29 Jan 2016
Hefty Fines Imposed for WEEE, Other Environmental Laws: Non-Compliance Signals Warnings for Electrical Appliance Sellers in the EU
Hong Kong traders selling electrical and electronic equipment in the EU may well be aware of the stringent provisions being imposed by all the Member States as a result of the revised WEEE Directive (Directive 2012/19/EU). The latter is a recast of the original WEEE Directive, adopted so as to tackle the ever increasing waste stream of electrical appliances in Member States’ national territories.
The WEEE Directive, along with similar waste recycling directives covering batteries and packaging, places significant responsibilities on “producers” (the term includes importers). Among other obligations, these directives impose waste management costs on producers. Such costs take into account the waste collection, treatment and recycling costs of discarded materials. If any of the obligations are breached, severe penalties can be imposed. Indeed, the WEEE Directive for example specifically provides, in its Article 22, that “the Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this Directive”, and that “the penalties provided for must be effective, proportionate and dissuasive”.
It has come to light that last year, the online trading company Babz Media Ltd was successfully prosecuted by England’s Environment Agency for failing to comply with the WEEE implementing regulations, as well as provisions in the UK’s packaging and batteries regulations, over a three-year period.
The UK company evaded paying its UK recycling costs from 2011 to 2013 and, as a result, incurred a £45,500 fine, along with £8,724.98 in costs, not including the company’s own costs in defending the case. The company was fined for breaching environmental legislation in relation to three separate materials: packaging materials, batteries and electrical equipment.
Babz Media ltd is an online trading company and is based in Middlesex, England. It sells an extensive range of consumer products via eBay as well as through its own website. The company is said to have had a turnover of £19 million in 2014, and is also said to be a leading supplier of electrical cables, blank media and batteries, according to its website. The company had imported 163.7 tonnes of batteries for sale between 2011 and 2013, and 188 tonnes of electrical equipment in 2013, and it should have recycled 76 tonnes of packaging waste in 2013.
Pursuant to the Environment Agency’s inquiries, it was found that the company should have complied with all three waste regulations starting in 2011, but did not do so until 2014.
Babz Media ltd pleaded guilty in court for not registering with the Environment Agency and a producer recycling scheme for packaging waste, waste batteries and electrical waste. The company was also found guilty of circumventing the cost of financing the collection and recycling of the three types of waste between 2011 and 2013.
All WEEE registered companies are listed on the Environment Agency website, and so non-compliance with this requirement and other producer responsibility legislation is believed to be very likely to result in prosecution. A senior Environment Agency officer is quoted as stating that “this case shows that businesses must consider all aspects of regulation, and that environmental aspects are an important part of due diligence at all times. These regulations can affect all types of business no matter the method of selling. Online trading does not excuse companies from being compliant with the law.” The officer also stated that “this company didn’t meet their legal obligations through ignorance after starting trading, they remained non-compliant for over three years and that impacted others in the market due to the commercial advantage they had.” According to the same officer, “the regulations are there to increase recycling of valuable resources, support the recycling industry and reduce the use of packaging, WEEE and batteries in the first place. We will take robust action where breaches occur – online or otherwise.”
On a related note, the Spanish Supreme Court issued, late last year, a landmark ruling in support of the fight against air pollution. For the first time ever, the owners of two companies were sentenced to imprisonment for releasing tonnes of greenhouse gases into the atmosphere.
For the period between 2007 and 2010, the companies illegally crushed 2,236 refrigerators, releasing more than 3,000 tonnes of noxious gases into the atmosphere. According to the court, such a practice highly compromised not only the environment but also human health. Therefore, both businesses’ owners were found to have committed an environmental crime within the meaning of the Spanish Criminal Code.
Somewhat shorter prison sentences were imposed by the Supreme Court on the person providing the disused refrigerators to the appellants and the person that transported those refrigerators between that provider and the appellants. The Court concluded that they contributed to the environmental crime as they knew that the plaintiffs did not possess the permits necessary for the treatment of the dangerous substances contained in the discarded refrigerators.
The appellants argued that the release of polluting gases does not amount, per se, to a criminal offence under Spanish law. Although it is true that until 2019 such a practice is not prohibited but merely limited, the Court noted that an authorisation is nonetheless required for such an activity, which the convicted individuals did not possess. Moreover, the discarded refrigerators should have been decontaminated before being crushed, to avoid the uncontrolled liberation of gases.
Consequently, the appellants were also found to be guilty of breaching the Spanish rules implementing the EU’s WEEE Directive, as they did not have permission to deal with hazardous waste, including the noxious gases contained by the discarded refrigerating devices.
These judgments are significant as it is the first time that a UK business has been prosecuted for breaching all three waste recycling instruments of legislation, and Babz Media ltd is the first business to be prosecuted for failing to comply with its battery obligations in England. Similarly, it is the first time that Spanish courts have convicted individuals for releasing greenhouse gases into the atmosphere, as well as individuals related to the waste collection operations. The Supreme Court itself made note of this fact, in response to the appeals made by the company chiefs, adding that “for every type of criminal conduct there is always a first time”.
Hong Kong companies that export electrical goods to the EU should take into consideration the implications of the abovementioned cases on their business activities. For example, online traders must comply with the WEEE and other recycling laws’ producer responsibility provisions of any Member States in which they do business, including registration and payment requirements. See, for example, Article 16 of the WEEE Directive concerning distance selling. Furthermore, the commercial importers of Hong Kong goods must likewise need to ensure that they meet the WEEE (and other laws’) producer requirements. Failure to comply could lead to the likelihood of steep penalties.