Climate change liability cases continue to emerge

Introduction

The possibility that there might be liability for companies directly or indirectly responsible for greenhouse gas emissions for the injury and damage caused by severe weather is hard for those companies and their insurers to ignore, and for good reason.  

Huge evidential obstacles stand in the way of climate change liability claims, but they are potentially of very high value. If they start to get traction, claimant lawyers and funders across multiple jurisdictions will find them very hard to resist, with very serious consequences for the defendant companies.

The legacy of the Peruvian Farmer Case

We reported on the conclusion of the Peruvian Farmer case in July last year. The claimant alleged that historic greenhouse gas emitted by the German power utility defendant, RWE, contributed to increased global temperatures, which, in turn, caused the glaciers around a specific lake in Peru to melt, with residents in the town below facing an increased risk of severe flooding. 

Based on the existing German law of nuisance, the claimant alleged that RWE was liable for a slice of the cost of flood protection measures based on its 0.47% pro-rata worldwide greenhouse gas contribution.
 
The court found that there was no evidence of any real and imminent risk to the claimant’s property from possible flood waters on this occasion. That meant that, to the relief of greenhouse gas emitters everywhere, the claim failed. 

However, the court found that, were there to have been a relevant and imminent impairment to property somewhere in the world, a single material corporate group emitter in Germany could in principle (if causation were proved) be obliged to pay for preventative measures according to its share of emissions. Further, it would not matter that the emissions were lawful when made.  

The Pakistan Farmers case

We commented at the time that there might be enough in the Peruvian Farmer judgment under German law in the German courts to encourage further international claimants with a more compelling story on actual damage to bring actions in Germany against emitters based there, although their path in any future claim would still not be an easy one. 

Sure enough, exactly such a claim has now materialised. Last month, farmers in Pakistan brought an action against RWE and also Heidelberg Materials (another German company said to have emitted significant quantities of greenhouse gases in the past) in connection with the effects of severe flooding in Pakistan in the summer of 2022. They allege that the companies contributed significantly to climate change through carbon dioxide emissions and thus to the intensity and frequency of such extreme weather events.

The case is at a very early stage. It will be a very long time before the key issues around causation come before the German court, and the case may of course fail before it gets that far. However, if it does go the distance, the court’s consideration of causation issues will be of huge interest – not just in Germany but internationally.

Typhoon Odette  

The task for sufferers of climate related damage is to look around for a suitable jurisdiction where significant historic direct/indirect emitters reside and where there are courts that that will hear their claims under favourable laws. Skilled claimant lawyers are another important ingredient, along with mechanisms that protect claimants from the significant costs associated with such claims.

The Peruvian farmer and the Pakistan farmers identified Germany as a suitable place for their claims, but Germany is not the only venue. England might also be a promising venue, with its resident large corporates and skilled claimant lawyers. It has been the venue for several claims against such corporates for non-climate related international damage in recent years (see for example the recent Brazilian Fundao Dam collapse case against BHP), and help with claim finance can be made available.

This seems to be recognised by a group of claimants from the Philippines. Last month, they commenced a claim against Shell over its alleged role in causing Typhoon Odette in the Philippines, which caused significant damage and destruction.  

The claimants say that that Shell’s actions materially contributed to anthropogenic climate change which significantly intensified the typhoon’s impact and likelihood, thereby increasing the damage suffered. The claimants also argue that Shell knew about the dangers of climate change (and the impact of their operations on it) on climate vulnerable communities around the world from the 1960s, but failed to respond appropriately. 

As with the Pakistan farmers case, it will be a very long time before the key issues around causation come before the court, and the case may of course fail before it gets that far. Nonetheless, it is already a case of huge interest.

Conclusion

While claims like these remain ongoing, climate liability for large emitters remains a possibility for the future. There is still a very long way to go before liability is established, but claimants and their lawyers are learning all the time. If a credible link between traceable greenhouse gas emissions and adverse weather were ever demonstrated, and liability were ever established, the financial consequences for individual emitting companies could be extremely significant. This is certainly a strand of cases for large emitters and their insurers to watch.