Market Processes, Standardisation, and Tort Law

Private standards play a decisive role in tort law and in administrative law. Although they seem to be a perfect tool to achieve the goal of European integration, they tend to substitute democratic legitimacy with uncontrolled private governance. The loss of democratic control is accentuated by the failure of markets to provide sufficient incentives for standardising organisations to behave in a non-opportunistic manner. The dangers of cartelisation and oligopolistic behaviour are obvious. The approach to overcome these deficits is complex: on the one hand, an institutional governance of private organisations is necessary to incorporate third party interests in the process of enacting private standards; on the other hand, the legal effects of private standards have to be restricted to mere assumptions dependent on the democratic quality of their enacting process. The problem of democratic legitimacy is aggravated by the parallel substitution of state authorities' control by means of private certification organisations which control only the management procedures of firms. As these management systems are difficult to be evaluate, the opportunities for opportunistic behaviour amongst firms and certifiers increases. Moreover, markets themselves fail to discipline certifiers by virtue of a lack of observable factors which might indicate the quality of certification. Tort law, too, cannot fulfil that gap by providing liability for damages caused by undue certifications because tort law suffers from a variety of shortcomings such as missing protection of public goods and difficult assessments of causation linkages. In sum, the author argues for a mixture of market incentives, tort law and administrative law. Each sector must fill in the gaps left by the others.