the native soil out of which the special laws also grow. By contact with the general law our youth learn legal thinking. The judges take their nourishment from it. What a fatal abyss opens before us! What a schism between the spirit of the normal administration of justice and the administrative jurisdiction that is being extended further and further! What a . . . danger of stagnation and degeneration of jurisprudence . . . (Die soziale Aufgabe des Privatrechts ( ) – ; trans. by von Mehren and Gordley, The Civil Law System ( nd ed. ),

.)

In the remainder of this subsection we shall concentrate on the peculiarly German method of introducing strict liability in the legal system. Then, in the next subsection (ii) we shall note some features shared by these enactments and, finally, in subsection (iii) we shall take a closer look at some of the most important statutes: the Strict Liability Act, the Road Traffic Act, Environmental Liability Act and related statutes, and the Products Liability Act.

The passing of strict liability statutes is not a phenomenon unique to Germany. One can find specific statutory interventions in the Common law system (for example the English Animals Act ) and in other civil law systems (for a list of French statutes see Viney, Les obligations: la responsabilité ( ) ff.). What is, however, typically German is the development of a legal tradition, going back to the first Prussian Railway Act of, that the introduction of strict liability into the legal order is a prerogative of the legislature. This mentality, along with the carefully, and on the whole restrictively, drafted articles of the Civil Code had an important consequence. It made it difficult for German judges to develop the kind of general, all-embracing rules which their French counterparts were able to create thanks to the wide if not amorphous delict provisions found in their Code. As a result, though there are a number of situations where fault can be presumed, there is no general presumption of liability for damage caused by things (whether dangerous or not) under one’s control analogous to that established by the famous first line of Article French CC, or in a much more limited fashion in England (Rylands v. Fletcher [ ] L.R. H.L. ), or any general rule dealing with “extra-hazardous”

activities. Nor has German law adopted the bold attitude taken by the French Supreme Court in the Desmares decision (and subsequently incorporated in the French Road Traffic Act of July ) to ignore the contributory negligence of the victim in certain instances of strict liability. Once again, clear statutory provisions to the contrary make this impossible.

The next thing to note is that the introduction of strict liability was the result of different though not necessarily mutually exclusive factors, which influenced the mind of the legislator. (Indeed, looking at the strict liability acts one can trace the evolution of industrial and technological developments in modern Germany.) So, for example, it has for some time now been recognised that the social security legislation of the earlys, namely the Sickness Insurance Act of (Krankenversicherungsgesetz) and the Accident Insurance Act of (Unfallversicherungsgesetz), had predominantly political not legal motives. For they were largely prompted by Bismarck’s political calculation that the satisfaction of certain legitimate needs of the working classes concerning conditions of work and accident insurance would go a long way in “taking the wind out of the sails” of the socialist movement which was at that time, in Germany and elsewhere, slowly gaining wider political support. (For further details see Lawson and Markesinis, op. cit. I,

.)

In other instances it was the novelty of the danger coupled perhaps with the risk of serious injury resulting from the operation in question. This was so, for example, in the case of the Prussian Railway Act of (later incorporated in the Imperial Act on Liability of ) and the Road Traffic Act (Strassenverkehrsgesetz), both of which dealt with potentially dangerous (and, at the time of their enactment, also novel) activities. In all instances, however, the utility of rail and, later, motor vehicle transportation was perceived. Clearly, increased benefit was accompanied by increased dangers. The solution was obviously to permit these activities and, indeed, to encourage them in various ways, but only on condition that they were saddled with the cost of the risks they entailed.

In yet another group of cases the enormity of the possible damage resulting from the activity in question was such that the activity could only be allowed to continue “at a very high price”. The “Act Relating to the Peaceful Use of Nuclear Energy and the Protection Against its Dangers” (Gesetz über die friedliche Verwendung der Kernenergie und den Schutz gegen ihre Gefahren) —more briefly referred to as the Nuclear Energy Act—therefore imposes absolute liability on the operator of installations which are concerned with nuclear fusion or fission. This is also the case according to § ff. of the Air Traffic Act (Luftverkehrsgesetz) of . In both these instances, liability is truly “absolute” in the sense that even the defence of force majeure is denied to the “operator” (of the nuclear installation) and custodian (of the aircraft). Finally, the enormity of the potential harm that can be caused by water pollution must explain the (financially) unlimited liability imposed by the Water Supply Act of (Wasserhaushaltsgesetz). This is imposed on anyone who “introduces” substances into water (which includes lakes, rivers, streams, ponds etc.), thereby altering the quality of the water so as to render it harmful.

The Imperial Act on Liability of (Reichshaftpflichtgesetz), originally imposed strict liability for death or personal injury suffered by persons “in the course of operation of a railway” (§ ). The legislator had a variety of aims in mind when, in it extended the statute to cover property damage and in extended it further to cover death or personal injury caused, under certain specific circumstances, by gas, electricity, or steam. (The present version—the Haftpflichtgesetz of —includes harm caused by gases, fumes, and piped fluids.) Notable among these aims was the desire to facilitate the

evidentiary burden of proof cast on the unfortunate victims of what the French, at that time, called the “anonymous accidents” caused by modern industrial machinery. (See Josserand, Cours de droit civil positif français ( nd edn., ) ii, no. .) To some extent the same is also true of the most recent of these strict liability statutes—the Act on Pharmaceutical Products of (Arzneimittelgesetz). But arguably from the beginning, and certainly, with the passage of time, it became obvious that the imposition of strict liability in the above instances also aimed at placing the risks of these activities on the shoulders of those who could best carry them. For all these industrial concerns were in a far better position to spread the cost of accidents either by reflecting it in the form of minute increases in the cost of their products or, later, by their greater ability to insure. The same motive can also be found in modern product liability law, though the Product Liability Act had, as its immediate cause, the EEC’s desire to try to achieve greater harmonisation of the law of the Member States. Be that as it may, the fact is that in our modern mechanised society a variety of policy aims accounted for the steady increase of legislative enactments, each dealing with a fairly narrowly defined activity or risks emanating from ownership of potentially dangerous things or substances. Some of the problems raised by this patchy growth of the law will be noted in the next subsections.

(b)Some general characteristics shared by all or most of these enactments

(i)Similar or analogous clauses

Though one of the ideas behind specific legislation is to allow the legislator to word his provisions in a way most appropriate to the particular risk or industry being regulated, this has not prevented the appearance in most of these enactments of almost identical provisions. One such provision—imposing maxima for monetary compensation—can be found in all but one of the statutes, and because of its importance it will be discussed separately, below. Another common provision (for example § of the Strict Liability Act; § of the Road Traffic Act ) preserves the validity of the “Common law”— which, in effect, means the Civil Code—so that a victim can recover further sums by relying on the fault-based articles of the Code. This, as we shall note, is often necessary. For, first, the monetary maxima imposed by these statutes (and discussed below) may not be sufficient. Secondly, and perhaps more importantly however, is the fact that compensation under these statutes does not include sums for pain and suffering. These can thus be claimed only if the fault-based provisions of the Code can be successfully invoked. (The only exception to this last rule can be found in § III of the Air Traffic Act.) According to recent reform proposals this artificial restriction is abandoned. Damages for pain and suffering will then be available also if the plaintiff bases his claim not on § BGB but on the defendant’s strict liability under the various specialized statutes. Details are discussed in chapter section below. At this stage, it is, perhaps, worth observing that other systems, which have on the whole adopted the German way of introducing strict liability by means of specific statutes, have not followed the German example of imposing monetary maxima or excluding from the statutory provisions compensation for pain and suffering. As a result of this arguably more logical approach to the problem, these systems have been able to provide for the exclusion of the ordinary rules of civil responsibility. The Swiss Road Traffic Act—in force in its latest form since August — provides such an example. (For a good summary of Swiss law see Deschenaux and Tercier,

La responsabilité civile ( ) ff.)

A third type of common clause reduces the liability of the tortfeasor by taking into account the contributory negligence of the victim. (See, for example, § a of the Imperial Act on Liability—now § of the Strict Liability Act; § of the Nuclear Energy Act.) The reduction of the damages awarded to the victim will be decided in accordance with § BGB after weighing the victim’s own fault against the typical risks connected with the activity in question (the so-called “business risk”) and the causative connection with the victim’s hurt (BGHZ , ). In extreme cases this could mean either that the victim could lose his entire claim for compensation (see, for example, BGH VersR , ) or the reverse, i.e. receive full compensation despite some negligence on his part (see, for example, BGH VersR , ). In the context of traffic accidents, the recognition of this defence has meant a net increase in contested cases. For there is hardly an incident in which the keeper of the vehicle will not invoke this defence and start a usually lengthy dispute into the exact facts of the accident. Many of the advantages of a strict liability statute can thus soon be lost in a controversy over facts which have little or reduced significance given today’s insurance background. In this context, it is therefore important to note with approval the solution advocated by the Court of Cassation in the Desmares decision which refuses to take into account the victim’s own fault in the realization of his harm. (see Cass. ème civ. juillet , D. , ; see, also, the Law of July , reprinted as Addendum to B. ). This approach, however, has not prevailed in Germany, insurers arguing that the abolition of the defence would affect the level of motor insurance premiums. (For a look of the German position by a knowledgeable French insurer see, Margeat, “Nos voisins européens et la protection des victimes de la circulation”, Gaz. Pal. May/ June , . The text of the French statute is reproduced below at pp. ff.)

(ii) Monetary maxima imposed on compensation paid under these statutes

Save in the case of the Water Act (and also in the case of § BGB) all other strict liability statutes impose maximum amounts, which can be paid in the form of compensation under their respective provisions. However, recourse to the fault-based provisions of the Civil Code for additional compensation for pecuniary losses, as well as for pain and suffering, is in all cases expressly permitted. (See §§ of the Strict Liability Act; of the Road Traffic Act; of the Air Traffic Act; , of the Nuclear Energy Act.) Here the only limitation on the tortfeasor’s liability is, practically speaking, his capacity to pay or, if he is insured, the ceiling of his insurance coverage. Thus, if a person is killed or injured through the operation of electricity, gas, steam, or current escaping from a cable or a pipeline or a plant for the provision of such energy or material (§ of the Strict Liability Act, ), then the concern in question will be liable to indemnify to the full his medical expenses (§ ) and to compensate him for his lost earnings by paying him an annuity of not more than DM , per annum per victim. And the liability under the Act (§ ) for property damage will not exceed DM , . (This figure applies even if more than one objects was damaged in the course of the same accident; but it does not apply to damage to buildings.) In the case of motor vehicle accidents, to which the Traffic Act of December applies, the sums are DM , in the form of an annuity or a maximum lump sum of DM , . Where several persons are killed or injured in the same accident, the liability of the person responsible cannot exceed in total the amount of DM , . The total liability under the Act for damage to property is, again, DM , and this even where several objects are damaged in the same accident (§ ;

see also § of the Air Traffic Act and § of the Nuclear Energy Act). It should be noted however that if recent reform proposals become reality these maxima are considerably raised. (The recommended provisions are reproduced alongside the Act). These figures represent true maxima so that if, for example, more than one person or car is injured or damaged in the same accident the total amount available will have to be shared between them all. Who, in the case of a traffic accident, is responsible to pay these sums will be discussed in greater detail in subsection , below. Here suffice it to state that since the enactment of the Obligatory Insurance Act in , the “holder” of any car is obliged to take out third-party insurance which, as a minimum, covers the above sums. Needless to say, the growing cost of road accidents, coupled with the very real possibility of the “holder” of the car being made additionally liable under § I BGB, has meant that insurance policies covering risks in excess of one million marks are increasingly common these days. (In practice the extra coverage, typically of the order of million DM, can be obtained at a very small extra premium.) Incidentally, these maxima can be (and have over the years been) readjusted by governmental decree in order to take into account inflation and other rising costs.

As stated, the regulation of compensation through statutory maxima makes it increasingly likely that in cases of serious accidents the “Common law”—i.e. the BGB—will be invoked. This, of course, means that the victim is then thrown back into the fault system with all the theoretical and practical disadvantages that this entails (delays, costs, uncertainty of result, increasing the load of court work). Even so, the victim’s position has, once again, been improved in recent years by the development of three devices. The first is the “discovery of new duties of care” which were discussed above, in chapter , A ). The second way is to treat many of the provisions of the Road Traffic Act as “protective laws” and allow the victim to bring an action under § II BGB (discussed in the next chapter). Finally, the German courts are, in many cases, willing to invoke the doctrine of primafacie proof—Anscheinsbeweis—which is analogous to our doctrine of res ipsa loquitur. In practice, this can often result in the surreptitious introduction of strict liability in a system which, judging by the letter of its Civil Code, remains faithful to the idea of fault.

(iii) The courts’ role in defining the precise ambit of the statutes

As one would expect, all these enactments contain terms or notions, which though simple and obvious at face value, have given rise to many difficulties of proper demarcation. In the face of these observations, the courts have not been inactive and the rich case law that has emerged clearly presents great interest both to the academic and practising lawyer. Here, for reasons of space, we shall limit our observations to three points. First, is the use of normative theories of causation as a means of defining the proper ambit of the statute in question. Second, comes the occasional tendency to construe narrowly certain provisions. Finally, we note the tendency in other, more numerous, instances to define more widely a particular statutory term and thus, to enlarge the scope of the statute in question. In all these instances we find illustrations of how the courts have exercised the rather limited role ascribed to them by legal tradition in the area of strict liability.

. Compensation under the strict liability rules will clearly be limited to the extent that the harm complained of represents the realisation of precisely that danger which prompted the legislator to enact the strict liability rule. The search for the protective aim of the violated norm thus becomes as important in this area of the law as it is when

discussing causation problems arising from the violation of fault-based rules (§ I and II BGB; see above, chapter , section A. ). The limits of the liability will, therefore, be determined by discovering whether the type of harm in suit and the manner of its infliction was of the kind which the statute wished to prevent. The search for an answer to such questions will, obviously, start by looking at the wording of the relevant statute. For example, was the plaintiff injured “in the course of the operation of a motor vehicle”? (beim Betrieb des Fahrzeuges : § I of the Road Traffic Act.) Or was he killed “in the course of the operation of a railway” (§ of the Strict Liability Act)? In all these cases, the endresult will largely be determined by the judge’s value judgment of the situation, which will often lead him to an interpretation of the enactment against the background of contemporary socio-economic demands. A decision of the German Supreme Court in brings this point out very clearly (BGH September , BGHZ , , case , below). The court in that case had to decide whether a stationary vehicle could be brought under § I of the Road Traffic Act. This, as will be explained below, imposes strict liability upon the keeper of a motor vehicle which “in the course of operation” injures or kills another person. In the court’s view since

the legislator has not provided any . . . explanation, it is for the judge to interpret this ambiguous rule [accident in the course of operation]. The judge is, therefore, not prohibited from interpreting § StVG broadly if in so doing he conforms to the sense and purpose of the enactment to protect participants in traffic against the dangers of motor traffic. It is therefore entirely within the scope of permissible interpretation if this protection . . . is extended also to the dangers produced by stationary vehicles in present-day traffic conditions.

Clearly, continued the court,

“even if the legislator of (when the first Road Traffic Act came into force) saw the chief danger of motor vehicles, in their rapid movement due to engine power . . . that would not exclude the adaptation of the concept ‘in the operation of a motor vehicle’ to the experiences and requirements of present-day traffic”.

In the end, therefore, the use of normative theories of causation can lead—as AngloAmerican lawyers have also discovered—to a considerable flexibility. In turn, this can produce an extension (and not only a restriction) of liability, rendering the defendant liable for all the “typical” consequences inherent in his business activity. (Cf. in this respect the views of Ehrenzweig in his Negligence Without Fault ( ) reprinted in Cal. L. Rev.( ); see also “Vicarious Liability in the Conflict of Laws—Towards a Theory of Enterprise Liability under ‘Foreseeable and Insurable’ Laws III”, Yale L. J. , ( ).)

. An example of narrowing liability can be found in the area of application of § BGB in so far as it imposes strict liability. Here, it must be shown that the harm caused was the result of the specific dangers arising from the animal’s nature. Damage caused by a bolting horse—even where the cause of its fright is an external noise—or from a biting dog, would clearly be the kind of typical harm that animals of this kind can cause. But the injury suffered by a rider who borrowed from a friend a horse, which he knew to be unruly when ridden by strangers, in order to demonstrate his greater riding skills, would not lead to strict liability of the owner of the horse. (BGH NJW , ; NJW , ). Nor, as Professor Kötz has suggested (Deliktsrecht, no. ), would a cyclist, who collided in darkness with the corpse of a dead dog, be able to sue its owner under § BGB. For in such a case, the hurt of the plaintiff cannot be traced back to a special risk inherent in

the animal. (But see OLG Celle VersR , . Liability under § I BGB is another matter.) The example may seem far-fetched; but this kind of reasoning produced the same (negative) conclusion in a case where the plaintiff’s cellar was flooded as a result of his drains being blocked by cow-dung from the defendant’s cows (LG Köln, July , MDR, ). Further illustrations were given in the previous section (iii).

At this point a brief excursus can show how the same kind of legal reasoning can be found in precisely the same area of the law in the Common law system. Thus, s. I of the Animals Act, enacted in England in , imposes strict liability for “damage” done by straying livestock “to the land or to any property on it”. The definition of damage in this section is narrower than the general definition given in s. , which includes personal injury and disease. The narrower definition of s. I is generally taken to prevail in this case since it is regarded as lex specialis. (For example, Winfield and Jolowicz, On Tort ( th edn. by W V H Rogers) and n. .) For our purposes, however, it could be seen as a statutory embodiment of the scope of the rule theory. In other words, it can be said that the legislator wished to impose strict liability only when the typical consequences resulting from cattle trespassing actually occurred (damage to land, crops etc.). When other harmful consequences flowed from such straying livestock (e.g. human beings were trampled down) then liability should be based on the possible fault of their owner and not on the statute.

A similar narrow interpretation of the rules of strict liability has been adopted in other instances outside the area of the Civil Code. The Water Supply Act imposes, as we have seen, strict liability on anyone who “introduces” (leitet ein, bringt ein) substances into water, thereby prejudicially altering its physical, chemical, or biological characteristics. The deliberate discharge by factories of pollutants into nearby rivers, lakes, ponds, or estuaries is, of course, caught by this provision. But so is the discharge of substances, which do not affect the quality of water and marine life therein, even if its effects are not known to the person (legal or physical) who is carrying on these activities. On the other hand, the courts insist that for harmful conduct to be brought under this statute it must be shown that there was “a positive act objectively aimed at the water”. As stated, this would include the above activities of “discharge” of substances, but would exclude, for example, a collision between two petrol tankers which led to one of them falling into a nearby river and thereby accidentally emptying its contents into the water. (See Larenz/Canaris, II , § V; idem in VersR , , . (In the th edn., § . ix, p. , another illustration is given: bridge collapsing under the weight of a petrol tanker.) See also BGHZ , ; ,, ; , , . For other examples see the discussion in (iii), below.)

. More often than not, however, the courts use the avowed purpose of the rule imposing strict liability in order to give an extended meaning to a term or phrase to be found in one of the enactments. A number of illustrations will be given in (ii), below, when we talk about traffic accidents. Here we shall, therefore, concentrate on one of the bestknown examples which can be found in the definition of a “railway” in § of the old Imperial Act on Liability—now included in the Strict Liability Act.

Today, there is no doubt that “railway” includes all types of transport moving on rails— whether wide or narrow gauge, or moving above or beneath the metal rails in question; indeed, the Strict Liability Act has made this clear by expressly including cable-cars and suspension railways. But the statute also requires that the accident happened “in the course of the operation of a railway . . .”. The question thus arises whether this statute can be extended to cover other activities carrying with them risks not unrelated to the kind of dangers peculiar in some sense to the operation of a railway. This question as to

whether the accident can be regarded as a “business accident” (Betriebsunfall) and thus covered by the statute was, in a sense, linked with the question of proper definition of a railway. Both were raised in one of the early cases that came before the Reichsgericht in

(RGZ , ).

In that case the defendant, a building contractor, was engaged in the business of constructing a railway and was moving earth around in tipping-wagons operated on a narrow-gauge rail when the accident occurred. The Court of Appeal refused to apply § of the Imperial Act on Liability of . Its decision was reversed by the Reichsgericht in a judgment most notable for its polemical style against all attempts (favoured by some judges and academics) to give a narrow interpretation to the recent Imperial enactment. The Supreme Court openly alluded to the policy factor briefly mentioned at the beginning of this paragraph. It concluded that any narrow interpretation of the wording of the statute, of the kind adopted by the Court of Appeal, would lead to the emasculation of the new statute and should, therefore, be rejected. As a result of this bold judgment, and after many others took a similarly broad view of the notion of “business accident”, German law has now come to include under the protective ambit of this paragraph not only typical accidents connected with railways, such as deaths or injuries resulting from sudden application of brakes (even where this is caused by the totally unexpected appearance of a child or animal on the tracks: RGZ , ; BGH VersR , ), swaying or swinging of carriages, derailments, or accidents caused by faulty signalling, but also cases where passengers are injured on platforms when jostled by other passengers during rush-hour. For this to happen, however, there must exist a “direct external local and temporal connection between the accident and a particular business procedure or business installation belonging to the railway” (BGHZ , , ). This rather verbose statement can lead to some fine distinctions so that, for example, if the plaintiff’s injury is caused by the kind of jostling that takes place in crowded stations or results from an uneven or slippery surface of the platform, the railway concern will be liable. But if the injury resulting from the fall was caused by, say, the presence of black ice, formed by freezing rain, then the liability of the railway would have to be based on fault (i.e. pleaded under § I BGB). However, it is always possible in this case to try and argue that the water that froze, and caused the fall of the plaintiff, came from a railway engine or found its way onto the platform because of a defect in the station roof. If such an allegation is substantiated, then one could again be back under the heading of “business accident” and thus be able to invoke strict liability. Given the desirability of avoiding such niceties and, one might add, given the prevalence of modern insurance, it is not surprising to note a very clear tendency to interpret the statute “generously” and thereby afford maximum protection to victims. A result, one might add, that the French courts have also very largely managed to achieve through the medium of Article French CC, or the discovery of implied contractual terms (obligations de sécurité) in the contract of carriage. (For a summary of the French approach, which moves freely between contract and tort, see Terré, Simler and Lequette, Droit civil, les obligations, th ed. ( ) nos. , and references in note .)

(iv) Is analogical extension of the statutory rules possible?

We have already noted how the German courts carved out for themselves an important area of activity in this otherwise statute-dominated part of the law. Yet they stopped short of taking the most vital step, which would have placed them on an approximate par with

the legislature, when they refused to arrogate to themselves the right to extend analogically specific statutes to new situations raising similar issues of public policy. The important judgment of , RGZ , , that marked the beginning of this judicial attitude towards this matter, is reproduced below as case . (For other instances see RGZ ,

; BGHZ , .)

The litigation was provoked by an accident caused when one of Count von Zeppelin’s experimental airships was forced by bad weather to land and then broke its moorings, injuring one of the many spectators who had spontaneously gathered to witness this novel sight. An attempt to extend analogically the recently enacted ( May ) Road Traffic Act was rejected by the Supreme Court on the ground of the exceptional nature of this piece of legislation. Yet, the policy reasons behind the legislator’s decision to enact the Traffic Act (novel form of transport, increased dangers etc.) were, arguably, equally to be found in airships; and, indeed, other German-inspired systems, such as the Austrian, have allowed their courts to extend statutes analogically, imposing strict liability (see cases cited by Zweigert and Kötz, An Introduction to Comparative Law, ( ), p. ). In , however, the German Supreme Court refused to accept this and has since repeatedly adhered to this position (see, for example, BGHZ , and cases cited previously). The “tame” language employed in that famous judgment thus stands in stark contrast to the “bold” approach adopted some thirty years earlier when, for a moment, the court seemed to indicate its willingness to play a part in expanding the grounds of strict liability.

(v) A critical epilogue

Though necessarily brief, our sketch of the German way of introducing strict liability has already revealed some of the system’s cardinal weaknesses. The notion that only the legislator can introduce strict liability has resulted in a delayed, patchy, and complicated system for handling accidents resulting from new technology and more generally, the risks of modern life. It has been delayed because, inevitably, there always was, and always will be, a time-lag between new technological developments and the time when the legislator intervenes in order to regulate them. The result is that until such intervention occurs, the courts have to step in and handle as best they can the problems posed by new technology. (Some illustrations can be found in RGZ , (protection of property before the enlargement of § of the Imperial Act on Liability, discussed in section (iii) and below); RG JW , ; RGZ , (liability of electricity companies before the extension of the Imperial Act on Liability); RG DJZ , (car accident before the enactment of the Road Traffic Act).)

It was patchy, since each statute only handled specific problems, on the basis of scientific and technological information available at the time of their enactment, while leaving often-related activities or risks outside their purview. The inability to extend these enactments analogically, only aggravated the difficulties. Thus Professors von Caemmerer, Kötz, and others have for some time now been pointing out the capriciousness of the existing law and advocating the adoption of a more generalized provision to deal with this subject. So, for example, why cannot the dangers inherent in operating an explosives factory be assimilated to those of the gas industry dealt with by § of the Strict Liability Act? Could it not be said that the operation of a large river dam poses risks broadly analogous to those found in nuclear stations regulated by § of the Nuclear Act? Should the spraying of a poisonous insecticide lead to strict liability only if it contaminates water, in accordance with § of the Water Supply Act, but not when it destroys or dangerously

contaminates useful crops? Or why should a contractor using a tipping-wagon for the construction of a railway be strictly liable for any damage he causes, but only be liable upon proof of fault if he is simply helping build a factory or a large block of flats? Other systems have provided for strict liability not only in the case of specifically mentioned activities, but also in all those instances where an activity carries with it an increased danger for others.

Finally, the system is complicated because the imposition of maxima for monetary compensation and the exclusion under these statutes of all compensation for pain and suffering often means recourse to the ordinary, fault-based liability rules to be found in the Civil Code. If these “limitations” imposed by the statutes were dictated by fears of unlimited liability and unbearable economic consequences, especially at a time when insurance was not as widely spread as it is today, then the time has surely come to reconsider the validity of this kind of argument. Certainly, the absence of any maxima in compensation paid under the Water Act has caused no problems. In motor vehicle insurance, coverage in excess of the maximum amount provided by the statute (i.e. DM , ) is widely obtained without a considerable increase in premium cost. Finally, the Swiss experience, quite different in this respect from the German, has not justified the fears expressed in Germany concerning an extension of the rules of strict liability. A more unified treatment of its problems would, it is submitted, be a considerable improvement on the status quo. But, despite many rumblings, and even more proposals for reform, the present system seems unlikely to be greatly changed in the near future. Thus, in this as in so many other areas of civil liability (e.g. § BGB; express recognition of the right of personality etc.) the codal framework has proved too resistant to much-needed change.

(c)Four specific statutes on strict liability

(i)The Strict Liability Act

It was stated earlier in this section that the history of the German strict liability statutes follows closely the development and expansion of modern industry. The Strict Liability Act of brings this point out very clearly.

The origin of this Act can, in a sense, be traced back to the Prussian Railways Act— by any reckoning, a most pioneering enactment. For when it was enacted, the Kingdom of Prussia had less than kilometres of rail tracks so there was really no pressing practical need for such a measure. But capitalism in those days also had its paternalistic aspects; and, in any event, the economic consequences resulting from the imposition of strict liability for harm to persons or property “resulting from carriage on the railway” (§ ) hardly affected the mainly land-owning dominant class.

The importance of the railway system for the economy and, later, the defence of the realm, was quickly perceived by the German leaders. The investment in an efficient national railway system was considerable and with the unification of the Reich, the enactment was to serve as the model of the Imperial Insurance Act of . This statute introduced strict liability for railway carriage throughout the entire Reich. But the version of the statute it was also narrower than its model—which remained in force in Prussia and certain other parts of Germany (and also served as the model of an Austrian enactment of ). For § of the Act limited strict liability to cases of death or personal injury only (and excluded property damage) resulting from the “operating of the railway”. This discrepancy between the old, geographically limited but in one respect wider statute and the Imperial enactment posed difficult problems which a number of

courts tried to resolve by extending strict liability to property damage caused by the operation of railways (cf. RGZ , ). These attempts, however, achieved only limited success and, on the contrary, attracted some hostile academic criticism. It was not, therefore, until the enactment of the Commercial Code that some measure of uniformity was achieved in the area of liability for carriage of goods. This trend was firmly consolidated in when a special statute, amending the Imperial law, introduced strict liability for property damage, as well (Gesetz über die Haftpflicht der Eisenbahnen und Strassenbahnen für Sachschäden). This position is, of course, now also clearly reflected in § of the consolidating enactment.

Apart from this “retrograde” step, connected with the exclusion of property damage from the scope of the statute, the Imperial Insurance Act was a far-reaching enactment. § , for example, imposed what we would call true vicarious liability on the operators of mines, quarries, pits, and factories for the damage caused by the faults of their authorised agents or representatives. This was a great step forward for those persons working in these industries and most exposed to their dangers. And the progress was even greater if taken together with another set of provisions of the Act—§§ and —which greatly increased the discretion of the courts in evaluating the evidence and the amount of damages to be awarded. This “free evaluation” principle, as it became known was a great innovatory step when compared with the rigid rules of procedure applicable at the time. (It was subsequently widely adopted by the Code of Civil Procedure of with the result that §§ and of the Imperial Insurance Act became redundant and were abolished.) But the more equitable treatment of industrial accidents did not stop there. The passing of the social security legislation of the early s gave even greater protection to the working classes for accidents at work, and the consolidation of the entire law of social insurance by the Reichsversicherungsordnung removed accidents at work from the province of the law of tort. A bird’s-eye view of this system will be given in the next subsection.

The expansion of the Imperial Insurance Act continued well into the twentieth century. Apart from the enlargement that took place in in order to include property damage, a further amendment was introduced in . This extended the ambit of the statute to cover injury to persons or damage to property resulting from the operation of electricity, gas, steam, or current escaping from cables, pipelines, or plants for the provision of such energy or materials (see § of the statute). The Haftpflichtgesetz ofJanuary (extended strict liability further so as to include gases, fumes, and piped fluids but in other respects it can be regarded as a consolidating act.

Finally, one should note that the Strict Liability Act contains the usual defences— contributory fault of the victim (§ ) and force majeure (höhere Gewalt) (§ ), which is interpreted in a very stringent manner (and thus is more demanding a test than that of unavoidable event: unabwendbares Ereignis). Thus, in one case (BGHZ , ) the young plaintiff was electrocuted when his kite—secured by a metal wire and not, as is usual, by a string—came into contact with an overhead electricity cable. Though the facts of the case were, clearly, very atypical, the Supreme Court refused to treat this as a case of an unavoidable accident and held the electricity operators liable to the victim. (For the full text of the statute see below, p. )

(ii) Accidents at work and social security legislation in modern German law

Since Germany has had a no-fault compulsory insurance scheme covering accidents at work, gesetzliche Unfallversicherung (statutory accident insurance). This has been

amended and expanded in various ways by subsequent enactments and now forms part of a wider and more comprehensive system of social security that covers such things as permanent incapacity for work as well as sickness.

Here we shall limit our comments to the treatment given to accidents at work, a phrase which should be taken to include not only injuries sustained while actually at work but also accidents occurring while travelling to and from work. (Hence in practice we have, here, a considerable overlap with the compensation system established by the Road Traffic Act discussed below.)

The importance of this statutory insurance can be seen from the fact that two thirds of the population of Germany are currently covered (Kötz/Wagner, no. ). Awards are made to all those in paid employment (whether German nationals or not), certain groups of self-employed persons. Since , children and students have been covered by the schemes. The latter group is certainly not negligible: in alone about million DM were paid out for these so-called “education accidents” (Kötz/Wagner, no. ).

Compensation in the above cases is made through various schemes which are administered by trade co-operatives or institutes (Berufsgenossenschaften) which are separate legal entities, usually in close contact with one another, and under the general supervision and responsibility of the Minister of Labour and Social Security. The institutes function on a territorial basis and are organised to cover different commercial or other activities. There are in all some thirty-four industrial accident insurance institutes; nineteen agricultural institutes; thirteen municipal accident insurance organisations; eleven State funds; four Federal insurance institutes; and a number of other smaller autonomous funds—some ninety institutes in all. The first two of these, however, are the most important, covering between them some per cent of work accident insurance. These institutes are self-governed by boards or councils, usually composed of equal numbers of employers and employees. Every employer is automatically a member of the institute appropriate to his firm’s activities in the locality in which it carries on its business. Institutes may provide voluntary insurance for the self-employed in their areas and some actually make this compulsory.

The financing of the various institutes is a complicated affair. Generally speaking, revenue from taxes funds those institutes, which insure public employees; and the funds of agricultural institutes are subsidised by the central (Federal) government. The thirtyfour industrial accident insurance institutes, on the other hand, derive their funds entirely from contributions made by employers, though there is the possibility (realised once only) of mutual financial help. The contributions vary depending on the risk factor attendant on the branch of industry to which the member belongs as well as on the risk-rating of the firm in question. These figures are reviewed periodically and contributions tend to vary from to per cent of earnings.

The awards are made by the officials of the appropriate institutes; and there is an intricate system of appeals to local State and Federal courts. A basic assumption of the system is that if an employee is entitled to compensation under SGB VII (for an accident suffered at work), save in cases of intentionally inflicted injury, the injured victim cannot claim any further compensation by relying on the ordinary tort rules of the BGB: the employer or any other colleague of the victim who may also be responsible for the accident enjoy an immunity (§§ , SGB VII. Previously §§ , RVO). Hence, this is the only main area in which tort law has been completely replaced by a compulsory and statutory insurance scheme in Germany. It is interesting to note that one of the main objects of tort—to provide incentives to reduce the risk of accidents—has been appar-

ently achieved by other means. In the institutes running the system introduced a system by which the contribution of the individual employer depended also on the number of accidents in his company. As a result, the overall number of accidents has decreased significantly. (Cf. Kötz and Schäfer AcP ( ), .)

The statutory scheme just described thus provides a number of advantages/incentives to employers. But is the system acceptable also from the employee’s perspective? One of the main advantages is that the employee will be able to obtain compensation from a solvent debtor and he will not have to establish the fault of the employer. Nor will his own contributory fault be taken into account to reduce his “damages”. This highlights once again the overall aim of social protection of the system. Its main disadvantage is, of course, that the employee cannot recover damages for pain and suffering (§ BGB). On the other hand, the system of awards tends to be closely connected with the victim’s pre-accident earnings and the sums recoverable can thus often be quite generous. More precisely, the system of an abstract assessment of the victim’s earning disability tends—to some extent—to generate windfall payments. Professor Kötz (op. cit. no.) gives the example of a legal representative who while on a business trip has an accident and loses his right arm. This means that according to the disability guidelines his earning capacity will be diminished by per cent. Generally speaking, whether or not he subsequently learns to write with his left hand and performs his duties just as he did before the accident will not be taken into account. (Limited exceptions from this are contained in §§ , SGB VII.) Moreover, pensions and other periodic payments are index-linked. What is awarded depends largely upon whether the case is one of personal injury or death.

Awards for personal injuries will cover medical costs, including the costs of nursing, convalescence, and rehabilitation. The vast majority of cases will be dealt with under the general sickness insurance schemes (which are financed by contributions from both employers and employees). But the accident insurance institutes will meet all costs after the eighteenth day and, in about – per cent of the cases, depending on the type and seriousness of the injury, they take over responsibility from the outset and handle the case through their own specialists and hospitals. The institutes will also pay varying sums for loss of wages depending on the degree of invalidity incurred (minimum per cent) and the period it lasts, but during the first six weeks of incapacity the employer remains responsible for paying the victim’s wages. Total incapacity will usually produce approximately per cent of the pre-accident wages for the first thirteen weeks of the incapacity and from then onwards a pension equal to two-thirds of the pre-accident wages within certain maximum limits. In the case of partial incapacity, the sums payable represent the proportion of the sum payable in the case of total incapacity that corresponds to the actual degree of incapacity and these sums are increased by small amounts if the injured person has dependants. In the case of fatal accidents, a sum equal to one month’s earnings plus the funeral expenses becomes payable immediately. In addition to this sum, a widow would receive a pension, which is usually per cent of the deceased husband’s preaccident income. This sum can be increased to per cent where the widow is over the age of forty-five or her own earning capacity is reduced by at least per cent, or if she has children to look after. Children can also receive a pension, which is higher where both parents are dead and lower if one of the parents has died. The sums are, once again, calculated on the pre-accident earnings of the parent, are index-linked, and cease to be paid when the child becomes eighteen. A widower, too, can claim a pension, but only where he can show that his wife was mainly responsible for the maintenance of the family and

that he is, through incapacity, unable to support himself. Naturally, this applies if the wife died in an industrial accident as defined above.

A final issue that is of great practical importance in this context of accidents at work is whether the insurance institution can recoup from the tortfeasor the compensation it has paid to the victim. According to § SGB VII the employer (or another employee) is liable to the extent that the insurer paid the victim; this is however subject to the crucial condition that the accident was caused intentionally or by gross negligence. In the case of a deliberately caused accident this seems perfectly sensible. But this may be more difficult to justify in the case of gross negligence since the advantages of certainty and simplicity of the social security system may thus be undermined. If on the other hand a third party caused the accident negligently then the victim’s claim in tort against the third party will be transferred to the insurer (cessio legis), § SGB VII. This has given rise to difficulties in cases where both, the employer and a third party, have caused the injuries. The question then is whether the third party is fully liable or whether his liability ought to be limited to his share of the blame. The courts have adopted the latter view (BGH , ; see more recently NJW , ). Otherwise the third party (who might be per cent responsible) would be required to pay compensation for per cent of the loss sustained by the victim, while at the same time he could not claim any contribution from the employer, who is per cent to blame, but who enjoys an immunity from liability as against the victim, § SGB VII. This cannot be right. The aim of the statutory insurance scheme is not to deprive third parties of their right to contribution (§§ , BGB) but to protect the employer who finances the insurer by paying premiums. Thus, the insurer will be able to recover only per cent of the loss in our example.

It goes without saying, as the example given also shows, that the rights to recoup awards of compensation raise intricate issues and require a special infrastructure to deal with them. In certain areas, where the third party is, himself, insured, the social security institutions sometimes enter into so called general “loss-sharing-agreements” with the private insurer (Teilungsabkommen). The claim is then settled on the basis of previous statistical experience without looking at the facts of the individual case. This saves the cost of establishing the respective portions of negligence in the individual case but it also departs from the idea of personal responsibility for one’s acts under § I BGB. This is most likely the case in the area of car accidents, for here insurance is compulsory (where the figure of payments under such agreements amounted in to . million). (For further details see Kötz/Wagner, no. – with references.)

(For the historical background of the Unfallversicherungsgesetz of : Kaltenborn, “Die Sozialgesetzgebung des Reichskanzlers Fürst Otto von Bismarcks”, JZ , . The subsequent Reichsversicherungsordnung (RVO) was replaced in by the provisions in Sozialgesetzbuch (SGB) Book VII. Its purpose is to protect employees against risks specifically associated with their activities as employees, namely to suffer an accident at work (Arbeitsunfall, § SGB VII), or to sustain an illness that is related to specific health risks of the task assigned to the employee (Berufskrankheit, § SGB VII). In the period betweenand there were around two million accidents in employment per annum where the employee was not able to work for more than three days (including roughly .

cases of “professional” illness). See Kötz/Wagner, no. .)

(iii) The Road Traffic Act

(a) General observations. The twentieth century presented tort law with challenges never before encountered during its long history. A set of legal rules, originally devised

for human beings, were increasingly applied to legal entities. Rules, which are meant to regulate the consequences of blameworthy conduct were used to determine the allocation of risks. Modern insurance and social security meant that more and more of those who met the cost of accidents were innocent absentees. One could go on and on with this list with the intention either to criticise the “antiquated” tort system and recommend its reform or abolition or, alternatively, to marvel at its ability to survive such changes. This is not the place to do either. But it is, perhaps, appropriate to remind the reader that the topic that has revealed the greater weaknesses of tort law, has prompted some of its most imaginative writing, and has proved a veritable hot-bed for ideas for reform, is the law of traffic accidents.

The practical significance of the topic is undisputed. In Germany, with whose system we are here primarily concerned, the cost of car accidents, in both human and financial terms, is enormous. In there were about million licensed cars. In the same year the police registered . . car accidents in which . people were killed and . injured. Given the complexity of the compensation system—which draws its funds both from social security and private insurance—it is difficult to give an accurate idea of the financial cost. What is clear, however, is that insurance payments for personal injury, death, and property damage were around . billion DM in . (See Kötz/Wagner, no., .) Moreover, in the first half of the ’s, roughly per cent of all civil claims brought before the Amtsgericht and . per cent of those brought at the Landgericht were related to traffic accidents. See Greger Haftungsrecht des Straßenverkehrs rd edn. ( ), Einleitung, no. .) Whatever else these figures may suggest, they certainly make one wonder whether and to what extent has the strict liability statute succeeded in accelerating compensation for victims of traffic accidents and reducing the volume of civil litigation.

Clearly, the topic is one of those that could justify on its own an “advanced course in tort law”. Here we shall only outline the German approach under three headings. In the first we shall sketch briefly the gradual expansion of the statute law in order to assure a more comprehensive protection of victims of car accidents. In the second, we shall describe the main liability provisions of the Road Traffic Act of . In the third, we shall consider some of the shortcomings of the present law in the light of some brief comparative observations. Before tackling these points, however, some reference must be made to the very rich legal literature on this subject.

Further reading

On German law (written in German) see Becker-Böhme, Kraftverkehrshaftpflichtschäden. Die Regulierung in der Praxis, th edn. ( ); Bauer, Die Kraftfahrtversicherung ( ); Becker,

Kraftverkehrs-Haftpflichtgesetz ( th edn., ); Birkmann, “Die Rechtsprechung des BGH zum Verkehrshaftpflichtrecht”, DAR , ; Drees/Kuckuk/Werny, Strassenverkehrsrecht Kommentar ( th edn., ); Gelhaar/Thuleweit, Das Haftpflichtrecht des Strassenverkehrs ( ); Gessner/Kötz, “Verkehrsunfälle vor Gericht. Eine rechtstatsächliche Untersuchung”, JZ , ; Greger, Haftungsrecht des Straßenverkehrs, rd ed. ( ); Grossfeld, “Haftpflichtversicherung im Wandel” VW , ; Hanau, “Rückwirkungen der Haftpflichtversicherung auf die Haftung”, VersR ,

; Jagusch/Hentschel, Strassenverkehrsrecht ( th edn. ); Weyers, Unfallschäden, Praxis und Ziele von Haftpflicht und Vorsorgesystemen ( ); Wussow, Das Unfallhaftpflichtrecht ( th edn.

).

For a brief account in English see Pfennigstorf, “Analysis of the German Auto Accident Compensation System” in Comparative Studies in Automobile Accident Compensation, ff., published by the US Department of Transportation in ; idem, German Insurance Laws

(trans. and annotated in English) and published by the American Bar Foundation in and (Supplement).

For proposals for reform of the German law see Bollweg, “Gesetzliche Änderungen im Schadensersatzrecht?”, NZV , ; von Caemmerer, Reform der Gefährdungshaftung ( ); Güllemann, Ausgleich von Verkehrsunfallschäden im Licht internationaler Reformprojekte ( ); von Hippel, Schadensausgleich bei Verkehrsunfällen, Haftungsersetzung durch Versicherungsschutz ( ); idem, “Schadensausgleich bei Verkehrsunfällen, Mögliche Wege einer Reform”, ZRP , ; Kötz, “Empfiehlt sich eine Vereinheitlichung und Zusammenfassung der gesetz lichen Vorschriften über die Gefährdungshaftung im BGB”, Gutachten und Vorschläge zur Überarbeitung des Schuldrechts ( ) ; Krause, Das Risiko des Strassenverkehrsunfalls, Zuordnung und Absicherung ( ); Schmeer, “Haftungsersetzung durch Versicherungsschutz?”, VersR , ; “Soziale Sicherung gegen Unfälle im Strassenverkehr?” Verhandlungen der Tagung des Deutschen Sozialgerichtsverbandes in Berlin am ./ . . ( ).

Finally, excellent comparative law insights can be obtained by reading Professor Tunc’s “Traffic Accident Compensation: Law and Proposals” in vol. XI, chapter of the International Encyclopedia of Comparative Law ( ) and the most recent collection of essays on his latest proposals on the subject entitled Pour une loi sur les accidents de la circulation ( ).

(b) Increasing protection through statutory interventions. We have already noted that the introduction of strict liability in German law has been a closely guarded legislative prerogative. In this area of the law, legislative intervention on two fronts (the purely delictual and the insurance front) has been coupled with a close regulatory function on the part of the State. In different ways both have tried to improve the protection given to victims, the public in general, and in some cases, the insured keepers of the cars.

The process has been a gradual one. The first attempts to introduce strict liability were made nearly two years after the BGB came into force. A conference of lawyers then passed a resolution demanding the extension of the Imperial Insurance Act of to motor vehicles (even though at that time there were less than cars on the road) and, what is particularly interesting, proposing the creation of a mandatory co-operative riskspreading association. (Verhandlungen des Sechsundzwanzigsten Deutschen Juristentages I,

– ; III, – (Berlin , ).) The idea met with some success with the government, which even went so far as to present Parliament in with a Bill. But by that time the motor car lobby was also gaining strength. So the Motor Vehicle Act (Gesetz über Verkehr mit Kraftfahrzeugen) that was finally enacted on May , was a compromise. For. (i) it introduced maxima for monetary compensation, which the Imperial Liability Act in its original form did not contain; (ii) it included no proposals for some kind of insurance scheme (as proposed by the conference), and (iii) it excluded from its application death or injuries suffered by the driver or non-paying passengers. The idea behind this last restriction was that the rationale of strict liability for car accidents was the danger posed to road-users by fast-moving objects. Strict or stricter forms of liability by means of specific statutes were first introduced by Denmark in (and were considerably extended by a amendment). Sweden followed suit in (and its statute was further amended in ), then came Greece in , Norway in , Finland in , Switzerland in , and the Netherlands in . A readable account of the very different evolution of the English Common law during this same period can be found in an Article written by J. R. Spencer in [ ] Cambridge Law Journal ff..

After various amendments and re-enactments, the Motor Vehicles Act became the Road Traffic Act (Strassenverkehrsgesetz) of December and has since then survived

basically unchanged. But the introduction of strict liability helps the victims of traffic accidents only so long as the tortfeasors can and will pay. In the absence of obligatory insurance this could not originally be guaranteed, even though many German drivers voluntarily obtained insurance coverage after the enactment of the Act. In the s, however, a new trend started to manifest itself. In warehouse operators were, under certain circumstances, obliged to carry insurance; in the same was true for airplanes. Obligatory third-party liability insurance for cars was clearly not far away. In fact, it became a reality on November , when the first Obligatory Insurance Act came into force imposing on the “keeper” of a motor vehicle an obligation to carry insurance for himself and for the authorised driver of his vehicle. But there were still important gaps and, following the European Convention on Compulsory Insurance against Civil Liability in Respect of Motor Vehicles (European Treaty Series no. ), the Act was revised and re-enacted under the short title Pflichtversicherungsgesetz of April . The main two loopholes that were closed by this enactment concerned (i) uninsured cars and (ii) hit-and-run accidents. In effect, the Act “legalised” an unofficial agreement that the insurance industry had operated since . A private non-profit corporation, controlled and managed by the insurers, was created and compensation was provided out of its funds to the victims of the above-mentioned type of accidents. But compensation from the fund was limited in two important ways. First, it was entirely secondary in nature and could be claimed only if no compensation could be obtained from any other source. Second, it was limited to the statutory maxima (now, as we have seen, DM , ) and was and is further limited to claims for actual pecuniary damages arising from death or injury. Property damage, therefore, and pain and suffering are not compensated under this scheme save in very exceptional circumstances of real hardship. The other insurance gap that remained to be filled was connected with the possibility of an insurance company going bankrupt and being unable to meet its obligations. Though not something that has happened frequently—indeed so far as one can discover there exists only a handful of such incidents—German insurers decided to intervene in this area as well. Thus, inthey created a private law corporation known as the Aid for Traffic Victims Fund (Verkehrsopferhilfe e.V.) which meets to the full all claims made against insolvent members, subject to a small deduction.

The increased legislative intervention described in the preceding paragraphs has created a regulatory background against which the modern insurance market operates under the supervision of a Federal Office situated in Bonn. The intricate nature of the rules so established stems partly from the need to regulate the interrelationship with the social security system of compensation, notably through the establishment of a complicated system of subrogation. The complexity also becomes inevitable when one remembers that one is here trying to protect at one and the same time the interests of (i) the public at large, (ii) the injured person, and (iii) the insured himself.

The protection of the public at large is assured first of all by the creation of the obligatory system of liability insurance. (Only the Federal State, the States of the Federal Republic and certain public institutions are exempt from this requirement.) Second, this protection is ensured by imposing an obligation on insurers to provide the minimum mandatory coverage (application for insurance coverage cannot be refused except in certain narrowly defined cases given in § of the Obligatory Insurance Act). Third, the protection is ensured by the establishment of an elaborate administrative system by which no car is put on the road without a valid licence and, for this to be obtained, a valid certificate of insurance must be produced. Operating a car in contravention of the

above is made a criminal offence, and penalties are also imposed if the termination of an insurance policy is not notified without delay to the licensing authority.

The protection of the injured person is, clearly, also furthered by all the above rules. In addition, however, since the victim has been given a direct right of action against the insurer (§ I of the Obligatory Insurance Act, following the French model of the action directe). The victim can rely on the insurance policy even after its cancellation, but only if the claim is made within one month from the cancellation being notified to the licensing authority. Moreover, the victim’s rights against the insurer are protected against the risk of the contract being void or voidable or the insurer having some other defence against the insured. Defences of the insurer are that the insured failed to pay the insurance premiums on time, or that the insured breached some other collateral “obligation” arising from the internal relationship between the insured and insurer. The most important example of this is found in cases where the insurer claims that the victim increased considerably the risk of an accident by driving under the influence of alcohol or not keeping the car in safe condition for driving. Finally, since the insurer is also liable for the damage caused by unauthorised drivers of vehicles for which their keeper is not liable under § III of the Road Traffic Act. This is because the insurance covers the respective driver of the insured whether he may be authorised by the keeper or not. As a result of all these statutory provisions, the victim’s protection under the compulsory insurance scheme is almost absolute. This can be understood only if one acknowledges that this comprehensive insurance coverage serves mainly a social purpose. This is to protect the injured but at the same time to spread the risk of this immensely useful but also highly dangerous activity to the whole community of those carrying out the activity.

The general rule as to statutory insurance schemes is that the insurer’s liability to the victim is limited to the amounts, if any, that the victim cannot recover from other sources—notably the social security system (§ c IV VVG, Insurance Contracts Act). It should be noted however that this rule does not generally apply in the context of car insurance. (§ Nr. of the Obligatory Insurance Act.) The insurer’s liability is not excluded by the fact that the injured is entitled under a social security system. In these cases the victim’s medical expenses and even lost earnings are met by the appropriate social sickness insurance or social accident insurance. Given the dominant role in the compensation system played by the various social security schemes, the insurance companies tend to be brought into the picture at a later phase when the social insurance carrier wishes to be subrogated to the compensation claims of the insured. (The victim’s claim is assigned by operation of law to the social security carrier, § I SGB X.) The subsidiary liability of the car insurer is, in turn, subject to an exception where the insured breached one of the collateral “obligations” (Obliegenheiten) owed to the insurer, the insurer is then relieved from his liability to the victim. (See Greger op. cit. Anh II no.– . A brief description in English of these complicated subrogation agreements can be found in Pfennigstorf’s account of German law quoted in the Further Reading above.) Needless to say, an insurer who has paid the victim or his social security carrier may, in his turn, seek reimbursement from the insured person in accordance with the relative insurance laws and will be entitled to do so under § Nr. S. of the Obligatory Insurance Act if the insured breached an obligation owed to the insurer. It should not be overlooked, however, that the insurer’s claim against the insured is in most cases limited by statute to an amount of , DM (§ III KfzPflVV). (There is no such limit in the case of reimbursement claims by social security carriers. Where the injured is covered by social security legislation and in addition the insurer is not liable under §

of the Obligatory Insurance Act, the combined effect of the above rules will be that the insured will be held personally liable to the full extent. This is the case if certain obligations owed by the insured to the insurer are breached. See for details Greger op. cit. Anh II no. ff.)

In practice, as was already alluded to, the insurer will seek reimbursement from the insured in cases where the insured is in some way in breach of the contract of insurance. This will be the case where, for instance, the car is used by an unauthorised or unlicensed driver, or is used for unauthorised racing. The same would be true if the contract was concluded under fraud or misrepresentation or there was a failure to pay agreed premium etc. Thus, as Professor Kötz points out (no. ), the rules which govern the question whether the insured is protected by the policy acquire the function of determining whether and to what extent the keeper or driver of the car will be hold personally liable for the accident. This is remarkable for this was originally the purpose of the rules governing ordinary delict and strict liability.

Finally, the interests of the insured (and, arguably, once again the public at large) were safeguarded by a stringent supervisory control exercised over the one hundred or so insurance companies that are involved in the car insurance field. This regulatory function was by any standard quite stringent and included such things as the control of the standard terms of insurance contracts as well as an effective control on premiums to be charged and the criteria for differentiating between premiums. Needless to say, this last point had been very controversial, critics of the old regime arguing that it prevented effective competition between insurance companies and thus helped in keeping insurance premiums unrealistically high. (For further details on this see Gärtner, Privatversicherungsrecht ( ) .) The enactment of the “third generation” Council directive on non-life insurance brought about a major change: control of standard terms by way of authorisation had to be abolished (there is only a post-market abuse control); the same happened with regard to the premiums (they are “controlled” only insofar as they may represent a danger for the financial health of the insurance company). See for details: W.-H. Roth, “Die Vollendung des europäischen Binnenmarktes für Versicherungen”, NJW , .

(c) The salient features of the Road Traffic Act . The leading provision of this enactment is, undeniably, § . (The full text of the liability section of the Act is reproduced below, B. .) § imposes upon the “keeper” or “holder” (Halter des Fahrzeugs) of a “motor vehicle” strict liability for personal injury, death, and property damage resulting from the “operation of a motor car”. These three terms must be examined more closely.

Motor vehicle. This includes, according to § II of the Act, all land vehicles, which are driven by mechanical force and are not attached to railway tracks. § , however, excludes from the purview of the Act all slow-moving vehicles, i.e. those whose maximum speed at ground level does not exceed kilometres per hour ( . m.p.h.). Given the evidence that we now have that most lethal traffic accidents occur at speeds of under mph, this provision of the statute seems of dubious validity.

Keeper. The liability is primarily imposed on the keeper of the car. The keeper is the person who uses the car at his own expense and who has the power of disposal that goes with such use (see RGZ , , ; BGH May , BGHZ , etc.). The owner is usually deemed to be, but need not always be, the keeper. Cars driven by the employees of the keeper and causing damage will render him liable under the Act, the defence of bad selection or supervision, provided by § BGB (discussed in chapter , section A. ), not being available in this case. A person using a car on a short-term hire agreement will,

usually, not be treated as its keeper (see BGH May , BGHZ , ; , ). But in the case of a long-term hiring agreement, the user of the car may become its keeper if he is saddled with all the running costs. (BGH March , BGHZ , .) If the car is used with the consent of the keeper, or it has been stolen because the keeper’s negligence facilitates such a theft, the keeper (along with the user: Benutzer) will remain liable under the Act (§ III). But if the car is used without the keeper’s knowledge and consent—by a so-called “joy-rider” (usually a thief)—then that person and not the keeper will be liable under the Act. The danger that could result from this rule to a victim of a car accident (impecuniosity of the “joy-rider” and, hence, inability to meet the victim’s claims) has, as we have seen, been removed by the insurance legislation of which renders the insurer liable. The German statute—unlike those of Austria and Switzerland—also regulates in § the liability of the driver. This, however, is only a prima-facie liability, which the driver can rebut by proving that he was not negligent when driving the car. In practice this exculpatory proof is very difficult to adduce, the courts imposing on drivers a very high standard of care indeed, and thus rendering the driver jointly liable with the keeper of the vehicle. When this is so, § is brought into operation and the extent of the compensation to be paid as between keeper and driver will be determined in accordance with the usual rules of contributory fault (§ BGB).

Damage caused in the course of the operation (running) of the car (beim Betrieb des Fahrzeuges). This is the last positive requirement for strict liability to be imposed on the keeper. As already indicated, this term has given rise to a very rich case-law which is marked by the courts’ desire to extend the protection of the victims of traffic accidents. (Though, once again, their value judgments are often couched in causative language. See, for example, BGH NJW , .) Naturally, the term “in operation” includes the typical way harm is caused, namely through collisions with moving or even immovable objects (other cars, cycles, pedestrians, sign posts etc.). But no contact with the car that causes the injury is required; for example a sudden turn of a car which causes a cyclist, who is coming behind it, to swerve, lose his balance, and fall can render its driver liable under the Act. (BGH October , NJW , .) A leakage of oil on the road or dropped cargo, which then causes an accident, can also be brought under this heading. An accident is caused by the “operation” of a car even where the car is stationary and not, strictly speaking, “running” on the road. Abandoned stationary vehicles (because the driver is having a rest or because they have broken down) which have caused an accident have thus also been brought under this heading (see, for example BGHZ , , case ); though a police car or a motor cycle which was parked in the middle of the road with its lights on to serve as a “signal” that there was an accident ahead, was not included under the term “in operation” (OLG Celle DAR , , cited by Kötz/Wagner no. ). Likewise, not in operation (for the purposes of the statute) is a motorcycle placed on the road with its engine running simply in order to use its headlamp in order to light up the path ahead. (BGH VersR , ) The case law, in its desire to invoke the strict liability of the Act and afford greater protection to victims has, in fact, gone even further than the above examples may suggest (though these results have not escaped criticism). In one case when a tank smashed a paddock fence thereby enabling a horse to escape into the highway causing an accident, it was held that the accident had occurred in the course of “operating a motor vehicle” (OLG Celle NJW , ). In another, more extreme case, the same was held to be so when the car that caused the plaintiff’s death was deliberately driven into him in order to facilitate the driver’s escape from arrest. But it remains very doubt-

ful that this was the type of “mischief” that prompted the legislator to impose strict liability. A proper application of the scope of the rule theory should have then produced the opposite result. Thus, in other cases a more correct result has been reached by observing the proper purpose of § of the Road Traffic Act. One such case is BGH NJW ,, which is reproduced below (case ), not only because it illustrates the point just made, but also because it shows how casuistic the approach of German courts is in this respect. In that case the engine of a stationary specialised motor vehicle was kept “running” in order to help to discharge its cargo in a silo. One of the questions the court had to decide was whether damage caused during this operation could render the keeper of the vehicle liable under § of the Road Traffic Act. The Supreme Court, overruling the Court of Appeal, held that it could not since, in principle, the statute only applied to “such perils . . . which emanate from the motor vehicle in its capacity of an engine serving transport”. The court continued, “Since our legal system does not know of a general principle of strict liability for operating engines supplying power at work, § of the Road Traffic Act cannot be applied to accidents which occur in consequence of technical processes which cannot any longer be reasonably connected with the character of the engine employed as part of a motor vehicle.”

If the above requirements are satisfied, then the keeper of the vehicle will, usually, be liable to the extent provided by the Act (see §§ , , and ) and perhaps, additionally (see § of the Act) in accordance with the general rules of the law of delict (namely § I or II BGB). But the liability under the Act will be excluded if he, the defendant, succeeds in proving that the accident was caused by an unavoidable event. An “unavoidable event” is defined by § II as “an event that (inter alia) . . . is due to the conduct of the injured party or of a third party (who is not an employee) or of an animal and if both the keeper and the driver of the vehicle have applied that care which is required in the light of the circumstances”. This concept peculiar to the Road Traffic Act is difficult to classify. For on its face it raises fault connotations that cannot be squared with the nature of strict liability. It cannot come as a surprise therefore that the defence has been interpreted in a very strict way, the courts demanding proof of “extreme concentration and circumspection” on the part of the driver (BGH VersR , ). And, it is made even harder by expressly stating (§ II ) that an event is not unavoidable if it is due to a defect in the construction of the vehicle or a failure of one of its component parts (e.g. defective axle, brake failure, etc.). Moreover, the courts have assimilated to this “mechanical” failure of the car any “human” failure of its driver so that, for example, the loss of consciousness on the part of the driver, perhaps because of a sudden and unexpected brain haemorrhage, will not count as an “unavoidable event” (BGHZ , ). In practice, therefore, adducing this exculpatory proof is difficult though not necessarily impossible, e.g. unexpected appearance of black ice. (See Kötz/Wagner, no. ff. and references given therein.) At the time of writing, the most recent reform proposal of September

( . Gesetz zur Änderung schadensersatzrechtlicher Vorschriften) draws the consequences from this and abolishes the concept of Unabwendbarkeit. However, in line with other strict liability statutes, the keeper’s liability will not be absolute and the defendant will be able to raise the defence of force majeure (“höhere Gewalt”). This, however, does not mean that the plaintiff’s overwhelming responsibility cannot be taken account of. His causal contribution to the accident will acquire weight in the context of § BGB (contributory negligence) and, accordingly, his claim can be reduced, in extreme cases to zero. The reform is thus not likely to have a major practical impact—as the proposal readily admits—though it will enhance consistency in the law.

Apart from the above—and the exclusion of the liability of the keeper for damage caused by a “joy-rider”—the Act also contains one more important exceptional case where its application is excluded. This can be found in § a which states that the Act does not apply (i) to injury or death caused to any non-paying passenger travelling in the car (and this is taken to include the driver—see BGHZ , , ) and (ii) to damage to property carried in the car unless it is carried by a paying passenger on himself. Naturally, in these cases the victim’s claims can be based on the ordinary provisions of the Code (§ I and II BGB). In this respect, therefore, we note a significant difference between German law and French law, since the latter changed its case law in on the so-called transport bénévole. Otherwise, one should not a considerable convergence between French and German jurisprudence on such key definitions as the involvement (implication) of the car in the accident in question. And there is hope for further convergence. For the reform proposal (already referred to in the previous paragraph) proposes the abolition of this peculiarity of German law which can only be explained as a historic relic. (See also the recommendations of the Verkehrsgerichtstag). Thus, it will no longer be material whether the injury occurred while the victim happened to be inor outside the car.

Finally, as was already alluded to, according to § of the Act, the injured party’s contributory fault will also be taken into account. This can mean that, either this fault will be deemed to be the sole or main cause of the accident, or more likely, the victim’s fault will be considered as a contributing factor to his hurt and the damages awarded to him will be reduced in accordance with § BGB. It is of first importance to observe how the nature of liability under the Road Traffic Act transforms the defence of § BGB. It is not necessary for the defendant to invoke or establish the fault of the other driver or keeper if two or more cars are involved in an accident (§ I of the Act). Decisive is the risk inherent to the respective vehicle in the circumstances (Betriebsgefahr). This means that if two cars collided and both drivers were without fault then each driver will be able to recover per cent of his loss from the other provided that the two cars posed roughly the same degree of danger. It should be noted that this is by no means rare. One must consider that fault needs to be proved by the plaintiff and this will be often difficult. Hence, in most cases an (expensive) expert will be instructed by the parties to reconstruct the accident and often it will remain impossible to ascertain the exact degree of negligence involved on either side. The expert will in effect determine the outcome of the trial either way. If fault is established on either side the respective rate of liability will shift accordingly up to a maximum of per cent where the risk peculiar to the plaintiff’s car is totally outweighed by the defendant’s share of responsibility (for instance because he was grossly negligent). (A detailed account of the jurisprudence is given by Greger, op. cit. § StVG, no. – .)

(d) A comparative epilogue. Despite the fact that over the years a number of loopholes affecting traffic accident victims have been closed, German law on this subject still retains much of its vitality and controversial nature. Many of the criticisms have been voiced in a comparative way and it is appropriate in a book such as this to adopt a similar attitude.

The German approach to traffic accidents via a strict statutory liability is not unique. As already noted, Austria, Greece, the Netherlands, Switzerland, and the Scandinavian countries have all followed the same path and one can find quite similar (though not German-inspired) enactments even in the Common law world (the Saskatchewan Motor Vehicle Insurance Act being, probably, the best-known example). This way of regulating traffic accidents is markedly different from the French approach through the Code (but see now the Act at p. below) and the Common law’s persistent tendency to

treat traffic accidents as a branch of the law of negligence. But in addition to being different, the German approach was, despite gaps, also pioneering in so far as it introduced strict liability at a very early stage in the life of the motor car. (The Scandinavian countries took a similar approach at about the same time.) Yet, even allowing for the progressive closing of the gaps of the original enactment and recognising as undeniable the extension of the protection given to car accident victims, German law still remains, in some respects at least, less wide and less generous to victims than some of the more contemporary European systems. Two of its main weaknesses will be discussed below while a third—the extreme complexity of the compensation system—will be ignored since this accusation can also be levied against the English and French systems.

Subject to the reform proviso explained above the first weakness of German law is the exclusion from the Traffic Act of injuries suffered by non-paying passengers. True, the position of the gratuitous passenger may not be as bad as it can be in some US jurisdictions where his recovery will depend on proof of gross negligence on the part of the driver; but it does remain unjustifiable given modern insurance practice. By contrast, in this area the most conceptually antiquated French system managed to break new ground when in the late sixties it decided to extend the strict liability of Article CC to such cases. The older arguments invoked against such an extension (consent of the victim; impropriety of suing one’s “benefactor” without at least proving some fault on his part), advanced in all systems, have been increasingly recognized for what they are—fictions, appropriate to an era when third-party liability insurance was not compulsory, but objectionable relics now that modern insurance practices have transformed this part of the law. Old practices, however, die hard, especially when the insurance lobby wishes to retain them.

Insurance arguments also point to another weakness of the German system; the decision to reduce (and in extreme cases even eliminate) the victim’s damages because of his own contributory fault. The abolition by the courts of this defence is impossible in German law given the express statutory provisions of the main Act; but even the desire to do this has often been lacking. For proposals for reform have always been met with moralistic arguments that any such move would not only increase the number of accidents but it would also sap tort law of much of its moral content. Empirical evidence, however, has shown that the first objection at least is not convincing. Many would thus be prepared to treat the legalistic arguments in favour of retaining the defence of contributory fault as a smoke-screen concealing the vested interests of certain members of the legal profession who vehemently oppose the abolition of this lucrative source of revenue. Tort law is thus increasingly seen in the area of law accidents as little more than a “forensic lottery” (the title of a pioneering monograph by Professor Isson). Tort litigation (especially in France and in Common law jurisdictions) has cluttered the overburdened courts even further. And tort law has itself been forced to encourage the growth of fictions (e.g. the tendency to discover negligence in cases of unfortunate but statistically inevitable inattentions) in order to avoid the harshness of its rules. Here, again, French law has proved its flexibility and given a lead by recently advocating the abandonment of the defence of contributory fault. True, the pioneering decision of the Second Chamber of the Court of Cassation was rendered in a car accident case based on ArticleCC; and the problem now exercising the French courts is whether it should be limited (as Professor Viney has argued in Dalloz Chronique , ) to cases where insurance is obligatory or, at least, widely prevalent. That it should is not seriously disputed though how this can be achieved, given the wide wording of Article CC (“One is responsible for the damage caused by the things in one’s care”), is another difficult matter (see

Durry, Rev. trim. dr. civ., ). But whatever the difficulties of delimitation, the fact remains that the French experiment (which has still to receive the blessing of the plenum of the Court of Cassation) has given an interesting lead and has generated legal literature which can be consulted with profit even by the non-comparatively minded Common lawyer. (See now the Act reproduced below at p. .)

This brings us to the next point that at least American students of the modern civil law should bear in mind. The study of the European systems (including the English), fruitful as it may be, must always be undertaken bearing in mind some essential differences in the legal background. Thus it must be remembered that in Europe (including England) civil action claims arising from car accidents are not tried by juries. Likewise, the American style contingent fee system for legal remuneration is banned, and most importantly, a highly developed social welfare system plays an important part in the overall compensation of car accident victims. All these factors can help to explain the lower levels of awards and other differences in the substantive law. Finally, though Germany (like the USA) is a Federal State, tort law (and hence, traffic accident law) is the same in all the States of the Federation. Thus, one does not find in Germany the regional variations that the American (or Canadian) lawyer has come to accept in his own system.

This comparative epilogue should, perhaps, end by reminding the reader that, once again, the study of the subject can be greatly enhanced by an interdisciplinary approach. The contact with insurance, in particular, must never be forgotten; and it could provide the “unifying link” in any comparative study that sought to argue that legal borrowing is possible even in an area where historical and conceptual differences might at first sight seem to discourage it.

(iv) Environmental liability1

Further reading

A. Texts of German Environmental Laws: Kloepfer, Umweltschutz, Textsammlung des Umweltrechts der Bundesrepublik Deutschland (looseleaf collection of virtually all German environmental laws); B. Books: Landsberg and Lülling, Umwelthaftungsrecht—Kommentar ( ) (the first and best commentary on the ELA co-written by one of the drafters of the ELA); Salje, Umwelthaf- tungsgesetz—Kommentar ( ); Schmidt-Salzer, Kommentar zum Umwelthaftungsrecht ( ); Schmitt, Haftungsund Versicherungsfragen bei Umweltrisiken ( ); C. Articles: Diederichsen, “Die Haftung für Umweltschäden in Deutschland” Produkthaftpflicht international (PHI / ) (Sept. ); Hager, “Europäisches Umwelthaftungsrecht”, ZEuP , ; W. Hoffman, “Germany’s New Environmental Liability Act: Strict Liability for Facilities Causing Pollution”, Neth. Int’l L. Rev. – ( ) (a fully annotated text providing the basis for this note); W. Hoffman, “Environmental Liability and its Insurance in Germany”, Fed’n of Ins. & Corp. Couns. Q.– ( ); Michalski,“Das Umwelthaftungsgesetz”, Jura , ; Nicklisch,“Umweltschutz und Haftungsrisiken”, VersR , ; Salje, “Die Entscheidungspraxis zum UmweltHG”, VersR, ; Wagner, “Die Aufgaben des Haftungsrechts—eine Untersuchung am Beispiel der Umwelthaftungsrechts-Reform”, JZ , .

. Environmental Liability under German Law Prior to

Environmental liability in the Federal Republic of Germany has been the subject of many provisions widely dispersed throughout public and private law. Numerous public

1Subject to some updating, this section draws heavily on a note prepared for the third edition of this book by William C. Hoffman, International Legal Counsel, Cologne Reinsurance Co., Cologne, Germany. We are grateful to Mr Hoffman for his assistance in this matter.

law provisions prohibit specific polluting activities, and various civil liability laws require polluters to compensate for losses caused by pollution. See Kloepfer, Umweltschutz (collecting texts from over separate pieces of German legislation regulating and providing liability for activities harmful to the environment).

Thus, German environmental law in force prior to consists of a patchwork of various laws, each having a relatively narrow scope of application. Many individual federal laws regulate single activities, such as construction, mining, railroads, streets, hunting, hotels, x-rays, and the removal of animal bodies, to name only a few. Each law contains restrictions deemed appropriate to curb pollution with respect to the particular activity. As a result, approximately separate federal laws regulate water pollution arising from different sources and activities.

As will be discussed below, the ELA is an attempt to provide a broader and more comprehensive liability scheme supplementing the numerous pre-existing laws. An understanding of the ELA therefore requires a review of the most significant pre-existing laws, including: state police power, § BGB, and special laws providing strict liability for damage caused by water pollution or by certain inherently dangerous facilities.

Police Power to Prevent Pollution

The several states (Länder) of the Federal Republic have police power to regulate directly conduct causing pollution, including conduct that threatens to pollute. Liability is strict, and force majeure generally is not a defence; in many cases, no proof of causation is required at all. The police power is, however, generally preventative only, and permits State and local authorities only to issue orders enjoining future pollution but not to order the clean-up of past pollution or to order payment of police-response costs. See Schmitt,

Haftungsund Versicherungsfragen at – , .

In short, while public liability for police-response costs does not exist per se, in some cases authorities can, in effect, order “clean-up” operations by reference to a future threat to public health. However, the police power is not a source of tort law, and does not provide for civil damages as compensation for injury to persons or property. For a damages remedy, the claimant must sue under the various liability laws.

§ BGB and the “Common Law” of delict

A claim for nuisance arises under §§ , BGB. Liability for nuisance is strict. The action will lie where one landowner infringes the right of another to make use of the land. Generally, however, the offending neighbour is liable only for emissions that substantially deprive the claimant of use of the land. According to § I BGB the landowner cannot prevent emissions of “unweighable materials” (unwägbare Stoffe), such as airborne substances, vibration, noise, or similar emissions from another plot that have a negligible impact only on the use of the land (unwesentlich beeinträchtigt). If the emissions exceed levels customary for the area, and it is also economically reasonable to require the offending landowner to reduce the emissions (§ II BGB), the plaintiff will be granted an injunction (§ BGB). If on the other hand it is not reasonable to demand that the emissions are reduced, the landowner is required to tolerate the interference under § II BGB. However, in this case § II BGB entitles the land-owner to compensation for the economic consequences of the interference. In the case of certain plants and facilities that are subject to the Bundesimmissionsschutzgesetz (BImSchG) § BImSchG is lex specialis. Those rules are very similar. If the landowner is not allowed to prevent the emission he will be entitled to compensation.

Thus, § BGB affords protection to private use interests in land and does not extend to other kinds of injuries that pollution can cause. Personal injury or damage to personal property cannot give rise to a claim under § BGB. For example, in the “Smelting Oven” (Kupolofen) case from , BGHZ , , it was held that an industrial landowner was not liable under § for damage which airborne ashes, emitted by its facility, caused to the paint of cars parked on neighbouring industrial property. A further problem is that proving the elements of causation can be exceedingly difficult in environmental cases. § BGB generally defines the unlawfulness of emissions. It acquires thus importance also in the context of claims based directly on § I BGB, which is mainly relied on in claims for personal injury. However, plaintiffs in environmental cases benefit from a (to some extent) reversed burden of proof. For, in analogy to the product liability jurisprudence, the BGH reverses the burden of proof in claims based on § BGB. (See BGHZ, , – ; JZ , – .) It is thus for the defendant to prove that the emissions are within the limits imposed by law and/or in that particular area customary. If that is not the case, the operator of the facility must further establish that he has undertaken all reasonable or economically sustainable precautions to prevent any damage that the emissions may cause. The rationale of reversing the burden of proof is clear. (It must be remembered that German law does not normally provide for procedures of pre-trial disclosure.) Only the company running the facility is able to control the emissions and to give evidence whether these have been such that the safety standards have not been violated. If the defendant establishes that the emissions are below certain levels prescribed by statutory instruments, then the plaintiff must prove that the defendant has not done enough in the special circumstances of the case. A third limitation results from the negative criterion that the emissions are customary in the respective area. This, potentially, inhibits the imposition of pro-active measures that increase the safety of the facility. It should be further noted that the main impetus for basing claims in personal injury cases on the general law of delict was § BGB, namely the availability of damages for pain and suffering, which, if the already discussed reform proposal becomes reality, will no longer be the case. Such damages will then be recoverable under the special strict liability statute.

Increasingly, the German legislature responded to the inherent limitations of § BGB and similar provisions by enacting a number of pollution laws of special scope.

Water Resources Act

By far the most significant civil environmental liability act in force prior to is the Water Resources Act of (WRA) (Wasserhaushaltsgesetz). § WRA imposes strict liability for bodily injury, property damage and—unlike §§ or BGB—pure economic loss resulting from any change in the physical, chemical, or biological composition of a water source. Liability for pure economic loss may arise under the WRA where, for example, water contamination causes a loss of income to a fisherman or to another business dependent on the water source.

§ I WRA provides for non-facility liability and § II for facility liability. The facilities caught by the Act are those which process or store materials that typically pose a danger of pollution to water. This was denied for instance (BGH NJW , ; see, also, case ) in the case of a facility that stored plastic materials to be used in the assembly of caravans. It burned down and dangerous substances escaped together with the water used to extinguish the fire. The material stored in the warehouse did not represent

a typical danger against which § II WHG afforded protection. As was explained by way of introduction (section (b)(iii)) the main control device of strict liability is the concept of legal cause. It focuses on the specific danger which was meant to be prevented by imposing strict liability, and the present case is a further example of this. Multiple tortfeasors are jointly and severally liable. Further, in the BGH construed the WRA to give rise to a presumption of causation. If the polluting substance is “inherently suited” (geeignet) to cause the harm suffered, then causation may be presumed; BGHZ , ,. This presumption applies, however, only if it not clear which of several facilities caused the damages. But in relation to a single facility the claimant bears the full burden of proving causation.

Other Facility Liability

Other strict liability laws enacted since the WRA have also used the “facility liability” approach. These laws apply only to certain types of facilities deemed inherently dangerous. Usually, the types or categories of facilities are listed in an appendix to the law. Under the most significant of these laws, strict liability exists for injury or damage arising from mining facilities (Bundesberggesetz), from nuclear reactors (Atomgesetz), from electricity plants and other energy production facilities (Haftpflichtgesetz), and from certain other facilities that release emissions harmful to the environment (BImSchG).

. The Environmental Liability Act

As shown, the state of German environmental law in force prior to was a patchwork of numerous individual provisions enacted piecemeal and each having a relatively narrow objective. This state of the law gave rise to a need for a broader and more comprehensive statute. It will be remembered in particular that the WHG of covers only damage caused through polluting water.

On November , the Rhine was severely polluted following a fire at a large chemical plant in Schweizerhalle, Switzerland. Water that had been used for extinguishing the fire drained into the river, washing highly toxic substances released during the fire into the environment. As a result, from Basel, Switzerland to Rotterdam in the Netherlands, the Rhine became extremely contaminated and virtually all fish and much other wildlife were destroyed. This event prompted the German government to announce, in , that a strict liability law was desired, not only for water damage but also for damage caused by air and soil pollution.

The act that emerged after a hotly debated legislative process is the Environmental Liability Act of (Gesetz über die Umwelthaftung). This was adopted in spite of harsh criticism by the industry which had feared disadvantages in international competition. However, none of these fears seem to have actually materialized. This may be partly due to the balanced approach adopted by the ELA. Thus, it does not impose liability for abstract “ecological” damage to the environment. For liability to arise, a protected interest (property, life or health) of a particular individual must be violated through the ecological mediums of air and soil (§ ). The ELA contains a mixture of public, criminal and administrative law but it is also a liability law providing a civil damages remedy for harm caused by pollution of air, soil or water. As such, the ELA has a broader scope than prior liability laws but it does not pre-empt or supersede any of the prior laws. Rather, the ELA coexists with and complements them, although some overlap is apparent.

Nature, Scope and Elements of Liability Under the ELA

The ELA imposes strict liability of up to DM million for bodily injury and DM million for property damage caused by any one environmental impact on air, soil or water. Liable persons are the “operators” (Inhaber) of certain facilities listed in Appendix of the Act. Thus, facility operators may be liable for a total of up to DM million per impact, per facility.

Unlike the WRA, however, the ELA does not provide for recovery of damages for pure financial loss or non-material harm. A claimant seeking compensation for pure financial loss must therefore establish liability under other provisions permitting recovery for such losses, such as the WRA (permitting recovery of pure financial loss caused by water pollution) or § BGB (damages for pain and suffering; pending reform).

The nature and scope of liability under the ELA in general are set out in § of the Act, which provides: “If anyone suffers death, personal injury, or property damage due to an environmental impact emitted from one of the facilities named in Appendix , then the operator of the facility shall be liable to the injured person for the damages caused thereby.” Liability is “strict” under § ELA. Polluters are liable for damage caused by their pollution regardless of whether the environmental impact was intended or negligent, known or unknown, occurred within a short span of a few minutes or over a prolonged period of many years. Causation alone, if proved under the ELA’s provisions discussed below, provides the basis of liability. Further, the ELA as enacted contains no development risk exclusion, so that it is no defence against liability to assert that the state of scientific or technical knowledge at the time did not permit the defendant to know of the potential harm to the environment. Moreover, strict liability can attach under the ELA for amounts of pollution that are authorised or tolerated by existing regulatory laws, if the claimant can establish the element of causation.

Liability seems to be joint and several among multiple defendants under the ELA but the issue is controversial. A draft bill containing a pro rata apportionment among multiple defendants was blocked by the Upper House in October , and one of the provisions that were unacceptable to the Upper House was the pro rata provision. That provision was deleted from the ELA as enacted. The better view now seems to be that multiple ELA defendants are subject to general tort principles, including joint and several liability under § BGB. This means that any one of several defendants held to be jointly liable may be liable for the entire amount given by the judgment (regardless of what percentage of the damage that particular defendant might have caused in fact). However, recently the OLG Düsseldorf adopted a different approach. (See its judgment of June, JZ , .) In that case, the plaintiff proved that the defendant’s emissions caused damage to the paint of his adjoining house and claimed the cost of repainting it. The defendant objected that part of the damage resulted out of the “general pollution” of the air in that particular neighbourhood. The court followed this and apportioned liability, allocating to the defendant a share of %. Under § BGB this would not be the case. If other polluters contributed to the damage, then the defendant remains liable in full and may seek contribution from the other polluters. It is clear that identifying the other polluters and holding them responsible would not have been easy in the case at hand. So, on final analysis, the question is who bears the risk of “general air pollution”. If one approaches the problem from general principle it should clearly be on the defendant (cf. Salje JZ , ff.). In tort law it suffices that the defendant contributed to the damage. Furthermore, the operator of the facility alone is able to control the risk of causing the

damage by taking protective measure and avoiding that the overall pollution reaches critical levels. It is therefore somewhat puzzling that the court departed from this and in effect seems to have restored the pro rate apportionment principle that had been rejected by Parliament (even though it limited the ruling to the specific case).

Several exclusions from liability delimit the scope of the ELA. § ELA excludes liability for damage caused by force majeure (höhere Gewalt). Further, § ELA excludes liability for property damage that is “only insubstantial” or that the impairment is “reasonable according to the local conditions” if the facility was “operated properly”, i.e., according to all applicable regulations and no interruption of operations has occurred.

In order to establish liability under the ELA, a claimant must prove three elements: ( ) that the defendant operates a facility named in Appendix ; ( ) that an environmental impact was emitted from the defendant’s facility; and ( ) that this environmental impact caused the damage complained of. The following paragraphs examine each of these elements briefly.

Facility

The ELA applies only to a “facility” as defined in its provisions. Because the ELA imposes liability on a “per impact, per facility” basis, the definition of “facility” would play an important role, for example, in determining whether the ELA defendant might be subject to multiple limits of liability, e.g., where more than one “facility” may be said to have given rise to an “environmental impact”.

§ II ELA defines “facility” (Anlage) to mean a “permanent structure such as a place of business or warehouse”. The same provision states that “facility” also includes any “machines, instruments, vehicles and other mobile technical structures”, and “outbuildings” which “stand in a spatial or technical relation to a facility or part thereof and could be significant for the occurrence of an environmental impact”. Thus, the existence of a “facility” seems to be tied to a structure, vehicle, or instrument of some kind. Under § ELA, uncompleted or unfinished facilities and finished facilities no longer in use are included in the definition.

Appendix of the ELA contains a list of specific types of facilities. These are grouped into ten general categories of facilities engaged in the processing, manufacture, or handling of certain materials and include industries engaged in:

( ) mining, energy and heat production;

( ) the manufacture of products from stone, earth, glass, ceramic, and other construction materials;

( ) the processing and manufacture of steel, iron, and other metals;

( ) the manufacture of chemical, pharmaceutical, or petroleum products or their further processing;

( ) treatment with organic materials and the manufacture of artificial materials; ( ) the processing of wood and wood pulp;

( ) the production of food, feed, and agricultural products; ( ) the treatment of waste;

( ) the storage and disposal of certain materials; and

( ) other facilities, including paint, printing ink, asphalt, etc. production.

This list of facilities is more extensive than prior facilities appendices, and includes certain toxic waste disposal and burning facilities not previously subject to major environmental legislation.

Environmental Impact

§ I ELA defines “environmental impact” (Umwelteinwirkung) to mean an impact from “material, vibration, noise, pressure, rays, gasses, steam, heat, or other phenomena which are emitted into soil, air, or water”. Thus, the ELA applies to all emissions already specifically prohibited by § BGB, and also overlaps with the remedy for bodily injury and property damage caused by water pollution under the WRA. Strict liability for bodily injury and property damage resulting from impacts on soil and air is, however, new under the ELA.

Causation

The element of causation presents the core problem of proof under the ELA. Causation can present nearly insurmountable difficulties in cases of gradual pollution arising from sources located far away, such as chemical emissions from a distant smokestack, toxic waste seeping into a water source, etc. The drafters of the ELA drew on the experiences from the WRA and attempted to compensate for this difficulty with a presumption of causation.

At the time of its passage through the legislature, the ELA’s most controversial provisions were those located in § ELA. § I ELA provides that the element of causation will be presumed upon a prima facie showing that the particular facility is “inherently suited” (geeignet) to cause the damage. Thus, the drafters of the ELA codified the judge-made presumption of causation that had its origins under the WRA in the decision, cited supra. This presumption reverses the burden of proof: it eases the claimant’s evidentiary burden by shifting to the defendant the task of showing an absence of causation. However, unlike its predecessor under the WRA, the presumption of causation under § I ELA applies equally in cases against single facilities. Once the presumption applies, the defendant may be held liable unless the presumption can be precluded or rebutted.

§§ II, III and IV ELA provide that the presumption of causation set out in § I is precluded from arising, and has therefore no application, if the defendant can show that his facility was “properly operated”. “Proper operation” means that the facility fulfilled all “special operational duties” and that no disruption of operations occurred. “Special operational duties” refers to all applicable administrative regulatory duties aimed at preventing pollution. In a sub-presumption aiding the defence, the ELA provides that compliance with a “special operational duty” may be presumed for purposes of excluding the presumption of § I. If ( ) documented checks are required by law and ( ) such checks do not allow for an inference of a violation, then compliance with the applicable laws will be presumed.

A defendant may rebut the presumption of causation under § I by using the provisions of § ELA. In cases of single or multiple facilities inherently suited to cause the claimant’s damage, the presumption of causation is rebutted if another “circumstance” (Umstand) also appears “inherently suited” to be the cause.

Substantively, perhaps the most far-reaching effect of the ELA’s presumption of causation occurs in connection with joint and several liability. In cases against multiple defendants, the presumption may form the basis of liability as against all defendants who fail to exclude or rebut it.

It must be noted, however, that neither §§ II–IV ELA nor § ELA operates as an absolute defence. In other words, even if a defendant successfully precludes § I’s presumption of causation from arising under §§ II–IV, or rebuts it under § , this alone

will not necessarily relieve a defendant of liability. Rather, the effect of these provisions is merely procedural; the claimant thereby loses the benefit of the reversed burden of proof. In such a case, the claimant bears the full evidentiary burden on the element of causation which, if met, nevertheless establishes liability.

Perhaps the drafters of the ELA did not foresee that § ELA may turn out to be the exception that swallows the rule. The broader the courts construe the language “inherently suited” in § ELA, the easier it will be for a defendant to point to facts giving rise to a “circumstance” to rebut the presumption under § . 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. Thus, § I’s presumption, together with § ’s rebuttal thereof, could operate to blunt the teeth of the ELA. But these fears have not been confirmed, for the BGH has taken a clear, plaintiff-orientated stance on this matter and has interpreted these exceptions narrowly. However, as the language “multiple facilities” in § makes clear, in no case can another defendant facility be the other “circumstance” justifying the exclusion. Thus, § prevents multiple defendants from using each other to deflect use of that presumption.

It comes as no surprise then that the first BGH decision on liability under ELA deals almost exclusively with this key issue of ecological liability: causation and burden of proof. (BGH, June , NJW , = JZ , , with an approving note by Hager). In this case the plaintiff suffered from headache, insomnia and was feeling unwell for several years. She sued the operator of two varnishing facilities which were located at a distance of three kilometres. The difficulty in this case was that the defendant could prove that, overall, it had respected the limits imposed by statutes on toxic emissions. Accordingly, the claim failed in the lower courts. But the BGH reversed those decisions and remitted the case for re-hearing. The Court of Appeal had not decided whether the emissions were suited to cause the injury and thus whether the presumption of causation (§ I ELA) was raised. For it had stated that in any case the presumption would be rebutted. This provoked harsh criticism from the BGH.

First, as to § II, the court applied a strict approach and required that the judge needed to establish specifically and in detail that the level imposed by law for the respective emissions was respected and that thus the plant was “properly operated”. In this context the judge had also to take account of the evidence offered by the plaintiff that the plant was not run properly (this proof is presumably easier to adduce than to establish causation itself).

Secondly, as to § , the requirements were also considerably toughened. It does not suffice to refer in a general manner to circumstances that might constitute an alternative (to the emissions of the defendant’s facility) cause of the injuries. On the contrary, the alternative cause must be identified and scrutinised specifically before the exception can apply. Again, the proof offered by the plaintiff may be relevant and indeed essential in this context (the lower courts had simply ignored it). (The judgment arrives at remarkably similar distinctions in the context of § I BGB; however, the relevance of this is limited as soon as damages for pain and suffering will become more broadly available).

Right to Disclosure

In a highly unusual provision for German law, the ELA confers on claimants and defendants rights to obtain information pertinent to ELA claims. Generally, German civil

procedure does not provide for party-initiated fact gathering. See John H Langbein, “The German Advantage in Civil Procedure”, Univ. of Chi. L. Rev. , ( ). There is a substantive-law-based right to disclosure; but this remedy is a limited one. It will help the plaintiff to calculate the damages, for instance in the field of intellectual property law, where the holder of the infringed right may calculate damages on the basis of the profits made by the defendant.) §§ and ELA grant claimants a right to seek disclosures from facility operators and from administrative agencies. § ELA grants defendant facility operators a similar right. In further provisions, these rights are made subject to other laws, more firmly imbedded in German legal tradition, providing for secrecy. See §§ II,, and II ELA.

Mandatory Insurance of ELA Appendix Facilities

§ELA imposes a provision-of-coverage requirement for the facilities named in Appendix of the Act. The operators of those facilities must ensure that compensation will be provided for losses caused by an environmental impact issuing from such a facility. This

§ELA coverage may take the form of ( ) a liability insurance provided by an insurance company licensed to do business in Germany; ( ) an indemnity agreement with the federal government or a state; or ( ) an indemnity agreement with certain credit institutions if the security provided is comparable to an insurance coverage.

The mandatory insurance requirement of § ELA will not come into effect until the Ministry of Justice issues a decree setting the terms of the insurance. The decree has not been issued as of October . When issued, it will establish, for example, what coverage limits will be required. If the recently issued genetic damage insurance regulation is any indication—and some believe that it is—the mandatory minimum amount of coverage might be between million and million DM. On the other hand, one cannot dismiss summarily the view that the special hazards posed by ELA Appendix facilities may prompt the Ministry of Justice to require some higher amount of coverage, particularly since the ELA itself imposes a potentially far greater amount of liability.

The drafters of the decree will also resolve issues arising from the nature of mandatory insurance of ELA Appendix facilities. For example, § I ELA provides in part: “If a facility that is no longer in operation presents a special hazard, the competent public agency may order the person who operated the facility at the time of the ceasing of operations to provide for coverage for a period not to exceed ten years.” Based on this provision, the Ministry of Justice could require facility operators to purchase an “extended reporting period” of up to ten years for claims based on damage caused by a facility’s operations but discovered after operations cease.

Competence of the Court and Extraterritoriality

Generally, the proper German court for a claim in tort is the forum delicti commissi. See Code of Civil Procedure (Zivilprozeßordnung) § (the proper court is the court of the district “in which the tort was committed”).

This rule does not always designate a single forum in environmental cases because damage occurring in one forum may be due to pollution emitted in another. As with other multi-jurisdictional torts, the locus delicti (or “place where the tort occurs”) can be either the place of the emission or the place where the claimant’s damage is located. A claimant in a border-straddling case therefore may choose the more favourable of two proper courts.

However, the ELA abolished the claimant’s choice of forum in domestic cases. The ELA amended the Code of Civil Procedure to provide that an ELA action must be brought in the district court where the facility emitting the pollution is located (§ a ZPO). If, however, the facility emitting the pollution is located beyond German borders, then this rule does not apply. Thus, in cases of emissions from abroad causing damage in Germany, the general procedural rule of claimant’s choice of forum applies. (Note that Article Nr.of the Brussels Convention or Article Nr. of the Lugano Convention will have to be applied with priority.)

. Liability for Genetically Modified Products

In the German Parliament also passed the Genetic Engineering Act (Gentechnikgesetz, GenTG); (BGBl I. ). This statute mainly regulates the conditions for the licensing of facilities that produce or research genetically modified products. But it also provides for a strict liability regime of such facilities in § GenTG. Like the ELA the statute does not exclude liability for so called “development risks”, i.e. risks that could not have been foreseen at the time when the product was put into circulation. Similarly, it is required that physical damage to one of the protected interests (life, health, property) has occurred (§ VII GenTG). According to § I GenTG if the damage was caused by a genetically modified product it is presumed that the damage was caused by the specific alteration of the genetic structure of that product. This presumption is displaced (§ II GenTG) if the damage is likely to have been caused by some other property of the product. The legislator adopted here a far more cautious approach than under the ELA. It may be perhaps due to this restrictive approach that so far there seems to be only one reported case in which a plaintiff sought to establish liability under this provision. In LG Stuttgart NJW , a farmer claimed the cost of effectuating (precautionary) examinations of the harmful effects of the genetically modified crop growing on the adjoining plot, which was administered by a polytechnic for research purposes. His claim failed as he could not establish that he actually suffered damage.

. Conclusion

Comparatively speaking, Germany is a leader in matters of environmental liability legislation in Europe. Indeed, German law has provided for strict liability for a wide variety of environmentally-related damage since the WRA entered into force in . Thus, German strict environmental liability pre-dates by many years the experience of the United Kingdom under the Environmental Protection Act and of the United States under the Comprehensive Environmental Restoration, Compensation and Liability Act of (CERCLA).

However, it must be noted that the patchwork of German environmental laws seems to result in a less comprehensive body of law than, say, in the United States, where civil liability, police power to order clean up, and enforcement provisions are combined in CERCLA. In Germany, civil liability for harm caused by pollution arises under entirely separate laws than does the power to order clean up. Whether or not this patchwork approach makes a substantial difference in the effectiveness of German law to regulate and deter pollution, as well as to compensate for pollution-related harm, is a far more difficult question, the answer to which will have to be based in part on future experience under the ELA.

(v) The products’ liability regime (including the Pharmaceutical Products Act)

The Products Liability Act (Produkthaftungsgesetz) of December follows in its structure largely the European Community’s Directive of July to which it aimed to give effect. Products to which it applies includes all moveables, excluding agricultural produce and animals. These products must, further be defective in the sense that they lack the security one is entitled to expect from them. The definition of defect is thus stricter than that found in § BGB of the law of sales which defines the defect by reference to the reduced value or utility of the sold object. This liability envisaged by the statute falls primarily on the manufacturer (Hersteller): (§ ). If more than one is implicated, their liability is in solidum (gesamtschuldnerisch: § ). Clearly manufacturers of finished products, component parts, and new materials are subject to the new regime (§I of the Act reflecting Article ( ) of the Directive). But the Directive (Article ( )) and the Act (§ I) resolves an ambiguity that existed in German law prior to by subjecting anyone “who presents himself as the producer by affixing to a product his name, trade name, or other distinguishing feature”. Dealers were also not normally liable for not testing products (BGH NJW , ), though there was a greater inclination to find dealer-importers liable given the difficulty of enforcing judgments against foreign manufacturers. Immunity, however, seemed the rule rather than the exception (BGH NJW , ). Again, the new regime is stricter. § III of the Act thus follows Article III of the Directive, making the supplier liable under the Act whenever the producer cannot be identified.

The Act covers personal injury and damage to (other) property but not economic loss or the so-called, insidious spreading loss (Weiterfresserschaden). In the case of death, funeral expenses can also be claimed; and, in what is an interesting illustration of claimable ricochet damage, the statute expressly allows dependants to claim their own loss of support. (§ ). But the victim has to carry himself the first DM , of his damage. The liability is avoided if one of the six possible defences mentioned in § of the statute applies; but all kinds of exemption clauses are null and void. § of the statute, following Article of the Directive, provides that an action under the new law will expire ten years after the producer has put the actual product that caused the harm into circulation. This is the absolute outer limit for § I of the Act (again following the Directive: Article ) provides for a limitation period of three years from the moment when the claimant knew or ought to have known of the damage (pending reform of the BGB: according to the new § BGB the limitation period will start to run from the end of the year when the plaintiff knew or ought to have known).

The new statutory regime, expressly predicated on no fault liability, does not exclude in any way the application of other rules which may be more favourable to the plaintiff. Thus, if his harm is under the above-mentioned deductible of DM , an action based on the rules of the “ordinary” law may be the only remedy. The same is true if the exact opposite occurs namely, the plaintiff’s damages exceed the maxima provided by the statute (or he wishes to claim money for his non-pecuniary harm such as his pain and suffering.) Recourse to the “ordinary” law here means the law of torts for the German courts, unlike their French counterparts, have not allowed an extension of the contractual remedies. But the obstacles that this might create in terms of fault have been considerably lessened by the presumptions of fault or the reversal of the onus of proof, which the German courts have introduced in a number of cases. The continued vitality of the “ordinary” law, described above in chapter two, remains obvious and, indeed, one is struck

by the paucity of decisional law ten years after the coming into effect of the said Act. The reader must read the text of the statute (reproduced below at p. ) in conjunction with what has been said in the earlier chapter.

Another way in which the plaintiff may choose to base his claim is on one of the other, related statutes of strict liability. The Gentechnikgesetz of June is one (discussed in the previous section (iv) ) at the border line between environmental liability and product liability; the very long (over ninety paragraphs) Law of Pharmaceutical Products (Arzneimittelgesetz of August (BGBl I. , modified on August , BGBl. I. ) is another. All of these statutes have there own “peculiarities” and complexities but, clearly, they represent too specialised an area of tort law practice to warrant a more detailed consideration in a comparative law textbook. For fuller details one must therefore consult such leading treatises as Deutsch, Arztrecht und Arzneimittelrecht, nd ed, ( ). The periodic literature is also large; and has grown as a result of the AIDS contaminated blood cases which made their appearance all over Europe in the mid ’s and, inter alia, led most European courts to increase considerable their quantum of damages. (On the AIDS cases see: Durquet-Turek, “La responsabilité du fait des produits en Allemagne. Le problème de sang porteur du virus du SIDA”, Gaz, Pal. – Sept. ,. On the case law in general after the coming into effect of the act see: Kullman, “Die Rechtsprechung des BGH zum Produkthaftungsrecht in der Jahren – ”, NJW ,. On the effect of the AIDS cases on the level of damages, von Bar, Festschrift Deutsch.