BRAZIL Law and Practice Contributed by: Thaís Vasconcellos de Sá and Ana Julia Grein Moniz de Aragão, Bermudes Advogados
8. Insurance 8.1 Environmental Insurance
background in lawsuits discussing specific environ- mental accidents/incidents and related damages), but this is a global litigation trend that should rapidly reach Brazil. 6.6 Environmental Audits There is no universal norm for environmental audits across all sectors. However, audits may be required:
Directors’ and officers’ liability insurance (D&O) is available in Brazil and may cover defence costs and certain civil liabilities related to environmental matters, subject to policy terms and exclusions. Specialised environmental liability insurance products (eg, envi- ronmental impairment liability, third-party liability for pollution) exist in the Brazilian market. Coverage of administrative fines and criminal penalties is typically excluded or highly restricted due to public policy con- straints. Corporate Insurance for Environmental Accidents As for companies, environmental risk insurance is available, including: • policies for sudden and gradual pollution; • third-party bodily injury and property damage; • clean-up costs; and • transportation-related pollution. Some licensing authorities may require financial guar- antees for decommissioning of operational structures (covering the costs of remediation) in specific sec- tors. There is no general compulsory environmental insurance nationwide, but contractual and licensing requirements can make coverage effectively manda- tory for certain activities. Punitive fines and criminal sanctions are generally uninsurable; coverage usu- ally focuses on remediation of damages, third-party damages compensation, and (eventually) costs of the defence.
• as a condition of licences; • in compliance programmes; • in applications for loans; • within supply chain standards; or
• under TACs signed with public prosecutors – including via the engagement of third-party audi- tors, paid by the interested company, for the technical support of the public prosecutors in assessing compliance. Specific sectors must also prepare and maintain envi- ronmental and waste management plans subject to review and verification by the respective regulatory agency. Directors and officers can be personally liable for criminal offences if they engage in, authorise, consent to, or omit to prevent environmental infractions in their sphere of responsibility within the relevant governance bodies of the company (as per Article 2 of Federal Law No 9,605/98). Such liability will be subjective. Criminal sanctions can range from fines to imprisonment, with alternative sanctions such as community service and other restrictions of rights. For administrative liability, directors and other officers may face liability (ie, be considered “offenders”) only if they were co-authors of the acts considered as the administrative infraction, via their own direct acts or omissions, and not merely due to their capacity within the company’s governance. 7. Personal Liability 7.1 Directors and Other Officers
9. Lender Liability 9.1 Financial Institutions/Lenders
Under Brazilian law, financial institutions and lenders may, in certain circumstances, be held liable for envi- ronmental damage as indirect polluters, particularly when they fail to comply with a legal duty of safety under statute or contract. Governmental financing institutions have a statuto- ry duty to verify that the projects they fund are duly licensed by the competent environmental authority
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