CASE

Earthquakes occur historically in a specific region. They are not life-threatening; however, the earthquakes damage the foundations of houses and cause cracks in the walls.

A group of owners of private houses demand compensation from the state. Will they receive compensation and, if so, for what losses? And is it possible to start a collective proceeding? If so, please indicate the most important bottlenecks in this particular case. Would it make a difference if the earthquakes did not occur historically, but are the result of mining activities in the region?

DISCUSSIONS

AUSTRIA

Matthias Dangl and Georg E Kodek

Operative Rules

To assert official liability it is necessary to prove that the local authority acted negligently by designating the plots as building land in the zoning plan or by granting building permits for the houses.

Apart from a potential official liability, the homeowner’s policy will usually cover the loss (partially). However, homeowners are not obliged to conclude such a policy. Furthermore, the Austrian legislator created a special fund (Katastrophenfonds) to provide compensation for damages caused by natural disasters. However, according to the federal states’ guidelines, there is no legal entitlement to receive money from this fund.

If the earthquake was caused by a mining company, claims for damages could be brought under the general tort provision of § 1295 para 1 ACC.

A collective action (as described in the Austrian section in the procedural rules chapter) would be possible.

Legal Formants

The Austrian Supreme Court confirmed official liability in the context of flood damages. It was ruled that the municipality was obliged to make flood run-off areas visible in the zoning plan. In another case official liability was confirmed because of culpable non-clarification of the flood hazard in the building permission process.

If the earthquake was caused by a mining company, claims for damages could be brought under the general tort provision of § 1295 para 1 ACC. In this case there would also be detailed conditions imposed by the administrative authorities as to what safety precautions have to be taken by the mining company. In the event that these precautions imposed by the authorities are inadequate, official liability could also be established if the authorities acted negligently.