The developing (and divergent) role of the Courts in climate change cases in England and Australia

Overview

With claimants around the globe continuing to bring novel and ambitious climate change-related cases before common law Courts, some judges are hesitant to be drawn into what may be perceived as a political debate.

Earlier this year, the Full Federal Court of Australia (in Minister for the Environment v Sharma [2022] FCAFC 35 ("Sharma")) and the English Administrative Court (in R (Friends of the Earth Limited) v the Secretary of State for International Trade / Export Credits Guarantee Department (UK Export Finance) & Ors [2022] EWHC 568 (Admin) ("FoE", "UKEF" and "FoE v UKEF")) highlighted two fundamentally different approaches to the role of the judiciary in climate change-related claims. In this article we summarise the different approaches and consider where the Courts may go from here. 

The Full Federal Court of Australia allows the Sharma appeal

This case involved a major infrastructure project (a coal mine extension) that required the approval of the Minister for the Environment. A group of children brought a tort claim (i.e. a private law claim) against the Minister, a claim which highlighted the intergenerational effect of climate change. They argued that the vulnerability of the young claimants gave them standing to bring a claim.

In the first-instance decision, the High Court found that the Minister did owe a duty of care to the claimants. The core of the claimants' argument was that the Minister was required to consider the Paris Agreement when considering whether to allow the expansion to the coal mine. (For more on the Paris Agreement, see the explanation in the box below.) The Court reasoned that there was a special relationship between the Minister and the children, that the harm to the children was reasonably foreseeable, that the children were vulnerable, and that the Minister had the ability to avoid this harm through the operation of their statutory power. (For a summary of the facts and the Federal Court's decision, see our earlier case summary.)

The Paris Agreement

The Paris Agreement is an international treaty concerning climate change and, in particular, seeks to limit global warming.  It is the third treaty in the UN climate regime, and entered into force on 4 November 2016. The UK signed and ratified the Paris Agreement in 2016, and is one of 197 signatories. The aims of the Paris Agreement include to "hold the increase in the global average temperature to well below 2C above pre-industrial levels", "increasing the ability to adapt to the adverse impacts of climate change" and "making finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development". The Paris Agreement distinguishes between the obligations of "developed" and "developing countries", providing that developed countries should take the lead in some respects, including in regard to the cutting of emissions and the provision of finance and technology to mitigate against the adverse impacts of climate change. 

The three judges sitting in the Full Federal Court of Australia issued separate judgments, all three of which allowed the appeal. The Court did not dismiss the risk posed by climate change, or the scientific consensus.  In the words of Allsop CJ, "the nature of the risks and dangers of global warming, including the possible catastrophe that may engulf the world and humanity was not in dispute". While the Minister (unsuccessfully) appealed certain aspects of the Federal Court's factual findings, the case primarily related to the role of the judiciary in the context of climate change litigation, and also the procedural issues associated with private law claims brought against public political figures. 

As we noted in our previous article on Sharma, the hybrid nature of the claim was particularly interesting in a UK context as the negligence standard is a lower hurdle for a claimant to attain than the "unreasonableness" standard of judicial review. The Federal Court considered this point at length and determined that while a Government body could owe a duty of care to a group of citizens and, therefore, could be sued in negligence, it was inappropriate to do so in the circumstances of the present case as the resulting duty of care would be unworkable.  The Court pointed to many factors it considered in coming to this conclusion but the key ones were (i) that the duty went far beyond what the empowering legislation required the Minister to consider, (ii) the underlying risk associated with global warming could only be addressed through inter-governmental coordination and political cooperation (and not by a single Minister in Australia) and (iii) the duty that the claimants sought to impose on the Minister was to be imposed prior to the claimants suffering damage, which presented a significant causation issue that is ill-suited to the law of tort.

The Court also had considerable concerns about the appropriateness of a claimant asking the judiciary to restrain Government policy over what the Court considered to be a "core policy issue".  The Court considered climate change to be the responsibility of the executive and legislature, while the Courts were tasked with "quelling private controversies or controversies between individuals and government".  In the judgment of Allsop CJ, express reference was made to the New Zealand Court of Appeal's decision in Smith v Fonterra [2021] NZCA 552 where that Court also considered the judiciary to be "ill-equipped to address the issues that the claim raises" and, instead, preferred to leave climate change policy to democratic institutions.  In that case, like Sharma, the first-instance court considered that a climate change-related duty may exist, only for the Court of Appeal to consider such a duty to be unworkable and striking out the claim on appeal. (For more on Smith v Fonterra, see our earlier article, which also considers the application of the case to the UK.)

As noted above, the Court considered there to be significant causation issues associated with climate change-based negligence. Interestingly the Court strongly suggested that the High Court of Australia should consider the issue (either on appeal or in a future case) and, in particular, the issue of whether existing case law on tortious causation should be reconsidered in order to accommodate a climate change cause of action.  Ultimately, while the Court closely considered the English Fairchild line of case law (see the box below), it concluded that applying such a test to climate change litigation was beyond its remit as an "intermediate appellate court". 

Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 (HL)

In Fairchild, workers had been exposed to asbestos in the course of working for multiple employers such that it was not practicable to determine which employer was responsible for each employee's asbestos exposure. The House of Lords' solution was to allow a claimant to prove that a defendant employer had contributed to the risk of exposure, rather than having caused the risk on a traditional "but for" analysis. Interestingly the New Zealand Court of Appeal in Smith v Fonterra, after surveying the UK's asbestos line of caselaw, concluded that applying such a principle to climate change litigation would create "indeterminate liability" for defendants. 

Finally, the Court rejected the suggestion that the claimants, as children, were particularly vulnerable to the effects of climate change: a direct rejoinder to the element of the first-instance decision that drew so much media attention following the initial success by the claimants. The Court considered all Australians to be equally vulnerable to the impact of climate change and, therefore, the age of the claimants had no impact on their standing to bring the claim.  In our previous article on Sharma we considered this to be a particularly interesting aspect of the claim and noted the similar approach taken in the US in the Juliana litigation and the contrasting approach in a Swiss claim brought by the elderly (who were said to be particularly at risk to the effects of climate change e.g. from heatstroke).   

"Room for reasonable experts to disagree"? FoE v UKEF

The UK Government's adherence to the Paris Agreement, and the role of the Courts in supervising any such adherence, came under scrutiny recently in the English High Court in FoE v UKEF.

FoE challenged the decision of UKEF to provide up to £1.15 billion of financial support to a liquified natural gas project ("LNG") in Mozambique (the "Project"). UKEF was not alone in providing support for the Project. Other lenders included export credit agencies from South Africa, Japan, Italy, Thailand, and the United States.

Broadly summarised, FoE contended that:

  • UKEF had erred in law or fact when determining that the decision to fund the project was compatible with the UK's commitments under the Paris Agreement; and/or

  • in determining that funding the Project was compatible with the provisions of the Paris Agreement, UKEF failed to consider key factors.

Although the two presiding judges, Lord Justice Stuart-Smith= and Mrs Justice Thornton, were broadly aligned in respect of the relevant legal principles to have regard to, they reached markedly different conclusions as to the application of the law to the facts of the case: Stuart-Smith LJ found that UKEF had complied with its legal duties in approving the funding of the Project, while Thornton J considered that UKEF had failed fully to quantify the level of greenhouse gas emissions arising from the project and, therefore, UKEF had acted irrationally. The divergence of views as between Stuart-Smith LJ and Thornton J has resulted in permission being granted for FoE to appeal to the Court of Appeal. 

The role of the Paris Agreement in judicial review

Addressing the proper interpretation of the Paris Agreement, Stuart-Smith LJ pointed to the principle of dualism when considering the interpretation of international legal obligations, noting that international law and domestic law are "regarded as separate legal systems, operating on different planes". Therefore as a starting point, Stuart-Smith LJ considered that, when international law crossed over into the domestic plane, it would be appropriate to identify where the international obligations sit on a spectrum ranging from "the aspirational and high-level political end" to the "rigidly prescriptive". 

Stuart-Smith LJ considered that the Paris Agreement tended toward the high-level political end of the spectrum, and any interpretation of that agreement therefore required a flexible approach, adopting the test of "reasonable tenability". For this reason, Stuart-Smith LJ considered that there was no need to arrive at an exclusive interpretation of the language, but rather the Court only needed to be satisfied that the UKEF's interpretation was tenable. Thornton J shared this view in her separate judgment.

Accordingly, Stuart-Smith LJ considered it appropriate to afford UKEF a wide margin of discretion, in light of the lack of prescriptive obligations contained in the Paris Agreement, the fact that different elements of the Paris Agreement appeared to be in tension if not in "frank opposition" with one another (in particular the elements regarding the eradication of poverty), the absence of established jurisprudence on the correct interpretation of the Paris Agreement and its provisions, as well as the fact that the Court is "not authorised to decide questions so as to bind the near 200 sovereign parties to the Paris Agreement."

The scope of the UKEF inquiry

As with Sharma, Stuart-Smith LJ also considered the decision to be highly political (with a high degree of policy judgement) and, therefore, that a relatively low intensity of judicial review should be applied by the Court.  Both Stuart-Smith LJ and Thornton J considered that it was not the Court's role to adjudicate on the merits of a public policy decision, and judicial review should not be viewed as "politics by another means". Rather, the Court's role was to consider the lawfulness of the relevant decision. 

Stuart-Smith LJ found that UKEF had acted in accordance with its "Tameside duty", namely its duty as a public body to carry out a sufficient inquiry prior to making its decision. The decision in question, Stuart-Smith LJ emphasised, was not to decide whether the Project should go ahead at all, but rather whether it should provide export finance to a project that would go ahead in any event. However, while both Stuart-Smith LJ and Thornton J agreed that the Court must only be satisfied that UKEF held a "tenable view" regarding the interpretation of the Paris Agreement, Thornton J considered UKEF additionally needed to demonstrate that it had considered the impact of Scope 3 emissions and, therefore, that "funding the project is consistent with a pathway towards limiting global warming to well below 2C and pursuing efforts to 1.5C." (See the text box below for an explanation on Scope 3 emissions.) In the opinion of Thornton J, UKEF had an obligation to quantify (and thereby consider) the Scope 3 emissions that would arise from the project and, in failing to do so, had failed to discharge its duty of inquiry and had acted irrationally. 

Scope 1, 2 and 3 emissions

The Greenhouse Gas Protocol (an international initiative which has developed greenhouse gas accounting and reporting standards), has divided the categorisation of emissions into three broad categories: Scope 1, 2 and 3. Broadly summarised, Scope 1 emissions are those which have been directly emitted from the facility that is owned or controlled by the company that is under an obligation to report its emissions levels. Scope 2 emissions relate to indirect emissions which result from the offsite generation of energy that has been purchased to support a particular project. Scope 3 emissions relate to all other emissions that "occur in a company's value chain", which can include downstream emissions.

Stuart-Smith LJ disagreed, considering that there was no specific obligation to quantify Scope 3 emissions because the UKEF's decision would (on the evidence of UKEF) have no impact on whether or not the project would go ahead, and the Scope 3 emissions would be accounted for via the carbon budgets of each signatory to the Paris Agreement. Accordingly, in the view of Stuart-Smith LJ, UKEF could have rationally reached their decision without having quantified Scope 3 emissions. 

Conclusion

With the global and urgent risk presented by climate change, and given that many Courts are delivering the clear message that these are political issues rather than legal ones, it would appear that politicians will need to take a more active role in setting the climate change agenda. From a business perspective, the uncertainty that arises out of this will, no doubt, be problematic for businesses whose operations give rise to greenhouse gas emissions (whether Scope 1, 2 or 3), and also for those who invest and do business with them. 

Between Sharma, FoE v UKEF and Fonterra there are now three first-instance decisions of common law Courts where a judge has considered that a climate change-related duty may exist, and two appellate decisions (plus the opinion of Stuart-Smith LJ in FoE v UKEF) where a Court has taken the view that no such duty could exist within the existing common law legal framework. This area of law is evolving and it is not unexpected to see divergent and contradictory decisions in the circumstances.  It seems inevitable that these cases will need to be brought before higher appellate courts before these claims become more predictable.  In this respect we note that the claimant in the New Zealand Fonterra decision has recently been granted permission to appeal before the New Zealand Supreme Court, which may start to provide some clarity around the extent to which common law Courts are willing to intervene in climate change litigation within that jurisdiction. 

That said, given the huge volume of cases that are being issued, and the multiple causes of action and divergent approaches we're seeing in different jurisdictions, we query whether higher appellate decisions will in practice stem the number of cases that are being brought in the short term, particularly if the existing political impasses continue. Further, given the international nature of these claims, it may be that successful causes of action from one jurisdiction are copied and applied in another, meaning that authoritative statements from appellate Courts in relation to one cause of action quickly become sidestepped as new causes of action are deployed.  This is something we have seen already in Europe on the back of the successful Milieudefensie claim, where a copycat German claim was brought shortly afterwards, and the Urgenda Foundation claim, which resulted in copycat claims in both Belgium and Germany. 

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