The intense rains that hit Rio Grande do Sul (RS) between the end of April and the beginning of May this year caused devastating floods, with extensive damage to the population of Rio Grande do Sul and consequences that seem to be far from over. Even after a few months, it is still not possible to accurately measure the extent of the damage.

A survey carried out by Sebrae/RS in partnership with the State Secretariat for Economic Development (Sedec) revealed, for example, that 35.71% of businesses are still out of operation and that another 25.15% are partially paralyzed.

The catastrophe has repercussions in the most diverse areas of law, such as civil, labor, tax, insurance, real estate, environmental, infrastructure, contracts with the Public Administration, among others.

In the context of civil law, specific rules were not implemented for this exceptional period, as occurred in the COVID-19 pandemic, for example, with the enactment of the emergency and transitional legal regime of private law legal relations (Law 14,010/20).

Given this absence of specific rules, this article seeks to address the effects of the tragedy in Rio Grande do Sul on civil liability.

The matter addressed here is a timely reflection in view of the large number of contracts that are impossible to fulfill (contractual damages) and the cases of property owners who suffered damages resulting from the tragedy (non-contractual damages). These situations may originate, respectively, in the breach of a contractual obligation and in the practice of an unlawful act.

Situations of default

In contractual relationships, the legally expected behavior of the debtor is the fulfillment of what he has committed to the creditor. There are situations, however, in which the debtor does not comply with the obligation assumed by him, which constitutes default.

This default, in turn, attracts consequences that vary according to the nature of the obligation, the circumstances of the non-compliance, and the type of default (absolute or relative).[1] Among the possible repercussions are the forced fulfillment of the obligation, the payment of losses and damages with interest, monetary adjustment, and lawyer's fees, in addition to the possibility of termination of the contract.

There are hypotheses, however, in which the obligatory context between the date on which the contract was entered into and the date on which the obligation becomes due differ significantly, as seems to be the case of many contracts affected by the tragedy in Rio Grande do Sul. For this scenario, there are three possible situations in which the catastrophe can be framed in the state:

  • as an event of fortuitous event or force majeure, which makes it impossible to comply with the agreed obligation;
  • as an inducer of excessive burden to one of the parties to the contract; and
  • as a taxable event to claim an exception for the unfulfilled contract.

In relation to the first scenario, the fortuitous event or force majeure refers to the necessary and unforeseeable fact whose effects could not be avoided or prevented. The fortuitous event has a natural origin, while the force majeure originates from human action, but the legal effects are the same.

The climate tragedy in Rio Grande do Sul may constitute an unforeseeable event that leads to the involuntary non-performance of the provision, extinguishing the obligation due to the impossibility of its fulfillment.

However, the debtor cannot use the institute to extinguish the obligation in the following cases:

  • if the risk of events of this nature has been expressly allocated to the debtor in the contract;[2] or
  • if the tragedy has not made it impossible to fulfill the obligation assumed by the debtor.

From the perspective of contractual unpredictability (second scenario), the event in RS could be qualified as extraordinary and unpredictable, to the point of making the obligation excessively onerous for one of the parties and extremely advantageous for the counterparty. In this case, the injured party may request the termination or revision of the contract – a revision that may also be sought by the benefited party, as an alternative to termination.[3] The Civil Code also presents a simplified alternative,[4] in which the provision can be judicially rebalanced if the unforeseeable event has generated disproportion.

The Superior Court of Justice (STJ) has already faced a situation analogous to the rains and floods in RS as a result of the covid-19 pandemic, in which it was decided:

“... In business contracts, special prestige must be given to the principles of contractual freedom and pacta sunt servanda, guidelines set forth in article 421, caput, and 421-A of the Civil Code, included by Law No. 13,874/2019.4. Nevertheless, the legal diploma itself consolidated hypotheses for the review and termination of contracts (317, 478, 479, and 480 of the CC). With doctrinal support, it is verified that article 317 configures a general clause for the review of the contractual provision and that the systemic and teleological interpretation of arts. 478, 479, and 480 also authorize the judicial review of the agreement.5. The Theory of Unpredictability (article 317 of the Civil Code), of French origin, requires proof of the following requirements: (I) obligation to be fulfilled at a later time than its origin; (II) supervenience of an unforeseeable event; (III) that causes a manifest disproportion between the value of the installment due and that at the time of its execution. At the request of the party, the judge may correct the value of the installment, in order to ensure, as far as possible, its real value..." (STJ, Special Appeal 2032878/GO, Third Panel, Rapporteur Minister Nancy Andrighi, judged on April 18, 2023)

However, once again, the climate catastrophe in Rio Grande do Sul cannot be pointed out as a fact that generates an excessive burden on all debtors who are victims of the event. It is essential to prove that the tragedy was the source of the contractual disproportion (causal link) and that it was, in fact, at least unpredictable – and extraordinary, if the request is for termination or contractual review.

In commutative contracts, even if there is no force majeure or unpredictability, a third scenario may be configured, in which the debtor has reason to allege the exception of an unfulfilled contract, if the counterparty that imputes default (or demands the fulfillment of the obligation) has not previously borne its contractual obligations. This hypothesis would give the debtor the right to refuse to comply with its obligation because the counterparty (alleged creditor) has not fulfilled theirs, so that it can serve as a relevant defense to the imputations of default. It is necessary, however, to prove that the counterparty failed to comply with its obligations in the first place.

It is worth mentioning that these legal figures that allow the debtor to default on the obligation without attracting the consequences of default to themselves will not always be applicable. There may, for example, be scenarios in which rains and floods did not interfere with the agreed obligations. It is necessary to evaluate in a concrete case whether, in fact, the tragic event impacted the hiring. However, it is certain that at least part of the interrupted or partially paralyzed contracts, according to the Sebrae/RS survey, will never be fully resumed, as the appropriate legal solution is to release the parties from their obligations (which needs to be evaluated on a case-by-case basis).

Non-contractual civil liability

The tragedy in Rio Grande do Sul also has repercussions on non-contractual civil liability, especially with regard to the obligation to indemnify for non-contractual damages resulting from a climatic event and, if this obligation is confirmed, who would appear as the debtor.

Jurisprudence has increasingly recognized that, despite being due to nature, climatic events constitute strict liability of the state entity, since the State could act to mitigate the damage through preventive measures. This, in fact, was the understanding of the Court of Justice of Rio Grande do Sul (TJRS) itself in a judgment of an incident of jurisprudential uniformity:

"INCIDENT OF UNIFORMITY OF JURISPRUDENCE. APPELLATE PANELS OF THE PUBLIC TREASURY ASSEMBLED. CIVIL LIABILITY, IN CASE OF STATE OMISSION, FOR DAMAGES RESULTING FROM FLOODS AND FLOODS. DIVERGENCE BETWEEN THE TAX PANELS ON WHETHER THE STATE'S LIABILITY IS OBJECTIVE OR SUBJECTIVE IN THE HYPOTHESIS. ACCEPTANCE OF THE INCIDENT AND STANDARDIZATION OF THE UNDERSTANDING, WITH THE ISSUANCE OF A STATEMENT IN THE FOLLOWING TERMS: "THE STATE'S CIVIL LIABILITY, IN CASES OF OMISSION, GENERIC OR SPECIFIC, IN THE EVENT OF FLOODING AND FLOODING, IS OBJECTIVE, EXCEPT FOR THE PROOF, BY THE PUBLIC ENTITY, OF RUPTURE OF THE CAUSAL LINK BETWEEN THE OMISSION AND THE DAMAGE EXPERIENCED BY THE PRIVATE PARTY". INCIDENT KNOWN AND THE UNDERSTANDING IS STANDARDIZED, BY MAJORITY, WITH THE ISSUANCE OF A STATEMENT. (TJRS, case 71008591331, CNJ 0028774-83.2019.8.21.9000, Appellate Panels of the Public Treasury Reunited, rapporteur Laura de Borba Maciel Fleck, judged on March 13, 2020)"

The judgment resulted in the issuance of Statement 23 of the Precedent of the Appellate Panels of the Public Treasury of the TJRS, by which it was established that: "the state's civil liability, in cases of omission, generic or specific, in the event of floods and floods, is objective, except for the proof, by the public entity, of rupture of the causal link between the omission and the damage experienced by the private party".

The understanding, in this sense, is that the state entity not only repairs the damage caused to the victims, but also implements effective public policies to prevent future events, which are increasingly frequent.

In order for victims to be compensated, it is very important that they document the damage caused, for example, through photographic records that demonstrate the lost assets, as well as proof of expenses for restructuring the affected site.

It should be emphasized, however, that the strict liability of the state entity for the effects of the tragedy in Rio Grande do Sul should not be applied indiscriminately to the damages suffered by the victims. This is because the victim needs to prove that, before the event, his harmed legal asset was in good standing. For example, if the civil construction fell after the rain, but the work did not have a construction permit because the land was unsuitable for the project, the victim will not be able to use the tragedy to claim compensation for the damage.

There may be hypotheses, however, in which the irregularity is insufficient or irrelevant to remove the responsibility of the state entity. The absence of an operating license for a commercial establishment, for example, will not necessarily remove any and all damage resulting from rains and floods, as the building may have been affected regardless of the activity carried out there.

Case-by-case analysis

The tragedy in Rio Grande do Sul, as can be seen, attributes many effects to civil liability, but caution must be exercised and each case must be analyzed individually, so that the debtor does not suffer the legal consequences of its default – in contractual liability – or can be compensated – in non-contractual liability.

Caution is especially important when it comes to an event that may be linked to climate change, as rains and floods in RS have been considered. This is because these climate changes stem from various global human behaviors and activities, which makes it difficult to establish a causal link.

Added to this is the scientific consensus that extreme weather events – such as rainfall and floods in Rio Grande do Sul – tend to become more frequent and intense with the increase in the global average temperature. This may lead, in the future, to the inadequacy of legal theories linked to non-compliance with contractual obligations and non-contractual liability and the consequent need to revisit the adequacy of these theories for damages arising from climate change.

Until this occurs, however, an event of this magnitude can have many legal implications in both contractual and non-contractual scenarios. Even so, not all damages suffered will be compensable, and not all those who cause damages will be able to use this event to exempt themselves from liability. It is necessary to carefully analyze each case.

 

[1] In the case of relative default (arrears), the date of the constitution in arrears will depend on the existence or not of a term (maturity) and the nature of the debt, whether liquid or illiquid. For liquid, positive, and fixed-term debts, the date of the constitution in arrears is the due date. For undue or illiquid debts, the constitution in arrears will be by means of judicial or extrajudicial interpellation (article 397, caput and sole paragraph, respectively).

[2] Article 393 of the Civil Code.

[3] Articles 478 to 480 of the Civil Code.

[4] Article 317 of the Civil Code.