Torts and Conflicts of Law

Issues
Overview
Introduction :Scope of Subject Matter
Issues
(a) Jurisdiction
(b) Choice of law
Traditional and Modern Approaches to Choice of law
Trans boundary Environmental Torts
Conclusion
Introduction
Scope of Subject Matter
Wide Ranging from Traffic Accidents, Issues of
negligence to IPR infringement, Environmental
and Maritime Satellite communication Issues in
Cyber space )
CROSS-BOUNDARY torts represent special problems
for conflict of laws because of the multiplicity of policy
considerations and the absence of an obvious focal
point.
Approaches In Civil remedy (Jurisdiction)
The dominant European approach, also reflecting
the practice of most civil law countries, is to
locate the forum in the place of the domicile of
the defendant.
This preference for the forum rei is codified in Article
2 of the Brussels Convention that governs jurisdiction
in civil and commercial matters in the European
Union
 Jurisdiction : European Approach
Brussels regulation the general bases of Jurisdiction is
the domicile of the Defendant
Special provisions are ascribed for Torts: in matters
relating to tort, delict or quasi-delict, in the courts for
the place where the harmful event occurred;
Approaches In Civil remedy (Jurisdiction
 This rule is obviously beneficial to plaintiffs seeking to bring an action against a
multinational parent company in the home state, since the domicile of a
company is normally taken to be the place of its incorporation.
 A second approach, reflected in one of the special rules of jurisdiction in
the Brussels Convention, is to allow the plaintiff in a tort action to select
the forum delicti — “the place where the harmful event occurred” rather
than the place of the defendant’s domicile. This rule can give rise to difficulties
where the “harmful event” occurs in more than one country —
 French Potassium Mines case
 European Court of Justice: where it was held that the plaintiffs could
bring their actions in either France or the Netherlands, since both
conduct and injury were both necessary components of the harmful event.
Approaches In Civil remedy (Jurisdiction
doctrine of forum non conveniens The doctrine, which
originated in Scots law but has been all but completely
transformed by subsequent judicial reasoning, allows
the court to stay the proceedings where an adequate
alternate forum exists and where certain other criteria
are met.
doctrine of forum non conveniens

Dow Chemical Co. v. Castro Alfaro:

Costa Rican resident Domingo Castro Alfaro (plaintiff), an employee of the
Standard Fruit Company in Costa Rica, and several other employees brought suit in
a Texas court against Dow Chemical Company (Dow) (defendant), headquartered in
Michigan, and Shell Oil Company (Shell) (defendant), headquartered in Texas,
alleging they suffered medical injuries due to their exposure to
dibromochloropropane (DBCP), a pesticide manufactured by Dow and Shell and
used by Standard Fruit.
The injuries occurred on American-owned land within Costa Rica. The trial court
dismissed Alfaro’s complaint citing the doctrine of forum non conveniens, which
allowed the court discretion to decline to hear cases in certain circumstances, such
as when the forum would pose an undue hardship on a defendant or when the
exercise of jurisdiction would threaten comity between governments. Alfaro
appealed. The intermediate appellate court reversed and held that the Texas
Legislature had abolished forum non conveniens. The Supreme Court of Texas
accepted the case for review.
doctrine of forum non conveniens
A critique of the forum non conveniens doctrine was offered by
Judge Lloyd Doggett in Dow Chemical Co. v. Castro Alfaro:
The doctrine of forum non conveniens is obsolete in a world in
which markets are global and in which ecologists have documented
the delicate balance of all life on this planet . . . . [It] enables
corporations to evade legal control merely because they are
transnational . . . . In the absence of meaningful tort liability in the
United States for their actions, some multinational corporations
will continue to operate without adequate regard for the human
and environmental costs of their actions. This result cannot be
allowed to repeat itself for decades to come. As a matter of law and
of public policy, the doctrine of forum non conveniens should be
abolished.
doctrine of forum non conveniens
A second critique, closely related to the first, relates to
the human right to accessible justice.
Under the European Convention on Human Rights
(ECHR), for example, it is now settled law that the rights
to civil justice under Article 6 include the right to
“effective access” of national courts in respect of civil
claims.
Golder v. United Kingdom, “right to institute
proceedings in respect of civil matters is a universally
recognized principle of law, and that the denial of this
right constitutes a denial of justice.
 Jurisdiction
Alien Torts Act grants jurisdiction for a case brought
by an alien for a tort only, committed in violation of
the law of nations or a treaty of the United State.
Applicable Law
Applicable Law
Several different choice of law rules have been proposed
from time to time as being the most appropriate,
 One is the law of the place where the tort was committed
(lex loci delicti commissi). This has found favour on the
Continent of Europe and was the prevailing rule in the
United States until its disadvantages, caused it to be
abandoned in most states after 1962 in favour of a more
flexible but more amorphous rule.
The lex fori has also been suggested as the governing law.
Its earliest advocates had in mind the concept that tort is
akin to Crime so lex fori
 Applicable Law
In revulsion from the unfortunate decision of the
Scottish Court of Session in McElroy v. McAllister, J. H.
C. Morris put forward a third choice of law rule as the
most appropriate. This is the ‘proper law’ of the tort,
adopted by way of analogy with the proper law of the
contract. The proper law is that with which the event
has its closest and most real connection.
Historical Beginning and Principles in Torts
(Common Law Approach)
The Halley case (1868) -when a tort is committed overseas,
the plaintiff can only sue on the principles of the forum’s
tort law.
Facts defendants, while navigating Belgian waters, were
compelled by Belgian law to employ a pilot, whose
negligence caused damage to the plaintiffs. The
defendants were vicariously liable for the acts of their
compulsory pilot by the lex loci delicti but not the lex fori.
Issue Applicable law
Held (Selwyn LJ), defendant not liable under English law.
Double Action ability Rule Explained
Phillips v Eyre
Facts - assault and false imprisonment committed in
Jamaica. These torts were recognised in both England
and Jamaica, but a statute had been passed in Jamaica
that had retrospectively validated the defendant’s acts.
 Held dismissed the plaintiff’s action because,
although the requirements of English tort law had
been met, the defendant’s acts were justifiable by
Jamaican law.
Double Actionability Rule
“”As a general rule, in order a found a suit in England for
a wrong alleged to have been committed abroad, two
conditions must be fulfilled. First, the wrong must be of
such a character that it would have been actionable if
committed in England; ... Secondly, the act must not have
been justifiable by the law of the place where it was done.”
Two Conditions
(a) wrong must be actionable if committed in England
(b) the act must not have been justifiable by the law of
the place where it was done
Double Action ability Rule Problems
McElroy v. McAllister
Facts -The pursuer’s late husband was injured in an accident in
England, forty miles south of the border, when in a lorry being
driven by another employee while they were on the business of
their Scottish employer. All parties were Scots.
She sued as her husband’s executrix in Scotland claiming (1)
under Scots law (lex fori ), solatium; (2) and (3) by English law
under the Law Reform Act 1934 on behalf of his estate and
under the Fatal Accidents Act; (4) by both laws the funeral
expenses.
Held Double Action ability was not satisfied because of
differing head of compensation under different jurisdictions
Modification of Double Actionability Rule
Chaplin v. Boys
Facts - a motor accident had occurred" in Malta between two
servicemen stationed temporarily in Malta but normally resident in
England. The defendant was adjudged to have been negligent and
he, and his English insurance company, became liable to compensate
the plaintiff. However during the course of English proceedings it
emerged that, although English law would have assessed damages at
£2250, Maltese Law, the lex loci delicti, would only have assessed
damages at £53. The discrepancy arose from the refusal of Maltese
law to allow recovery for pain and suffering and loss of amenity as
recoverable heads of damage.
same cause of action arose under both Maltese and English law but
certain heads of damage were unknown to Maltese law.
Modification of Double Actionability Rule
Held
Lord Pearson and Lord Donovan allowed recovery on the basis
that the reference to the lex loci delicti was only to establish that
the act was not innocent by that law.
Lord Donovan alternatively relied on the characterisation of the
issue of recovery for heads of damages as procedural and thereby
governed by the lex fori.
Lord Wilberforce, Lord Hodson and Lord Guest required civil
action ability by lex loci delicti as well, but while Lord
Wilberforce and Lord Hodson allowed recovery by the way of an
exceptional application of the lex fori to displace the lex loci
delicti because the double action ability test failed
Modification of Double Actionability Rule
Lord Wilberforce ,”The basic rule of English law with
regard to foreign torts as requiring action ability as a
tort according to English law, subject to the condition
that civil liability in respect of the relevant claim
exists as between the actual parties under the law of
the foreign country where the act was done.
His Lordship added that this general rule should be
applied in most cases, but there was a flexible exception
which could only be invoked where there are “clear and
satisfying grounds” for not applying the general rule.
Modification of Double Actionability Rule
RED SEA INSURANCE CO LTD V BOUYGUES SA
In this case, the respondents (Plaintiffs), none of whom were
from the forum (Hong Kong), were all engaged in a
construction project in Saudi Arabia. The respondents can be
conveniently divided into three groups. The first group
comprised the main contractors for the project, the second
group consisted of suppliers of building materials, and
members of the third group were the consultants. The appellant
(defendant), incorporated in Hong Kong with its head office in
Saudi Arabia, was the insurer of the building works. The
appellant was resisting a claim from the respondents in respect
of structural damage to the building works
Modification of Double Actionability Rule
The Privy Council heard the case on the basis that
English law was applicable. The questions for decision
were:
(1) whether there was an exception to the double
action ability rule in Boys v Chaplin;
(2) whether the exception could operate to displace
the lex fori in favour of the lex loci delicti; and
(3) whether the exception could be applied to the
entire case. All were answered affirmatively.
Status of Double Action ability Rule
New Zealand continues to embrace the double action
ability rule, applying the law of the forum as the
substantive law, but applies a flexible exception to
allow the law of the jurisdiction with the most
significant relationship with the occurrence and the
parties to be applied.
US Approach In Torts
Babcock v. Jackson, the New York Court of Appeals
launched the American choice-of-law revolution.
One change brought about by the revolution was that
the choice of law should no longer be based on rules,
such as the lex loci delicti or, for that matter, a single
connecting factor, such as the place of conduct or the
place of injury. Rather, the choice should be based on
multiple factors, contacts, and policies, including the
policies embodied in the substantive laws of the states
involved in the conflict and their respective wishes
or “interests” in having their laws applied
US Approach In Torts.
Torts and Fraud: Torts are governed in nearly all
issues by the law of the place of wrong, “the state
where the last event necessary to make an actor
liable for an alleged tort takes place.” Restatement
(First) of Conflict of Laws.
In most cases the last event is the event causing injury
and so the place of the wrong is effectively the place of
injury. Frauds are similarly governed by the place of
the wrong, which is where the loss is sustained, not
where the fraudulent misrepresentation is made.
Issues in Torts and Conflict of Laws Problem
Determining Place of Harmful event
Suppose that a farm is raising chicken in Texas and shipped to Chicago
where it is slaughtered and packed. The meat is sent by the packing
company to all the states in the United States, England, and India.
The meat is not edible and has not been subjected to the statutory
processing and testing required by the state of chicago.
A housewife in India buys a part of this animal, becomes ill as a result of
the contamination, and brings an action against the packing company.
Where is the "place of wrong /harmful event "? According to some it
is where the "last act or event" occurred. This would be in India, where
there are no statutory requirements similar to those of chicago.
It would offend almost anyone's sense of justice if the packing company
could escape liability merely because the plaintiff lives in India, rather
than chicago.
US Approach In Torts
The Second Restatement contains certain sections
governing specific causes of action as well as an
umbrella “significant relationship” test
he place where the injury occurred,
the place where the conduct causing the injury
occurred,
the domicile, residence, nationality, place of
incorporation and place of business of the parties, and
the place where the relationship, if any, between the
parties is centered.
US Approach in Torts
In Nnadili v. Chevron U.S.A., Inc., the plaintiffs
claimed that activities at the defendant’s gas station in
Maryland had contaminated the plaintiffs’ lands in the
District of Columbia. Following minimal analysis, the
court quickly concluded that D.C. had the greatest
interest in applying its law because, although the
conduct occurred in Maryland, all the injuries and all
the plaintiffs were located in D.C.
US Approach in Torts
This approach was developed originally by Professor
Brainerd Currie and it advocates the following: that the
law of the state having the strongest legitimate
interest in advancing its policies in a particular
case should prevail. This means, inter alia, that
different legal systems may often be applied to the
same claim for damages, depending on the issue in
dispute. Such a situation may, for example, result in the
basis of liability being subject to one law and the
amount of compensation being subject to another law.
Codification attempt Rome II Regulation
Rome II regulation establishes conflict of law rules for
cases of tort/delict,
For example, if a German mining company engages in
blasting operations in the Italian Alps, causing an
avalanche in the French Alps that injures a group of
English tourists, Rome II regulates whether the injury
law of Germany, Italy, France or the United Kingdom
applies
Rome II Regulation
The general rule of Rome II is that “the law of the country
in which the damage occurs” is the applicable law,
“irrespective of the country in which the event giving
rise to the damage occurred and irrespective of the
country or countries in which the indirect consequences
of that event occur” (Article 4(1))
The principle of the law of the place of the damage had
in particular been expounded by the French Supreme
Court “In French private international law […] the
territorial law that is competent to govern civil liability
in tort is the law of the place where the damage
occurred”.
Rome II Regulation :Specific Choice of Law
• In cases involving intellectual property rights, the law of the
country where protection is sought generally applies (lex loci
protectionis).
• In cases involving labour disputes, such as a strike, the law of
the country in which the industrial action takes place
generally applies.
• Finally, a court has the discretion not to follow the general
rule (although most of the exceptions must be followed) in
special cases where an injury or wrongdoing is “manifestly
more closely connected” with a country other than the one
in which the damage occurred. This is typically described as
“escape clause” –
Rome II Regulation: Specific Choice of Law
• Where both victim and injurer habitually reside in the same country, the law of that
country generally applies.
• Where the victim and injurer have a pre-existing relationship – as when they are
preparing to conclude a contract with one another or when they already have a
contractual relationship separate from the injury – the law governing that pre-existing
relationship generally applies.
• In cases involving product liability, determining the applicable law involves a
combination of multiple factors, particularly where the product was marketed.
Generally, if the product was marketed in the victim’s country of residence, that country’s
law applies.
• In cases involving unfair competition, the law of the country in which consumers’
or competitors’ interests are affected applies. In cases involving restrictions on
competition, the law of the country in which the market is affected generally applies.
• In cases involving environmental damage, a plaintiff may elect to have applied either
the law of the country in which the damage occurred (the general rule) or the law of the
country in which the event giving rise to the damage occurred.
 Canada choice of law Supreme Court of
Canada - Tolofson [1994] 3 S.C.R. 1022
Tolofson : lex loci delicti rule should be applied because it
would promote “certainty, ease of application and
predictability” and “meet normal expectations” of the
parties
•Court rejects Babcock and “modern” U.S rules because of
their “extreme uncertainty”
•Only exception: discretion in rare international cases to
avoid “injustice”
•“Order and fairness” are the “underlying principles” of
choice of law and “order comes first”
•“Order is a precondition to justice.”
In re Lockerbie Air Disaster
1988 terrorist bombing of Pan Am flight 103 from
London to New York Bomb explodes over Scotland,
killing all 259 passengers and crew from over 10
countries and 11 residents of Lockerbie, Scotland
Lockerbie Air Disaster New York federal court
- 1996 Pescatore, 97 F.3d 1 (2d Cir. 1996)
New York choice of law rules
•Scotland was “random” crash site with little interest
in applying its damages law
•Damage laws of the domiciles of each decedent
should apply
•The available damages in each case varied widely
depending on the domicile law
Lockerbie Air Disaster Miami federal court -
1996 unreported decision
Florida choice of law rules
•Law of Scotland, as the place of the accident, applied
rather than law of decedents’ residences in England
•English families who brought suit in Florida
recovered substantial non-economic damages while
most survivors (including other English families)
suing in New York were limited to economic damages.
 Conclusion
Modern state choice of law rules give courts
tremendous discretion
Environment Torts
Facts 100 largest economies in the world, fifty-one are
corporations and forty-nine are states.
Since the largest 200 corporations are estimated to account for
27.5% of world economic activity, it is not surprising that they
are seen to symbolize both the creative and destructive sides of
global capitalism.
Some argue that MNCs are responsible for major technological
innovations beneficial to the environment, and have, in any case,
an environmental track record superior to smaller local firms.
Others see MNCs as the main vehicles for large-scale
environmental degradation, particularly in developing countries
where they are mainly unaccountable for their activities.
Facts
In recent years, MNCs have increasingly been accused
of engaging in polluting or environmentally degrading
activities through their subsidiaries, particularly in
developing countries MICHEL CHUSSUDOVSKY,
THE GLOBALIZATION OF POVERTY: IMPACTS OF
IMF AND WORLD BANK REFORMS (1997);
Incidents
 In 1984 a leak of methyl isocyanate gas from a pesticide plant owned by Union
Carbide in Bhopal, India, resulted in the loss of over 3,500 Plaintiffs failed in
their attempt to sue in the U.S., and following much-delayed litigation in India
the case was settled for $470 million.
 • In 1990, Costa Rican banana plantation workers won the right to sue Dow
Chemical in Texas courts for injury and sterility resulting from exposure to
Dow-manufactured chemicals in Costa Rica.
 • From 1982 to 1994, the village of Bukit Merah in Malaysia was exposed to
radioactive tailings from the activities of the Asian Rare Earth corporation — a
Japanese/Malaysian joint venture owned in part by Mitsubishi. Although
exposed residents were denied redress under Malaysian tort law, the publicity
surrounding the case resulted in the closure of the installation.
Incidents
In 1993 a group of Ecuadorian indigenous people from
the Oriente region of the Ecuadorian Amazon brought
an action in the U.S. against Texaco for deforestation
and environmental degradation.
After a long legal battle, over 4,000 South Africans
won the right in July 2000 to sue Cape Industries in
the UK for asbestosis and mesothelioma resulting
from exposure to asbestos in South Africa.
Present Legal positions
The regulatory response to environmental damage by MNCs has
been largely ineffective. International environmental treaties bind
state parties, but do not place obligations directly upon companies.
There have been some scholarly exploration of holding the “home”
state liable for the activities of MNCs headquartered within its
jurisdiction, but this approach has largely failed due to both political
opposition as well as the problems in jurisdiction
 There have been a number of “soft” initiatives to regulate MNCs by
establishing guidelines and codes of conduct, including the
International Labour Organization (ILO) Tripartite Declaration of
Principles concerning Multinational Enterprises and Social Policy,14
the recently revised Organization for Economic Co-operation and
Development (OECD) Guidelines on Multinational.
Environmental Torts
Trail Smelter cases, Chernobyl accident and Sandoz
Chemical Fire case, are all about environmental
liability law.
Sandoz Chenical Fire case which involved a fire at a
Sandoz corporation warehouse in Switzerland. The fire
resulted in thousands of cubic meters of chemically
contaminated water seeping into the Rhine and
constituted one of the worst environmental disasters
ever in Western Europe. None of the states affected
brought claims against Switzerland.
Environmental Torts
Because of the importance of regulating the evironmental liability,
European Union countries made a directive in 2004. The reason to
make this directive is an environmental damage in transboundary
pollution.
On Wednesday 13 November 2002, the Prestige, a Bahamas-
registered, 26-year-old single hull tanker owned by a Liberian
company and carrying 77 000 tonnes of heavy fuel oil, sprang a leak
off the coast of Galicia. It eventually broke apart on 19 November and
sank 270 km off the Spanish coast. Thousands of tonnes of heavy
fuel oil spilled into the sea and polluted the Galician coastline.
The pollution then spread to the shores of Asturias, Cantabria and
the Spanish Basque country. In cases like this, there is clearly a need
to ensure that the damaged environmental assets are restored;
Issue sin Environmental Torts
 Jurisdiction: Generally is in the place where the
incident occurred( Difficult to determine where)
lex loci delicti and Issues
Rules of private international law normally seek to apply the law of the
place where the wrong occurred (lex loci delicti). With transnational
environmental damage, however, it may be impossible to identify a
single place of the wrong.
 As Betlem notes, this can be for three reasons:
 1) the “tortious activit[y] [has] taken place in several . . . countries,”
2) the activity causing the harm and the actual manifestation of the
harm may be in different countries,
3) the legal effects of the tortious act may pertain to a country other
than that of the tortfeasor.
 4) that the manifestation of harm may take place in several countries,
and 5) either the tortious act or the resulting harm may take place in an
area beyond national jurisdiction (e.g., the high seas).
lex loci delicti and Issues
In the case of the Sandoz chemical leak, for example,
the spill occurred in Basel, Switzerland, with the
chemicals spreading down the Rhine and causing
damage in Germany and France. In the French
Potassium Mines case, the leak of salt originated in
France, passed through German waters, and caused
damage in the Netherlands.
Approaches In Civil remedy
In the absence of a single global court, the next best
available remedy for potential litigants is to gain access
to the court that is best able to hold the corporate
group accountable. In most, but not all cases, this will
be a court located in a country where the parent
company is incorporated. The chief attraction of
such courts is that they are likely to wield
jurisdiction over the corporation with access to the
largest fraction of the group’s assets.
 Alternate Approaches
lex loci actus Arguments
There are at least three arguments in favour of adopting the lex loci actus.
First, the tortfeasor should be subject to a known and local legal
framework rather than foreign legal rules that may be both unknown and
unforeseen.
Second, the lex loci actus plays a role in deterring similar actions in the
future and must be crafted so as to meet the ends of justice.
 Third, in the context of transnational companies, the argument is
advanced that the law of the parent company should apply simply due to
the structure of the enterprise: a single policy decision taken at the
headquarters of the parent company could result in environmental
damage in a number of countries in which subsidiaries are located. It can
be argued that the law of the parent company jurisdiction regulates the
“mind” of the entire transnational enterprise.
Alternate Approaches
lex loci actus Arguments
The rule of the law of the place of the dangerous
activity (State of the emission) is, at least in principle,
accepted in particular in Austria, the Netherlands,
Denmark, Finland and Sweden. It should however be
emphasized that these systems permit in general the
application of the law of another State, with which the
litigation (or the parties) have closer connections.
Alternate Approaches
lex loci actus Arguments
Similarly, it may be difficult to identify a single location as the locus actus.
Consider, for instance, the case of the Bhopal gas leak. In that case, the plaintiffs
alleged that a contributory cause of the leak was the decision to shut off the
refrigeration unit on the ill-fated tank of methyl-isocyanate, thus allowing the
gas to warm from 0° Celsius to the more volatile ambient temperature. The
documentation showed that the cost-saving decision to shut down the
refrigeration unit was taken in the parent company headquarters in Danbury,
Connecticut, and communicated by letter to the management of the Indian
subsidiary plant located in Bhopal. Although these allegations were never
adjudicated, they could form the basis of at least contributory negligence or
even strict liability if found to be true. If such actions were found to be tortious,
then where is the locus actus? In the U.S. where the decision was taken? Or in
India where the decision was implemented? One may be tempted to answer that
the wrongful act occurred in both India and the U.S., but this does not solve the
problem of which set of legal rules will actually govern the litigation.
lex loci damni Arguments
On the other hand, arguments given in favour of the lex
loci damni include the idea that the injured party
should be subject to the same framework of rights and
obligations, regardless of the location of the tortfeasor.
What is relevant, on this argument, is the nature of the
injury and the set of legal expectations that the injured
party had immediately prior to the injury. The location
and nationality of the tortfeasor, it is argued, should
have no bearing on the injured party’s rights within a
localized system of rights and obligations.
lex loci damni
Conflict of laws rules for nuclear matters are also
found in the Agreement of 22 October 1986 between the
Swiss Confederation and the Federal Republic of
Germany on the subject of civil liability in nuclear
matters. Under Article 4 of this Agreement, the courts
of the State on the territory of which the harmful
event occurred, apply their own law
The problem
North –South Divide
The combined effect of declining jurisdiction in the North and selecting
applicable law from the South is that plaintiffs seeking redress for
environmental damage caused by subsidiary companies are likely to meet
with frustration. There is a further problem, which is that the quantum of
damages is likely to be lower in developing countries. This is true for four
reasons. First, wages are lower, so compensation for lost wages will be
lower as well. Second, the costs of medical care and environmental
remediation are likely to be lower, although they may also be higher
where scarce technologies are required. Third, awards of punitive or
exemplary damages are rare in most developing countries while awards
for non-pecuniary loss such as pain and suffering are either low or non-
existent. And finally, courts in developing countries are often ill-
equipped to apply complex methods of environmental valuation in order
to establish remediation awards.
The problem
If tort law is likely to result in lower awards for
environmental damage in developing countries, then
it is fully in keeping with certain versions of neo-
classical economics, which argue that environmental
damage is economically more efficient in poorer
countries. This view was put forward in 1991 in its
starkest and most controversial form by Dr. Lawrence
Summers, then Chief Economist for the World
Bank
The problem
The value of lost wages is one of the main determinants of
the quantum of damages. Without a tort law system that
paid less for injury and death in developing countries,
The second argument is based on the idea that poor
people who live in relatively unhygienic situations are
unlikely to complain of environment
The third argument invoked by Summers was based on
the notion that environmental protection is more highly
valued by the rich than the poor: The demand for a clean
environment for aesthetic and health reasons is likely to
have very high income elasticity.
The problem
The objection to the Summers Memo is an ethical one
and relates to the treatment of human life.
As Summers rightly points out, the direct cost to
industry of morbidity and mortality resulting from
environmental damage is lower in those countries where
wages are lower. Life is literally cheaper in Africa. This is
consistent with tort based approaches to valuation.
Where the cost of human injury and life is treated in this
way as a cost of production, it can be included in
corporate accounts and affects the structure of incentives
and disincentives that shape corporate behavior.
Solution
The valuation of certain types of environmental
damage should be based on a principle of universal
and equal respect for the environment rather than
transient market preferences.
On this line of reasoning, the value of a set of natural
resources and ecological processes is dependent
wholly upon the properties of that particular
ecosystem, and not upon the historical accident that
the humans who live in the area happen to earn lower
wages.
 Solution
The value of tort law in an environmental
management system is two-fold:
restorative function so far as it is able to compensate
humans for injury and remediate damaged
environments,
Deterrent effect
Solution
rely more heavily on human rights standards,
including in particular the idea of a universal right of
access to justice that contains a cross-border
component.
move from a regime based largely on regulation and
tort toward a regime that does more to emphasize the
criminal liability of corporations for environmental
harm.