Introduction
Dangerous work
Principal's interest
Principal's economic strength and professional insight
Principal's instruction, control and supervision
Comment
The Danish courts over the past few years have become more inclined to impose liability to a principal for a third party acting independently.
The principal is charged with liability in cases where the contractor (or subcontractor) has caused liability-inducing damage in connection with the performance of or in connection with dangerous work, and in cases where the principal had a special reason to limit the risk by carrying out supervision and control considering their professional insight.
The principal is charged with liability particularly in cases where the principal themselves would have been subject to strict liability when performing the dangerous work in question.
The starting point in Danish law is that parties are only liable for their own culpable behavior. An exception to this is found in DL 3-19-2, where an employer (or principal) is liable for the harmful actions of its employees under certain conditions.
It is generally agreed that the principal's liability laid down in DL 3-19-2 cannot be extended to include the principal's liability for an independently acting third party. The reasoning behind this is that the employment conditions are not the same regarding instruction, control and supervision capabilities for an independently acting third party. Notwithstanding this, the exception is seen in jurisprudence to be used by the courts, so that the principal, when the specific circumstances justify it, is imposed a liability.
The principal's liability is not conditioned on the fulfilment of fixed conditions. Instead, the courts make an overall assessment of the specific circumstances of the case to determine whether the principal can be held liable. As a principal, it is therefore crucial to be aware that in certain cases – including where the work can be characterised as dangerous – the principle can be held responsible for the damages caused by their independent (sub)contractor.
The court predominantly utilises the following assessment criteria:
- dangerous work;
- the principal's interest;
- the principal's economic strength and professional insight;
- the principal's instruction, control and supervision.
The starting point is that the courts impose liability on a principal, particularly in cases where the principal themselves would have been subject to strict liability when carrying out the work in question, especially in the case of dangerous work.
In the "Spray" case,(1) the principal had hired an independent contractor to carry out spraying with various poisons on the principal's leased areas. The Court of Appeal determined that the contractor, not the principal, had acted culpably. Notwithstanding this, the Court of Appeal confirmed that by delegating the spraying, which was dangerous for the neighbouring areas, to the contractor, the principal could not waive responsibility for the consequences of the contractor's error, which is why the principal was held liable.
In this case, particular emphasis was placed on the fact that the spraying posed a danger to the neighbourhood/neighbours. Neighbouring legal views must thus be considered to have an influence on whether a specific work qualifies as dangerous, and thus when a principal can be liable. The principal's responsibility for an independently acting contractor is intensified in the case of dangerous work, and especially in cases where it is not due to random circumstances who the injury affects.
Thus, in the "TDC" case,(2) the Supreme Court also placed particular emphasis on the neighbouring legal views when deciding whether a principal could be held liable. In the case, it was also established that the neighbouring legal views are not limited to actual neighbouring relationships. In the case, a contractor had been hired to lay down a telecommunications cable, which caused a break in a water main. The decisive factor for whether it was dangerous work was that the work was carried out in the vicinity of other cables.
Historically, excavation work has been considered an area of work which is associated with particular risk, and the principal has thus in many cases, depending on the specific circumstances, be held liable regarding this type of work. Excavation work is considered, also in relation to the TDC case, to be dangerous work.
In assessing whether the principal can be held liable, it is essential to establish whether the work in question can be classified as dangerous work.
However, the criteria have been extended, as the courts in several decisions have imposed liability on the principal where the work could not in isolation be considered as dangerous work, but rather where the work in question was carried out in close connection with work that could be characterised as dangerous.
This was also true in the "Road Paving" case,(3) where the Court of Appeal imposed liability on the principal as a result of the principal's failure to supervise the execution of the work, but especially also as a result of the special nature of the project – that is, the closure of natural gas pipelines. Whether a specific work can be classified as dangerous work should not exclusively be assessed based on the risk of injury during the execution of the work but must be seen in the context of where the work is carried out, including whether it is carried out in the vicinity of other people's property and/or life and health.
Case law shows that the courts want to accommodate the injured party's options for compensation in the case of dangerous work, but that the principal at the same time must risk being held liable in situations where the principal themselves would have been subject to a strict liability standard if the principal themselves had carried out the work.
In case law, in the assessment of whether a principal can be held liable, the fact that the work was carried out in the principal's interest is also important. However, the interest criteria are only used as a supplementary element by the courts, as it rarely stands alone or is highlighted as central to the courts' decision.
The interest criteria, however, is decisive in the assessment of whether an employer can incur liability pursuant to the principal's liability according to DL 3-19-2. Here, too, the criteria for when liability can be established for an employer and a principal differ respectively.
This is supported by the "Sewerage" case,(4) where a municipality had hired a contractor to carry out excavations for a sewer line. The Court of Appeal here justified the principal's liability on the basis that the project was carried out in the municipality's (principal's) interest. The criteria of interest – combined with the fact that it was dangerous work – was thus decisive in the present case to impose liability on the principal.
In the most recent case regarding the principal's liability, the "Pressure line" case,(5) the Supreme Court imposed liability on the principal on the grounds that it was particularly risky work (dangerous work with the establishment of a new pressure line), which was connected to a such a special risk of damage to surrounding wires (neighbouring legal views) that the liability requirement was tightened.
The Supreme Court thus overturned the Court of Appeal's decision, which, contrary to the Supreme Court, did not find evidence to deviate from the fact that the principal is generally not liable for damage outside the contractual relationship when the damage is caused by an independent third party.
The Supreme Court, however, considered the principal to be, in the specific circumstances, the closest to bear the risk of the damages because of the contractor's irresponsible drilling, as the principal would have been subject to strict liability if the principal had carried out the work in question.
The criteria of interest do not appear directly from the judgment's premises but was included and highlighted repeatedly by the parties to the case.
The interest criteria is used in jurisprudence with considerable caution, as both principal and contractor must be said to have a (main) interest in the work being carried out, and it can therefore be difficult to unequivocally determine in whose interest the work is carried out.
Principal's economic strength and professional insight
In recent case law, emphasis is also placed on the principal's financial strength, just as the principal's professional insight within the field of work under which the work is carried out is given importance.
In the "TDC" case,(6) the Supreme Court imposed a liability on the principal, contrary to the Court of Appeal, and stated in its decision that the principal had the technical and financial possibilities to limit and manage the risk relating to the work, which is why the principal was the closest to bear responsibility for the damage (split decision), despite the fact that the Supreme Court determined that the contractor had acted culpably against the principal.
In the "Steel ball" case,(7) the Supreme Court also stated in its reasoning that the principal had the technical and financial possibilities to limit and manage the risk of the work, which is why the principal was held liable. In the judgment in question, it was established that it is not sufficient to avoid liability for the principal to simply make the contractor aware that the work must be carried out with due care and caution.
Exemption from liability for the principal, on the other hand, requires the principal's active participation in the process/preparation, if the principal has special professional insight.
The reference in case law to the principal's technical and financial possibilities to limit and manage the risk of the work must be regarded as an extension of the scope of liability in employment relationships, as the principal's subjective circumstances are included in the assessment.
In view of the still sparse case law on this matter, it must be temporarily assumed that this is not a general criterion that must be met, but that it is a burdensome point if a principal has special professional insight into the work and/or greater financial strength than the contractor.
Principal's instruction, control and supervision
This criterion is the bearing one in determining the principal's liability according to DL 3-19-2. It is therefore also included as an element in the courts' assessment of whether a principal can be held liable or not.
In the "Road Pavement" case,(8) the Court of Appeal emphasised that the principal had a duty to supervise and control the work. The fact that the road surface was particularly vulnerable, and that the principal was aware of this, was emphasised. The principal's supervisory duty was thus strengthened due to his knowledge of the risk when carrying out the work. In the present case, however, the principal was not imposed with independent fault liability, as the principal had supervised.
In case law, it is essential whether the principal or their employees had specific knowledge of matters of significant importance towards the possibility of averting the damage that occurred, and that this failure to disclose resulted in the principal incurring liability.
The principal's instruction, supervision and control obligation must be seen in connection with the criteria of dangerous work, the principal's financial strength and professional insight. In relation to dangerous work, there will undeniably be a greater risk of injury, which in most situations will place greater pressure on the principal's supervision and control. The same applies to the principal's professional insight; the greater the insight the principal has in the subject area in question, the greater the requirements for supervision and control.
However, the state of Danish law is difficult to navigate. The principal must ensure that there is sufficient supervision and control, while not carrying out such extensive supervision that they may risk incurring independent culpa liability and/or could be identified as undertaker.
The criterion of the principal's obligation to instruct, supervise and control should thus be included in the assessment of the principal's liability, where the principal has special reason to carry out supervision and control.
No fixed and general criteria can be established for when a principal can exceptionally be held liable for the harmful actions of its assignees.
However, the courts are seen to predominantly apply four criteria when determining the principal's liability:
- whether work can be characterised as dangerous work and/or carried out in close connection with work that can be characterised as dangerous work;
- whether the work is carried out in the interest of the principal;
- the principal's financial strength and professional insight, and;
- the principal's instruction, supervision and control.
These four criteria are not exhaustive, and the courts thus also include other elements and considerations than these in the assessment, just as not all criteria are equally decisive or generally applicable.
Principles should be aware of all the four criteria mentioned when planning a task where an independent acting subcontractor is assumed.
It is consistent, however, that the work in question must be characterised as dangerous work, which is why this criterion alone must be considered a general criterion, just as the principal is only seen to be liable for liability where the contractor has acted culpably (and is therefore responsible) and where the principal has not themselves acted in a way that gives rise to liability or can be imposed an unlawful objective liability.
The principal's professional insight also leads to a tightening of their liability towards their independently acting third party, and the principal should therefore pay special attention to this.
This development in case law approaches the principal liability in DL 3-19-2, as the focus is to a greater extent on the principal's relationship rather than solely on the role of the contractor.
The courts have thus become more inclined to impose liability on the principal in cases where the contractor has caused an injury culpably (and are therefore liable) in connection with dangerous work, and the principal had a special reason to limit the risk by exercising supervision and control of their professional insight – however, without the lack of supervision by the principal being qualified as giving rise to liability in itself.
For further information on this topic please contact Elizabeth Nissen at WSCO Advokatpartnerselskab by telephone (+45 3525 3800) or email ([email protected]). The WSCO Advokatpartnerselskab website can be accessed at www.wsco.dk.
Endnotes