Climate change represents one of the main challenges of our times, being at the very centre of social and political life.
The relevance of this topic has led to a structural change in the social and political paradigm, influencing, in the last decades, some significant compromises, such as the Paris Agreement.
Indeed, the issue of climate change has already entered the legal arena, which might result in a new class of litigation.
In this regard, a legislative initiative in the European Union is currently underway to introduce a duty to perform human rights and environmental due diligence for companies based on or carrying out business activities in the EU in relation to their value chains.
Among the obligations set out in this Directive draft, besides annual due diligence exercises to identify and assess potential and/or actual adverse impacts on human rights and the environment that the activities of the obliged companies and their value chains may pose, and obligations to report and to design and integrate strategies to prevent, manage, mitigate, monitor, cease and correct the adverse impacts, is the obligation for companies with a net turnover of more than 150 million Euros to introduce, and adopt, in their commercial strategy, a plan, including implementation actions and related financial and execution plans, so that their business model and strategy are consistent with the commitment to limit global warming to 1.5º C and the goal of achieving climate neutrality by 2050.
Therefore, citizens, companies, society, states and supranational organisations will have to shape their behaviours towards adopting different sustainability standards, which is likely to entail changes in the investments and contracts and, consequently, in the related litigation.
Climate change disputes may arise in several configurations, depending on the relationship established between the parties involved. It is already possible to consider (i) disputes relating to contracts directly related to the issue of climate change, in compliance with the Paris Agreement; (ii) disputes relating to contracts affected by the issue of climate change; (iii) disputes relating to violations of the provisions aimed at protecting individuals from the impacts of climate change; and (iv) disputes relating to the adverse impacts generated on the environment and human rights by companies and their value chain.
It is expected that these new disputes will become very frequent, not only because there is more and more regulation on the subject but also because this regulation may impact most sectors of activity, of which energy, infrastructure, food and construction are paradigmatic examples.
Due to the technical specificities and importance of the rights at stake, these disputes will bring new challenges to clients and their lawyers.
We are already beginning to notice this trend in several jurisdictions: from claims relating to greenwashing and its advertising (in France, the United Kingdom, Italy or the Netherlands against oil and energy companies or companies in the transport sector and airlines) to claims for environmental damage caused by oil & gas companies, including claims against their directors.
This highlights the urgency of the right of action, which is accentuated by the nature of the rights in question.
Specific measures are envisaged to overcome the problem of judicial delays, such as injunctions, arbitration, and other means of alternative dispute resolution.
As regards injunctions, each proceeding will raise challenges regarding the fulfilment of the assumptions required under the law to resort to this type of action (i.e., the probable existence of the right, the periculum in mora and the proportionality between the injury and the ordered measure). Ultimately a specific injunction for environmental protection may be established, considering the importance of the matter and the need to quickly and effectively combat potential harmful conducts.
Arbitration, as alternative means of dispute resolution, might be another solution to the problem of judicial delays.
One of the advantages of arbitration is that it may include specialists in the matter, from the arbitrators to experts from the parties or the tribunal itself, who will jointly discuss the issue, reaching a compromise solution between the parties, with a special guarantee for the value at stake: the environment.
Another positive point of arbitration may arise from the regulation to prevent climate change is primarily international and applies, above all, to areas in which the commercial stream is also preponderant at a global level - think, for example, of the oil & gas industry.
Arbitration also allows for establishing arbitration clauses in the various agreements entered into in legal transactions, thus contributing, at first sight, to a possible solution to the problems that may emerge within these legal relations while also encouraging those involved to adopt the appropriate behaviour to preserve the environment.
On another level, it should be noted that climate change litigation poses a technical and scientific challenge in this area.
Contrarily to what may occur in arbitration proceedings, it is unlikely that court judges will become experts on the matter.
In short, the most diversified sectors of activity will have to adapt to be “compliant” with the new and growing environmental regulation. These changes will strongly impact legal practice. It will be up to the State to adopt legislation to address climate demands, providing for the detection of problems and their resolution.
