Climate change litigation on the rise: what does this mean for governments, local communities and investors?

With over 2000¹ cases filed internationally, climate change litigation is becoming an increasingly important and significant area of litigation. Not only is this type of litigation being used to seek to obtain compensation for affected persons, but it is also being used as a tool to hold governments and (often multinational) companies accountable for a perceived lack of climate mitigation efforts.²

This article explores the use and scope of climate change litigation and what it may mean for governments, local communities and investors. 

Actions against Governments

The majority of global climate change related litigation cases are being brought against States.³ These include (a) actions by litigants challenging national governments' policy response to climate change, (b) adaptation cases or (c) initiatives in which States are looking for guidance from international courts and tribunals. 

There are a growing number of cases which seek to challenge a State governments' policy decisions in order to compel further action to set and meet national-level targets and take additional action to combat climate change. For example, in the case of Urgenda v State of the Netherlands ("Urgenda"), the Dutch courts found that the Dutch government had breached human rights standards by not taking steps to reduce emissions by at least 25%. Following this landmark case, governments of at least four other European countries (including Ireland, France, Germany and Belgium) have been held to be in breach of human rights obligations by their national courts for failing to implement climate commitments.⁴

Another category of disputes seek compensation for monetary losses suffered by companies due to the impacts of climate change, such as rising sea levels, more frequently severe weather and intensifying wildfires affecting infrastructure and operations. These are often referred to as 'climate change adaptation cases'. For example, in late 2022, two such cases were brought against Exxon Mobil Corp. and other fossil fuel companies. The cases seek damages for the alleged substantial impact that fossil fuel companies have had in causing climate change and resulting harms to New Jersey;⁵ and for losses resulting from storms during the 2017 Puerto Rico hurricane season and ongoing economic losses since 2017.⁶

A further significant avenue to address climate change impacts is through procuring advisory opinions from international courts or tribunals. Three initiatives are currently being advanced:

1. On 31 October 2021, Antigua & Barbuda and Tuvalu signed an agreement⁷ establishing a commission with the power to request an advisory opinion from the International Tribunal for the Law of the Sea ("ITLOS"). 
2. On 29 November 2022, a group of 16 States led by Vanuatu published the draft text of a proposed UN General Assembly resolution ("ICJ Resolution").⁸The intention of the ICJ Resolution is to request an advisory opinion from the International Court of Justice ("ICJ") on climate change. 
3. On 9 January 2023, Chile and Colombia requested⁹ an advisory opinion from the Inter-American Court of Human Rights ("IACHR") on several human rights implications of climate change.  

As climate change law develops, advisory opinions are capable of clarifying the applicable international law standards by providing guidance and serving as points of reference in future negotiations and court and tribunal decisions. These three initiatives, and others that may follow, will be important developments to monitor.

Actions brought by affected local communities

Recent trends in climate change litigation show that communities in developing countries are potentially more acutely impacted by climate change. For example, in Daniel Billy et al v Australia ("Daniel Billy"),¹⁰ the UN Human Rights Committee ("UNHRC") considered the islanders' claim that the relevant Torres Strait islands were likely to be uninhabitable within 10 to 15 years due to rising sea levels. In what is considered a landmark finding, the UNHRC observed that the Australian Government had violated its human rights obligations towards eight Torres Strait Islanders through its climate change inaction. The UNHRC noted the obligation on Australia to provide adequate compensation to the alleged victims for the harm suffered, and to take steps to secure the communities' continued safe existence.

In the case of Juliana v United States of America ("Juliana"),¹¹ the US government was sued by 21 young claimants for failing to protect certain human rights of young people by promoting and subsiding the use of fossil fuels despite having knowledge of the harmful environmental impacts. Similar to the Urgenda case, Juliana has precipitated similar lawsuits outside of the United States, such as the Supreme Court proceedings in Colombia, where 25 young claimants successfully sued the Colombian government on the grounds that climate change, and the government's failure to reduce deforestation in the Columbian Amazon, had breached their fundamental rights.¹²

Actions brought by international investors 

International investment law is also being increasingly considered as an effective avenue to address climate change issues. The international investment legal regime comprises more than 3,000 bilateral and multilateral International Investment Agreements ("IIAs") aimed at promoting foreign investment. In becoming party to an IIA, a State commits to afford minimum levels of protection to foreign nationals in other IIA party States who invest in their territory. If standards of protection offered by a State are breached, foreign investors may, under many IIAs, commence arbitral proceedings against the host State through Investor-State Dispute Settlement ("ISDS").

Over the last decade there has been an increase in ISDS cases which can be considered to relate to climate change. These claims encompass compensation claims, relating to the alleged reduction in value of existing assets or investments made by foreign investors following the introduction of policy measures intended to address climate change.¹³ Another group of claims concern changes made to climate change-related legislation or policies originally introduced to meet climate goals, such as providing subsidies and other incentives to encourage investment in renewable energy.¹⁴ A third category of IIA claims may potentially be brought against States for a failure to take sufficient action to combat the impacts of climate change which results in damage to investments, such as impacts of extreme weather on investments or rising sea levels flooding investments.

Conclusion

This is a mere snapshot of the many legal actions brought by differently affected individuals, communities, companies and investors, and States. As climate change becomes ever more pressing, we expect to see more and more of these actions. Read the full article (pg. 54) or contact Robert Kovacs or Tessa Schrempf for further information.