Litigation Update: significant developments in climate-related litigation overseas

Last week, an Australian and a Dutch court each issued judgments being hailed as significant wins for climate activists. 
 
In the first decision, the Federal Court of Australia found that young people were owed a novel duty of care by the Commonwealth Minister for the Environment not to act in a way that would cause future harm from climate change in relation to the expansion of a coal mine. In the second, the Hague District Court found that the private company Royal Dutch Shell must reduce its annual carbon emissions by at least 45% (as against 2019 levels) by 2030. 
 
The decisions:

• reflect the increasing use of the courts as a forum for holding governments and private companies to account on climate change related matters; and

• serve as reminders to ensure that climate change matters are adequately taken into account in public and private decision-making, including in relation to strategic direction.

Federal Court of Australia finds that Australian government official owes children a duty of care

The Australian case concerned an impending decision by the Commonwealth Minister for the Environment (Minister) in relation to an application by Whitehaven Coal Pty Limited to extend the Vickery Coal Project, a coal mine in New South Wales.¹ The eight children who brought the claim alleged that the Minster owed Australian children a duty to exercise their statutory decision-making powers with reasonable care not to cause them harm as a result of carbon emissions from the extraction of coal. The children sought a declaration that the Minister owed them and other represented children a duty of care and an injunction against an apprehended breach of the alleged duty.
 
While the claimants were not successful in obtaining the injunction, Bromberg J found that the Minister owed the children a duty to take reasonable care to avoid causing them personal injury when deciding whether or not to approve the coal mine extension. The Court will take further submissions on matters relating to the declaratory relief sought, including whether it should extend to represented persons (ie children other than the eight applicants themselves), and the utility and terms of any such declaration.
 
In reaching that conclusion, Bromberg J observed that it was necessary to consider the "salient features" of the relationship between the decision-maker and the claimants, including matters such as coherence with the relevant statutory scheme, the foreseeability of harm, the control that the relevant authority has over the relevant risk, and the vulnerability of the people at risk. Weighing those factors, the relationship between the Minister and the children was such that a duty of care in negligence should be recognised. Elaborating that:

 "That conclusion is confirmed when re-examined through the lens of the neighbourhood principle and the criteria of reasonableness fundamental to the law of negligence.  By reference to contemporary social conditions and community standards, a reasonable Minister for the Environment ought to have the Children in contemplation when facilitating the emission of 100 Mt of CO₂ into the Earth's atmosphere."

In relation to the injunction, Bromberg J found that the claimants had not established that there was a reasonable apprehension of a breach of the duty of care. For example, the Minister may have options other than the unconditional approval of the project, and the Minister could now be expected to take notice of the matters canvassed in the Court's judgment.

Dutch Court requires Royal Dutch Shell to curb emissions

In the Netherlands, a claim was brought by environmental groups and individual claimants, alleging that Royal Dutch Shell (RDS) was acting unlawfully by failing to sufficiently reduce its emissions.² The claim was grounded in an "unwritten standard of care" in the Dutch Civil Code, as interpreted by reference to international human rights instruments (namely, the European Convention on Human Rights and the International Covenant on Civil and Political Rights) and other "soft law" (such as the UN Guiding Principles on Business and Human Rights).  
 
In what is considered to be the first major case in which a private company has been held to the requirements of the Paris Agreement, the Hague District Court ordered RDS (and the entities it commonly includes in its consolidated accounts) to reduce emissions by 45% compared with 2019 levels by 2030 through the general corporate policy that RDS sets for the Shell group (which appears to include its climate policy). This obligation applies to the total of RDS's activities, including emissions caused by the end-users of its products. 
 
The decision has features unique to the Dutch legal framework, which will not be applicable elsewhere. In particular, the decision is based on the unwritten standard of care in the Dutch Civil Code that acting in conflict with what is generally accepted according to unwritten law is unlawful.  However, the Court's reliance on human rights measures and international conventions increases the likelihood of the case being internationally relevant. Climate change litigation is occurring across numerous jurisdictions, and claimants and courts typically look for reference points in international decisions to guide the development of the law in this area.
 
RDS has announced that it intends to appeal the decision.

Observations:

Both decisions reflect a growing international trend for climate groups to use the courts as a strategic tool to hold corporate and government defendants to account. This trend is being increasingly reflected in New Zealand.   

Climate change considerations for government decision-makers

The recognition of a common law duty of care in Australia on a government Minister is particularly significant.³ Subject to any appeals, the Sharma case will likely influence the way in which Australian officials make decisions in relation to infrastructure projects which have the potential to increase emissions. Given those implications, it is reasonable to assume that a similar case may at some stage be brought in New Zealand and, indeed, similar themes were raised in the recent judicial review claim in relation to the Mill Road project in Auckland (that project has now been effectively dropped due to cost issues). Central and local government decision-makers should accordingly have the potential for such challenge in mind when exercising their statutory powers.

Companies should consider climate change issues in setting company strategy

The RDS case suggests that private companies should also take extra care in relation to climate change issues when setting company policy/strategy. While New Zealand does not have an equivalent to the standard of care under the Dutch Civil Code, it is possible that claimants in New Zealand could seek to invoke human rights analyses in claims against private companies. Accordingly, while such claims may well still face challenges in New Zealand, we see the Dutch decision as adding to the growing body of evidence that private companies should not consider themselves immune from private legal action to enforce compliance with international climate targets. 

Class actions landscape is evolving

One final point of interest from the two decisions canvassed here is that both claims were brought as group proceedings. While climate change class actions have not featured in New Zealand to date, the class actions landscape is rapidly evolving. For example, in the last year, the courts have ruled that "opt-out" proceedings are available in New Zealand (see more here), meaning that it is now more straightforward to bring a representative action on behalf of a wide group of individuals. Similarly, the Law Commission is currently considering submissions on the appropriate legal framework for class actions in New Zealand and current indications are that a more detailed class actions framework in New Zealand will result. These procedural developments could well be of interest to climate groups looking for opportunities to bring high-impact claims in the New Zealand courts.

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.