Friday, November 14, 2014

Latin American law favorable to climate change victims according to Environmental Law Alliance Worldwide

Latin American law favorable to climate change victims
according to Environmental Law Alliance Worldwide
A study elaborated by a network of lawyers around the globe confirms our findings: Some Latin American civil law is particularly favorable to victims of climate change claiming compensation from CO2 polluters. The Environmental Law Alliance Worldwide study also confirms that India is a jurisdiction that might provide victims of climate change with compensation for their damage. It furthermore declares Kenya to be promising.

Contrary to Claimer.org, the study labeled “Holding Corporations Accountable for Damaging the Climate” recommends the law of Mexico. For the other Latin American jurisdictions examined by the study Claimer.org agrees: Brazil, Ecuador, and Colombia are indeed promising. Furthermore, Claimer.org had identified Peru and Venezuela as jurisdictions providing good chances to victims of climate change.

There are some differences in the design of the study when compared to the Claimer.org approach. E.g. the Environmental Law Alliance Worldwide focuses more on constitutional rights. For some of the jurisdictions investigated, it comes to a positive result based on constitutional law, whereas Claimer.org came to a positive result in a view of the civil law.

At the same time, Environmental Law Alliance Worldwide does not examine for each of the jurisdictions the question whether the jurisdictions apply the principle of joint and common liability of tortfeasors (it touches upon this aspect only with regard to the U.S. law which is not of much help). This aspect is of utmost importance for Claimer.org. As none of the CO2 polluters are responsible for a share higher than 2%, victims of climate change might find it hard to get noteworthy compensation in jurisdictions which do not apply the principle of joint and common liability.

The study assesses also the question which rich jurisdictions (as fora) might be ready to apply the law of the favorable foreign jurisdictions. Like Claimer.org, the Environmental Law Alliance Worldwide identifies the Netherlands as suitable forum, evidently with Royal Dutch Shell as the most suitable defendant.

To sum-up, the study presented by Environmental Law Alliance Worldwide provides, in particular by its focus on constitutional law, for some valuable additions to our own research and other studies referred to on Claimer.org. However, it is not recommended to base a strategy on this study alone.

Related: Study of Latin American Civil Law Starting with Brazil

Thursday, October 23, 2014

How countries could facilitate private law compensation for climate change

Following the model of the Jewish Claims
Conference is one of many ways private
law can facilitate climate change compensation
(Image: by Arivumathi
How countries could facilitate private law compensation for climate change

In the previous blog post, we noted that countries hosting victims of climate change could modify their law to facilitate climate change damage compensation by court litigation. Which are the means that climate change victim countries could take to increase the likelihood of effective private law climate change damage compensation? Claimer.org has so far identified the following means which are mostly under the full sovereignty of each country:

  • Reducing the burden of proof for damages, causality and fault,
  • Establishing strict liability in addition to fault based liability,
  • Establishing joint and common liability (instead of proportionate liability, meaning that one tortfeasor is liable for the entire damage and must search for refunding with other tortfeasors),
  • Establishing the right to sue via class actions,
  • Empowering private associations to sue companies on behalf of the private climate change victims, following the model of the Jewish Claims Conference which was authorized to sue on behalf of the victims of the Nazi persecution without being formally mandated by them individually, and
  • Empowering the state or a specialized state agency to sue companies on behalf of the private climate change victims (like under the U.S. parens patriae theory or similar concepts, see Hare, Daniel (2013) "Blue Jeans, Chewing Gum, and Climate Change Litigation: American Exports to Europe," Legislation and Policy Brief: Vol. 5: Iss. 2, Article 4. Available at: http://digitalcommons.wcl.american.edu/lpb/vol5/iss2/4.

Claimer.org has cited manifold examples for countries which have, by tradition, the first five of these positive elements in their private law, see our blog posts on the various countries.

Are these means also sufficient for ensuring that the victims of climate change get compensation from a certain climate damaging company? The answer to this question depends inter alia on the possibilities for enforcement and thus on two further questions:

  1. Does the damaging company have assets in the country of the court ruling? If yes, enforcement is relatively easy.
  2. Do other countries/jurisdictions where the company has assets recognize climate damage compensation court rulings according to their rules on international private law? 
Here with the second question, we end-up in an extremely complex field in which factors of the court country intermingle with factors of the enforcement country/countries. To make a proper assessment, substantial legal research would need to be undertaken. Pending this research, it might be advisable for victims of climate change to use private law against companies in countries where those companies have assets and where there are good chances for success.

See again our country and region specific blog posts: 




Friday, October 17, 2014

Canadian big five possibly liable for 2.4 billion USD per year via foreign jurisdictions

 the five biggest Canadian oil and
gas companies could be held liable
for 2.4 billion US-Dollars 
The Canadian Centre for Policy Alternatives and the West Coast Environmental Law Foundation claim, in a study elaborated by two of their staff, that the five biggest Canadian oil and gas companies could be held liable for 2.4 billion US-Dollars per year due to their contribution to climate change. The two Canadian centers assume that there are manifold legal avenues to claim compensation for climate change damages. Climate change damages can be observed around the globe. Therefore the law of many different countries can apply, not just the Canadian law. Furthermore, the countries concerned by climate change may even adapt their law to facilitate climate change litigation in the same way as some Canadian provinces did for tobacco litigation. Once a judgment has been obtained outside Canada, enforcement might take place in Canada as well, say the authors.

Comments:
It seems that the West Coast Environmental Law foundation has started to engage in a more comprehensive program promoting climate change compensation by civil law litigation in an international context. To our knowledge, it is the first medium size NGO to do so. Claimer.org has advocated this approach for many years already, hoping to promote a game change from a purely national perspective to a global one. The study contains many references that demonstrate the viability of the international approach. This is the first merit of the study. The second consists in drawing the attention to the possibility of countries threatened by climate change to modify their private law in a view of climate change litigation, and therein namely compensation claims. Claimer.org investigates this issue in the following blog post.

PDF: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2014/10/Payback_Time.pdf

Related: Read more about Canadian Environmental law, and other North American Law with regards to climate change litigation.

Friday, July 25, 2014

Multi-national NGOs finally turning towards climate change liability?


Greenpeace, WWF and CIEL launched, at the end of May, a letter campaign addressing board members and CEOs of big CO2 polluters and of insurance companies. In their letters, the NGOs ask the addressees to be aware of the risk of criminal and civil liability if they were to deny the causality link between CO2 emissions and climate change. More on the addressees and the letters can be found here.

Already five years ago, Claimer.org has invited two of the three involved multi-national NGOs and several others to investigate whether climate change compensation claims can serve as a leverage to curb climate change. Two years ago, Claimer.org launched another campaign. At the time, we heard from one of them that they would rather see chances for injunction law-suits against polluters. We wondered how a few successful injunction law-suits can ever achieve any improvement for the climate.

In the meantime, NGOs were targeting investor decision-making. When doing so, they already referred to possible liability of CO2 polluters.

The recent letter campaign illustrates that the multi-national NGOs might move further into the direction of climate change liability. However, it is not sure that their current threatening strategy will have more effects than making a few attorneys, consulted by worried managers, richer. The letters fail to demonstrate how the denial of climate change, under the jurisdictions of the targeted managers, might cause or might have caused a damage for which the managers can be hold liable. There is only a vague footnote in which they refer to risk disclosure obligations, obligations which protect shareholders. The NGOs seem to claim that the obligation to disclose risks linked to climate change would be infringed by public denial of climate change. However, these are different pairs of shoes. Disclosing risks linked to climate change can be achieved by reports targeting investors. In parallel thereto, the managers can well work in favor of denial of climate change in the public debate to protect the financial interests of their companies. The two threads can be followed in parallel by the same managers. Moreover, it could even be argued that managers have also the obligation to pursue the financial interests of their stakeholders and thus to follow the two threads in parallel.

Our overall impression is that the letter campaign somehow beats about the bush. It targets the managers instead of the companies themselves. It targets the wrong risk, the risk of not fulfilling disclosure obligations instead of the risk caused by climate change. And it works in favor of shareholders instead of the victims of climate change. The task of the NGOs should not be to protect the interests of shareholders, but to protect the interests of the victims of climate change and to deter investors from fossil fuel investments. Neither goal will be reached by the NGOs. Evidently, the victims do not profit from the NGOs action. If we look at it under the aspect of possible deterrence, the liability risk the NGOs point at is too small to trigger de-investment. Thus it will not do much favor to the climate. Only the damages caused by climate change weigh enough to outweigh the profits of the fossil fuel industry. Only the credible threat to hold polluters fully liable for many and high damages caused by climate change can deter investors from further investing in fossil fuel energy production.

Thus we still have to wait for the multi-national NGOs to embrace the unique promising strategy: suing polluters for compensation regarding the damages caused by climate change. For how long?

Monday, June 16, 2014

A new role for insurers in climate change compensation?

New role for insurance companies
in Climate Change Litigation
So far insurance companies were mainly on the passive side of climate change litigation lawsuits. However, this might change. The Article “Responding to Litigation Risk from Climate Change – Informed Decision making“ of Mark Baker-Jones and a more detailed blog entry about climatelawyers.com report referring to a lawsuit of an Illinois insurer against public authorities in the wider Chicago area. The authorities are accused of negligence with regard to their task of storm water management. The negligence is said to have caused damage to the insured, mainly farmers. This case points at a new battlefield of climate change compensation litigation: the battlefield on which insurers oppose authorities.

The move of insurers against authorities might in the future be seen as a decisive move of insurance industry against those causing climate change related damage, though not climate change itself. In the above mentioned case, the authorities are said to be indirectly contributing to the damage, by not protecting against the consequences of climate change. It would only be logic that the insurance industry will sooner or later also attack the polluting industry and their shareholders directly. But when?

It can be guessed that the insurance industry has not yet taken this step because of its own capital interests or its interests in keeping the polluting industry as clients. However, this attitude of the insurance industry might change when climate change damages increase further.

Inside the insurance companies, there might be a discussion on how to make this step without damaging disproportionately the relationship with the polluting industry as clients. To protect the above mentioned interests, the insurance industry might outsource their compensation claims against the CO2 emitting industry to a specialized trust, fund or company (a kind of “bad bank” for (re-)insurance companies). Such a step could be taken by the insurers on their own initiative. Alternatively, stakeholders of the (re-) insurance companies, like investment, could invite the insurance industry to use potential compensation claims. Ideally the insurance industry will make this step as a block in one strike (e.g. managed by the few re-insurance companies) so that the CO2 emitting clients of the insurers cannot threaten anymore to move away to more lenient insurers.

If the direct outsourcing to a specialized trust, fund or company is still regarded as being too risky, the insurance industry will certainly find more elegant ways. E.g., the insurance industry could:

  • Invite auditing companies to point at the missed gains of climate change compensation via a specialized trust, fund or company. To transfer compensation rights to a specialized trust, fund or company would appear to be mandatory under common rules for good business practice if auditing companies were urging the insurance industry;
  • Lobby behind the scenes for business practice laws or standards obliging the insurance industry to realize the financial value of possible climate change compensation claims against CO2 polluters;
  • Sell the compensation claims to legal vulture funds. Legal vulture funds buy legal claims with little success-rate at big discounts.


Thus we can conclude that the insurance industry could, if time has come and intelligent technical solutions developed, turn against CO2 polluters in different ways, either directly or indirectly. Though insurance industry is currently still withhold by opposing interests, intelligent technical solutions might make the balance move earlier.

Update:  After the finalization of this article, the insurance company withdrew the class action against the authorities of the district Chicago. However, the vivid reaction to the class action and various other new events make us believe that the considerations laid down in our article are still valid.

Thursday, May 29, 2014

Recent articles on climate change litigation

Current state of climate change litigation 
Legal avenues to fight climate change are limited, but growing”, says Sharon Turner. She stresses “the injustices of climate change”, for which she assumes that the victims of climate change will ultimately get compensation from greenhouse gas emitters. Ever new research demonstrates causality between CO2 emissions and climate change. “Legal rulings will ultimately turn against greenhouse gas emitters”. She guesses that, backed by company law disclosure rules, this will lead to a change in the business practice of companies.

There are little chances for successful climate change litigation against U.S. cities for failing to protect against climate-change consequences, says Jenna Shweitzer on regblog.org, a law blog run by the University of Pennsylvania. More on this type of climate change litigation is to be found in our next blog entry “A new role for insurers in climate change compensation?”

Assad W Razzouk wrote in “The Independent” of Tuesday 22 April 2014 that “a barrage of lawsuits is needed to curb climate change”. Mr Razzouk has not compensation lawsuits against polluters in mind. Instead he wishes that trustees of investment funds are targeted for violating human and other essential rights. He does not expect a high success rate, but thinks that suing them would amount to a successful political campaign. Mr Razzouk thinks that pension fund trustee would not “like to be accused of violating the basic human rights” … “of millions of people and of many millions to come.” Climate justice issues for small islands developing countries are examined in this policy brief of the Hague Institute.

Anthony Cappelletti fears, in “Tort Issues for General Insurance Actuaries” that the big natural disasters might trigger “significant litigation” against insurance companies. This view is not particularly new. Unfortunately, he does not either bring along a deeper reasoning wherefore we do not recommend this article.

Update: More noteworthy documents on insurances and climate change compensation litigation is to be found in our next blog entry “A new role for insurers in climate change compensation?

Friday, April 4, 2014

Good chances for climate change compensation lawsuits in the Czech Republic

Civil Court in the Czech District of Jihlava
(Image Schuminka Janička)
The classic Czech tort law theory requires three elements for assuming tort: the breach of a legal duty, a damage and causal relationship between the breach and its consequently inflicted harm. The Civil Code Section 415 says that “everybody is obliged to behave in such a way that no damage to health, property, nature and the environment occurs”. This general obligation can be referred to in the case of climate change damages. Furthermore, there must be “fault”. But according to Section 420 (3) fault is presumed, and the tortfeasor has to demonstrate that the damage was unavoidable or not objectively foreseeable (and thus not attributable).

Besides the classic fault-based liability, there are special cases of strict liability. Section 420a of the Civil Code states: “Any person shall be liable for damage which he causes to another person while operating a business.”  Again the tortfeasor may argue that the damage was unavoidable.

Section 438 of the Civil Code provides that multiple tortfeasors are jointly and commonly liable in case of concurrent contribution, regardless of whether the contribution falls under strict liability or on fault. However, courts may also apply the principle of several liability. It is not clear to us on which basis such a decision is taken and whether it is necessary for applying the principle of several liability that a certain part of the damage can be attributed to the individual tortfeasor. It seems at any rate that several liability is the exception and that it requires a special justification to apply the principle of several liability instead of joint and common liability.

Besides the remaining uncertainty regarding the joint and common liability of tortfeasors, the Czech Republic seems to offer relatively good conditions for victims of climate change around the world to get compensation for their damages from defendants operating in the Czech Republic.

N.B.: Why can the Czech Republic (like all other European Union and European Economic Area states) be a forum for damages worldwide?

Monday, March 3, 2014

Rather low chances for compensation of climate change damages in Denmark and Norway

Norway beach being hit by bad weather
but chances for climate change litigation low
(Image by Aconcagua)
As Sweden is amongst those countries with the best chances for victims of climate change to get compensation of their damages, we examined again and more precisely the chances of the countries in geographic proximity to it: Denmark and Norway. Both legal systems have indeed similarities with the Swedish system. However, the Danish civil law is extremely rigid. Liability under ordinary civil law is limited to cases where there is a breach of a legal obligation or deviation from common behavior. Likewise, the environmental liability is limited to enumerated cases and to the risks for which the cases were enumerated. Thus oil drilling might be covered, but certainly not for the risk of climate change triggered by CO2 emissions.

In Norway, the situation is slightly better, but the likelihood of getting compensation for climate change damages is uncertain. Judges have a tremendous discretionary power because they have to ascertain that the causal contribution was a “substantial” one. The big Norwegian company Statoil is only responsible for a very limited share, it is in the hands of the judges whether Statoil's contribution is to be regarded as “substantial” or not. One could argue that Statoil is ranked amongst the 31 biggest polluters worldwide, see the CDP Global 500 Climate Change Report 2013 that we presented recently. Which contribution should be regarded as substantial if not the one of one of the biggest 40 polluters in history? But doubts remain: the share of Statoil is not as big as the 3 to 4 % of the biggest 5 polluters listed in the study. If we understand the CDP Global 500 Climate Change Report 2013 rightly, Statoil's share in CO2 emissions can be estimated at about 1 %.

Another hindrance in Norway is that joint and common liability seems to be limited to cases of conscious cooperation of tortfeasors. Conscious cooperation of tortfeasors is difficult to argue for in the case of climate change damages. We could thus at best expect proportionate compensation in Norway.

Certainly some of the very big oil companies like Shell and BP are also operating in Norway. But they do so via daughter companies like AS Norske Shell or BP Norge AS. Will e.g. the share of Shell worldwide be attributed to AS Norske Shell? Or is it possible to sue successfully the mother company of AS Shell Norske together with AS Norske Shell so that the worldwide share of Shell can be referred to for the question of “substantial” contribution? Only if at least one of the two questions was to be answered positively, we could assume rather good prospects for victims of climate change when suing in Norway. Unfortunately, we cannot assess these questions as of today. And even if the questions were to be answered positively, we would expect at best proportionate compensation, thus no compensation of the full damages.

Update: Chances for climate change damage compensation may be higher in Norway than previously estimated

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