1. The central question underlying this contribution is the manner in which compensation for loss resulting from disasters is regulated in Belgium and in The Netherlands. A distinction is drawn between so-called technological disasters, i.e. those marked by human involvement, on the one hand, and natural disasters on the other hand. From a theoretical perspective, the author asks the question as to how any loss resulting from disasters should be compensated in an ideal world. In so doing, he considers not only what should be the optimal level of compensation awarded to victims, but also the question as to how the various compensation mechanisms could provide potential victims with the best possible incentives for preventing such loss. As far as technological disasters are concerned, the author gives pride of place to solutions provided under the law of torts, for the simple reason that such disasters will frequently produce a perpetrator who can also be held liable. As for natural disasters, on the other hand, appropriate solutions should clearly be sought outside the law of torts, precisely because the chances of holding the only possible perpetrator, i.e. the public authorities, liable will frequently be much thinner.
2. As regards technological disasters, the author highlights three aspects which will be crucial in order to guarantee optimal levels of compensation and prevention. Firstly, technological disasters constitute a type of accident for which strict liability appears to be the most appropriate legal remedy. Both for the purpose of guaranteeing compensation for the victims and in order to create incentives for prevention, such strict liability should be combined with a system that guarantees solvency in such a way that the victim will also be able to claim from the perpetrator’s liability insurer. The problem here is that where the claim is brought using the ordinary civil proceedings, it can frequently take a very long time – years in some cases – before the tortfeasor can be definitively found to be liable for compensation. This mere circumstance can cause the loss to increase. This is why a strong case can be made, particularly when it comes to disasters, for introducing accelerated proceedings which will attend to the most urgent needs in order to prevent increasing the loss incurred.
3. As for natural disasters, a solution should be sought which is centred around the victim, more particularly through the mechanism of the so-called first-party disaster insurance – such as the insurance which house owners take out against the risk of flooding. Although this type of insurance presents many advantages, being capable of yielding both compensation and incentives for prevention, it nevertheless presents some problems. On the demand side, the problem is that demand for insurance is frequently too low, so that where serious disasters occur, it transpires that only a restricted number of victims had actually taken out insurance. One possible solution could be the introduction of compulsory insurance. On the supply side, the problem is that the losses resulting from disasters can be quite sizeable. This can result in disasters causing losses which are no longer insurable on the ordinary commercial insurance market, and cannot be covered by re-insurance either. This would appear to make out a case for intervention by the public thorities, the latter presenting themselves as the re-insurer of last resort. This type of public intervention is strongly to be preferred to ex-post compensation, under which certain victims are awarded compensation from public funds. Such an approach is inadequate in terms of generating incentives for prevention and serves to restrict demand for insurance. Against this theoretical background, the author considers, first, compensation of loss caused by technological disasters in Belgium and The Netherlands, and, subsequently, compensation of loss caused by natural disasters in Belgium and in the Netherlands.
4. In relation to technological disasters, the author notes that, in Belgium, the required strict liability mechanisms are available in principle. However, the problem here is that they frequently present an ad hoc character, and that they cannot in truth be described as a systematically considered introduction of a strict liability régime. One positive aspect of the Belgian system, however, is that in many cases it imposes an obligation to take out solvency cover – which invariably involves compulsory liability insurance. In addition, the Belgian Law of 13/11/2011 has created a specific set of rules aimed at providing compensation for the victims of technological accidents. Although some details of this law are open to criticism, it presents the all-important characteristics of having in essence created a mechanism which enables compensation to be awarded rapidly on the basis of the law of torts.
5. The law of The Netherlands also provides a number of strict liability systems. However, the “Enschede” and “Volendam” cases show that, where the disasters assume this kind of dimension, it is not so much the liable party who caused the loss who is required to pay the lion’s share of the compensation, but that the largest part of the damages awarded to the victims will be paid from public funds. Even the legislation which was specifically created in order to deal with disasters occurring in The Netherlands, to wit the Law on accommodating Losses resulting from Disasters and Serious Accidents (WTS), has proved unequal to the challenge of generating adequate levels of compensation for major disasters such as Enschede and Volendam. What these cases show in particular is that, in the absence of a system of compulsory insurance, only a very low amount of money was available for compensation from the contracted insurance. It was precisely for this reason that the public authorities provided the lion’s share of the compensation awarded to the victims. In fact, this situation, which shields the private sector from the cost and risk created by its activity, is regarded as undesirable in the Netherlands also, as can be seen from the reports emanating from various committees. Although a number of interesting options have been ventilated by way of solutions, this has yet to result in actual changes in the relevant law.
6. Until 2003, compensation of the loss caused by natural disasters in Belgium was characterised by a patchwork of rules, in which the Disaster Fund (Rampenfonds) played the leading part. In 2003, Belgium introduced compulsory cover for damage caused by flooding which was combined with fire insurance for low-level risks. However, this cover was only intended to apply to properties located in specifically designated flooding areas – and no such designation ever took place. Instead, a new Law of 17/9/2005 was adopted under which, following the French example, additional cover for loss from disasters was made available on (voluntary) fire insurance. This means that Belgium has to a large extent conformed to the system which appears to be the most appropriate from a theoretical viewpoint also, which is to create a system of first party disaster insurance. Thus it is that the part played by the public authorities, via the Disaster Fund, has become extremely marginal.
7. In the Netherlands, no insurance against earthquakes and flooding was, until recently, possible as a result of two binding decisions made by the insurers, and which had come into being in the 1950s. Under this arrangement, the insurers had agreed no longer to cover flooding or earthquakes. Following the floods which occurred in 1992 and 1993, these agreements between the insurers were withdrawn, under pressure from the politicians and from the competition authorities. Since then, a lengthy process of negotiation has taken place between the insurers and the public authorities in the Netherlands, with a view to putting into place a structured set or rules. In so doing, the parties involved have considered both the Belgian and French systems. In spite of the various reports, studies and discussions on the subject, no general flooding insurance has as yet been made available in the Netherlands. Accordingly, whenever the Netherlands suffer flooding, either the WTS will be held to be applicable, or, as is often the case with technological disasters, the public authorities may make available compensation on an ad hoc basis.
8. When comparing the relevant systems in both countries, one notices particularly that, to a certain extent, the Belgian legislation comes closer to the theoretical model than is the case with the Dutch model. Obviously this does not mean that the Belgian lawmakers have systematically sought to achieve a properly structured set of rules on the subject. As far as technological disasters are concerned, the Belgian model, although obviously capable of improvement at all times, presents the advantage of (a) making available a large number of strict liability systems, even though the latter have frequently been introduced on an ad hoc basis, and (b) being combined with compulsory solvency guarantees. The 2011 Law has also added an interesting novel element to the Belgian compensation model by creating a specific accelerated procedure. Obviously it remains to be seen whether this legislation is also capable of living up to its promise in practical terms.
9. In the Netherlands, the victims of technological disasters are – at the risk of exaggeration – dependent on their finding a solvent perpetrator and, in the absence thereof, on any ad hoc funds made available by the public authorities. The Enschede and Volendam disasters have demonstrated that the Dutch model presents the problem that those causing the loss are only exposed to tort liability to a very limited extent, and that the public authorities (and therefore the taxpayer) pay the lion’s share of the bill. In the light of the notion, inspired by legal economics, that those causing loss should be exposed to the social costs caused by their activity, this is not a desirable outcome.
10. As regards the compensation payable for loss caused by natural disasters, the Belgian model also comes closer to the theoretical model than does its Dutch counterpart. In Belgium, the relevant legislation has conformed to the theoretical model by reducing the call on public intervention by phasing out the role of the Disaster Fund and introducing compulsory disaster cover as an addition to the fire insurance policy. It is true that in the Netherlands there is legislation available in the shape of the WTS; however, the latter is seldom applied, which is related to the circumstance that losses which are insurable under normal circumstances are not eligible for compensation under the WTS. The Netherlands still have no proper system of flooding insurance. This is why the victims of major natural disasters continue to be dependent on the (political) willingness on the part of the public authorities to contribute from public funds. Although there are certain aspects of the Belgian system which are open to criticism, the Belgian model is, all in all, that which comes closest to the theoretical model as regards compensation for both technological and natural disasters.
