CAMAC has published its report  Long–tail liabilities: the treatment of unascertained future personal injury claims (pdf).

The report puts forward proposals to
improve the position of potential personal injury claimants whose
claims against a company may not emerge for a long time. The adequacy
of legal arrangements for the protection of these claimants was called
into question in the  Report of the Special Commission of Inquiry into the Medical Research and Compensation Foundation (September 2004) (the James Hardie inquiry).

The problem arises with claimants
whose personal injury or illness only comes to light well after
relevant activities – such as the sale of a product for which a company
is responsible – have taken place. Their prospects of recovering
damages will depend, apart from anything else, on the continuing
existence and financial strength of a company over the period in
question. The issue at stake is whether, and to what extent, special
provision should be made for these claimants against the possibility of
the company getting into financial difficulty.

The report makes a series of
recommendations including:

• Solvent companies.
  The share capital reduction, buy-back and financial assistance
  provisions should be amended to require that a proposed transaction not
  materially prejudice the company’s ability to pay its creditors or meet
  its contingent or other liabilities, including liabilities to future
  injury claimants. Also, a solvent company with anticipated liabilities
  of this nature that may render it insolvent at some future time should
  have the right to seek a court order confirming a plan to deal with
  these claims as they arise. 
• Voluntary administration. 
  A person representing future injury claimants should have standing to
  challenge in court a proposed deed of company arrangement on the basis
  that it would be unduly detrimental to the interests of these claimants.
• Schemes of arrangement.   The scheme provisions should be amended to permit schemes involving a company and an identified class of these claimants.
• Liquidations.   The
  court should have a power to order the setting aside of funds in trust
  for personal injury claimants, where the court considers that this is
  worthwhile, taking into account the distributable assets available for
  unsecured creditors.

The Committee did not support the
suggestion that these protections should be available
only where a mass future claim was afoot. Also, the Committee was not
persuaded of the need for a specific anti-avoidance provision.

The report notes the importance of
companies complying with their existing obligations to disclose
contingent and other liabilities, which can include unascertained
future personal injury claims. The proper identification and disclosure
of these anticipated claims, whether or not related to personal injury,
should be part of the responsible management of a company as required
by applicable accounting standards.