On September 10, 2015, the Court of Justice of the European Union (Court) adopted a landmark ruling resolving a dispute between the European Commission and the European Chemicals Agency (ECHA) on one side and several Member States on the other, regarding the concept of an “article” under the EU Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (REACH). In its ruling (see the judgment here), the Court followed much of the reasoning in the February 2015 opinion of Advocate General Kokott (see previous Sidley Update here) in rejecting the longstanding positions of the European Commission and ECHA and finding that components retain their character as “articles” after they are incorporated into an assembled product.
The Court’s rejection of the Commission and ECHA positions has important implications for the reporting obligations of producers and importers to ECHA under REACH Article 7(2) and the information obligations of suppliers to customers under Article 33. Those requirements apply if an article contains a substance on the REACH “Candidate List” of intrinsically hazardous substances (Annex XIV) that exceeds 0.1 percent of the article’s weight. Importers and suppliers of an assembled product – but not an EU producer of the assembled product – will now have to go through the cumbersome, difficult and potentially costly process of examining each component for Candidate List substances, to determine if they exceed the threshold for the reporting and information requirements.
First, Article 7(2) requires producers and importers of an article with a hazardous substance exceeding the foregoing level to notify ECHA unless the use of the substance has been previously registered. The Court interpreted Article 7(2) as meaning that the producer of an assembled product has to notify ECHA only if the product has hazardous substances not already registered that exceed 0.1 percent of the entire product’s weight. The Court said it follows from a literal interpretation of Article 7(2) that the producer’s duty to notify is not applicable to an article made by a third party, even if the producer uses that article as a component in making an assembled product. According to the Court, however, an importer of an assembled product needs to determine whether any of the components that make up that product contain hazardous substances exceeding 0.1 percent of the component’s weight. According to the Court, a different interpretation would risk that ECHA would not be informed about the use of substantial quantities of hazardous substances imported into the EU’s internal market.
Second, Article 33 requires all suppliers of an article to provide customers with sufficient information available to the supplier to allow safe use of the article. This requirement also applies when the article contains a Candidate List substance exceeding 0.1 percent of the weight of the article. The Court’s ruling that components retain their character as articles after incorporation into an assembled product has the same important consequences for suppliers throughout the supply chain under Article 33, as those described above for importers under Article 7(2).
In ruling that components of assembled products retain their character as articles, the Court followed the Advocate General in all but one important respect. Based on a proportionality assessment, the Advocate General had found that, under REACH Article 33, where information about hazardous substances in an article is not available there is no obligation to provide it. According to the Advocate General, that also applies to the names of hazardous substances in components of an assembled product. The Court, however, interpreted Article 33 as requiring that the information provided to customers must include, at a minimum, the name of the substance. According to the Court, that requirement cannot be regarded as imposing an excessive burden.
Pursuant to the Court’s ruling, therefore, all suppliers in the supply chain of an assembled product must not only determine whether components in the product contain hazardous substances exceeding the 0.1 percent limit relative to the weight of the component. At a minimum, they must also determine the names of those substances even if other information regarding their safe use is not available. As the guidance notes of the Commission and ECHA are inconsistent with the Court’s ruling, they will now need to change and update the guidance to reflect the ruling.
In summary, the Court’s rejection of the Commission’s and ECHA’s broad interpretations of the concept of an “article” as applied to assembled products, expands the heavy administrative burden that REACH already imposes on industry.