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Divergent global approaches to climate change litigation: New Zealand Court of Appeal provides an alternative to Dutch Milieudefensie case

Overview

Towards the end of last year, in Smith v Fonterra [2021] NZCA 552 ("Fonterra"), New Zealand's Court of Appeal provided a counterweight ruling to the Dutch Milieudefensie claim (on which, see our briefing). 

 

 

The claimant pursued a novel climate change-related claim against several significant greenhouse gas emitters.  The New Zealand High Court declined to strike the claim out on the basis that the defendants may have breached an "inchoate" climate change duty of care.  The New Zealand Court of Appeal struck out the claim on the basis that it was inconsistent with fundamental principles of New Zealand (and English) common law.  The Court's approach can be contrasted with Milieudefensie and may give an indication of how an English court would approach a similar claim in this jurisdiction, given the close jurisprudential connections between the two jurisdictions. 

The claimant in Fonterra brought claims in (i) public nuisance, (ii) negligence and (iii) a new climate change duty against several significant greenhouse gas emitters. The claimant brought the claim both as an individual who is impacted by climate change and in his capacity as a community elder who was representing vulnerable Māori living in coastal areas of New Zealand.  The defendants were seven significant greenhouse gas emitters across a range of sectors although, as the claimant acknowledged, there was no principled basis for singling out the seven defendants in particular. 

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Summary

The Court, while clearly sympathetic to the claimant's cause, made it very clear that it did not consider the common law to be an appropriate mechanism to address the threat from climate change. Before addressing each  cause of action the Court made several "global" points regarding climate change litigation and the common law:

  • the common law tradition is one of incremental development and not radical change;

  • major departures from existing legal principles risk subverting the doctrinal coherence that holds the common law together;

  • no existing tort in New Zealand (or England) involves a scenario in which every person in the world (to varying degrees) is both responsible for the harm (i.e. greenhouse gas emissions) and the victim of that harm (i.e. the impacts of climate change);

  • no defendant alone made a material contribution to climate change and there is no principled point of distinction between an entity selected by the claimant as a defendant and any other greenhouse gas emitter that had not been sued;

  • if one defendant was found to be liable in tort then every other individual and entity in New Zealand would also be acting unlawfully, with sweeping legal, social and economic consequences;

  • the Court could not offer a remedy (in the context of a private law civil proceeding) meaningfully to address the harm complained of (i.e. climate change on a global scale); and

  • the claimant was effectively seeking a court-designed regulatory regime, which was beyond the expertise of any court, stating that climate change "provides a striking example of a polycentric issue that is not amendable to judicial resolution".  

The Court made it very clear that the common law was an inappropriate way in which to address climate change. It considered, in the context of taking action on climate change, the common law to be inefficient and that the court process lacked the institutional expertise and democratic participation that is necessary to address a multi-faceted issue such as climate change, stating that "this pressing issue calls for a sophisticated regulatory response at a national level, supported by international co-ordination".

Public Nuisance and Negligence as causes of action

Turning to the public nuisance and negligence causes of action, the Court gave an overview of the historic English common law position. While the Court of Appeal queried some aspects of the High Court's reasoning (the High Court having struck out both the public nuisance and negligence causes of action) ultimately it found that there was a lack of connection between the harm alleged by the claimant and the defendants' greenhouse gas emissions.  The Court considered this to be fatal to the claim: the claimant was unable to prove a direct causal link (in either the public nuisance claim or the negligence claim) between the effects of climate change and the emissions of the individual defendants.  Accordingly the Court of Appeal dismissed the claimant's appeal on these grounds. 

The rejection of the "inchoate" duty

The Court did not address the novel climate change duty sought by the claimant in great detail. Although it was not addressed in the Court of Appeal's judgment, in the High Court the claimant had placed significant emphasis on an extra judicial paper written in 2018 by three of New Zealand's Supreme Court justices, including the Chief Justice, which suggested that, while the threat posed by climate change could not easily be met through existing causes of action (such as negligence), a new private law cause of action may develop in order to meet the challenges associated with climate change mitigation. 

The High Court, in the context of a strike out application by the defendants, declined to strike the novel duty out on the grounds that the issues it raised could only be properly explored at trial. On appeal, however, the Court of Appeal considered it to be appropriate to strike the claim out.  The Court stated that the "bare assertion of the existence of a new tort without any attempt to delineate its scope cannot of itself be sufficient to withstand on strike out on the basis of speculation[t]he mere fact of novelty cannot be enough".  The Court considered that any "novel" duty would suffer from the same causative issues that the negligence and public nuisance cause of action suffered from and, accordingly, the Court of Appeal upheld the defendants' cross-appeal and struck out this cause of action. 

Contrast with Milieudefensie

The differences between the approach taken by the Courts in Fonterra and Milieudefensie are striking. In our previous article on this topic we noted that there was a similarity between Milieudefensie and the approach taken in Fonterra in the New Zealand High Court: now the two claims stand in stark contrast to one and other.

By way of a recap, Milieudefensie was a class action spearheaded by several environmental NGOs and was brought against Royal Dutch Shell ("RDS"), the head of a multinational group of companies headquartered in the Netherlands and the UK (the "Shell Group"). As in Fonterra, the claimants argued that RDS owed a duty to Dutch citizens to protect them from the adverse effects of climate change (although in Milieudefensie the duty was expressly against all Dutch citizens whereas in Fonterra the duty was to an individual, who brought a claim on behalf of himself and an undefined class of similar people). The duty in question was based on a provision of the Dutch Civil Code, somewhat analogous to English law tortious concepts, that provides for a private law cause of action should a defendant breach an "unwritten standard of care" owed by it to a claimant. The claimants alleged that RDS breached the unwritten standard of care it owed to them by failing, in implementing globally applicable Shell Group corporate policies, to commit sufficiently to reducing its level of emissions to an appropriate level by 2030.

The Dutch District Court agreed with the claimants and held that RDS had breached the unwritten standard of care it owed by failing to implement appropriate corporate policies. It considered the existing policies to be "intangible, undefined and non-binding". The Court also considered the policies, which focused on carbon reduction by 2050, to be insufficient: RDS needed to implement policies that would strive for a reduction by 2030 across the entire Shell Group.

Accepting, of course, that there are different legal traditions between the Netherlands and New Zealand, the Court of Appeal's ruling in Fonterra takes the opposite approach, on similar issues, to that adopted in Milieudefensie. For example, the Court in Milieudefensie was very comfortable in both (i) creating a new private law duty and (ii) making an order with global consequences — whereas in Fonterra the claim was expressly struck out because the Court of Appeal was unwilling to do so.  One particularly interesting difference between the two cases was how the Courts in the respective jurisdictions dealt with the issue of whether greenhouse gas emissions, generally, were "unlawful".  In both cases, the Courts considered that the simple act of emitting greenhouse gases was lawful, but:

  • in Fonterra, the claimant accepted that emissions themselves were lawful but instead argued that the defendants should be required to reach a point of net zero emissions by 2030 (under supervision of the Court).  The Court of Appeal had difficulties with this approach because the claimant would not be seeking the prohibition of an act that is lawful until it reached a particular court-mandated level, subject to any offsetting.  The Court considered this would amount to some form of judicial "emissions trading scheme" and this would be outside of the domain of tort law because, essentially, the claimant was not seeking redress flowing from an inherently harmful act but, rather, asking the Court to declare that a lawful act becomes unlawful once it hits a certain threshold; whereas

  • in Milieudefensie the Court acknowledged that RDS's emissions were not "currently unlawful" but nevertheless ordered RDS to "limit or cause to be limited the aggregate volume of all CO2 emissions into the atmosphere … by at least net 45% at end 2030…". In essence, the Dutch Court was willing to make an order to reduce emissions even in circumstances where the underlying act by RDS (i.e. the emission of greenhouse gases into the atmosphere) was lawful. 
Application to the UK

In our previous article we wrote that, in England, if a claim like the one brought in Milieudefensie were to succeed, it would "require an English Court to push the boundaries of established legal principles to their limits, if not expand them", a notion that the New Zealand Court of Appeal clearly agreed with in the Fonterra The New Zealand Court of Appeal's judgment is, in our view, an instructive counterweight to the expansive approach seen in Milieudefensie (and, as we noted in a recent briefing, also in Germany).  There are several points to keep in mind in considering these contrasting trends, in particular:

  • The relative size of greenhouse gas emitters that are domiciled in the UK and the Netherlands (versus New Zealand) may mean that, for policy reasons, courts in certain countries may be more willing to entertain the idea that individual defendants could be responsible for climate change in a way that the New Zealand Court of Appeal considered the individual defendants in Fonterra could not. In Fonterra the Court had difficulties drawing a principled distinction between the activities of the defendants chosen by the claimant and other (non-represented) emitters — which proved to be a problem for the claimant as the Court of Appeal could not see how causation could be established against the defendants to the claim.  However, in Milieudefensie the Court accepted that the Shell Group was a major global emitter of greenhouse gas and could, presumably, have drawn a distinction between RDS and other, smaller, Dutch emitters. 

  • The Court's comments in Fonterra about the difficulty of applying tort law in situations where a claimant is also committing the same harm (e.g. greenhouse gas emissions) is an issue which is also likely to prove difficult were a similar claim brought before an English court.   We also foresee that, like the Court of Appeal in Fonterra, an English court may also find that climate change intervention is best addressed by national regulators (with the benefit of international cooperation and the usual stakeholder consultation on which policy-making is founded) because of the polycentric nature of climate change and the limitations of the common law in this area which have been acutely identified in Fonterra

  • Fonterra is also interesting from a procedural perspective. While the UK Supreme Court and the English Court of Appeal have indicated in recent decisions (e.g. Vedanta, Okpabi, and Maran1) that they are willing to entertain the expansion of common law duties in negligence in the context of parent company liability and value chain liability claims by refusing to strike them out at an early stage, Fonterra arguably represents a more traditional approach to the issue of strike out. The Court of Appeal ruled that "The purpose of the strike-out jurisdiction is to ensure that parties are not put to unnecessary expense and precious court resources are not squandered by claims that have no chance of success. It demands an element of rigour in the interests of justice".2 Nevertheless, the prevailing trend set by the Supreme Court in England at present in relation to novel tortious claims (albeit those were not cases concerned with climate change) is to allow them to survive attempts to strike out.


Vedanta Resources Plc v Lungowe [2019] UKSC 20; HRH Emere Okpabi v Royal Dutch Shell [2021] UKSC 3; Begum v Maran (UK) Ltd [2020] EWCA 326.

2 For completeness, we note that an application has been made for leave to appeal the Fonterra decision to the New Zealand Supreme Court.  At the time of writing, the leave application has not been determined.  

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