Knowledge of contamination may result in liability

The owner of real estate that was contaminated by a third party may be required to take remedial measures along with the polluter even though the owner did not cause the harm, but knew about it.

The need for effective and quick application of extensive and complicated legal regulations in transactional practice often leads to the popularisation of rules of thumb which the parties rely on when negotiating their contractual rights and obligations. As a consequence of this approach, the parties may establish the terms of the transaction or the framework for due diligence without attention to certain specific cases not covered by such simplified rules. This may lead to erroneous legal conclusions or the failure to secure the parties’ interests adequately.

For example, in Poland there is a rule of thumb that in the case of contamination of real estate prior to 30 April 2007, the controller of the surface of the land is liable (even if it did not cause the harm), but the perpetrator is liable for contamination thereafter under the “polluter pays” principle. But a determination during the course of due diligence that a given entity was not the perpetrator of any contamination occurring on or after 30 April 2007 does not necessarily mean that it is not liable for harm to the environment caused during that period by third parties.

The “polluter pays” principle is not an absolute rule. Like almost all environmental liability rules, it does have exceptions.

Liability for harm to the environment is currently governed by the Act on Preventing and Remediating Harm to the Environment of 13 April 2007 (Journal of Laws 2007 No. 75 item 493, as amended). This act applies to environmental harm affecting the surface of land that occurred on or after 30 April 2007. Under the general rule, liability under this act is imposed on an entity exploiting the environment, conducting activity presenting a risk of harm to the environment. The act specifies the situations in which liability may be imposed on another entity.

For example, under Art. 12(2) of the act, the controller of the surface of the land (i.e. the owner or perpetual usufructuary of the real estate) may be liable to conduct preventive and remedial measures jointly and severally with an entity exploiting the environment who caused harm to the environment. Joint and several liability may also arise if harm or the direct threat of harm to the environment was caused with the consent or knowledge of the controller of the surface of the land. The controller of the surface of the land will be able to avoid liability only if it notifies the regional director of environmental protection of the event promptly after learning of the event. A lack of awareness of this rule increases the likelihood that the controller of the surface of the land will not promptly take the actions described in the act, and as a result will be subject to liability together with the entity that caused the harm.

It should also be pointed out that in the situation described above, the controller of the land will share joint and several liability with the polluter even if the controller of the land does not itself conduct activity presenting a risk of harm to the environment. The mere fact of controlling the real estate will be sufficient.

In transactional practice, this provision is particularly significant for owners of real estate who have provided access to the property to other entities for the purpose of conducting economic activity with a significant environmental impact. The predominance of the “polluter pays” principle does not mean that there are no important departures from this rule.

Dominik Wałkowski, Environmental Law Practice, Wardyński & Partners