Environmental Liability

Several environmental disasters, such as Chernobyl or The Prestige, forced to take strong measures to protect the environment. The publication of the Directive 35/2004/CE established several principles and is a milestone in regard to environmental liability.

Environmental Liability
We may safely state that the environment should always be front-page news; also, that it has concerned governments and other organizations for several decades, even if action has been slow for the most part. Over the years, environmental disasters like Bhopal, Exxon Valdez, Doñana, Prestige, Chernobyl and the like have embodied some of our darkest fears. These tragedies, however, demonstrate that you can't just "let it ride" and expect things to take care of themselves. One has to take action. First off you must prevent disaster. Failing that, you have to attenuate or remedy the damage caused.

Remediation is particularly complex when we discuss environmental liability. The damage at stake is different from the kind of damage we usually deal in. Claimants are no longer specific natural or legal persons but entire communities or, if you will, humankind at large. Does not the environment belong to everyone, is it not our collective heritage? To people in the USA this topic is quite familiar and has been for a couple of decades. In Europe, it has come to the fore with the publication of Directive 35/2004/CE, regarding environmental liability.

The directive has been translated into the legal corpus of most Member States (including Portugal) and establishes a number of innovative principles, such as the "polluter pays” principle, the "damage to biodiversity” (water bodies and natural habitats), the need for the operator, faced with imminent environmental damage, to launch all necessary preventative measures, the reparation of caused damage (in either case, prevention and reparation expenses have no upper limit), objective, no-blame responsibility for activities considered hazardous to the environment...

Another relevant issue is that the Directive allows Member States to decide whether or not they will make financial collateral/warranties mandatory to ensure compliance with the duties assigned to operators. The case in Spain and Portugal: Lawmakers have deemed fit to enforce such a mandatory warranty, which will certainly boost a dedicated insurance segment. As far as we know, and at this writing, this is the only type of warranty demanded by law.
Now if you compare Portugal and Brazil, let us state that, although in Portugal a number of companies are required to subscribe to such a warranty, many others are not bound to do so (namely those not contemplated by Annex III), albeit responsible for the environmental damage they cause.
These companies will enjoy numerous advantages by taking out insurance policies to cover a significant part of the responsibility anticipated by the Law.

Thus we might aver that, in Brazil, a number of companies are bound to feel similar interest, namely those carrying out certain operations of considerable size. Such companies may want to subscribe to a warranty as indicated above, to protect their assets and estate under situations involving environmental damage. They would then be best prepared to face updates on regulation which will, sooner or later, become inevitable: The environment is a growing concern the world over, starting with the USA and spreading to Europe. This concern is not going away and is likely to take more and more of the lawmakers' agenda in a number of countries, especially those with so-called "emerging economies", as is the case with Brazil.
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