Product Liability 2009 - Arnold & Porter LLP

32
Chapter 5
REACH and the Consumer
Products Sector - Regulatory and
Product Liability Implications of
the EU’s Chemicals Regime
Freshfields Bruckhaus Deringer LLP
Introduction
Nearly two years ago, REACH - the European Union (EU)’s
comprehensive new regulation on chemicals - came into force
across the 27 Member States, after nearly a decade of wrangling,
horse-trading and intense lobbying.
REACH is a dramatic overhaul of the EU’s regulation of chemical
substances and of their use in downstream products. The
underlying premise of REACH is that Europe’s previous chemical
safety regime was not fit for purpose. Of the 100,000 or so
substances currently sold in the EU, the vast majority never had to
be tested under previous EU legislation. Little formal data on
possible human health or environmental impacts was available to
national regulators, on whom the burden for testing fell. REACH is
intended to fill this information gap by requiring industry to provide
the European Chemicals Agency (ECHA) with data on the safety
and properties of tens of thousands of substances (see inset box:
“REACH in a nutshell”).
Although its primary impact will be on the chemicals industry,
REACH also poses significant challenges for downstream users of
chemicals, including manufacturers and importers of consumer
products. In particular, the potential product liability implications of
the new regime for some such companies should not be
underestimated. REACH is, after all, intended to generate new data
on chemical hazards: the European Commission (the Commission)
has stated that “it is expected that REACH will generate new data
which will help identify another 600 substances of very high concern
over the next 11 years” [see Endnote 1]. The branding of another 600
substances as hazardous that have not been previously classified as
such may well, in turn, fuel litigation on both sides of the Atlantic.
In this briefing, we map how REACH may affect EU and
international consumer products companies, focusing in particular
on their regulatory obligations under REACH and its potential to
increase their exposure to product liability and occupational health
litigation.
REACH in a nutshell
The REACH Regulation (1907/2006/EC) was adopted on 18
December 2006. It applies to most chemical substances, whether
on their own, in preparations (mixtures) or used in products (or
“articles”), that are manufactured or used in, or imported into, the
EU in quantities of over one tonne per year. Its principal elements
are as follows.
Legal entities
All obligations under REACH fall on EU legal entities, as defined
under the national law of the EU Member State in which they are
Paul Bowden
Andrew Austin
active. This means that:
Companies based outside the EU do not have direct legal
obligations under REACH (although the legal entities in the
EU that import their products - such as distributors or first
tier customers - may well do).
Where a company in Member State A has a branch office in
Member State B, and that branch office manufactures or
imports a substance, registration and other obligations
under REACH in respect of that substance may well lie with
the company in Member State A rather than the branch
office. This will, however, depend on whether the national
law of Member State B recognises branch offices as having
separate legal identity or not.
Different legal entities in the same corporate group may
each have their own, independent obligations under
REACH. Although they can informally agree between
themselves that one group company will take the lead in
ensuring REACH compliance, they cannot legally “contract
out” of these obligations.
Registration and pre-registration - “no data, no market”
The central requirements of REACH are that:
Substances, on their own or in preparations, may not be
manufactured in the EU, or imported into the EU, in
quantities of over one tonne per year unless they have been
registered. This is the principle of “no data, no market” set
out in Article 5 of the REACH regulation.
Substances contained in articles that are manufactured in, or
imported into, the EU must also be registered if relevant
tonnage thresholds are met and they are intended to be
released from the article under normal or reasonably
foreseeable conditions of use, as discussed later in this
briefing.
Registration requires any legal entity that manufactures a
substance in the EU or imports it into the EU to obtain information
on the properties of that substance, to assess the risks arising from
its use and to establish how those risks can adequately be
controlled, before documenting this process in a registration
dossier supplied to the ECHA (see below).
The timetable for registering most substances that are currently
sold and used in Europe is staggered over an 11-year period
according to perceived risk and tonnage:
Such substances placed on the market in quantities greater
than 1,000 tonnes must be registered by 1 December 2010.
This deadline also applies to substances which ECHA has
determined to be particularly “high risk”.
Such substances placed on the market in quantities of
between 100 and 1,000 tonnes must be registered by 1 June
2013.
WWW.ICLG.CO.UK
ICLG TO: PRODUCT LIABILITY 2009
© Published and reproduced with kind permission by Global Legal Group Ltd, London