Federal court confirms judgment against shipowner - International Law Office

Facts
First instance decision
Appellate decision

Facts

In 1998 a ship called the Bahamas was hired to carry sulphuric acid for three companies located in the state of Rio Grande do Sul. While berthed, the ship began to discharge the dangerous chemical. The discharge to the first receiver had already been concluded when, on August 30, it was observed that the ship was no longer operating. Port authorities went aboard and ascertained that a serious leak of sulphuric acid was heading towards the Patos Lagoon, where the terminal was located (for further details please see "Salvage company and insurer held accountable for environmental civil action").

First instance decision

A suit for civil liability was filed against the parties considered potentially responsible for the accident. In its ruling the first instance federal court decided, among other things, that:

• the company recipient of the first part of the cargo was not deemed liable, as the carriage contract had been successfully fulfilled and its cargo had been duly delivered, and there was therefore no chain of causation with the accident;
• the shipowner was found liable, by applying the theory of full risk, and the chain of causation between its activities and the damage that occurred was also evidenced; and
• the second recipient of the cargo was equally found liable - the court understood that the full risk theory would apply to it, and that there was a chain of causation between its business activity involving the product, as a production input, and the damages caused to the environment.

The court ordered the companies jointly to pay the sum of R20 million immediately. It stated that this amount would not harm or impair the activities of the liable companies, but would be sufficient to prevent the further occurrence of damages.

One of the companies receiving the cargo filed an interlocutory appeal at the Fourth Region Federal Court, requesting suspension of the judgment until the decision became final, alleging that it had no financial capacity to shoulder the payment.(1)

Appellate decision

The appellate judge confirmed the first instance decision. He held that the appellant company presented no evidence to support the allegation of lack of financial capacity to pay the indemnity. He also pointed out that the company's financial results in 2009 were well above the amount of the award.

The appealed decision was therefore maintained with the stipulation of immediate payment of the award, once the risk of irreparable damage for the company was absent. Furthermore, the court stated that as the companies were found jointly liable, the payment of the award must be split between the three defendants.

For further information on this topic please contact Godofredo Mendes Vianna at Law Offices Carl Kincaid by telephone (+55 21 2276 6200), fax (+55 21 2253 4259) or email (godofredo@kincaid.com.br).

Endnotes

(1) Interlocutory Appeal 0001947-23.2012.404.0000/RS