Holding the security industry liable for terrorism-related risk difficult
Published on LBM. As the attack on the Twin Towers on 9/11 has shown, terrorism can lead to large-scale damage, massive property damage, thousands of cases of personal injury, pain and suffering and enormous consequential damage, including billions in lost profits. Can the security industry be liable?
After 9/11 many law suits were filed seeking compensation of damages totalling over 1 billion US$. Among the parties sued in these law suits were not only public authorities, but also security firms and an aircraft manufacturer. The magnitude of this litigation caused concerns in the US over unlimited liability of security firms which was believed to create disincentives for firms to develop and introduce new security technology. In response to these issues the US introduced its US Safety Act, a regime intended to offer security companies protection against liability exposure.
In a book called Civil liability in Europe for terrorism-related risk, Cambridge, Cambridge University Press , 2015, Lucas Bergkamp, Michael Faure, Monica Hinteregger and Niels Philipsen examine the exposure of operators of facilities such as airports, train stations, nuclear power plants and the security industry to liability. After the terrorist attacks in Paris, Madrid, London and Brussels, also in Europe concerns have arisen about a potential liability exposure for terrorism-related damage which has been called “enterprise-threatening”. The book analyses civil lability for terrorism-related risk under international and European Union law and the law of several representative Member States. The book also compares the liability environment in Europe to the situation in the US which, as noted, thought it necessary to provide for liability protection for industry through specific legislation.
The international liability treaties do not specifically deal with liability for damage caused by terrorists and neither does European Union legislation. As a result liability for damage caused by terrorists is chiefly a function of national law. The facility operator may be liable towards victims under fault-based liability rules or under strict liability if the activity is deemed “hazardous”. In theory also a security firm could be liable, but the burden of proof lies with the victim. Despite suggestions to the contrary the authors found no evidence of an impending liability crisis in the security industry. Assertions of potentially “enterprise-threatening” liability exposure are not consistent with the liability standards under the law of the examined legal systems. Thus far facility operators and security firms have not been held liable for damage caused by terrorist attacks in Europe. It is therefore concluded that no urgent EU measures are necessary.
However, although the case for a liability limitation for the security industry is therefore weak, civil liability for terrorism-related risk is an issue that does require the attention of policy-makers. Policy-makers should take time to analyse the liability exposure of operators and security firms. It is particularly important to verify any malfunctioning of the markets for terrorism-related insurance and public procurement of security services. To prevent specific problems of liability rules to the case of terrorism the EU could consider drafting a recommendation or communication concerning the promotion of the insurability of terrorism-related risk. In developing policy on this issue, the government should keep in mind that its primary responsibility is to prevent terrorist attacks from occurring and liability for damage caused by such attacks can contribute to accomplishing this objective.