Legal briefing | Environment & Regulatory | 07 Oct 2015

EU chemical law update

Overview

European Court issues landmark judgment on substances in products

Summary

The Court of Justice of the European Union (CJEU) has issued a landmark ruling that the 0.1% 'weight by weight' thresholds contained in REACH's1 'notification' and 'supply-chain information' provisions shall apply to individual 'component' parts or articles and not just the finished 'complex' article or product.

This judgment clarifies a long-standing debate amongst Member States and the EU Commission as to how this 0.1% threshold should be applied. However, as a consequence of this judgment, economic operators, in particular 'producers', 'importers' and 'suppliers' of articles and products will face increased compliance challenges.

Introduction

On 10 September 2015, the CJEU issued its judgment in Case C-106/14 which primarily concerns the application of the 0.1% Substances of Very High Concern (SVHC) threshold under the EU's REACH Regulation. 

As a consequence of this judgment … 'producers' and 'importers' of products will face increased compliance challenges.

Overview

The CJEU's judgment closely follows the Advocate General's opinion issued in the case in February. 

Court's judgment

The Court clarified that the REACH Regulation does not draw a distinction between when (i) articles exist as individual parts or articles (for example a single finished component that goes into a laptop computer), and (ii) when 'component' parts or articles are contained in a 'complex' product (for example the end laptop computer which consists of many component parts). In doing so, the Court endorsed the "once an article, always an article" argument of the minority of EU Member States and contradicted the guidance previously published by the European Commission and the European Chemicals Agency (ECHA).

With respect to the application of the 0.1% SVHC threshold contained in REACH's notification and supplychain information provisions (under Articles 7(2) and 33), the Court held that the 0.1% threshold should apply to the weight of the component 'article', not the entire end 'article'.

Impact on 'producers', 'importers' and 'suppliers'

The Court's judgment also clarified the responsibilities of economic operators within the supply chain. In particular, the ruling held that:

  1. The 'producers'2 duty to notify ECHA of SVHCs in articles under Article 7(2) covers those articles which the producer itself has made or assembled. There is no duty for producers to notify the ECHA of products produced by a third party (as that third party 'producer' will be under its own notification duty).
  2. The 'importers'3 duty to notify ECHA of SVHCs in articles under Article 7(2) applies to all 'component' articles within complex articles (and not merely the final 'complex' article).
  3. 'Suppliers'4 of products should provide information to recipients and consumers under Article 33 (specifically when that article contains greater than 0.1% of an SVHC) all along the supply chain when the article is supplied to a third party. The minimum information to be provided is the name of the substance in question.

Comment

In its judgment, the CJEU has ensured that ECHA is notified of, and recipients and consumers of products are informed of, the presence of SVHCs in products. There are clear policy drivers behind the CJEU's decision; for example, the CJEU note that ECHA should be able to monitor the flow of SVHCs into the EU to better understand how future risk management measures (be it authorisation or restriction) may be applied.

From a business perspective, 'producers' and 'importers' will want to review the adequacy of their restricted substances policies and procedures in light of this judgment as well as procurement arrangements. We anticipate that this new interpretation will result in far more products being caught by the regime.

'Producers' will wish to ensure that notifications are provided to ECHA (under Article 7(2)) in respect of 'component' articles which they make or assemble.

'Importers' will wish to ensure that the required SVHC information is now sought from upstream suppliers where necessary in respect of all 'component' articles so that the importer can analyse whether an ECHA notification is required. This extensive information gathering exercise is a task which the CJEU openly acknowledge in its judgment will be difficult.

Finally, 'suppliers' of articles will wish to ensure that adequate information is sought from upstream suppliers and passed to downstream users to ensure safe use in respect of 'component' articles.

As a CJEU judgment, this ruling is, strictly speaking, effective immediately. Given the background to this dispute and the high-profile judgment, it is likely that economic operators will be expected to demonstrate compliance with these new requirements. However, in practice, national regulators and enforcement bodies will understand the challenges this judgment poses to economic operators and will likely adopt a facilitative approach to compliance.

We would be pleased to assist with any enquiries you may have on this judgment. A selection of our team's chemicals experience includes advising:

  • article manufacturers on REACH, including: registration of substances in articles, notification of SVHCs in articles, customer / consumer communications and supply chain risk management
  • a chemical manufacturer on an Ozone Depleting Substances, REACH and CLP warranty and indemnity claim
  • a clothing manufacturer on the new ‘treated article’ provisions of the Biocidal Products Regulation
  • chemicals manufacturers on the new phase-down requirements under the F-Gas Regulation and CLP Regulatory issues
  • U.S. importer on pan-European RoHS notifications
  • U.S. electronics manufacturer on an EU regulatory landscaping and compliance project. In addition, members of our team have previously advised on REACH consortium agreements, disputes over data usage and REACH matters in corporate transactions.

References

1 the EU's principal chemical law regime

2 those who make or assemble an 'article' within the EU

3 those who are responsible for the physical introduction of the 'article' into EU custom's territory

4 those producers or importers of articles, distributors or other actors in the supply chain who place an 'article' on the market in the EU

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