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Types of liability

What types of liability can arise for environmental damage (eg, administrative, civil, criminal)?

The Environmental Liability Directive (ELD) (2004/35/EC, as amended by Directives 2006/21, 2009/31 and 2013/30) sets out EU-wide rules on liability for environmental damage. On the basis of the ‘polluter pays’ principle, Article 8 of the ELD requires EU member states to hold operators listed in Annex III strictly liable for carrying out dangerous activities that cause environmental damage. Operators carrying out other activities may be liable for fault-based damage to protected species or natural habitats, provided there is a causal link. There is no financial cap to liability. Member states may provide rules for the allocation of shared liability.

Directors’ and officers’ liability

Can directors and officers be held personally liable for company environmental offences? If so, can liability be limited through insurance coverage and/or contractual indemnities?

Environmental liability can be attributed to an ‘operator’ of an activity that has caused environmental damage or, where there is imminent threat of such damage, defined as:

any natural or legal, private or public person who operates or controls the occupational activity or, where this is provided for in national legislation, to whom decisive economic power over the technical functioning of such an activity has been delegated, including the holder of a permit or authorisation for such an activity or the person registering or notifying such an activity.

The ELD does not provide for supplementary liability of an operator company’s directors or officers.  In light of the risk of personal liability, directors and officers liability insurance is available to cover this. It is not possible to contract out of statutory liability. 

Liability for authorised activity

Can environmental liability arise even in the course of authorised activities (eg, operations subject to environmental permits)?

Yes. Article 2(6) of the ELD specifically provides that activities causing environmental damage for which an operator may be liable include where a permit or authorisation has been granted to an operator for that activity, or where the operator has notified or registered the activity.


What defences are available to environmental offenders?

The ELD contains a number of exceptions where liability does not arise (Article 4). These are valid where the environmental damage is caused by or arises from: 

  • an act of armed conflict, hostilities, civil war or insurrection;
  • a natural phenomenon of exceptional, inevitable and irresistible character;
  • an incident (eg, oil pollution by sea-going ships) in respect of which liability or compensation falls within the scope of:
    • the Civil Liability for Oil Pollution Damage Convention 1992;
    • the Establishment of an International Fund for Compensation for Oil Pollution Damage Convention 1992;
    • the Civil Liability for Bunker Oil Pollution Damage Convention 2001;
    • the Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea Convention 1996; and
    • the Civil Liability for Damage Caused during Carriage of Dangerous Goods by Road, Rail and Inland Navigation Vessels Convention 1971;
  • activities covered by the Treaty Establishing the European Atomic Energy Community (including nuclear risks) or incidents or activities in respect of which liability or compensation falls within the scope of:
    • the Brussels 1960 and Paris 1963 Third Party Liability in the Field of Nuclear Energy Conventions;
    • the Vienna Convention on Civil Liability for Nuclear Damage 1963;
    • the Supplementary Compensation for Nuclear Damage Convention 1997 on the Application of the Vienna Convention and the Paris Convention 1988; and
    • the Brussels Civil Liability in the Field of Maritime Carriage of Nuclear Material 1971;
  • pollution of a diffuse nature, where there is no causal link between the damage and the activities of an individual operator;
  • activities the main purpose of which is to serve national defence or international security; and
  • activities the sole purpose of which is to protect against natural disasters. 

In addition, the ELD is without prejudice to the right of an operator to limit its liability in accordance with national legislation implementing the Convention on Limitation of Liability for Maritime Claims 1976 or the Strasbourg Convention on Limitation of Liability in Inland Navigation 1988.

Member states may also allow an operator not to bear the cost of remedial actions where the operator can demonstrate that it was not at fault or negligent and that the

environmental damage was caused by:

  • an emission or event expressly authorised by, and fully in accordance with the conditions of, an authorisation conferred by or given under applicable national laws and regulations; or
  • an emission or activity or any manner of using a product in the course of an activity which the operator demonstrates was not considered likely to cause environmental damage according to the state of scientific and technical knowledge at the time when the emission was released or the activity took place (the ‘state of the art’ defence).

Liability in share sale/asset purchase

What rules govern the transfer of environmental liability in share sales and asset purchases?

The ELD does not contain any such specific rules.

What environmental due diligence measures are recommended before concluding share sales/asset purchases?

It is always necessary to conduct environmental due diligence before concluding share sales/asset purchases where there is a risk of liability attaching to the transaction. EU-level liability provisions under the ELD, as well as national specific implementing provisions, must be checked.

Lender liability

Can lenders be held liable for environmental offences?

The ELD provides that only operators as defined can be held liable. 

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