The council said it was ‘disappointed’ at the ruling, maintaining that there had been no link between the birth defects and the reclamation work. Corby says it will appeal against the High Court ruling and start mediation with the families and claimants involved in the case (BBC news, 19 August).

Simon Johnson, director at Lloyd’s broker Aon, said that the Corby litigation could stimulate more legal action particularly affecting councils that have invested in regeneration and built on brownfield sites. “Most worrying, defence and other costs could run into millions of pounds and may not be insured,” he commented.

In recent years industrial pollution issues have been dominated by global climate change or other environmental concerns. But as the Corby case shows, pollution incidents can end in human tragedy. The misery is often prolonged as legal disputes take years to unwind.

In fact this year is the 25th anniversary of the Bhopal disaster. Poison gas leaked from the pesticide factory operated by Union Carbide killing thousands and injuring many more. In 1989, Union Carbide agreed to pay $470m in compensation.

But like pollutants, the repercussions cannot be easily washed away: in Bhopal 100,000 people say they are chronically ill as a result of the accident. And this month an Indian court reissued its arrest warrant for Warren Anderson (BBC news, 31 July), who was the head of Union Carbide when the accident happened.

Related links:

Corby Borough Council
The battle for birth defects answers, BBC news, 29 July 2009
Birth Defect Victims Win ‘Toxic Soup’ Case, Sky News, 29 July 2009
1984: Hundreds die in Bhopal chemical accident, BBC On this day

Research published recently by Lloyd’s and the RAND Institute for Civil Justice Europe (Litigation and business: transatlantic trends, pdf 1.6mb, November 2008) has already raised the prospect that class actions are on their way to Europe from the United States, increasing anxieties of a further litigation boom. Europe is seeing a rise in consumer and investor activism, and a growing willingness by legislators to allow people to pursue mass grievances through the courts.

Swiss Re points out in its new report that the European Union is interested in using collective redress both to enable compensation for infringement of competition rules and to improve consumer rights within and across member states. About half of EU member states have already introduced instruments for collective redress and the European Commission is moving towards the introduction of collective redress mechanisms right across the 27 member states.

Swiss Re says insurers need to get involved: “We are convinced that the insurance industry has an interest in actively participating in the ongoing legislative dialogue in order to explain the potentially adverse consequences of unbalanced collective redress systems.”

Swiss Re suggests lawmakers should bear in mind the unintended consequences of the US class action system, which has contributed to a massive increase in the cost of the US tort system to $250 billion annually.

On the other hand, as Swiss Re points out, the broad trend towards the spread of collective action also presents some business opportunities for insurers, such as an increased demand for different liability coverages, including product liability and Directors & Officers.

But whatever systems are adopted in Europe and elsewhere, the imperative must be to look at what is wrong with the US system, where costs are out of control and claims too often made without merit, and prevent it happening here.

As Swiss Re says, “Access for all should make litigation more efficient, not more expensive—for either plaintiff or defendant.”

>Read lloyds.com article: Are class actions coming to Europe, 18 February 2009