FRANCE Law and Practice Contributed by: Carine Le Roy-Gleizes, Corentin Chevallier, Alice Messin-Roizard and Antoine Juquin, UGGC Avocats
icy on incorporating environmental criteria into their investment strategy.
As regards M&A transactions, there is a general duty to provide information. A seller who fails to provide the appropriate informa- tion because of voluntary omission or negligence might retain environmental liability in the following situations. • The seller is liable for hidden defects that signifi- cantly reduce or prevent the property’s use, affect- ing the buyer’s decision to purchase. The buyer may cancel the sale if not provided differently by the contract. This exclusion does not apply if the seller knew of the defect at the time of sale. • When the seller intentionally retains information to mislead the buyer (fraud), the buyer may cancel the contract. 17.3 Key Issues in Environmental Due Diligence In France, the most common legal issues concern non-compliance with applicable environmental regu- lations. These breaches may include obligations relat- ing to waste management, polluting emissions or the protection of biodiversity. On the other hand, the absence of permits or authorisations to operate clas- sified facilities, although important, is less frequent. There are also soil and groundwater contamination issues. However, these must be assessed on a case- by-case basis.
17. Transactions 17.1 Environmental Due Diligence
Environmental due diligence is typically conducted on M&A but is less frequent for financial and real estate transactions. Environmental due diligence is particularly important when a classified facility is included in the deal, as it is the only way to identify compliance issues regard- ing every environmental regulation and the liabilities issued in connection with contaminated lands. Environmental due diligence performed by a pur- chaser typically ensures that the seller complies with applicable environmental regulations. In the case of a classified facility, the due diligence will also check the possession and validity of the permits and licences required for the activity, and the fulfilment of the pre- scribed conditions. The buyer will also check the legal implications of the identified risks. 17.2 Disclosure of Environmental Information The seller of land must inform the purchaser via a writ- ten statement that a classified activity used to oper- ate on the site. The landowner must also inform the potential buyer of any danger or harm resulting from the previous facility operation. When the seller is also the facility’s operator, the contract must demonstrate that the seller provided information concerning whether or not the facility’s operation led to the use or storage of hazardous sub- stances.
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