Wednesday, June 8, 2016

Automotive industry liable for climate change damage due to CO2 emissions cheating?

“Dieselgate Turns Into CO2-gate: Huge Amounts Of Cheating Revealed”, writes The automotive industry's cheating now touches also the domain of fuel consumption and CO2 emissions. Several European, American or Japanese manufacturers were identified by authorities as cheaters. Hence we analyze whether this fact might increase in Europe the chances for victims of climate change to obtain compensation for their damages.

Let us take as first example the Netherlands, a state which we have repeatedly praised as relatively favorable forum for climate change damage compensation lawsuits. In the Netherlands like virtually all other European states, there are provisions obliging the manufacturers to label the CO2 emissions of new cars. These provisions aim at informing the consumer on the expected CO2 emissions so that he can choose cars which have less CO2 emissions. The purpose of these provisions is thus clearly to protect against climate change. We can therefore easily state a “breach of a statutory duty”. In addition it is a “breach of a statutory duty” which aims at protecting against climate change. This is the ideal situation for assessing the “imputability” or “attributability” which is one of the key criteria in the Dutch law, but also in many other legal systems. As the connection between statutory duty and damage could hardly be more evident, there is no need to refer to a vague “duty of care” for which “imputability” or “attributability” are quite difficult to underpin.

Let us take as a second example Germany, for which we had been very skeptical so far, see an article about liability under German law and a case when a Peruvian farmer sued in Germany. Germany has also adopted legal provisions on the labelling of CO2 emissions, and these have the same purpose as in the Netherlands. Their breach constitutes a breach of a “protective law” (“Schutzgesetz”) which is relevant under § 823 II of the BGB (Civil Code). Again there is no doubt about the connection between statutory duty and damage. The automotive industry engineers were very much aware of the causality between their cheating and the additional fuel consumption and the additional CO2 emissions. Whereas the path of tort law was quite closed for climate change victims wishing to sue in Germany, the path of § 823 II BGB now seems open.

Based on these two examples we could assume that the cheating of the automotive industry could become a game changer in the battle for compensation of climate change damages. It is to be noted that quite some other jurisdictions Europe are similar in so far as liability in these jurisdictions is best to be based on a breach of a statutory duty.

Still we are not too optimistic. The reason is twofold:

  • The automotive industry companies are not amongst the biggest CO2 polluters, even when the CO2 emissions of all their vehicles are fully attributed to them. Will courts ever hold an automotive industry company liable for a less than 1% contribution to climate change?
  • The additional emissions which are due to the cheating represent, at best, 10% of the overall historic CO2 emissions. Thus the cheating will never be responsible for more than 0.1% of the CO2 emissions. Contrary to the U.S. law tradition, European courts do not practice punitive damage compensation. Thus the damage attributable to the cheating is so minimal that courts will be extremely hesitant to assume liability and even more so to assume joint and common liability.

We thus maintain our previous recommendation for Europe: victims of climate change have the relatively best chances for obtaining compensation when suing in the Netherlands, Norway, Sweden and the Czech Republic the carbon major companies with place of business there.

Also see: The most appropriate defendants in the Netherlands and Sweden

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