Efficient Court Decisions and Limiting Insurers' right of recourse: The Case of Custodian Liability in the Netherlands and Belgium

Abstract

Custodian liability is the liability for losses caused by an object under a person's control. Although the basic rules regarding custodian liability are quite similar in The Netherlands and Belgium, one major difference exists. Whereas Belgium always applies strict liability, in the Netherlands, strict liability does not apply if the suit is filed by a subrogated party (e. g. an insurer). These parties have to rely on negligence. We examine from an economic perspective whether strict liability or negligence is better suited for custodian liability and consequently also analyse the efficiency of the Dutch limitation on recourse. We examine written law and case law. More specifically, we focus on the question whether courts, by interpreting the concepts of "defect" and of "custodian", place liability on the person who was in the best position to prevent the accident from happening (or to minimise the risk that the accident would happen).