Real Estate Investor Magazine South Africa September 2013 | Page 50

LEGAL MOVES BY PATRICK FORBES Environmental Indemnification Look a little closer at the laws O ver the past 15 yea rs since the promu l g at ion of t he Nat iona l Environmental Management Act (NEMA), there has been an array of further environmental litigation that has entered our legal landscape. This raft of laws has however created a highly reg ulated env ironment within which to operate, and business has accordingly sought to identif y the risks associated with falling foul of such legislation and to identify the necessary means to avoid those risks where possible. The reaction from the market place to the onslaught of “green law” has been varied, depending largely on the sector in which a particular business operates, but there has certainly been a clear acceptance by business of the legislation that has been passed to regulate and control our interaction with the natural environment around us. Part of this acceptance by business is evident from property agreements relating to purchase and sale transactions, leases and mortgage bonds amongst others, in which there is a proliferation environmental indemnification clauses in one form or another. These clauses are drafted, depending on the nature of the agreement, with a view to minimising the risk to one or other party entering into the agreement, for environmental damage and the costs that may be associated with remedying any such damage. But how effective are these indemnifications, and do they adequately cover the parties for the risk posed? Part of this raft of green legislation is the National Environmental Management Waste Act (NEMWA), which deals with, amongst a number of other aspects, the classification, the disposal, the recycling and the treatment of waste. When NEMWA was brought into force there were, however, certain provisions that were not brought into operation at the time the act was promulgated and will only to be in force at some unknown later date. Nonetheless, consideration of these provisions may reveal certain shortcomings in the legislation and it is therefore vital to ensure that indemnifications serve their purpose for the party seeking to be indemnified. Sections 35 - 41 of NEMWA, the remediation or contaminated land provisions, although not yet in force, are set to become effective at some later date. These provisions in their current wording will allow for them to be applied retrospectively, in other words, applicable to circumstances that may have taken place prior to the law actually coming into effect. This is unusual in a legal context, but it means that one is forced to take cognisance now of what is intended as the provisions may have an impact upon actions taken both now and in the past. In order to understand the nature of how an indemnity will or will not provide the protection sought, one needs first to examine how the proposed contaminated land provisions will operate. The provisions allow for the Minister or the MEC to identify contaminated land by way of a notice to be published in the government gazette, or a notice to a particular person, to identify what is termed an “investigation area”. Once the investigation area is established, the Minister or MEC may then cause a site investigation to take place by directing either the owner of the property within which the investigation area is located, or the person conducting the activity that has caused or may have caused the contamination, to conduct a site assessment. Once a site assessment report has been completed considered, there are four options available to the Minister or MEC, in respect of the investigation area, 1) to declare it a risk that warrants immediate remediation, 2) to declare it a risk that requires remediation over a specified period, www.reimag.co.za 48 September 2013 SA Real Estate Investor