I owe the title of this post squarely to Arie Van Hoe. The sentiment which Arie taps into, is that of most of the immediate commentary on Lliuya v RWE at the Hamm regional court, acting as court of appeal. Most of the immediate commentary notes the significant legal points scored by Mr Lliuya, even if his claim was ultimately dismissed. Consequently even in losing, the determination of the claim by the Hamm court may inflict long-lasting injuries on big greenhouse has emitters.
Background to the case is on the Sabin Center’s climate litigation database. In essence, claimant’s home is situated in the Peruvian Andes, right below a glacial lake. The gradual melting of the ice threatens to flood his home as well as that of many others. Claimant requests in essence a contribution by RWE to the costs of putting up a protective flood barrier. RWE is historically and currently an electricity generator, having used and continuing to use mostly fossil fuels in its production process. Hence it is undeniably a contributor to global greenhouse gas emissions, adding to climate change.
The first instance court had dismissed the claim in a succinct judgment issued at the end of 2016. In essence that court first declared part of the claim inadmissible on claim formulation grounds. For the remainder [42 ff] it employed the sine quae non formula for damage attribution: without specific scientific attribution of RE’s share of global GHG emissions directly to the glacier’s melting, it held RWE cannot be held liable for it.
The court of appeal has now reversed, in a more extensive judgment. What we have to go on so far is an altogether brief press release, as well as what appears to be an unofficial 139 page English version of the judgment, doing the rounds on linked-in: hat off to Nyanje wa Nyanje for directing me to that document. An additional reliable source of content on the judgment is Sébastien Duyck’s live tweeting of the judgment when it was being delivered.
The (only) reason the claim was dismissed, was that claimant was unable to prove that his property was threatened by a concrete imminent danger, at the time the judgment was issued. This concrete imminent danger is required under the relevant applicable German law.
I have amalgamated below the main takeaways from the judgment, using all sources mentioned in the previous paragraph. References to page numbers in this post are to the aforementioned English unofficial translation. (All commentaries so far not bene notably omit what seems to have been an interesting discussion on Article 4 and 7 Rome II p.32 ff, which I shall leave to share with the conflict of laws afficionados for a later date).
The applicable law is Section 1004 of the German Civil Code (BGB). This offers injunctive relief to protect property from disturbance.
The following points are of immediate note.
- The classic ‘gouvernment des juges’ (“judges should not be meddling with politics”) argument, is summarily dismissed p.63. RWE had formulated the argument as there being “concerns that the judiciary is being instrumentalised to enforce environmental policy goals and that it is being overburdened by the enforcement of individual claims. The judges straightforwardly posit that much litigation deals with political interests and that their task is simply to apply Section 1004.
Boomeranging RWE’s argument, they dismiss it p.63 as “not relating to a legal examination of the requirements for claims under Section 1004 BGB, but [rather being] of a political nature.”
- The overall finding of the judges that under the relevant German laws of nuisance, injunctive relief is available to halt infringement of one’s property by corporations’ past and current greenhouse gas emissions.
The judges threw out a whole series of distinctions (see also below) which RWE attempted to make. In essence: there is no reason in principle not to apply Germany’s injunctive relief for unlawful interference with one’s property, to imminent danger caused by greenhouse gas emissions. RWE’s press release on the judgment is disingenuous: in direct contradiction of RWE’s statement, it is absolutely the case that the judgment creates precedent by establishing in principle that a German company may be held responsible for the effects of its greenhouse gas emissions on climate change, viz assets ‘worldwide.
- That latter point is a further important finding of the court: the geographical distance between the source of the disturbance and the affected property was held to be irrelevant for the application of Section 1004; proximity is not a prerequisite (p.39), ‘the world is a village’.
- Further, the test which is to be applied is that of legal causality, which is not necessarily the same as scientific causality (p.42). In this respect the Court of Appeal applies the same conditio sine quae non test as the court of first instance, but comes to a different conclusion, namely that the defendant’s emissions did contribute materially to the climate change events which now threaten damage.
- In an echo of product liability litigation such as in tobacco or asbestos, the judges confirm RWE’s contribution to causation, given that a corporation like RWE could have recognised since the mid-1960s that a significant increase in industrial CO2 emissions would lead to global warming and to the consequences alleged by the claimant. Based on generally known facts (§ 291 ZPO), the court is convinced that it was already foreseeable in the mid-1960s for an optimal observer in the role of an energy producer that anthropogenic greenhouse gas emissions would lead to global warming and the associated consequences (p.49).
Reference here is made to the 1965 first expression a the White house of the ‘Keeling curve’.
A lack of specific empirical knowledge does not preclude the recognizability of scientific interrelationships, nor does their supposed complexity (p.50).
- The defendant’s contribution to causation is also held to be significant (p.49). There was discussion on the figures (in particular the differences between claimed 0.47% and 0.38% of global industrial CO2 emissions, and discussions of 0.24% of all worldwide CO2 emissions). The court’s upholding material contribution echoes the Dutch courts’ findings in Urgenda that many pennies make a pound: all causal shares of the world’s largest emitters are each less than 3.6% of total emissions (p.52).
- One cannot hide behind group structures. The fact that the emitting plants have not been operated by the defendant itself in recent decades, but by its subsidiaries, does not preclude the defendant’s status as an interferer with claimant’s property rights. The emissions of the subsidiaries were held to be attributable to the defendant as if they were its own, as it manages and controls the group (p.43). This is an echo of the ‘locus delicti commissi’ discussion in business and human rights claims.
- The classic ‘permit defence’ is dismissed p.79 ff. The permits and approvals from (German) authorities for the operation of its plants and the certificates under the Greenhouse Gas Emissions Trading Act (TEHG), to which the defendant repeatedly refers with regard to its CO2 emissions, do not force claimant to tolerate a concrete threat of impairment of its property.
As a rule, official permits are said not to create a duty for third parties to tolerate nuisance, particularly seeing as here those said to have to suffer the consequences are owners affected by remote immissions.
In some sense therefore there is in the court’s findings a potential for reverse discrimination: those affected remotely arguably stand a better chance of dismissing the permit defence than those directly territorially protected by the environmental Statutes from which the permits originate.
At any rate the court also points out that the relevant permits etc did not cover all emissions from 1965 onwards.
- The judges dismiss p.81 RWE’s appeal to the positive externality of its emissions, namely the public need for security of supply. The court holds that an undoubtedly existing societal need does not automatically determine the specific legal relationship between two private legal entities.
- A large section of the judgment is then devoted to the only issue that sank the claim: the scientific discussion of imminence of flooding.
Permission to further appeal the judgment was denied, however I understand that such permission may be directly sought with the higher courts.
I kicked off with Arie’s title. ‘a pyrrhic loss for claimants’. That suggestion could also be read in the light of the tendency of many public interest litigators to represent a loss as a win, even when it is simply a loss. This is not one of those cases in my opinion. Climate litigation is most diverse, and as the long and windy road which Mr Lliuya has had to take illustrates, it is not for the faint-hearted, or for those without financial backing of NGOs or others.
Many obstacles remain, including the specifics of the type of injunctive relief offered by the applicable law here, and the laborious and expensive task of proving the science in the various ways specific claims will require. Yet evidently the direction of travel set by Lliuya v RWE is encouraging on the path to climate justice. Together with the 21 May Advisory Opinion of the EFTA Court in Case E-18/24 Norway v Greenpeace (opining that Scope3 GHG emissions must be included in the environmental impact assessment of future drilling permits), this has been an encouraging week.
Geert Van Calster
Full professor KU Leuven
https://gavclaw.com/
Corporate Finance Lab 