Property law: An important change in liability regulations for contaminated land

This new statute aims at implementing EU Directive 2004/35/EC on environmental liability with regard to the prevention and remedying of environmental damage. Along with providing completely new legislation, the new statute also amends certain provisions of the existing Environmental Protection Act (April 27, 2001).

Among the various provisions of said act, one of the most important ones, drawing many land buyers' attention, was the infamous Article 102, which stipulated the "holder pays" principle. To the surprise of investors from other jurisdictions, this provision made the owner (holder) of the land potentially liable for contamination, even if he or she had not been the polluter. There were certain exceptions protecting land holders for example from becoming liable for contamination which occurred before September 1980, but the general rule allowing the authorities to hold the holder of the land responsible was considered extremely restrictive compared to other European jurisdictions.

Polluter liable for land contamination

However, EU Directive 2004/35/EC clearly makes the polluter liable for the damage (land contamination), and therefore as of April 30, 2007, Article 102 of the Environmental Protection Act will apply only to past contaminations. This means that the "holder pays" principle has been abolished, but all contaminations before April 30, 2007 may be treated according to the old regulations. This transitional rule will certainly raise questions as to how it should be applied. However, it is too early to speculate how it will be viewed by legal commentators and environmental authorities. As of April 30, entities which need to deal with land contamination should first turn to the new statute.

Importantly, the statute contains many new rules concerning the obligations of entities holding contaminated land. For example: Any "new" environmental damage subject to the new law, as well as any immediate threat thereof, should be promptly reported to the environmental authorities, who may order decontamination, referred to as "remedying action." Under the law, the authorities (the provincial governor, or wojewoda, as of April 30, 2007) may order the owner of the land where the soil has been contaminated to measure and/or monitor contaminant levels at the site in question.

Criminal liability

In addition, the joint and several liability of the land holder has been upheld, if he or she knew about the given polluting activity or acted in collusion with a third party. As in the past, the remedying action will have to be agreed upon with the authorities.

Failure to fulfill the obligation to report contamination, as well as failure to perform remedying actions may result in the criminal liability, punishable by fine. This rule may in some case also be applied to management board members of a company.

The new statute is too new to be commented upon comprehensively, but it should be taken into account in assessing environmental risks in all real-estate transactions in Poland.

Jakub Kutzmann is an associate with Linklaters law firm. e-mail: jakub.kutzmann@linklaters.com