An Economic Analysis of a Swedish Environmental Liability Case

A High Court case illustrates Swedish legal reasoning. The case extends the use of strict liability, although the main liability rule is negligence. The aim of the paper is to show the usefulness of the economic analysis in a practical case. The case concerns liability for damages caused by a leaky, hot-water pipe. The defendant maintained that it should not be held liable because it had not acted negligently, and the district court and the court of appeals supported the defence. Nevertheless, the High Court decided on strict liability. The High Court used a line of argumentation that, partly and implicitly, may have been economically correct. However, the precedence was most limited and unclear. Given an explicit goal of economic efficiency, the precedence would, in this simple and straightforward case, be that strict liability should prevail where the cause is unilateral and the injurer is able to cover and/or insure the loss.