On 3 March 2011, Mr Justice Edwards in the High Court held that the courts do not have jurisdiction to pierce the corporate veil and impose so called "fall back" liability on directors personally for environmental cleanup. In doing so he disagreed with three previous High Court judgments going back to 2002.
The Waste Management Acts 1996-2003 provide a mechanism for individuals, local authorities and the Environmental Protection Agency to apply to court for clean up orders. This is in sections 57 and 58 of the 1996 Act. Where waste is or has been held, disposed of or recovered in a manner that is causing or may cause environmental pollution, then the court may require the relevant person to stop doing so and to clean it up or pay costs. Where the relevant person is a company, and if that company is in receivership or liquidation or otherwise does not have sufficient resources to pay for that clean up, what happens?
In 2002, in a case concerned with an illegal waste site in Coolnamadra Co Wicklow, Mr Justice O'Sullivan held that the individual directors should be liable on what he termed a "fall back" basis, if the company that put the waste there could not pay for the clean up required. He did so relying on a European concept called the "polluter pays principle". This is enshrined in European Law and is referred to in the Irish Waste Acts. That decision was followed in two other cases since then. None of these decisions were appealed.
In a separate more recent case, the issue came up again and this time the High Court has determined that the earlier cases were wrongly decided. Mr Justice Edwards has held that no fall back orders can be made against individual directors of a corporate entity under the provisions of the Waste Acts on a true construction of the law. In doing so he has held that Irish law has not correctly transposed the relevant European Waste law. This decision may yet be appealed to the Supreme Court. Directors may still face liability if they can be shown to have acted fraudulently for example, but for now there is no automatic entitlement for the courts to make directors personally liable for environmental clean up.