In order to understand the actions of the parties involved some background information on the devel-opment of the case is essential. The timeline below provides an overview of the events that have occurred since the decision to put a ban on the use of asbestos in roofing sheets was made by the Danish authorities.
1976: Dansk Eternit-Fabrik A/S estimates that there will continue to be a basis for a produc-tion of fibre cement roofing sheets in Denmark, and the company starts developing non-asbestos roofing sheets. The decision to develop new asbestos-free roofing sheets implies that roofing sheets will continue to be available to Danish house-owners for repair and replacement of existing roofs as well as for new constructions and extensions. Finally, 1,300 jobs will be saved.
1979: The Ministry of the Environment demands that new fibre cement roofing sheets must be asbestos-free by 1984.
1981-82: Dansk Eternit-Fabrik A/S has come so far in the development of technology and product concepts, that the first trial productions are initiated.
1983-84: The testing of the newly-developed asbestos-free roofing sheets continues. Comparative tests with asbestos containing roofing sheets are performed in co-operation with the Danish Technological Institute. A small number of houses are fitted with the newly-developed asbestos-free roofing sheets for testing purposes.
1984: The Ministry of the Environment extends the time limit and demands that asbestos con-taining roofing sheets must be phased out by the end of 1989 at the latest.
1984-86: About DKK 500m investments are made in research and development. Several competi-tors stop their production because they do not want to take up the technical challenge of developing a completely new product, new machines and new technology, nor to initiate a major transition process.
Tests show that the characteristics of non-asbestos roofing sheets as a minimum match the those of the existing asbestos containing sheets.
1987: Sale of non-asbestos Eternit fibre cement sheets begins and the Ministry of the Environ-ment reduces the transitional period requiring that all roofing sheets be asbestos-free by 1987.
May 1988: A new and shorter production line is put into operation. For technical reasons the composition of the sheet material is changed to contain less flyash and more cement. The shorter production line gives the sheets more time to harden.
1993-94: This period sees a rise in the number of complaints, in particular regarding the appearance, suggesting that there may be unexpected problems with the sheets.
None of the tests, which compared the asbestos containing sheets with the asbestos-free sheets, gave reason to expect a higher number of complaints than before.
1994: The number of complaints continues to increase. Dansk Eternit Fabrik A/S considers how to act responsibly in this unexpected situation. The company decides to ensure that it will be able to remedy the defects and repair previously delivered sheets/roofs for many years ahead. By allocating funds for this purpose, thereby ensuring continued production, the company demonstrates its willingness to assume its responsibility.
All Dansk Eternit Fabrik's assets (including subsidiaries) and goodwill are sold at maximum price, which is the full price of all assets and a sum for transfer of goodwill. The sales price is fixed on the basis of independent external valuations.
As at 31 December 1994 the existing Dansk Eternit Fabrik is renamed DEF 1994. From this date, the company is a pure service company whose only purpose is to process the complaints over defective Eternit roofing sheets, which were delivered until the end of 1994.
DEF 1994 A/S has gained considerable funds of some DKK 220 m from the sale of its activities and goodwill to the new company, Dansk Eternit A/S. These funds are to be used to remedy the defects relating to the approved complaints over defective roofing sheets delivered before 1 January 1994.
1995: All employees are transferred to the newly formed company, which starts its activities with effect from 1 January 1995. Under the agreement, Dansk Eternit delivers roofing sheets to DEF 1994 in so far as it is necessary for remedying the defects relating to the approved complaints.
May 1 1996: Together with a number of other companies within the Danish roofing business, Dansk Eternit expands the the roofing material warranty period from 5 to 15 years. The warranty covers sheets sold after this period. The scope of the warranty and the eligibility requirements to be met to file a complaint are set out in the warranty provisions.
1997-2000: During this period Dansk Eternit's production plant is modernised, and the products are continuously developed.
2000: The Western High Court Judgement delivered in June assumes a tacit warranty issued by DEF 1994 A/S to each individual house-owner whose roof is fitted with non-asbestos
Eternit sheets - and determines that the sheets will have an acceptable appearance for 15 years and serve as a tight roof for 20 years.
The Western High Court determines the effect of this tacit warranty to be a claim for damages corresponding to the cost of a new roof - including the cost of dismantling the existing roof and laying a new roof - with deduction of the use the house-owner has enjoyed from the roof. The judgement is not subject to the roof actually being replaced.
The judgement delivered by the Western High Court represents a radical rethinking in relation to the provisions of the Danish Sale of Goods Act and the General Law of Contract, which have been in force till now. The judgement provides for subjective assessment of acceptable appearance, long periods of warranty and reduces the producer's free choice of remedy. In sum, it extends the producer's liability to pay damages.
As the case has far-reaching consequences and constitutes a lead case to many producers, the judgement is appealed to the Supreme Court.
2001: As a result of the Western High Court Judgement to extend the producer's liability to pay damages in relation to previous legislation (combined with a pending arbitration case brought by a foreign company), DEF 1994 suspends its payments on 15 January. The decision to file for suspension of payments has been made in order not to prejudice any of the creditors as it is currently doubtful whether DEF 1994 will be able to satisfy all the claims for damages.
The period for suspension of payments is renewed every third month by the Maritime and Commercial Court. Last time, the Bankrupcy Court extended the period to 15 January 2002.
The Supreme Court finalised the appeal case proceedings on 18 - 19 October and the
judgement was announced on 6 November.
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