Folks, since the climate tort cases are coming up, here is analysis of the tort and climate litigation cases in NZ, Europe and the US in the last few years in my new book, Principles of Enterprise Law: https://www.cambridge.org/gb/academic/subjects/law/corporate-law/principles-enterprise-law-economic-constitution-and-human-rights?format=PB

This is from chapter 11, on natural resources regulation – hopefully the Dutch and German approaches are informative. Obviously this is much more than a technical tort problem, but to a great degree I wish the NZ Supreme Court would treat it as if it were.

Best wishes, Ewan

>>> 

(c) The failure of tort and criminal law?

The most striking feature of the law on climate damage is the paucity in tort and criminal law to make negligent perpetrators compensate, and to punish those who recklessly or intentionally cause damage. It is a scientific consensus that burning coal, oil and gas causes global warming: the companies that extract fossil fuels and sell them cause it. However, both the common law of tort and crime have an exceptionally poor historical record in holding environmental polluters to account. For instance, oil spills into Sydney Harbour and a subsequent explosion was damage that was too ‘remote’.¹ Chemical spills polluting Cambridge groundwater were also too ‘remote’ a consequence to have to compensate.² The common law attitude differed when it came to strict liability for dangerous escapes from a reservoir flooding a coal mine.³ Today, the main paradigm for tort is negligence,⁴ but according to Professor Lee, ‘any action against emitters will face profound and extensive doctrinal challenges, at every step of the process.’⁵ Thus, it is necessary to identify the appropriate questions ‘at every step of the process.’

(i) Tort law

In the tort of negligence there are five main questions: is there damage, a duty of care, breach, and causation, that is not too remote? First, there are a growing number of climate damage events, ever more extreme: flooding in the UK, bushfires in Australia, hurricanes in America. This results in damage to property, personal injury, and death. Second, is there a duty of care? In the established categories of damage to property and person,⁶ this depends on whether harm is reasonably foreseeable, there is proximity, and it is fair, just and reasonable to impose a duty.⁷ As we have seen, climate damage was foreseen already in 1965, and fossil fuel companies like Exxon were doing extensive research on the issue from 1977. Third, is there a breach of a duty of care? If the reasonable person should know their action could cause harm, but acts anyway, there is a breach of duty.⁸

Fourth, does a fossil fuel company’s actions cause climate damage? Here it is clear that multiple parties pollute the atmosphere in different quantities, but as we have seen only 90 companies are responsible for 63% of all historic emissions.⁹ There is scientific uncertainty about the link between any given source of emissions and the resulting damage, because emissions in one place lead to uneven global patterns of warming. But in the face of such uncertainty, it was established in Fairchild v Glenhaven Funeral Services Ltd that a tortfeasor is responsible for the material increase in risk that they cause.¹⁰ The preferable principle appears to be that tortfeasors are jointly and severally liable, although an alternative theory is that they may have proportionate liability, a rule that matters where some companies have gone insolvent.¹¹ The regularity and severity of these events is increasing, which means that a percentage likelihood that any event is caused by climate damage rises. The fifth question is whether the causal chain is too ‘remote’, to which the answer must be ‘no’, as climate damage from fossil fuels is expected and well understood.

The most likely step on which fossil fuel defendants will place their weight of argument will be causation. In the German state court for Essen, an ongoing case named Lliuya v RWE AG admitted that a major energy company, RWE AG could in be liable in principle for damage to a glacier in Peru. Mr Lliuya’s village, Huaraz, was near a melting mountain glacier, increasing the size of lake Palcacocha, and requiring flood defences. It was submitted that RWE had contributed to 0.47% of global carbon emissions, and should therefore be liable for 0.47% of the cost of flood protection. While the State Court dismissed the claim, arguing there was no ‘linear casual chain’, in November 2017 the Upper State Court admitted the claim to move to the evidential phase on the threat of mudslides, and RWE’s exact contribution, to be assessed by experts.¹² Plainly, if one case establishes liability for one company for climate damage, every company under Germany’s jurisdiction could be sued for their contribution: this would probably make fossil fuel companies insolvent. A simple application of first principles in English law compels the same result.

A sixth issue can be added: should judges decide profoundly political issues? War and nuclear holocaust aside, no issue is as important as the future of life on Earth. This raises the question of ‘justiciability’. In negligence, it arises under whether it is ‘fair, just and reasonable’ to impose a duty of care for climate damage.¹³ It could be argued that the Paris Agreement 2015, or the Climate Change Act 2008, should displace tort law in application to greenhouse gas emissions. In the US, a similar argument found success. In 2007, the US Supreme Court held by a 5 to 4 decision its Environmental Protection Agency had a duty to regulate greenhouse gas emissions under the Clean Air Act of 1963.¹⁴ This apparent victory was short lived, as American Electric Power Co v Connecticut held by 8 to 0 that given the EPA’s jurisdiction, federal tort law, and public nuisance,¹⁵ was pre-empted.¹⁶ For the US Supreme Court, the fact that statute ‘speak[s] directly to [the] question’ displaced the claim against the five largest power companies, emitting 650 million tonnes of CO₂ a year, for contributing to global warming.¹⁷ This uniquely broad approach to pre-emption ignored the objective of the Clean Air Act, which like all environmental law, sets minimum standards for ‘clean air’ or ‘air pollution prevention’. It does not set a fixed standard and a fixed licence to pollute.¹⁸ English law should not replicate this reasoning: in environmental matters there should be no pre-emption of tort at any level, without explicit words in statute.¹⁹ The US Supreme Court majority, did suggest that state tort law might not be pre-empted,²⁰ but in subsequent cases courts may conclude that, as the issue crosses state boundaries, state law is pre-empted as well.²¹ Executive action therefore is currently needed in the US to control federal pollution, a position that is incompatible with an effective system of justice.²²

It is increasingly accepted that common law and equity must interpreted in light of human rights, particularly under the European Convention on Human Rights,²³ and in international law,²⁴ as in the International Covenant on Economic, Social and Cultural Rights. For this reason, the Dutch Supreme Court’s decision in Urgenda v State of Netherlands could be influential. It held the Dutch government had to reduce greenhouse gas emissions by 25% before 2020, a standard taken from the UN Framework Convention on Climate Change, Annex I, and a report of the IPCC in 2007. This lists developed countries which must reduce emissions between 25% and 40% by the end of 2020 to stay below 2 degrees of climate damage.²⁵ The Dutch Supreme Court held failure to meet even the lower end of this target violated both the right to life in ECHR article 2, and the right to private and family life in ECHR article 8.²⁶ In a similar Klimaschutz or Climate Change case in 2021, the German Constitutional Court held that the government had a duty to speed up its climate protection measures, as part of its constitutional duty to protect the rights to life, and the environment under the Grundgesetz 1949, articles 2 and 20a.²⁷ The significance of a decision on these grounds is that, if followed by other courts around Europe, UK courts have strong grounds to interpret common law norms, including the tort of negligence, so as to be compatible with protection of the right to life and privacy.

It is likely that the same issues come before the UK courts, as they already have to the courts in New Zealand, and again in the Netherlands.²⁸ There is then a choice to make about whether tort law plays a positive role: either it helps end the ecosphere, or it helps end fossil fuel damage. In Smith v Fonterra Co-Operative Group Ltd, the New Zealand Court of Appeal refused a claim of Mr Smith over damage to coastal property. He argued the damage was contributed to by a subsidiary of Bathurst Resources group (the largest coal miner in New Zealand), an oil refinery (owned mainly by ExxonMobil, BP, and Z Energy), a power station owned by Genesis Energy LP (in turn held mainly by US asset managers such as Invesco, ALPS Advisors, JP Morgan, and Chickasaw²⁹) and other emitters. Mr Smith did not attempt to bring evidence of these entities’ contribution to climate damage, or set about detailed quantification of loss to him. In the High Court Wylie J held that climate damage would occur anyway, that the ‘defendants’ collective emissions are miniscule’ (without evidence of what they were), and that ‘reasonable persons in the shoes of the defendants could not have foreseen the damage’. Such damage was (apparently) ‘an unlikely or distant result of the defendants’ emissions’.³⁰ This exceptionally callous reasoning is false, since one of the defendants, ExxonMobil, actually did foresee climate damage in 1977.³¹ On the contrary, if companies know, or turn a blind eye to damage, in Rookes v Barnard, the House of Lords established that exemplary damages are available where conduct is ‘calculated to make a profit’. ‘Where a Defendant with a cynical disregard for a Plaintiff's rights’, said Lord Devlin, ‘has calculated that the money to be made out of his wrong-doing will probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity.’³² However the Court of Appeal upheld the decision. French J reasoned that although ‘reasonable foreseeability of harm is arguably a trial issue and not of itself a ground for striking out’ in this case, there was no ‘proximity’. By this it asserted, bizarrely, that there was no ‘physical or temporal proximity’, as if the case law and limits on psychiatric harm could be likened to the scientifically undoubted connections between fossil fuels and climate damage. Furthermore, it rejected there was an adequate causation connection in law, because not every potential plaintiff was before the court: it asserted, quite wrongly, that in cases on material increase in risk, ‘one or more of [the defendants] was responsible for all the harm suffered’. This is false: an essential point of the material increase of risk test is that there may be liability when potential co-defendants are insolvent. Then, instead of serious engagement with the issues, the Court of Appeal retreated into floodgates platitudes, that defendants were ‘virtually limitless’, that being unable to find every one was ‘an insuperable problem’ and they were unprepared to ‘abolish the [so called] relational underpinnings that are fundamental to tort law.’³³

Where the New Zealand courts invented ‘insuperable’ problems, Dutch courts have surmounted them. In Friends of the Earth v Royal Dutch Shell plc, the Hague District Court held that under the Dutch Civil Code, Book 6, section 162(2), failure to abide by the Paris Agreement 2015 article 2(1) would be tortious: that is ‘what according to unwritten law has to be regarded as proper social conduct’. In interpreting this general tort law duty (which appears identical to open-textured norms, such as the ‘neighbour’ principle in common law) the Court took into account ECHR articles 2 and 8 on the rights to life and a private, family and home life, and the parallel provisions in the ICCPR articles 6 and 17. It noted that the ‘serious and irreversible consequences of dangerous climate change in the Netherlands... pose a threat to the human rights of Dutch residents’. It followed that Shell had a duty to cut its emissions in accordance with the Paris Agreement duties by 45% by 2030, whether those were generated directly by its corporate group (scope 1), indirectly from its purchases (scope 2), or indirectly from its value chain or the purchase and use of its products (scope 3). Moreover, Shell was required to take action immediately, and not wait for any appeal process.³⁴ Following the case, Shell plc deleted ‘Royal Dutch’ from its name, and announced a relocation of its headquarters to London, presumably in the hope that it can escape judgment, although predictably its PR operations denied this. Enforcement and legal reasoning in English courts should follow the Dutch model, not the New Zealand model. Indeed, it is difficult to see why the New Zealand courts failed to have the presence of mind to reason in a similar way to the Dutch court, or perhaps they just do not care about the international human rights treaties that New Zealand has signed and ratified: an unforgiveable frivolity and failure of legal reasoning, worthy of the utmost condemnation.

1The Wagon Mound (No 2) [1961] UKPC 2.

2Cambridge Water Co Ltd v Eastern Counties Leather plc [1993] UKHL 12, cf the Environment Act 1995 ss 5-6.

3Rylands v Fletcher [1868] UKHL 1

4Strict liability, however, probably covers more accidents, because it is the norm for workplaces and products, and in road accidents (ch 15) there is no remoteness principle at play, and insurance.

5M Lee, ‘Climate Change Tort’ (2015) ssrn.com, disapproving of overcoming the problem ‘creatively’.

6cf Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4

7Caparo Industries plc v Dickman [1990] UKHL 2, adopting the reasoning of Bingham LJ [1989] QB 653.

8Donoghue v Stevenson [1931] UKHL 3, per Lord Atkin

9R Heede, ‘Tracing anthropogenic carbon dioxide and methane emissions to fossil fuel and cement producers, 1854–2010’ (2014) 122 Climatic Change 229

10Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22. McGhee v National Coal Board [1972] UKHL 7. In the US, see Sindell v Abbott Laboratories 26 Cal 3d 588 (1980).

11Barker v Corus (UK) plc [2006] UKHL 20 which appears to follow the reasoning in H Hansmann and R Kraakman, ‘Toward unlimited shareholder liability for corporate torts’ (1991) 100 Yale Law Journal 1879 but see the Compensation Act 2006, where Parliament disapproved of this limitation. It may be prudent to distinguish joint liability of individuals (an original concern of Hansmann and Kraakman) from corporate entities, though Barker was in principle approved again in International Energy v Zurich [2015] UKSC 33.

12(2015) Case No. 2 O 285/15 Essen Oberlandesgericht

13Marcic v Thames Water plc [2003] UKHL 66, and see ch 13(4).

14Massachusetts v Environmental Protection Agency, 549 US 497 (2007), under 42 USC §7521(a)(1)

15While public nuisance was pleaded under US law, it would appear that negligence is the more appropriate tort in English law.

16American Electric Power Co v Connecticut, 564 US 410 (2011)

17564 US 410 (2011) per Ginsburg J. See also Native Village of Kivalina v ExxonMobil Corp 696 F 3d 849 (2012) certiorari (i.e. appeal) denied by Supreme Court (2013), claimed damages for sea level rise and future floods.

18cf 42 USC §7401(a)(3) referring to the ‘primary responsibility of States and local programs’, with (4) federal assistance. This does not refer to ‘exclusive responsibility’.

19Even if there are express words displacing tort claims, this may be incompatible with human rights, as below.

20564 US 410 (2011) Ginsburg J, leaving ‘the matter open for consideration on remand.’

21cf City of New York v BP plc (2^nd Cir 2021) dismissing an action.

22cf E McGaughey, ‘Fascism-Lite in America (or the Social Ideal of Donald Trump)’ (2018) 7(2) British Journal of American Legal Studies 291, on the breakdown of democracy and justice, due to the US Supreme Court.

23Human Rights Act 1998 s 6 and R (Unison) v Lord Chancellor [2017] UKSC 51, [89] per Lord Reed, ECHR case law is ‘relevant to the development of the common law.’

24Saad v Secretary of State for the Home Department [2001] EWCA Civ 2008, [15] per Lord Phillips MR, and cf R (SG) v Secretary of State for Work and Pensions [2015] UKSC 16, [247]-[257] per Lord Kerr (dissenting)

25UN Framework Convention on Climate Change 1992, Annex I, and recommendation from the IPCC Working Group III, Climate Change 2007: Mitigation of Climate Change (2007) Contribution to the Fourth Assessment Report, ch 13, 776, Box 13.7. Note that the Renewable Energy Directive 2009/28/EC Annex I target for the Netherlands was just 14%.

26Judgment (20 December 2019) 19/00135, text in Dutch but best translated through deepl.com.

27Klimaschutz or Climate Change (24 March 2021) 1 BvR 2656/18

28Smith v Fonterra Co-Operative Group Ltd [2020] NZHC 419

29See CNN Business, ‘Top 10 Owners of Genesis Energy LP’, cnn.com

30[2020] NZHC 419, [82]

31[2020] NZHC 419, [89]-[96] also rejecting a relationship of proximity.

32[1964] UKHL 1

33[2021] NZCA 552, [96]-[113]

34(26 May 2021) C/09/571932 / HA ZA 19-379, especially paras 4.4.9 and 4.4.10

School of Law, SW 2.15
www.kcl.ac.uk

Papers on LawArXiv or SSRN

@ewanmcg

Confidentiality: The information contained in this e-mail and any attachment may be confidential and may contain privileged information. It is intended only for the use of the named recipient. If you are not the named recipient, please send immediate notification and delete it from your system. In such an event, you should not disclose the contents of this e-mail to any other person, nor copy or print it.