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Lender Liability for Environmental Damage

Published online by Cambridge University Press:  25 July 2001

Richard Hooley*
Affiliation:
Fellow of Fitzwilliam College, Cambridge; University of Cambridge

Abstract

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The article considers the dangers of too readily imposing liability for environmental damage on banks lending to environmentally sensitive industries. There is evidence from the United States that businesses in environmentally sensitive industries have found it more difficult to raise money from banks and that insurance companies have limited environmental cover. The author expresses the hope that the English courts will not go down the “capacity to influence” route that has been so recently rejected in the United States. Lenders not exercising operational control should not be liable. He then considers the safe lending practices by which the risk of environmental liability can be considerably reduced. These safe lending practices attempt to tread the line between the lender being fully aware of all risks in respect of the lending and avoiding conduct which might be characterised as participation in or control of the borrower’s business.

Information

Type
Articles
Copyright
Copyright © Cambridge Law Journal and Contributors 2001