A litigious climate - reports from the IBA Litigation Committee Annual Litigation Forum 2022, London, UK

Tuesday 13 December 2022

On 27, 28 and 29 April 2022, the members of the IBA Litigation Committee convened at the Royal Lancaster Hotel in London. Due to the Covid-19 pandemic and the related travel restrictions, this was the first time since the 2019 Litigation Forum in Berlin that many of our members were able to travel freely again and meet with their friends and colleagues from across the globe. Although for many the pandemic brought many parts of the world to a grinding halt, the legal profession was resilient and quickly adapted to remote working and conducting hearings online.

The law developed as well, not only in connection with the pandemic itself, but also in relation to that other global issue: climate change. The global debate about this pressing issue is no longer limited to protesters like Extinction Now taking to the streets or governments and non-governmental organisations (NGOs) gathering at international conferences where they debate emission reduction pathways and the division of the global burden across nations in the global north and the global south. The issue has become a vibrant legal issue, with numerous court cases pending against governments and private actors in many jurisdictions.

For that reason, the leadership of the Litigation Committee dedicated the entire programme of this year’s Litigation Forum to climate change litigation. Spread across five panels of experts, including lawyers working at NGOs, judges and litigators who represent clients in these cases, the topic was explored from various angles in a very informative and thought-provoking way. This overview contains reports received by the newsletter editors and they thank the rapporteurs for their contributions.

Panel 1: Climate change cases against governments – an overview of the state of play 

Rapporteur: Marieke Faber (NautaDutilh, New York)

The first panel, chaired by Marieke Faber and consisting of Professor Remo Klinger (Geulen & Klinger, Berlin), Professor Caio Borges (Instituto Clima e Sociedade, Rio de Janeiro), Anja Ipp (ClimateChangeCounsel, Stockholm) and Sudhanshu Swaroop (Twenty Essex, London) discussed the state of climate litigation against governments from a holistic perspective. The first half of the session centred on claims brought by civil society (eg NGOs or private citizens) addressing a government’s climate inaction. The second part focused on claims brought by the investor community (eg energy companies) following climate action on the part of states. The panel explored the question whether governments are, in fact, caught between a rock and a hard place when it comes to conceiving and implementing climate policy. 

To kick off the discussion, Marieke Faber briefly discussed the Urgenda v State of the Netherlands case, in which the Dutch government was ordered in 2015 to reduce carbon emissions by a minimum of 25 per cent in 2020. This judgment paved the way for subsequent successful climate litigation against states. A notable example is the important Neubauer decision from the German Federal Constitutional Court (2021). Klinger, who acted on behalf of the plaintiffs in this case, elaborated on the argumentation of the court. In Neubauer, the court held – in essence – that Germany has a state objective to protect the environment. The court considered that this means that Germany is constitutionally bound to comply with the Paris Agreement. 

Borges provided insight into the state of play in Brazil. Borges explained that state-based litigation in Brazil (as in many other jurisdictions in the global south) is concerned with enforcing existing rules and policies. In April 2022, a number of ‘containment’ cases were initiated before the Brazilian Supreme Court, seeking to establish that the government’s failure to implement existing policies (especially in the area of land use – about half of Brazil’s emissions) represents an unconstitutional omission. So far, the Supreme Court appears open to interpret the Brazilian constitution in line with environmental interests. 

Another important strain of Brazilian climate litigation relates to Brazil’s Nationally Determined Contribution (NDC). Plaintiffs argued that Brazil cannot regress in its NDC as this would constitute a violation of Article 4 (3) of the Paris Agreement. It raises the interesting question of what ‘progression of the ambition’ means for purposes of the Paris Agreement. 

The panel discussed to what extent compliance with climate goals (eg in the form of a court order) can be enforced. Courts are treading carefully, in observance of the separation of powers doctrine. However, if governments are acting in breach of their obligations, what enforcement remedies are available? Enforcement litigation in this context is unprecedented and raises numerous legal and practical issues. However, it may very well be (one of) the next development(s) within the area of climate litigation against governments. 

The other side of the story is that governments are being challenged with respect to the climate policies they do implement. Companies that are affected, may bring claims in arbitration under bilateral or multilateral investment treaties. Ipp explained that climate-related investor claims broadly fall within two categories: claims related to policies designed to cut high-emitting activities (eg the phase-out of certain energy sources) and claims related to policies designed to incentivise low-carbon technologies (but that were later amended). 

The outcomes of such proceedings, so far, has been dispersed. Swaroop spoke in more detail about some pending cases. For example, Swaroop mentioned the cases of RWE and Uniper against the Dutch government. In an effort to meet its emission reduction targets (inter alia to comply with the Urgenda judgment), the Dutch government decided to phase out coal power by 2030. RWE and Uniper claim that this was unfair, because the Dutch government failed to provide compensation. The Westmoreland v Canada case was also discussed. 

The panel then discussed the implications of investor claims on effective climate action by governments. One of the criticisms cited was the large monetary amounts that can be involved (billions of claimed damages is not uncommon). This may lead to ‘regulatory chill’ and may lead governments to be less ambitious in their low-carbon incentive schemes going forward, slowing the energy transition. The panel went on to exchange thoughts on potential solutions to the ‘squeeze’ governments find themselves in. Swaroop mentioned the efforts to revise some investment treaties (eg the Energy Charter Treaty) to better align them with the Paris Agreement and emission reduction targets. Ipp discussed some of the options arbitral tribunals may have in the current system, such as the reinterpretation of fair and equitable treatment (FET) provisions and the mitigation of damage awards (eg basing awards on amounts actually invested versus projected long-term profits). It was concluded that a change of mindset is required, both by the international investment community, legislators and the legal profession, to curb the inhibiting effect of investor-state claims on climate ambition.

Panel 2: The role of the courts in climate change litigation 

Rapporteur: Daan Lunsingh Scheurleer (Clifford Chance, Amsterdam)

The second panel dealt with the role of the court and was chaired by Jane Colston (Brown Rudnick, London), who also served as one of the conference co-chairs. The members of the panel were: Robert Allen (Simmons & Simmons, London), Robert Johnston (Johnston, Winter & Slattery, Sydney), Kamila Drzewicka (Client Earth, Warsaw), The Hon Mr Justice Robin Knowles CBE (High Court of England and Wales, London), Saverio Lembo (Bär & Karrer, Geneva) and Catherine Odigie (ED&F Man Capital Markets, London).

Colston opened the session describing the growing trend of climate litigation, which increasingly seems to no longer to turn on the question of whether there is climate change, but what action should be taken and by whom. Given that there are many policy considerations attached to this issue, the question arises whether the courts should be involved at all. Should the courts set policy or should they defer to governments to do so? Whatever the answer, courts will be involved in any event, to ensure that the laws which are put in place by governments are complied with.

The panel was asked what in their view the definition of climate change litigation is. Knowles explained that the courts are seeing cases against governments and against corporates. No hard lines can be drawn between these types of cases; climate change litigation has more parameters than can be included in one definition. Drzewicka commented that, for an NGO such as Client Earth, litigation is a tool which is used daily to push for change – pushing governments on taking action and corporates to do better. For Odigie, climate change litigation is litigation that brings to bear the sustainability of planet Earth. The definition will continue to change as the law develops. Allen sees it as a very broad category of cases: there are public and private law disputes at all levels and sectors of the judiciary.
As to types of cases, Knowles saw the significance of emissions in the context of environmental planning, for instance around expanding airports. He also expects that the law on corporate separateness and the responsibility of parent companies for the climate impact of the activities of their subsidiaries will be a very important aspect that will be developed in the future. Issues relating to corporate governance, corporate responsibilities and fiduciary duties of boards will also be critical topics in cases against corporates and their boards. 

Odigie commented that the cases which are being brought are far-reaching. They trigger questions such as: what does it mean to be a successful business? How does a company reflect the climate implications of its products? How does a company quantify the risks it is running in the context of climate change? It does not only affect companies active in the environmental arena: it affects all companies. Allen mentioned various categories of cases, including greenwashing, misleading disclosures, insufficient financial risk management, mass torts. All these cases bring a high degree of reputational risk. Drzewicka explained that Client Earth looks for various ways to further its cause: using consumer protection laws in greenwashing claims, or using corporate law and shareholders’ rights to stop the construction of a coal-fired power plant, and using human and personal rights.

Johnston explained that in Australia, the political landscape has not been supportive of fighting climate change claims, because Australia is not a party to the Paris or the Glasgow Agreements, nor is there a human rights charter than can be invoked. Litigants in Australia need to allege a breach of a duty of care, but lawyers are stepping up and cases are being brought. Lembo explains that there are not many cases in Switzerland. However, a law mirroring the 2014 EU ESG directive came into force as of 1 January 2022. Civil climate change cases are difficult to bring in Switzerland due to a lack of class actions; criminal charges may be more promising as evidence may emerge in the context of a criminal investigation, which can be used in a civil law claim. Allen sees a continuously changing landscape: judges are not policymakers, but there seems to be an increasing climate awareness on the part of courts, as well as on lawyers in the way they present their cases. 

Justice Knowles mentioned the Standing International Forum of Commercial Courts (SIFoCC), established in 2017 (see www.sifocc.org). SIFoCC is designed to help commercial courts to deal with these types of issues. Members of SIFoCC discuss issues such as case management, preliminary rulings, multi-party technicalities and funding. SIFoCC will be a good platform for courts to come up with ways of dealing with climate change cases. 

Asked about their expectations for the future, the panel saw a rising tide of new cases, with a lot of creativity in the ways in which they are brought and the angles they take. Corporates will need to rethink how they operate and how they make their disclosures. The parent–subsidiary boundaries may erode, which will trigger rethinking the way in which groups of companies are structured and governed. Class actions will be important procedural avenues, as will be proxy courts such a ombudsmen and advertisement boards.

Panel 3: Tort law: a viable instrument in climate change actions against corporates? 

Rapporteur: Lucy Pert (Hausfeld, London)

The third panel focused on the narrow question of whether tort law is a viable instrument in climate change actions against corporates. 

The adverse effects of climate change are clearly outlined in the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report 2022. The IPCC concluded that many of the impacts of global warming are irreversible but there is a brief window of time to avoid the very worst impacts.

With this in mind, Lucy Maxwell of the Climate Litigation Network and Urgenda Foundation outlined some of the scientific developments that may assist in supporting tort litigation against companies. We now have far greater clarity on the projected harm caused by climate change at different temperature levels, on the size of the remaining carbon budget for a 1.5C world, and on the emissions reductions required. Importantly, through the fast-developing area of attribution science, we have greater clarity on the private actors who have made an outsized contribution to climate change. 

Maxwell then outlined some of the developments in climate litigation against states, many of which developed causes of action in tort. These cases include the Urgenda claim in the Netherlands and the Klimaatzaak case in Belgium, both of which are premised on tort under each country’s respective civil codes, as well as the Notre Affaire a Tous case in France, which is premised on the tort of ecological harm. While not without their difficulties, these claims have had some success in the courts. In particular, the issues of standing, justiciability and the willingness to address the scientific evidence have not been deemed to be major hurdles in many of the claims outlined. 

In contrast to the relatively receptive civil law jurisdiction, Peter Chaffetz of Chaffetz Lindsey outlined the position in the US. He began by noting the procedural complexity involved in US tort litigation due to the overlapping federal and state jurisdiction for many causes of action. He noted that federal appellate courts have consistently rejected the use of tort law to address climate change. The courts highlight problems in addressing such claims, including: 

•    the judiciary lacking the expertise and institutional capacity needed to address the effects of climate change; 
•    the fact that the judiciary should not take the place of the legislature in addressing these issues; and 
•    that state law should not be applied extraterritorially. 

Further, in almost all cases, the plaintiffs (along with everyone else) also contribute to climate change. Securities law claims based upon insufficient disclosure of climate risk, for example the claim in People v. ExxonMobil Corp., have similarly failed. 

Next, Tim Cooke-Hurle of Doughty Street Chambers in London contrasted the case of Milieudefensie v Royal Dutch Shell in the Netherlands with Smith v Fonterra et al. in New Zealand. In the case of Millieudefensie, the claims were based upon section 162 of the Dutch Civil Code but the analysis turned on a duty of care akin to that found in common law 
jurisdictions. The court found, having imported UN Guiding Principles on Business and Human Rights (UNGP) and Organisation for Economic Cooperation and Development (OECD) guidelines to inform the duty of care, that to stay in line with the Paris Agreement, Shell had to limit its emissions by year end 2030 to at least 45% compared to 2019 levels. 

In contrast, the claimants in Smith v. Forterra claimed in the tort of nuisance, negligence, and a new breach of duty tort. The court rejected the claim reasoning that common law tort proceedings are not an appropriate venue to address these issues, which required a regulatory response. The court believed that any remedy would require a court-supervised regulatory regime; without which the courts lacked the expertise to administer. Any litigation against a subset of emitters would be inefficient. The claimant also failed to convince the court that he was uniquely placed in terms of having suffered harm. When it came to assessing the claim for negligence, the court found that there was not sufficient proximity between the parties. Finally, the proposed new tort was allowed by the first instance judge, but struck out by the Court of Appeal because the claimant had failed to delineate its scope. 

Given the difficulties of bringing tort claims, at least under the common law, William Hooker of Pallas Partners addressed some other potential ways of bringing private law claims against private actors, such as shareholder litigation. He spoke of a claim in the Polish courts against two former state-owned utility companies, Enea and Energa, who planned to build a new coal-fired plant in the east of Poland. ClientEarth purchased shares in the companies and used its standing as a shareholder to bring a claim to challenge the lawfulness of the investment decision. More recently, ClientEarth has launched a derivative action against the board of Shell for failing to adopt an energy transition plan that is capable of meeting Shell’s stated commitment to an energy transition consistent with the Paris Agreement. Finally, Hooker highlighted that, if the common law lacks the tools to deal with climate change, there is potential to legislate to create identifiable causes of action in a statutory tort. 

The panel covered a lot of content and brought different perspectives to the question of whether tort law is a viable instrument in climate change actions against corporates. While it is clear there are challenges, it is still early days in the development of this area of law, and it will be interesting to see how the law evolves to tackle the climate crisis. 

Panel 4: Jurisdictional and conflict of law issues in climate change litigation 

The session was chaired by Sandrine Giroud (Lalive, Geneva) who moderated a panel that included Martyn Day (Leigh Day, London), Clément Dupoirier (Herbert Smith Freehills, Paris), Marina Skarbek-Kozietulska (Rö, Warsaw) and Professor Arnaud Nussbaumer (Keppeler Avocats, Geneva).

Forum and governing law are key elements to the success of a claim. With jurisdictions advancing at different pace on climate change, litigants have been leveraging the strengths and vulnerabilities of each legal system to advance or defend their claims from discovery proceedings to tort remedies. Drawing from recent cases, this panel considered the strategic procedural planning related to climate change claims with a focus on forum and applicable law.

Introducing the topic, Sandrine Giroud observed that examining forum and applicable law issues was often a chicken-and-egg situation as both are often strategically interdependent: the forum determines to a large extent the applicable law and vice-versa. Moreover, concepts used to determine forum and applicable law are in fact often the same as they are essentially based on the concept of tort.

Nussbaumer put the topic in perspective by discussing the trends and figures presented by the UNO Climate Report, which shows that most of the countries around the globe have experienced little to no climate change claims. It also shows that these claims are rather initiated in common law countries, where a nexus is easier to demonstrate.

Day continued with the question of the victims. The cases to bring to court today should concern ‘real’ victims, ie people who already suffered losses and harm. Theoretical loss is not a strong argument before a court nowadays. He stressed the fact that the number of claims is growing globally and that now is clearly the time to defend the planet.

Moving on to jurisdiction issues, Skarbek-Kozietulska discussed the fundamental question of the forum within the EU framework, which gives as general principle the domicile of the defendant, and, in case of tort, the place where the harmful event occurred. In case of damages, it offers some opportunity for forum shopping which can be useful for the claimants. 

Besides the standard ground for jurisdiction, the panel discussed special grounds for jurisdiction often used in relation to climate litigation such as connexity, attraction of parent companies or counter-action mechanism such as ‘negative declaratory actions’ whereby a company anticipating a liability action takes the first step of seizing the most favourable court to acknowledge that such company has not committed any tort, thus creating lis pendens

Day presented a Zambian pollution case and a Nigerian oil spill case. In both cases, actions were initiated in the UK against a parent company. UK courts accepted their jurisdiction based on the principle of access to justice. This should probably change due to Brexit, but forum non conveniens could still be considered.

The panel then discussed procedural issues which are determined by the applicable procedural law, in turn determined by the jurisdiction seized. Among other issues, Giroud raised the question of legal standing of NGOs, which can be a powerful tool but inadmissible in most jurisdictions. Dupoirier exposed the remediation tool that exists in France aiming to remediating a situation where a tort has been established and whereby compensation is then only due if the measures were not sufficient to remediate the tort. In such cases, however, personal interest should be proven to action the company, which is recognised for all NGOs that exist for more than five years (if their statutes provide for defense of nature). 

Giroud also raised the issue of taking of evidence and the possibility of seeking discovery which is a very powerful tool for the claimants. Day and Nussbaumer stressed that the tools in civil law jurisdictions are weaker in that respect. Skarbek-Kozietulska mentioned the situation in Poland where discovery exists, but the requests must be specific. However, documents obtained in other proceedings – before other authorities, for example – can be used freely.

Giroud then moved to the question of applicable law, which can be a very strategic point, considering the elements that must be demonstrated in different systems. Dupoirier reminded the panel that the Rome regulation is damage-based, except for the escape clause where it can be demonstrated that the case is manifestly linked to another country. He also exposed the French concept of the devoir de vigilance, introduced in 2017, by which holding companies must take appropriate measures to supervise their subsidiaries. Nussbaumer pointed out the interesting approach of New York and evoked the Kashef v BNP Paribas case, in which plaintiffs were domiciled in the US but suffered the harm in Sudan and the claim targeted people domiciled in Switzerland. The judges concluded that Switzerland had the most interest in this case and Swiss law should be applied.

Giroud raised the question of expert reports, which are very important in climate actions. Skarbek-Kozietulska explained that Polish judges are enthusiastic about them, even though it is considered a private document. The issue of making courts accept expert reports on legal questions was also discussed. Nussbaumer stressed that expert reports are fundamental to demonstrate the causality between pollution and damage. As lawyers, we should try to get closer to scientists who can demonstrate these facts and go to the courts that would accept this expert evidence.

Dupoirier’s final words were to recommend to corporations to anticipate these issues as much as possible, as the damages to reputation are very important in case of proceedings, even without condemnation; Nussbaumer stressed that, thanks to scientific progress, causation can now be proven– thus overcoming the general objection from courts that causation is not sufficiently established; Marina Skarbek-Kozietulska pointed out that climate litigation is only starting and recommended that defendants raise the jurisdiction defence; and Day stressed again that now it is time for litigators to succeed and defend the people who are actually suffering from climate change.

Giroud concluded by pointing out that, a few years ago, this topic would have raised eyebrows among international litigators but the success of this IBA Litigation Forum showed how relevant the topic is today. Lawyers must step up to the challenge to best advise and accompany their clients. 

Panel 5: Invoking human rights in climate change cases against private actors, such as companies 

Rapporteur: Anna Kirkpatrick (Clifford Chance, London)

In the penultimate session of the forum, the chair and the panel, consisting of Joana Setzer (Grantham Research Institute on Climate Change and the Environment, London), Monica Feria-Tinta (Twenty Essex, London) and Martijn Scheltema (Pels Rijcken, The Hague), discussed the emerging prevalence of litigation against corporate entities concerning climate change. There is an emerging recognition that climate change can and will have a significant and negative impact on people’s lives. This was underscored in recent reports by the IPCC: in its sixth assessment report, it stated that ‘it is unequivocal that climate change has already disrupted human and natural systems’. The people-related risks highlighted in the same report were memorably described by António Guterres as an ‘atlas of human suffering’ at the launch of the report in February 2022. 

The chair, Anna Kirkpatrick, explained this growing acknowledgement of the intersection between climate change and human rights. Setzer then provided a tour de force of the litigation landscape on climate issues. Drawing on her 2022 paper, Setzer explained the rise of so-called ‘rights-based litigation’, a term first coined in Peel and Osofsky to refer to cases that use rights as a basis to challenge inaction on climate change. These cases, which started with Leghari v Federation of Pakistan in 2015, have featured more prominently since the adoption of the Paris Agreement; climate-aligned rights-based cases and complaints were counted at 112 as at May 2021. They have typically been aimed at states. Feria-Tinta acts in high profile cases dealing with human rights and the environment and climate change. She considered some of mechanisms that can be used to bring states to account for environment-related human rights harms which go beyond court claims to include complaints to human rights bodies, such as the complaint brought by Torres Strait Islanders against Australia before the Human Rights Committee in which she acts. In a decision recently published by the Human Rights Committee, Australia failed to implement adequate climate change adaptation measures to protect Torres Strait Islanders from the impacts of climate change. 

More recently, claims have been brought against corporate entities. Scheltema provided an overview of the landmark 2019 ruling in relation to a claim brought by Milieudefensie and other civil society actors against Shell Plc. A Netherlands first instance court ordered Shell plc to reduce its Scope 1, 2 and 3 emissions by 45% from its 2019 levels by 2030. The court found that by emitting dangerous emissions, Shell plc was imminently in breach of an unwritten social standard of care that it owed to Dutch citizens and residents of the Wadden region. In interpreting whether Shell owed such a standard of care, the court took into account 14 factors, including human rights as articulated in the European Convention on Human Rights and international law. It also took into account soft law standards; in particular, the UN Guiding Principles on Business and Human Rights (UNGP). Scheltema explained that the UNGP provide a framework for companies to respect international recognised human rights. A process of due diligence on potential or actual negative and human rights impacts is crucial to ‘knowing and showing’ respect for rights. 

This is the first time that human rights and the UNGP have been used by a court in a claim between private parties to inform a standard of care owed between them in relation to climate action. The case is subject to an appeal and it remains to be seen to whether similar claims might succeed in other jurisdictions: recently a claim invoking fundamental rights in a comparable manner did not succeed against a car manufacturer in Germany. 

Regardless of the outcome of the appeal, the case demonstrates that the landscape of litigation alleging failures to take action to address climate change is rapidly evolving and the potential liability for liability is expanding.

A conversation around a hypothetical case study

The final panel was not a traditional panel, but a conversation about a case study involving a listed steel company headquartered in Germany, which is sued by an NGO seeking the reduction of the company’s global emissions by 50% by 2030. 

Expertly chaired by Sophie Lamb KC (Latham & Watkins, London), Kathleen Donnelly (Henderson Chambers, London) played the role of a lawyer acting for the hypothetical NGO with a shareholding; Adam Heppinstall KC (Henderson Chambers, London) played the role of the lawyer representing the hypothetical corporate defendant; and Dennis Horeman (De Brauw Blackstone Westbroek, Amsterdam) played the role of the judge having to decide on the matter. 

The panel discussed a wide array of relevant aspects of the hypothetical scenario. The conversation made it clear that this is a multifaceted area of the law which is still developing and that there are no definitive answers to the many questions that can be raised.