Lliuya v RWE: German Judges in Peru
May 2022, in the Andes mountains: A group of judges serving at the Higher Regional Court of Hamm, Germany, meets with expert witnesses and party representatives below a glacier near the Peruvian city of Huaraz. They have travelled from Germany to South America to take evidence in a trial between the Indigenous Peruvian farmer Saúl Luciano Lliuya and the German energy giant RWE. Due to the effects of climate change, the glacier under which the plaintiff lives is slowly but steadily melting. Since RWE’s past CO2 emissions have significantly contributed to worldwide global warming, Mr. Lliuya argues that the German company is partially responsible for the threat that the glacial runoff poses to his home. In order to protect his house from flooding, he seeks payment in the amount of €17.000 from RWE, a sum he says is equivalent to RWE’s overall contribution to global climate change of 0.47%.
The Growing Relevance of Climate Change Lawsuits
The lawsuit of Saúl Luciano Lliuya is a typical example of what is called climate (change) litigation. Over the last years, the amount of climate litigation worldwide has rapidly increased: In 2017, there were 884 climate change lawsuits brought in 24 countries. By July 2020, this number increased to at least 1,550 climate change cases filed in 38 countries. In 2023, a number of important climate change lawsuits in several jurisdictions, such as Germany, the U.S. and Canada, are likely to be decided.
Climate lawsuits can generally be divided into two categories: On the one hand, there are climate actions brought by citizens or non-governmental organizations against countries. Here, plaintiffs aim to make governments implement stricter measures to slow down climate change or to transpose agreed measures into hard law or regulatory instruments. On the other hand, courts are also increasingly dealing with “horizontal” lawsuits: These actions are brought by private actors against those corporations that are significantly contributing to global warming.
Within the category of horizontal lawsuits, there are usually two types of actions: First, there are cases where plaintiffs seek to force corporations to reduce their future CO2 emissions. An example of this is the 2021 decision in Milieudefensie v. Shell, in which the Hague District Court sentenced the oil and gas company Shell to reduce its CO2 emissions by 45% by 2030 compared to 2019. Even though Shell’s appeal is still pending, the case is a landmark decision, with some calling it a turning point in history. Second, there are lawsuits, such as Lliuya v RWE, by which plaintiffs seek to hold corporations accountable for past environmental damage associated with climate change. Both examples of Milieudefensie v. Shell and Lliuya v RWE show that the EU has become an important battleground for such horizontal climate lawsuits.
The Historical Gap Between Polluters and Victims of Climate Change
While CO2emissions into the atmosphere are caused locally, their impact on the climate is global. This is why there is a striking divide between those who cause the lion’s share of emissions and those who suffer most from the effects of climate change. On the one hand, CO2 emissions have historically come predominantly from the Western World, even though they now come increasingly also from emerging countries. When looking specifically at industrial emissions between 1751 and 2010, most of the world’s largest private polluters of carbon and methane were companies in the U.S. and Europe. On the other hand, global warming has the greatest impact on people living in the poorest regions of the world, whose historical contribution to climate change is comparatively minimal.
Horizontal climate lawsuits, like Lliuya v RWE, therefore seek to bridge the historical gap between CO2 polluters and the victims of climate change. The plaintiffs in such lawsuits, like Mr. Lliuya, are domiciled in countries where climate change threatens to drastically change the way of living, whereas the defendants, such as RWE, are located in countries where the damage caused by climate change has been less severe to date. Therefore, even though the sum claimed by Mr. Lliuya is comparatively small, commentators stress that granting the claim would “set a groundbreaking precedent that a corporation could be held liable for its contributions to global climate change”.
Some scholars of law and economics have expressed concern when it comes to attributing environmental damages to a corporation’s past activities, arguing that it would not be a meaningful contribution to the reduction of future CO2 emissions. However, among climate scientists, there is hope that if companies take the litigation risk seriously, “climate lawsuits could be a major systemic lever for changing the business model of emission-intensive companies” and therefore will “make a fundamental contribution to climate protection”. Moreover, experts of climate law underscore that lawsuits like Lliuya v RWE are not only about preventing future CO2 emissions, but also seek to establish accountability for the damage that has already been done, stating that “it is a question of justice that those who caused climate change assume responsibility for climate impacts”.
Legal Framework for Cross-Border Climate Lawsuit Before European Courts
Since polluters and victims of climate change are typically located in different countries, a cross-border climate lawsuit will only be heard if the court finds that it has international jurisdiction over the matter. In the EU, courts apply the Brussels Ibis Regulation, which came into effect in 2015, in order to determine whether they have international jurisdiction to hear such a case. Under Art. 7 para. 2 of the Brussels Ibis Regulation, a lawsuit in non-contractual matters can be brought to courts of a country where the harmful event occurred or is likely to occur. In a horizontal climate litigation scenario, the place of the harmful event can be seen as being where the negative effects of the CO2 emissions occur. However, as Marc-Philippe Weller and Mai-Lan Tran from the Institute for Comparative Law, Conflict of Laws and International Business Law at Heidelberg University point out, this provision is only applicable if such effects are taking place in an EU member state. It is thus of little help to plaintiffs, like Saúl Luciano Lliuya, who are seeking damages that occur outside of the EU. Therefore, as Weller and Tran note, climate action plaintiffs from non-EU countries that seek to sue European corporations before courts in the EU may file their lawsuit at that corporation’s registered seat, administrative seat, or the seat of headquarters (Art. 4 para. 1 and 64 para. 1 Brussels Ibis Regulation).
Once the court before which the climate action has been brought has acknowledged its jurisdiction, it will have to determine the applicable substantive law. The question of which law governs the substance of the case can likely determine the success of the climate lawsuit, as the prerequisites of liability and statutes of limitations may differ significantly depending on the applicable law. Under Art. 7 of the Rome II Regulation, which regulates the question of which law applies to non-contractual obligations in civil and commercial matters, a plaintiff in a cross-border climate lawsuit has the choice between the law of the place where the harmful event occurred and the law of the country in which the event that caused the damage occurred. In Milieudefensie v. Shell, the Hague District Court found that CO2 emissions themselves already constitute environmental damage and thus qualify as a “harmful event”. Moreover, the court held that the place where the board of a corporation makes policy decisions can be considered as the place where an “event giving rise to the damage occurred”, as these decisions themselves lead to an increase in the corporation’s CO2 emissions. This gives climate action plaintiffs the advantage of choosing whether to base their claim on the law of their home country, which according to Art. 3 of the Rom II Regulation can be applied even though it may not be the law of an EU member state, or the law of the country where the defendant’s management board is located.
Obstacles of Substantive Law: Causality, Legality of Emissions, and Duty of Care
While their international character does not pose a significant obstacle for successfully bringing a horizontal climate lawsuit before courts of EU member states, their “greatest hurdle”, as Weller and Tran point out, is substantive law. Monika Hinteregger, scholar of environmental law, explains that, in civil law systems, claims for damages caused by climate change can either be based on fault or no-fault liability. In both cases, plaintiffs generally have to prove that the damage they are alleging was caused by the defendant corporation’s CO2 emissions. Anastas Punev from the Wilfried Martens Centre for European Studies argues that the traditional understanding of causality, meaning a ”particular connection between the wrongdoing and the harm”, could “never be fully applied” to climate action lawsuits. He also notes that causality is “frequently modified to a probabilistic and abstract concept for the purpose of climate litigation”. Indeed, in order to demonstrate causation, climate action plaintiffs often rely on studies in the field of attribution science that seek to show the link between anthropogenic carbon emissions, global warming and extreme weather or natural catastrophes, such as floodings or droughts. For example, in the case of Lliuya v RWE, a study conducted by researchers from the University of Oxford and University of Washington that was released in 2021 showed that human activity caused at least 85% of the warming which led to glacial retreat above Huaraz.
Nevertheless, several legal aspects might exclude the defendant corporation’s liability for the damages associated with climate change. First, causation between a single corporation’s emissions and the damage caused by global warming can be problematic since one corporation is never solely responsible for the effects of climate change. Indeed, in Lliuya v RWE, the Regional Court of Essen, as the court of first instance, had followed a similar rationale. The court denied liability by RWE, stating that, since there are numerous emitters of CO2 in the world, the flood risk to Mr. Lliuya’s home would still persist even if RWE had not emitted any CO2. This argument, however, was not shared by the Court of Appeal. Equally, the court in Milieudefensie v. Shell took the stance that the existence of other emitters could not exempt Shell from liability, as each reduction of greenhouse gas emissions would in itself already have a positive effect on preventing climate change. This is in line with the position of climate action litigators like Roda Verheyen who represents Mr. Lliuya in his lawsuits against RWE: She states that a polluter can, in principle, be held liable as long as its contribution to global warming is significant enough to be measured and not so small that it may be considered negligible. Also to André Nollkaemper, professor for public international law at the University of Amsterdam, one of the lessons of Milieudefensie v. Shell is that shared responsibility for climate change does “not mean that in any way the responsibility of individual actors (states or non-states) is diluted”
A second counterargument against holding corporations accountable for their CO2 emissions, as pointed out by legal scholars such Gerhard Wagner, professor for Private Law, Business Law, and Economic Analysis of Law at Humboldt University, is that energy-producing companies like RWE or Shell typically operate both under a public mandate and with specific licenses and permits. The existence of those could be seen as an indication that the legal order assesses their business activities, and thus also their CO2 emissions, as legal, hence potentially shielding these corporations from civil liability for their emissions. In Milieudefensie v. Shell, the court recognized that Shell is not required to adjust its policies with respect to the EU Emissions Trading Scheme, under which companies can buy, receive, and trade emissions allowances. But the court also stated that other permits or obligations, arising from long-term concessions for the extraction of oil and gas, would not exempt Shell from civil liability. Similarly, the Higher Regional Court of Hamm held that, even though RWE’s CO2 emissions were legal, the company is not automatically exempt from civil liability for the damage that those emissions may cause to the plaintiff’s property.
Finally, depending on the type of liability that the claim is based on, a plaintiff in a climate action lawsuit may have to show that the corporation had a duty of care towards him that obliged this corporation to reduce its CO2 emissions. In Milieudefensie v. Shell, the court based Shell’s liability under Dutch tort law on an “unwritten standard of care” and interpreted this standard by referring to the UN Guiding Principles on Business and Human Rights. However, as Weller and Tran have stressed, this approach might not be directly transferable to other tort laws, such as the German one, where a more substantial justification for invoking unwritten standards would be needed. In Lliuya v RWE, the Court of Appeal bases the plaintiff’s claim on s. 1004 of the German Civil Code. Commentators highlight that this approach is remarkable, seeing that this provision of non-fault liability, which is typically applied in disputes between neighbors over property impairment, is now used to construe “a kind of global neighborly relationship” between Mr. Lliuya and RWE.
The Fear of too Much ‘Judicial Activism’
The fact that courts feel the need to resort to “unwritten” principles of liability or construe “global neighborly relationships” when holding corporations accountable for their CO2 emissions shows that climate litigation has started to push the traditional boundaries of tort law and civil liability. In legal scholarship, some eye this trend with scepticism: Punev, for example, sees the risk of a ”judicial overreach” if courts faced with climate change lawsuits start “stepping into the legislator’s shoes”. He therefore demands that the European legislator takes a more “proactive role” by establishing more detailed and realistic rules. Even courts in the EU themselves have invoked the principle of separation of powers between legislative, executive and judicial branch to dismiss horizontal climate action lawsuits, arguing that it is the duty of the legislator and not of courts to decide which measures should be taken to protect the climate. However, Mehrdad Payandeh, professor for international law, European law and public law at Bucerius Law School, notes that, in general, “the interpretation of general principles of law as well as the application of such principles and rules to new social phenomena is inherently the ambit of the judiciary”, underlining that “courts do not overstep their boundaries when they apply these general principles and rules to climate protection cases.”
If legislators seek to give courts clearer guidance on how to apply principles of civil liability to horizontal climate action cases, they could draw on the existing research in this field. In Canada, the West Coast Environmental Law and the Vanuatu Environmental Law Association have already in 2015 published a Model Climate Compensation Act which contains rules on the prerequisites for liability of “major emitters” that have contributed to global climate change. This model act also specifies how to calculate the amount of damages owed by corporations for their CO2 emissions. To Margaretha Wewerinke-Singh, co-author of the Model act, it is clear that if state legislators would implement a climate compensation act, it “would send a powerful message to fossil fuel corporations around the world by countering the assumption that corporations can continue to profit from greenhouse gas emissions—while shifting the costs to local communities”.
More Cross-Border Climate Litigation Against European Corporations at the Horizon
Lliuya v RWE is the first climate compensatory claim worldwide that has reached the stage of hearing evidence. Both polluters and victims of global warming will therefore closely watch the outcome of this dispute, which will likely end up before the German Federal Court of Justice. If Mr. Lliuya is successful, courts in the EU will see many more lawsuits brought by victims of climate change against major emitters of CO2. Whether these lawsuits can eventually contribute to more global climate justice remains to be seen. In any case, commentators have expressed the hope that the success of climate actions like Lliuya v RWE will ultimately “spur more political action” and thereby result in “a much-needed win for our planet”.