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The Americanization of the European legal system


Companies operating in Europe face an ever-growing multitude of national and pan-European laws, although generally the region remains far less litigious than the United States.

However, the European Commission has set itself the task of improving access to justice for its citizens. And recent years have seen a number of attempts to harmonize liability regimes across the European Union with the introduction of directives covering employment, products liability and the environment.

The latest attempts to harmonize have focused on age discrimination, which adds to existing employment related directives on racial, gender and disability discrimination, as well as directives that cover working hours and part-time workers. The absence of European legislation to harmonize the hiring and firing of staff, the introduction of pan-European discrimination laws and "cultural" differences all give rise to significant risks for companies operating in multiple European countries, experts say. Companies operating in Europe also face a regional-specific approach to litigation in general.

And in recent years, the United Kingdom has shown signs that the public is more inclined to resort to legal action in a bid to gain compensation. Some experts believe that other parts of Europe are showing similar signs.


But for now the European "common sense " approach to disputes, lack of class action lawsuits and a principle whereby the loser in a legal case pays all the legal costs, have helped keep U.S.-style compensation culture on the other side of the Atlantic. But there are worrying signs that European legislators could follow the U.S. model.

Around Europe, laws are being considered that could allow collective lawsuits similar to class actions in the U.S. The E.C. has also proposed that class actions be allowed for antitrust behavior, while legal experts argue that the E.C. product liability directive could also foster a compensation culture in Europe.

Directors and officers in Europe also face changes to the legal environment they operate in with new company law expected in the U.K. and Germany. Legislation is expected to increase the duties of senior managers in these two key economic zones.

Directors and officers are also more aware of compliance and regulatory issues, according to experts. In anticipation of a demand boom for directors and officers insurance in Europe, coupled with the need to diversify away from catastrophe business, insurers have been entering the market. With more competition, the soft market for directors and officers market is set to continue as buyers enjoy broader coverage and lower rates than in 2001 when the market reacted to a string of corporate scandals.