In November 2011, an accident during the drilling of a well in the Frade Field, 75 miles offshore Rio de Janeiro state, Brazil, caused the spill of approximately 3700 barrels of oil into the sea, generating the biggest media coverage and public outcry for such an event in Brazil – although it cannot be called the worst in Brazil’s history.

Yet, the Frade oil spill had massive press coverage and originated criminal charges and multibillion damages lawsuits. This article’s goal is to explain the legal landscape prior to the accident, the accident itself and the ensuing litigation, and point out some room for improvement in regulations and statutory law.

The Brazilian Constitution and environmental laws are progressive, treating environmental damages as a loss to society as a whole rather than just to landowners or even people directly affected by pollution.

Brazilian Law defines environmental damages very broadly, and Law 6,938/1981 expressly states that pollution can cause recoverable damages to third parties and to ‘the environment’ itself. The liability for such damages is strict. Environmental scholars agree that this strict liability applies not only to individual and quantifiable damages, but also to economic compensation collected by society through environmental and social compensation funds. The enforcement of such provisions in the oil industry is split between a couple of entities.

Jan-Mar 2016 issue

National Agency Oil, Natural Gas and Biofuels – PF / ANP