2010 saw a number of environmental disasters, one of which being the toxic sludge spill in Hungary in October whereby toxic material flooded onto nearby villages, waterways and eventually the Danube causing a substantial environmental impact.
The 2004 Environmental Liability Directive introduced into EU law the “polluter pays” principle with a view to preventing, limiting and remedying serious cases of environmental damage to land, water, protected species and natural habitats. Hungary implemented this Directive into local law and it should therefore now require MAL Zrt to not only clean up the environmental contamination but to also take the necessary restorative measures, which would include reintroducing animal and plant species or paying damages where that is not possible. Under the “polluter pays” principle, MAL Zrt should also be made to pay for the environmental damage it has caused.
This is the first significant incident that will really test the 2004 Environmental Liability Directive. At present there are all the signs that Hungary is taking its responsibilities under the Directive seriously, having taken MAL Zrt under temporary state control and frozen its assets while an investigation into the cause takes place.
These are obviously early days and the extent to which the relatively new environmental legislation will be implemented in practice will be closely observed throughout the EU. If the legislation is implemented as rigorously as it was intended then this could cause pressure on EU governments to consider mandating that companies make financial provisions against the risk of serious environmental disasters or that they obtain appropriate insurance for the specific risks arising from this legislation.