Regulation & Law

Brazil's Best Counsel 2020 - Chapter Opening: Environmental Law

Partners Oscar Graça Couto and Guilherme J. S. Leal co-authored the chapter opening for Environmental Law

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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the idea that this topic should be reserved to global diplomacy and international treaties is often dee­med to be outdated, as recent cases in the United States, Netherlands, Austra­lia, and other countries have shown.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.

 

E-mail: ocouto@gcouto.com.br  Phone: +55 21 3993-2886

 

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.

 

E-mail: gleal@gcouto.com.br  Phone: +55 21 3993-2885

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