Failing hospital boards in Emmen and Twente and a bungling government in the case of the detention centre fire at Schiphol-Oost – these are just a few recent examples where the finger of blame has been swiftly pointed at administrators with regard to responsibility and liability in the event of damage or accidents caused by the actions of organizations.
Generally speaking, it is still possible to take the directors of companies to court and punish them for fraud or mismanagement, a recent example is Ahold. However, it appears to be impossible to prosecute central government (the State) and its managerial officials, let alone convict them of serious breaches or errors that others are the victims of, because immunity from prosecution has been accepted by the courts. To a lesser extent this also applies to local authorities (municipalities, provinces). University lecturer in Labour Law Simone de Valk feels that from the point of view of legal equality and to provide more redress for victims that immunity must be waived. Trust in the government would then also be increased.
De Valk was awarded a PhD for her thesis on managerial liability. She investigated when exactly government officials in managerial posts and managers of companies can be made personally liable for transgressing moral standards that can be primarily regarded as those of the organization. To this end she compared the legislation and jurisprudence concerning the liability of company managers and of local authorities in civil law, criminal law and administrative law. The aim of the research was to chart whether working for a company or for the government makes a difference to the liability position of a manager. How can any differences be explained, and are these differences justified or should they be eradicated?
There are certainly differences. Managers of companies are fairly regularly and successfully made personally liable by third parties, usually trade creditors, in the event of the company going bankrupt. ‘Managers in local authorities, on the other hand, rarely run the risk of being made liable by third parties’, according to De Valk. ‘An injured party will nearly always make a claim on the government. On those rare occasions when an official is made personally liable by the injured party for the damage he has suffered, the judge applies stricter standards than for a manager of a company.’ In cases of civil law liability, the judge requires intent or wilful recklessness on the part of the government official, emphasizes De Valk. It is quite right that the personal liability of officials should be assessed with more caution than that of managers in the private sector, De Valk nuances her statement. ‘Government officials after all act within the framework of the general interest and do not have freedom of action.’
Government officials also have less to fear from criminal law than the managers and employees of ordinary companies. This is because the immunity of local authorities and officials in managerial positions is assumed. ‘The immunity of both the State and of the regional and local authorities, which are also partially immune, has now gone too far’, thinks De Valk. This state of affairs meant, for example, that it was not possible to prosecute the local authorities and officials involved in the fire in the detention centre at Schiphol or in the firework disaster in Enschede. De Valk: ‘I do not think that a judge should automatically be precluded from considering whether or not the mistakes committed by the Custodial Institutions Service in the Schiphol fire case are deserving of punishment.’ A judge can take the extraordinary position of the government into consideration when assessing whether the claim is justified or when determining the penalty. The current system also favours inequality of rights, she emphasizes. ‘For example, if the Working Conditions Act is not complied with, the State cannot be prosecuted but a company or a local authority can be.’ De Valk is referring here to the incident of the fire in the Catshuis, where a painter lost his life. The State had commissioned the work, but under current law it cannot be prosecuted for the death of the painter. Within this context, it is remarkable that the State does not have an exceptional position in administrative law – administrative penalties for transgressing the Working Conditions Act, for example, should be perfectly possible. Waiving immunity is also important because of the exemplary role of the government, according to De Valk: ‘The government should be the first to obey the law. In addition, administrative and political control mechanisms do not guarantee that the government will act with integrity.’ Waiving immunity from prosecution for local authorities is also important, adds De Valk, because it is sometimes very difficult to finger those responsible. Due to the complexity of organizations, it’s sometimes difficult to ascertain individual liability. De Valk is thus positive about the private member’s bill to waive the existing immunity that is currently being considered by the Dutch House of Representatives.
Implementing the private member’s bill would also make it possible to prosecute government officials in managerial posts. According to De Valk, the liability risk won’t be all that great in fact: ‘There are very strict conditions attached to the criminal liability of someone in direct or delegating control.’ In addition, she recommends that the Public Prosecutions Department be cautious about prosecuting individual officials. ‘Personal liability should only enter the picture if there is a question of really serious errors by the official.’ De Valk observes that the risks for personal managerial liability have become greater recently, inter alia because the legislator has made it possible to impose administrative sanctions (fines) on managers too. ‘Officials could thus be faced with sanctions imposed by a watchdog such as the Health and Safety Inspectorate if they have been lax in the field of safety or working conditions’, emphasizes De Valk. She is not in favour of further extending the possibilities for personal liability. For example, the SP has recently proposed a law outlining the criminal liability of failing bankers. ‘There are in principle already sufficient possibilities, and we should not expect too much of liability determination’, she says.
Dr Simone N. de Valk has been a lecturer in Labour Law for the Department of Business and Labour Law of the Faculty of Law of the University of Groningen since 2003. On 29 January 2009 she was awarded a PhD for a thesis entitled ‘Aansprakelijkheid van leidinggevenden naar privaatrechtelijke, strafrechtelijke en bestuursrechtelijke maatstaven’ [Managerial liability judged by civil law, criminal law and administrative law criteria] (Kluwer 2009)
Dr Simone de Valk
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