Judgment regarding compensation pursuant to the Epizootic Act

The Supreme Administrative Court has ruled on whether compensation for loss of production pursuant to the Epizootic Act (1999:657) may be paid to a party other than the party to whom a decision regarding measures according to the act is directed.

The Swedish Board of Agriculture has the authority to make decisions for the purpose of eradicating epizootic diseases, i.e. animal diseases posing a danger to the public which can be spread by infection amongst animals or from animals to humans and which can constitute a grave threat to the health of humans or animals or cause major economic losses for society.

A party who incurs costs or losses as a consequence of such a decision may obtain compensation from the state. Compensation is paid, inter alia, for losses of animals and for loss of production. Compensation is paid in accordance with general principles of tort law. This entails, inter alia, that only the person who has been directly affected financially by a decision is entitled to compensation. Thus, compensation is not paid to the party who indirectly incurs damage as a consequence of the decision (so called third-party damage).

The case concerned a company that had 10,000 eggs for hatching at a facility where avian influenza broke out. To prevent the spread of infection, The Swedish Board of Agriculture issued certain decisions directed to the owner of the facility, inter alia, that all eggs at the facility were to be destroyed.

The Swedish Board of Agriculture rejected the company´s application for compensation for loss of production, explaining that the company had not been directly and primarily affected but, rather, only indirectly, and that the losses were thus third-party damage which did not give rise to an entitlement to compensation. According to the Swedish Board of Agriculture, it is only the party whose facility is subject to the declaration of quarantine and declaration of infection and who has been subject to restrictions which may obtain compensation. When property owned by someone other than the party to whom the decision is directed is destroyed, it is a matter which may be addressed by means of civil-law rules.

The Supreme Administrative Court noted that the decisions of the Swedish Board of Agriculture are, as a rule, directed to the party who has the relevant animals in its care, but that the rules regarding compensation have not been linked to the animal keeper in the same way. According to the Court, the party to whom a decision regarding measures is directed is not decisive. Rather, the question regarding compensation is to be determined on the basis of tort-law principles

The Supreme Administrative Court stated that the company´s property was destroyed as a direct consequence of the decision by the Swedish Board of Agriculture regarding destruction of all eggs at the facility. Accordingly, as a consequence of the decision, the company has incurred direct property damage (destruction of eggs) which, in turn, according to the company, gave rise to consequential damage (loss of production). Accordingly, the company is not to be regarded as a third party in this situation. Accordingly, the company may be deemed to have been affected by the decision in such a manner that the provision of the Epizootic Act regarding compensation from the state is applicable.

Read the judgment here: