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Lender Liability for Environmental Damage – Some Preliminary Thoughts on Efficency and Justification

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Environmental Law and Economics

Part of the book series: Economic Analysis of Law in European Legal Scholarship ((EALELS,volume 4))

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Abstract

This paper discusses some possible assumptions applied to justify lender liability for environmental damage . In the paper’s first part views are discussed as to who, the lender or the borrower, can be regarded as the cheapest cost avoider in light of the cost-benefit analysis of environmental liability. Subsequently, the paper discusses a model of lender conduct under international codes of conduct for financial institutions (e.g. the Equator Principles ), based on ethical justification. The conclusion compares the approaches.

This research has been financed by the National Science Centre, Poland within the framework of the research project: 2015/17/B/HS5/00495.

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Notes

  1. 1.

    See Church 1988, p. 673, p. 679, drawing on Calabresi 1975, p. 212.

  2. 2.

    Hooley, 2001, p. 405.

  3. 3.

    Calabresi, 1975, p. 212.

  4. 4.

    Church 1988, p. 673.

  5. 5.

    Church 1988, p. 675.

  6. 6.

    Church 1988, p. 673.

  7. 7.

    Church 1988, p. 676; Hooley 2001, p. 405.

  8. 8.

    Church 1988, p. 676.

  9. 9.

    Hooley 2001, p. 405.

  10. 10.

    Church 1988, p. 677.

  11. 11.

    Church 1988, p. 677.

  12. 12.

    Hooley 2001, p. 405.

  13. 13.

    Hooley 2001, p. 405.

  14. 14.

    Rightly pointed out by Church 1988, p. 678.

  15. 15.

    Church 1988, p. 678.

  16. 16.

    Church 1988, p. 679.

  17. 17.

    Church 1988, p. 681.

  18. 18.

    Church 1988, p. 681.

  19. 19.

    Church 1988, p. 682.

  20. 20.

    See generally Hirschleifer 1976, pp. 290–296.

  21. 21.

    Church 1988, p. 686.

  22. 22.

    Church 1988, pp. 682–686, discusses this notion, taking into consideration the previous CERCLA liability regime.

  23. 23.

    Plato-Shinar and Gelpe 2011, p. 367.

  24. 24.

    The terminology applied is not uniform, e.g. Cooter and Ulen 2008, p. 289, use a similar term ‘lowest-cost risk-bearer’. See also Calabresi 1975, p. 135.

  25. 25.

    Plato-Shinar and Gelpe 2011, p. 367.

  26. 26.

    Plato-Shinar and Gelpe 2011, p. 367.

  27. 27.

    Plato-Shinar and Gelpe 2011, p. 368.

  28. 28.

    Plato-Shinar and Gelpe 2011, p. 368.

  29. 29.

    42 U.S.C. §§ 9601–9675 (1988). On legislative history of CERLCA see Wolford 1992, p. 1161.

  30. 30.

    On ‘potentially responsible parties’ see Wolford 1992, p. 1161.

  31. 31.

    42 U.S.C § 9601 (20) (A).

  32. 32.

    901 F.2d 1550 (11th Cir.), rehearing denied, 911 F.2d 742 (11th Cir. 1990), cert. denied, 111 S. Ct. 752 (1991).

  33. 33.

    Wolford 1992, p. 1198.

  34. 34.

    Wolford 1992, p. 1199.

  35. 35.

    Feess 1999, p. 235.

  36. 36.

    I draw here on Plato-Shinar and Gelpe 2011, p. 370.

  37. 37.

    Hooley 2001, p. 416.

  38. 38.

    Plato-Shinar and Gelpe 2011, p. 370.

  39. 39.

    Hooley 2001, 417. See also Acken 2014, pp. 496–498.

  40. 40.

    Pub L No 104–208, §§ 2501–05, 110 Stat 3009 (1996).

  41. 41.

    See a comprehensive analysis by Plato-Shinar and Gelpe 2011, pp. 370–371.

  42. 42.

    The list of member institutions is available under http://www.equator-principles.com/index.php/members-reporting.

  43. 43.

    http://www.equator-principles.com/resources/equator_principles_III.pdf.

  44. 44.

    The Equator Principles, Disclaimer.

  45. 45.

    The Equator Principles, Preamble.

  46. 46.

    The Equator Principles, Scope.

  47. 47.

    Category A comprises projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented. Category B comprises projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures. Category C comprises projects with minimal or no adverse environmental and social risks and/or impacts, see the Equator Principles, Principle 1.

  48. 48.

    The Equator Principles, Exhibit II comprises an Illustrative List of Potential Environmental and Social Issues to be Addressed in the Environmental and Social Assessment Documentation.

  49. 49.

    Http://www.unepfi.org/about/statements/history/.

  50. 50.

    Schweizerische Bankiervereinigung. 1997. Umweltmanagement in Banken. See Jeucken 2001, p. 147.

  51. 51.

    Trebilcock and Elliot 2001, pp. 67–70, discuss the gatekeeper duties of lenders in the context of family sureties. Generally on a gatekeeper strategy Kraakman 1986, pp. 53–104.

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Authors and Affiliations

  1. Faculty of Law and Administration, Jagiellonian University of Cracow, Cracow, Poland

    Piotr Tereszkiewicz

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Correspondence to Piotr Tereszkiewicz .

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  1. Faculty of Law, University of Lucerne, Lucerne, Switzerland

    Klaus Mathis

  2. Notre Dame Law School, University of Notre Dame, Notre Dame, Indiana, USA

    Bruce R. Huber

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Tereszkiewicz, P. (2017). Lender Liability for Environmental Damage – Some Preliminary Thoughts on Efficency and Justification. In: Mathis, K., Huber, B. (eds) Environmental Law and Economics. Economic Analysis of Law in European Legal Scholarship, vol 4. Springer, Cham. https://doi.org/10.1007/978-3-319-50932-7_18

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