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

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