Tuesday, 24 January 2012

Who identifies when only transnational legislation will do?

When inviting bids it's normal (I hope) that buyers carry out a risk assessment, identify who is best placed to manage those risks and stipulate the insurance cover which the successful provider will have to put in place during delivery of the contract.

The insurance cover aims to protect the buyer and others who may suffer during the supplier's delivery of the contract.  On one hand the buyer is being protected through the insurance in the event of supplier failing to deliver or causing damage.  On the other hand
the insurance provides some protection to the buyer if, say, members of the public or customers suffer directly in the contractor's delivery.

However, what happens if the contract has been completed and then claims start arriving at the buyer's door? In those situations it is unlikely that the supplier has any direct cover, after all the supplier will have completed delivery and the insurance liability could be expected to end on the same date.  One option is for the buyer to require insurance cover for a period of time beyond the period when the asset or service is delivered.  But say the claim is for a defect which only comes to light many years after completion, the limitation period has passed and all the organisational memory of who actually held the contract may also have gone too?  Equally, what happens when the claims start arriving and the supplier is no longer in business?

To compound matters let's say that the provider had been based in one country and the victim was from another, and the claim relates to health tourism.  No insurance to fall back on and no obvious route through the national courts?   

To me, when there are significant risks/costs to society as a result of a risk which cannot adequately be insured against, this can only be addressed by cross border legislation.  In fact, to me, this is where organisations such as the EU should add value.

Now given the UK's strained relationship with other EU countries at the minute, and the recent (French) breast inplant scandal which I have discussed from a variety of perspectives in earlier blogs.  Are the UK well placed to negotiate a legislative umbrella of protection for citizens?  

Who takes this sort of overview and identifies when only transnational legislation will do? Should that sort of analysis include procurement specialists?

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