Managing the risk of environmental liability in Brazil
In Brazil, whoever causes damages to the environment, either directly or indirectly, is subject to a strict liability regime, which is applicable regardless of fault and provides the defendants with little ways out. To have an idea of how stringent this regime is, even defences based on acts of God (widely accepted under the common law) cannot prevent polluters from being held liable, jointly and severally, for environmental damages somewhat connected to activities under their control. Therefore, responding to environmental lawsuits in Brazil is often a difficult, costly and time-consuming task.
This burdensome position which alleged polluters might find themselves in derives, to great extent, from our courts’ extensive interpretation of the environmental statutes. Indeed, open legal concepts (like “polluter”, “damage” and “causal link”), the language of which frequently raises doubts as to their range, are construed by judges to enhance environmental protection as much as possible (in dubio pro natura). Accordingly, a far-reaching liability regime has been built through both statutory and case laws.
Against this backdrop, two major questions are commonly raised: (i) Could the boundaries of environmental liability be pushed even further? (ii) How companies could mitigate the risk of being held liable? In a nutshell: (i) There are, indeed, fields where environmental liability is yet to be explored, like climate change; and (ii) Improvements in compliance policies, risk management programmes, and socially responsible initiatives might well prevent lawsuits, or at least limit their consequences.
There is a trend worldwide to embrace climate change as a domestic issue, justiciable under national and subnational laws. Indeed, the idea that this topic should be reserved to global diplomacy and international treaties is often deemed to be outdated, as recent cases in the United States, Netherlands, Australia, and other countries have shown. In this regard, in July 2019, a leading climate change case was brought by the Federal Government against a steel company and its managing partner. The Government seeks, amongst other measures, compensation for environmental and climate damages allegedly caused by the company’s continuous use of illegal charcoal in its activities. The case is still pending, but following its pathway, climate change disputes are likely to grow in Brazil, and courts tend to uphold the justiciability of the matter.
In order to mitigate not only the risk of climate lawsuits, but environmental legal actions more generally, companies should consider improving their (i) compliance policies, as failure to exercise due diligence and take all appropriate measures to ensure its suppliers and clients’ obedience to environmental law might lead to liability based on the “life cycle” and indirect impacts of the company’s products; (ii) risk management programmes, which became particularly relevant in Brazil this year, due to a widely reported collapse of a mining dam in the State of Minas Gerais, as well as the discussions in the House of Representatives regarding a possible environmental permitting reform, which raised an intense debate as to whether it represents a weakening of preventive instruments or optimization of administrative resources; and (iii) socially responsible initiatives, as environmental damages are frequently coupled with social impacts, and once the company proves its commitment with society, especially local communities, it enhances its reputation and the public acceptability of its activities.
Therefore, in 2020, climate change is likely to be at the core of the environmental debate and incorporated into new lawsuits, against both the government and private companies. And whoever is capable of transforming the risk of liability into actions of positive impact to the environment and society might not only contribute to the public good, but also strengthen its business.
ABOUT THE AUTHORS
Oscar Graça Couto: Partner at Graça Couto, Sequerra, Levitinas, Bicudo, Leal & Abby Advogados. Professor of Environmental Law in graduate and postgraduate programmes at the Pontifical Catholic University of Rio de Janeiro (PUC-Rio). Master in Comparative Law (M.C.L.) at University of Michigan Law School.
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Guilherme J. S. Leal: Partner at Graça Couto, Sequerra, Levitinas, Bicudo, Leal & Abby Advogados. Professor of Environmental Law in post-graduate programmes at the Pontifical Catholic University of Rio de Janeiro (PUC-Rio). Master (LL.M.) in Energy Law at University College London and Environmental Law at the George Washington University.
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