No-one cannow deny that the exploitation of natural resources is essential to oursurvival. The Industrial Revolution of the 19th century changed the dynamics ofhow we produce goods, creating new consumption habits. A significant part ofsaid goods’ production relies on natural resources and history shows that themore we consume, the more intensely we need to change our environment. Due to increasingenvironmental degradation, the UN ran its first conference on the environment inStockholm in 1972. The conference called for greater awareness of how humanactions were causing serious destruction, gravely threatening our survival.
Protecting the environment
This newglobal awareness of the environmental implications of human-related destructionmotivated governments to develop better stewardship of the environment. Angolanenvironmental legislators, through Presidential Decree nº 194/11 of 7 July, announced, among other laws, thatliability guidelines for environmental damage (RRDA – "Regime deResponsabilidade por Danos Ambientais”) would be based upon the polluter-pays principle. According topolluter-pays rules, polluters must bear the costs to repair environmentaldamage. This means that any and all agents who, as a result of their actions, cause damage to, or degradation, destruction ordilapidation of the environment, must provide reparation and/or indemnification for the damages caused. If there’s no damage, the agent is not heldaccountable. However, where theenvironment is concerned, even non-compliance with a protection rule leading topossible environmental damage, could render the agent accountable.
Environmental damage
The RRDAdefines environmental damage as ‘adverse change of environmentalcharacteristics, including among others: pollution, desertification, erosion anddeforestation’. However, this is a very broad definition, creating uncertaintyand insecurity around the legal consequences. Whatever the human action againstthe environment, all the available legal means will be brought to bear on economic agents. For this reasonit is agreed that by adding the adjective, ‘significant’ at the beginning, itgives the wording greater clarity, enabling it to be more effectivelyapplied within an environmentalresponsibility context. The general consensus is that environmental damageshould be categorised as subjective and ecological.
Damage issubjective when a tangible environmental component is harmed - soil, undersoil,air, water, light, flora and fauna – negatively impacting a person and theirproperty. Ecological when it alters, spoils or destroys the components of anatural asset.
Accountability guidelines
In order toprevent environmental harm and to ensure the person causing such damage isaccountable and pays for their actions, Angolan lawmakers introduced RRDAguidelines covering subjective and objective responsibility..
Forsubjective responsibility, agents who,with or without intent, cause environmental damage, must remedy such damagesand/or indemnify the government andcitizens for losses and harm caused, through compensatory measures andenvironmental reparation. Instead of reimbursing the government however, the fundswould be channelled into an Environmental Fund, financing studies and programmesto preserve natural resources, guaranteeing a healthy environment for citizens.This is particularly important when the person causing damage does not have theresources to prevent it worsening and/or for remediation.
Oddlyenough, Angolan lawmakers have categorised oil-related activities - the onescausing the most ecological damage in Angola – under subjective responsibility.Establishing a causal nexus or connection between pollutant emissions that havecaused thousands of fish to die and harmed citizens’ health is, environmentallyspeaking, an onerous, complex and difficult task. Placing the burden on thosethat have been harmed is not an ideal solution as it’s difficult to hold theagents who caused the damage to account. In response, the RRDA guidelines havechanged and in a preamble statement it’s confirmed they ‘revoke all legislationthat’s contrary to them’. Oil-related activities will now be categorised underobjective responsibility. For objective responsibility, an agent harming anenvironmental component, no matter what size, rights breached or third-partyinterests, must repair and prevent further environmental damage, regardless ofculpability or intent.
So, even ifthe agent invests in and adopts the necessary measures to prevent environmentaldamage, the agent will always, ‘ope legis’, be compelled to repair and/orindemnify for the harm caused. This solution appears not only economicallyinefficient but restrictive to economic enterprise. To improve efficacy, thereshould be categories for objective or subjective responsibility according to alist of activities that respectively pose a high environmental damage risk (andtherefore fall under objective responsibility). Lower-risk activities fallunder subjective responsibility.
The RRDAguidelines do not specifically cover Directors & Officers’ liability,however, such liability arises when an agent breaches an administrativeregulation intended to protect the environment, and as a consequence, fines willbe meted out. Within this context, Angolan lawmakers do not have an objectivecriteria for fines, the value of which ranges from a Kwanza equivalent ofUS$1,000.00 to US$1,000,000.00. When issuing a fine, the regulators do not makean accountability distinction between neglect and a wilful act, nor have theyseparated natural person from legalperson.
Thisoversight may stimulate arbitrary fines and cause uncertainty among economicagents; a situation incompatible with modern democratic governance. Despite themechanisms in place, environmental damage of the ecological variety isfrequent. Some destruction is of a magnitude that results in extremely highfines, leads agents to insolvency and curtails their ability to repair thedamage and/or compensate others for their actions. Therefore, it is mandatoryfor agents operating in Angola to have one or more of the following financial instruments:insurance policy, bank warranty, participation in environmental fund orprovision of dedicated capital reserves. All agents must only have the abovecontracts, funds cannot be diverted elsewhere nor have other obligationsimposed upon them due to administrative liabilities.
It is worthnoting that, among the instruments above, purchasing an insurance policy meetsenvironmental policy goals; it is the most cost-effective and gives agents riskassessment mechanisms to help them adopt the necessary damage preventionmeasures. Contrary to the stipulations of Angolan lawmakers however, insuranceshould not be mandatory. First, because these insurance policies hold inflexibleclauses and demands for capital and second, environmental risks can be hugely complex,some of which are not yet fully understood by insurers (the risk of gradualpollution, for one). It is therefore preferable to adopt a case-by-casepurchase model. This avoids the dilemma of adverse selection and ensurespolicies are designed – capital and coverage-wise – to meet the real needs ofeach agent.
Mário Xicato
Mário Xicato has a law degree from the Catholic University of Angola, andpost-graduate studies certificates in applied management from ABS, Nova University of Lisbon, andinsurance law from AIDA, Lisbon Law University, Portugal. He completed post-graduatestudies in banking, stock exchanges and insurance at BBS, Coimbra Law Schooland has a master’s in law and management from the Catholic University ofPortugal. Mário joined the insurance sector in 1998, working in the motordepartment at ENSA. He started in customer service, learning how toforensically assess vehicle body and material damage, and attendedself-development and skills’ training courses. He was then appointed to head ofAuto Claims, utilising his critical and analytical skills. Mário devotes hisfree time o writing articles thatpromote the growth of an insurance culture in his country.
