A Dutch court has ruled against a company which broke the EU Timber Regulation (EUTR). In its conclusion, it fleshed out the core obligations resting on companies under the law, which aims to stop illegal timber being sold in the EU.
The case started in 2015 with inspections carried out by the Dutch authority responsible for the EUTR (the Nederlandse Voedsel- en Warenautoriteit) on wholesale timber company Fibois BV Purmerend. According to the authority, the company had not fully complied with the due diligence obligation when placing Cameroonian timber on the EU market. It therefore ordered it to take all necessary steps to do so and imposed a conditional fine on Fibois.
The company challenged this decision before the Dutch court. In its ruling, the court pointed out that to comply with the EUTR, a company placing timber on the EU market for the first time has to collect information on its timber supplies and assess the risk that the timber has been logged illegally.
The court clarified that the information gathering needs to cover all the steps in the supply chain, from harvest to placing on the EU market. In this case, it noted that certain documents linking the logs that were processed and sold to the trees identified on harvest documents were missing at the time of the inspections carried out by the authorities. The company’s claim that this did not matter (because it had verified these documents) was dismissed by the court, which made clear that it is essential that compliance with applicable legislation be verifiable by the authorities.
The court ruled that because the information gathered was inadequate, it was actually impossible for the company to assess the risk of illegally logged timber in the supply chain. Given the significant risk of corruption in Cameroon and previous indications that a Cameroonian supplier had been possibly involved in the processing of illegally harvested timber, the court said that the risk of illegality could not have been negligible. The company, which had not taken adequate mitigating measures, was therefore found in breach of the EUTR due diligence obligation.
After Swedish authorities took action in 2016, this is another important ruling showing an increased effort across the EU to apply the EUTR, which has been in place since 2013.
Since 2013, national authorities in the EU in charge of EUTR enforcement have been focusing on explaining the due diligence requirement to companies. We welcome the current trend towards stronger enforcement as an incentive for companies across the EU to have robust systems in place to check the legality of their timber supplies.
The statements in the Dutch ruling should guide EU authorities and companies to understand the scope of their obligations under the EUTR and incentivise regulated companies to carefully asses the risk of illegal logging along the full supply chain.