Monday, December 28, 2015

Model law for compensation of climate change victims by CO2 polluters

cover of the west coast
climate law report
More than one year ago suggested that countries can adapt their civil law so as to facilitate climate damage lawsuits, see.

Now the Canadian NGO West Coast Environmental Law goes even further. It has published a model law for the compensation of climate change victims by “major emitters” of greenhouse gases (GHG). The model law is accompanied by a report which is also worthwhile reading. The report deals inter alia with the topic of enforcement of judgments in other jurisdictions (page 20) and basic principles of law, which are relevant in the given context.

The model law suggests solutions as to a range of topics, and these solutions can mostly also be incorporated into national civil laws in a selective way:

  • Who can sue / be a claimant? 
  • Who can be a defendant? The model law refers to the term “major emitters” who are defined as companies having emitted at a detectable atmospheric level of 0.1 ppm or more. 
  • On what basis can a claim be brought forward? Here the model law is unfortunately limited to the “cause of action” “nuisance” which is not so common outside the common law sphere. 
  • Jurisdiction. 
  • Causation and proof thereof. The model law contains some very interesting pragmatic solutions for this thorny issue, see page 31. 
  • What can the courts order the defendants to do? 
  • Barriers to climate change litigation. 
  • Coordination amongst different jurisdictions connected to the same tort. 
  • Apportionment amongst different tortfeasors, mainly based on the principle of proportionate responsibility. Unfortunately, the model law does not suggest common liability though this might have a much bigger deterring effect. 
  • Establishment of a climate compensation fund. 
  • Establishment of a climate damage insurance for GHG emitting companies. 
  • Limitation periods. 
  • Lawsuits of the state on behalf of the victims (“parens patriae lawsuits”).  
  • Class actions. 
  • Restricting adverse costs coverage. 
  • Legal assistance / funding. 
  • Addressing (weak) judicial capacities of claimants. 
If a municipality adapts laws around these key areas as descried in the report then this would open the possibilities of successful climate change civil lawsuits in that jurisdiction.

Read the full report here:

Also see: Europe currently better than U.S. for Climate Change Damage Lawsuits

Friday, November 13, 2015

More warn against liability for climate change damages

According to the Daily Telegraph, both a representative of the Bank of America and the Prince of Wales warned that fossil fuel companies could be hold massively liable for damages triggered by CO2 emissions. According to the Daily Telegraph, “investors in the City are increasingly concerned that fossil fuel groups and their insurers are on the wrong side of a powerful historical shift and could be swamped with exorbitant class-action lawsuits along the lines of tobacco and asbestos litigation in the US”.

In addition to the liability towards victims of climate change, fossil fuel companies might be liable towards shareholders. The New York Attorney General has just launched an investigation which is likely to address mainly this second aspect of liability, see this report of the New York Times.

Also Read:  Bank of England: Liability for climate changes damage may affect financial stability

Wednesday, October 7, 2015

Bank of England: Liability for climate changes damage may affect financial stability

In a speech at Lloyd's, the governor of the Bank of England, Mark Carney, took the view that climate change could have a disruptive effect on the financial stability in three ways, one of them being the liability of CO2 emitting industries. See the following extract of this speech:
“There are three broad channels through which climate change can affect financial stability:

  • First, physical risks: the impacts today on insurance liabilities and the value of financial assets that arise from climate- and weather-related events, such as floods and storms that damage property or disrupt trade;
  • Second, liability risks: the impacts that could arise tomorrow if parties who have suffered loss or damage from the effects of climate change seek compensation from those they hold responsible.  Such claims could come decades in the future, but have the potential to hit carbon extractors and emitters – and, if they have liability cover, their insurers – the hardest;
  • Finally, transition risks: the financial risks which could result from the process of adjustment towards a lower-carbon economy. Changes in policy, technology and physical risks could prompt a reassessment of the value of a large range of assets as costs and opportunities become apparent.” expects that the Bank of England's awareness of the potential of climate change damage liability to become mainstream thinking sooner or later. It could be rather sooner if key players understood that CO2 polluters can be targeted in many jurisdictions at the same time. This thought is now winning ground. Recently, the president of the Environmental Organization Center for International Environmental Law (CIEL), Carroll Muffett, joint the club. Carroll pointed out that the oil and carbon industry might face lawsuits arising from any country where they do business.

The full video of the full speech can be found here:

Thursday, September 10, 2015

Can low-lying coastal states sue CO2 polluting industries under international law?

Could a coastal states like Indonesia pictured above
sue companies contributing to climate change
using international law?
The idea that multinational companies may have rights derived from international law is pretty old and possibly already a majority view. The idea that multinational companies may have obligations based on international law directly (not just by transposition into national law) is not as old, but still far from being the majority view amongst lawyers. It has now been raised in the context of the major topic of this blog, the possible liability of CO2 emitting industries towards the victims of climate change.

Christopher Y. Nyinevi, in his article “Universal Civil Jurisdiction: An Option for Global Justice in Climate Change Litigation”, argues as follows: 
  1. Private companies are subjects of international law. Thus they can be competent defendants in climate suits under international law. Therefore they can be made liable for climate damages caused to other international actors, e.g. low-lying coastal states, through their activities.
  2. The doctrine of universal jurisdiction by which national courts may exercise jurisdiction over certain international law offences is applicable not only to criminal offences, but also to civil claims. Ordinary national civil courts could accordingly rule on the basis of the international law on compensation claims.
The author is not the only one to claim that the principle of universal jurisdiction could be extended to civil claims, see e.g. the footnote 3 in the article “The principles of universal jurisdiction and complementarity: how do the two principles intermesh?” by Xavier Philippe. The author is not the only one to claim that private companies can be subjects of international law, see the overview on the literature on this topic given by José Alvarez in his skeptical article “Are Corporations Subjects of International Law?” But admittedly, these views are minority views which cannot be expected to become majority views by tomorrow. Thus it is rather unlikely that the average civil law judge would follow Christopher Y. Nyinevi's argumentation.

However, most current legal majority views were minority views some time in the past. In the light of the tremendous public debate triggered by the global challenge called “climate change”, it is not excluded that the Christopher Y. Nyinevi's theory finds its way in some jurisdictions at least. In this case, Christopher Y. Nyinevi might be regarded retrospectively as laying the ground for another path of getting CO2 emitting multinational companies liable. But again, it is anything but likely for the time being.

Hence we recommend using Christopher Y. Nyinevi's theory as subsidiary argumentation to a campaign of detouring climate change activities rather than the main method of attempting to combat these activities. Low-lying coastal states and other states affected by climate change should preferably follow the path generally recommended by this website:
  • Assess which jurisdictions, according to their international private law, offer the possibility to sue a certain CO2 polluting company, e.g. because the company has a place of business in that jurisdiction or because it operates CO2 emitting facilities therein;
  • Assess whether the chances for success are high in that jurisdiction;
  • Assess whether the principle of joint and common liability is applied in that jurisdiction so that the company needs to pay for the entire damage and not just proportionately for its contribution;
  • Assess collateral factors like costs.
Further Reading: Relevant information thereon can be found in many of our blog posts and the hyperlinks therein, see our overview on recent articles.

Friday, August 21, 2015

Oil industry since 1990s misleading public opinion on climate change

(Image Union of Concerned Scientists)
Exxon and other carbon majors like BP, Chevron, Phillips and Shell were at least since the 1980s aware of the links between fossil fuels and global warming. Despite that knowledge they were promoting at least since the early 1990s climate change denial in public. This is the conclusion to be drawn from a report (summary, full report) and a pack of documents published by the U.S. NGO the “Union of Concerned Scientists”.

The documents may serve as means of proof for “negligence” of the CO2 emitting oil and gas companies in all jurisdictions applying this legal criterion in the context of liability claims based on classic tort law. In some jurisdictions, additional legal liability actions can be based on the fact that the oil companies were consciously misleading the public opinion. Misleading the public opinion could have delayed political action against climate change and thus indirectly contributed to the damages caused by climate change.

Also read: Obligation to disclose the risk of climate change litigation to shareholders

Thursday, July 16, 2015

Norway: chances for getting climate change damage compensation higher than previously estimated

Statoil Oil Platform in the Statfjord oil field
off the coast of Norway
In a previous blogpost, we have taken the view that the chances for getting compensation for climate change damages in Norway are rather limited. We now double-checked this assessment by evaluating additional sources. As a consequence of the renewed assessment, we now consider Norway to be close to or equal to the most promising European states, Sweden, the Netherlands and the Czech Republic.

A source used for the previous assessment vaguely suggested that joint liability is limited to cases where there is conscious cooperation of tortfeasors. We checked now more sources dealing with joint liability in order to verify whether this hypothesis is true (see source list below). This limitation could not be found in any of these additional sources. The absence of the requirement “conscious cooperation of tortfeasors” already justifies some upgrading of Norway's status to be a potential candidate for climate change litigation.

Moreover, some facts could be identified in these sources which increase the chances for winning lawsuits aiming at climate change compensation:
  • The rules regarding causality proof are generous. E.g. Paragraph / Section 59 of the Pollution Control Act provides: "A person that causes pollution1 that alone or in combination with other causes of damage may have caused the pollution damage, is regarded as having caused such damage unless it is established that another cause is more likely. " Lawyers question whether this rule deviates from the general rules on the burden of proof in Norwegian tort law. This means that rules regarding causality proof must be rather victim-friendly in general terms as well.
  • The Pollution Control Act provides for a damage compensation right based on strict liability (see Paragraphs / Sections 53 onwards). Surprisingly, it is not excluded that CO2 emissions would fall under the definition of “pollution”, see its Paragraph / Section 6 . However, Paragraph / Section 56 excludes liability for legal/tolerated pollution, unless the pollution is “unreasonable or unnecessary”. Thus we must rather assume that under the Pollution Control Act no liability can be claimed from CO2 emitting industries as long as they keep their activities in legal limits. But:
  • Even if CO2 emissions were not to fall under the Pollution Control Act, it is not excluded that Norwegian judges were to apply the strict liability rule – be it by analogy to the Pollution Control Act, be it because there is a growing tendency to impose strict liability by judge-made law.
Furthermore, there are several other factors which practically favor climate change compensation:
  • The Norwegian law is basically open to transnational tort lawsuits;
  • Class actions are possible;
  • The rules on standing are so generous that established associations may sue on behalf of the victims (however the obligation to pay for the defendant's costs when losing the case is prohibitive);
  • Economic loss in principle is recoverable like any other damage.
However, one question mark arisen in our previous blogpost on Norway remains. We wrote: “Judges have a tremendous discretionary power because they have to ascertain that the causal contribution was a ‘substantial’ one.” For more details on this aspect, please see our previous blogpost. Without this question mark, Norway would possibly have to be ranked on top of all states worldwide with regard to the chances to obtain compensation for climate change damages; the more so as the Norwegian Statoil and the Dutch/British Shell, both drilling Norwegian oil and gas, are amongst the top CO2 emitting companies worldwide.

Recommended for further reading in English:

  1. For the purpose of The Pollution Control Act, “pollution” means:
     1. the introduction of solids, liquids or gases to air, water or ground,
     2. noise and vibrations,
     3. light and other radiation to the extent decided by the pollution control authority,
     4. effects on temperature
    which cause or may cause damage or nuisance to the environment.
    The term “pollution” also means anything that may aggravate the damage or nuisance caused by earlier pollution, or that together with environmental impacts such as are mentioned in items 1 to 4 causes or may cause damage or nuisance to the environment.

Monday, April 6, 2015

New climate change compensation case in Germany

The disputed Laguna Palcacocha at risk of flooding
the city of Huaraz in Peru due to Climate Change
(image 2002 Georg Kaser)
According to The Guardian, a Peruvian farmer asks a German coal mining and energy giant (RWE) to pay a share a 0.5% (20,000 €) of the costs needed to prevent indirect effects of climate change. The costs are needed to protect his home from ever increasing floods which come down from a fast increasing glacial lake. The 0.5% share is based on RWE's contribution to climate change, since the 19th century, stated by scientists in 2013, see here.

The Peruvian farmer is supported by the German NGO Germanwatch which made an explanatory statement. He is represented by a solicitor / attorney, Ms. Roda Verheyen, who had a key role in, a not very successful joint venture of some big NGOs created about 10 years ago which does not seem to be active anymore.

Germanwatch is now the second medium-sized NGO moving into the direction recommended by for some years already, meaning claiming financial compensation. We welcome this step, though Germany is not the ideal jurisdiction.

Why is Germany not one of our favorite jurisdictions? According to our knowledge, the claim can be based on two paragraphs. One of them (§ 823 I BGB) is fault-based. However, fault can hardly be assumed for RWE's contribution to climate change that took place earlier than 1990. The other paragraph (§ 1004 I BGB) is at first sight more promising. However, this paragraph is so far mainly used for conflicts amongst neighbors. It has hardly ever been used for long-distance effects like CO2-emissions causing climate change causing flooding. Thus it is unlikely that the German courts would follow the argument of Ms Roda Verheyen. Furthermore, it is unlikely that the courts will regard overall mitigation costs of 4 million € appropriate for the farmer's property which might be worth less than 50,000 €. Resettlement would be much cheaper. To our knowledge, Ms Roda Verheyen does not represent yet the other inhabitants of the town concerned.

Finally, there is a practical argument: German courts are unlikely to recognize joint and common responsibility. Anticipating this case-law, Ms Roda Verheyen claims only a 0.5% share of the mitigation costs. But what will the farmer do with these 0.5% or 20,000 € when the rest of the money needed to undertake the 4 million € operation are not available? Is the claim still credible under these circumstances?

This example shows once again that there are good reasons for targeting those jurisdictions that have both good chances for victims of climate change and which recognize the principle of joint and common liability. Only in these jurisdictions the threat with lawsuits is more than a symbolic act. There are three jurisdictions in Europe (the Netherlands, Sweden and the Czech Republic) and quite some more in Latin America which all fulfill these conditions. So, why shouldn't NGOs focus on promising jurisdictions?

Related: Read more about Climate Change creating Canadian firms Potentially threatened via foreign jurisdictions

Tuesday, March 10, 2015

Suing CO2 polluters here, enforcing judgments there

A typical road signs in Australia with text changed
to remind that judgments can be enforced worldwide.
(Image Fred Quint)
Most lawsuits striving for compensation of climate change damage by CO2 polluters take place in the U.S. and in Australia with the U.S. having 420 and Australia having 70 decided cases out of 592 total decisions worldwide as of 2013. But chances for success are extremely limited in these jurisdictions. advocates for an alternative strategy: to sue in jurisdictions where chances for success are better and where the principle of joint and common liability for tort is recognized. As we have shown on this blog, some jurisdictions seem to fulfill these conditions: The Netherlands, Sweden, the Czech Republic, India, Peru, Venezuela, Chile, Ecuador, Columbia and maybe Brazil.

CO2 polluters do not necessarily have large assets in these jurisdictions. Accordingly, it could be argued that the strategy advocated by would fail. However, the enforcement of judgments is not limited to the jurisdiction of the judgment. Some international agreements and supra-national regional law provides for the possibility to enforce in another jurisdiction than the one of the judgment or ruling. And national law of several jurisdictions provides for this possibility as well, see the links below.

It is sometimes even possible that the climate change victim is residing in state A, that the CO2 polluter has his place of business in state B, that the victim successfully sues the polluter in state C (e.g. because fossil fuels of the polluter were sold and combusted there) and that the judgment/ruling of state C is enforced in state D, E or F.

To sum-up: victims of climate change and their lawyers might start an intelligent multiple-jurisdictions-strategy against CO2 polluters instead of repeatedly running against the walls of the U.S. and other legal systems with limited chances of success.

Websites informing about conditions for enforcing foreign tort judgments/rulings:












United States

United Kingdom