Climate Action

Key Takeaways

Potential implications resulting from the ITLOS Advisory Opinion are:

• uptick in climate litigation with UNCLOS providing another avenue to pursue claims in both international (State-to-State litigation) and domestic fora (against corporates and/or States);
• increased State action to promulgate and enforce more stringent and robust national climate legislation and nationally determined contributions;
• implementation of more robust approvals processes for emitting projects;
• increased risk of investor claims under investment treaties; and
• an opportunity for States to potentially negotiate new climate agreements with further obligations.

 

Introduction

On 21 May 2024, the International Tribunal for the Law of the Sea (ITLOS) handed down its advisory opinion in Request for an Advisory Opinion submitted by the Commission of Small Island States on Climate Change and International Law (Request for Advisory Opinion submitted to the Tribunal) (ITLOS Advisory Opinion).

In this two-part series, we unpack the ITLOS Advisory Opinion. In Part I, we outlined the arguments States advanced in the written and oral proceedings of the ITLOS Advisory Opinion, and the Tribunal’s key findings.

In Part II, we discuss the potential implications for governments and the private sector arising from the ITLOS Advisory Opinion, and where to next. You can also read our earlier article, Climate Change in the Spotlight: The Advisory Opinion Proceedings of the International Courts, which provides a high-level overview of the ITLOS and ICJ advisory opinion proceedings and considers the potential implications of each at both international and domestic levels.

 

Potential implications resulting from the ITLOS Advisory Opinion

The Tribunal’s findings suggest there could be several implications for both States and the private sector, including:

• uptick in climate litigation with UNCLOS providing another avenue to pursue claims in both international (State-to-State litigation) and domestic fora (against corporates and / or States);
• increased State action to promulgate and enforce more stringent and robust national climate legislation and nationally determined contributions;
• implementing a more robust approvals process for emitting projects;
• a risk of increased investor claims under investment treaties; and
• an opportunity for States to potentially negotiate new climate agreements with further obligations.

OPENING THE DOOR FOR CLIMATE LITIGATION UNDER UNCLOS

Climate litigation is increasingly being used to further the climate agenda, meet the temperature goal in the Paris Agreement, and limit the adverse effects of climate change on the climate system. As at June 2024, the Sabin Center’s database of climate litigation recorded 2,680 climate change cases filed globally.¹ Most of these cases are filed in domestic courts and a significant portion are filed by private entities / groups against governments.

Following the Tribunal’s findings in the ITLOS Advisory Opinion we are likely to see an uptick in climate litigation based on UNCLOS obligations in both international and domestic fora. The number and variety of climate change cases will continue to increase and such cases may expand their geographical reach, appearing in both developed and developing countries, as well as potential cross-border cases.

State-to-State climate litigation

With the ITLOS Advisory Opinion categorically recognising anthropogenic GHG emissions as ‘pollution of the marine environment’, UNCLOS now offers another avenue for States to seek redress against other States for the adverse effects of climate change, including through the use of ITLOS as a relevant forum. For example, smaller States could seek redress under Part XII against developed States for a failure to meet their obligations to provide the necessary technical, financial, and capacity-building assistance to assist smaller States in satisfying their obligations to protect and preserve the marine environment. States could also use litigation under Part XII to challenge the legitimacy of future fossil fuel projects, emissions intensive agriculture projects, changes to land use, or marine-based projects that may cause harm to the marine environment. Similarly, a State could sue another State for the actions of its private sector within their jurisdiction for approving such projects (as an omission).

This widening of avenues for State-to-State climate litigation does not, however, come without challenges. We see three factors that may limit the availability, or challenge the success, of future claims seeking to rely on the ITLOS Advisory Opinion.

First, States may choose to modify their declaration under Article 287 of UNCLOS to exclude ITLOS’ jurisdiction. Article 287 of UNCLOS permits States to choose one or more means of settlement of disputes concerning the interpretation or application of UNCLOS. These means include ITLOS, the International Court of Justice (ICJ), or an arbitral tribunal. It will be interesting to see whether high-emitting States take the step of removing ITLOS from its chosen means of dispute settlement to minimise the potential impact of a claim through forum shopping on the basis that an arbitral tribunal (or even the ICJ pending the ICJ Climate Change Advisory Opinion) is less likely to be influenced by the ITLOS Advisory Opinion. This however remains to be seen.

Second, the States that are most likely to be the applicant (e.g. developing States with low emissions and few financial resources), would need to carefully balance their desire to seek redress for the adverse effects of climate change, and the need to maintain the support, such as foreign aid, they receive from donor countries who are likely heavy emitters. Whilst not a contentious proceeding, Palau’s attempt in 2011 to seek an advisory opinion from the ICJ on obligations regarding climate change demonstrated the potential reactions of high-emitting States to such proceedings. In that case, it was reported the United States’ threat to cut off certain monetary aid provided to Palau was a determinative factor as to why the request never made it to the floor of the General Assembly.²

Third, in the event a successful climate litigation proceeding was concluded under UNCLOS, there are limited enforcement options for an ITLOS judgment or arbitral award. ITLOS’ decisions are final and binding, and the parties to the dispute are required to comply with them. However, the Tribunal has no means of enforcing its decision. By comparison, Article 94(1) of the UN Charter permits a State to have recourse to the Security Council to give effect to a judgment of the ICJ. No such recourse is contemplated for ITLOS judgments or arbitral awards.

Climate litigation against States

The ITLOS Advisory Opinion findings are also likely to provide further impetus to individuals or community groups to pursue claims against their governments/States for a failure to act in relation to emissions reductions and impacts on the marine environment, or for decisions to approve emissions intensive projects.

Governments are the most common respondents to litigation challenging mitigation and adaptation commitments in both domestic and regional litigation. For example, in Notre Affaire à Tous and Others v. France (2021), the Administrative Court of Paris held that the State’s climate inaction and failure to meet its carbon budget goals have caused climate-related ecological damages under international and European climate directives and regulations, the French Environmental Charter, Energy Code and Civil Code. The Court later ordered the State to take immediate and concrete actions by 31 December 2022 to comply with its mitigation commitments under national laws and repair the climate-related ecological damages caused by inaction, including subtracting excess emissions in the subsequent year.

A similar proceeding could be commenced against the government of a State party to UNCLOS for a failure to reduce emissions relying on the ITLOS Advisory Opinion.

Corporate climate litigation

ITLOS was not asked to opine on the actions of corporations or individuals, however, the Tribunal’s findings could be leveraged in domestic forums against high-emitting corporations. For example, we could see States or community groups within States commencing proceedings against heavy-emitting corporations for private law (e.g. negligence) or human rights violations.

Whilst States ultimately hold the obligations under international law in respect of climate change, corporations and individuals may be subject to national legislation requiring action with regard to greenhouse gas emissions, in implementation of a State’s obligations to protect and preserve the marine environment, for example. The Tribunal’s findings could therefore empower States and community groups to pursue claims against heavy-emitting corporations to require greater emissions cuts.

Leveraging the ITLOS advisory opinion for a human rights claim against a heavy emitter is unlikely to see much success. The Tribunal did not consider any issues relating to human rights in the ITLOS Advisory Opinion. However, a private law claim seeking emissions reductions from said corporation could rely on the ITLOS Advisory Opinion as anthropogenic greenhouse gas emissions were considered a form of “pollution of the marine environment”.

INCREASE IN MORE STRINGENT AND ROBUST CLIMATE LEGISLATION AND NATIONALLY DETERMINED CONTRIBUTIONS

National laws and regulations play a crucial role in the implementation of States’ international obligations. All 193 Parties (192 countries plus the European Union) that have joined the Paris Agreement have introduced at least one law addressing climate change or the transition to a low-carbon economy.³

ITLOS’ findings on States’ obligations of due diligence may serve as a basis for States to strengthen their domestic legislative frameworks.

Potential State responses may include legislating greater emissions reduction targets, banning or limiting the development of high-emitting projects, offering economic incentives to shift demand to sustainable solutions, or submitting a revised Nationally Determined Contribution (NDC) that sets more stringent emissions reduction. A failure to implement a national system of legislative and enforcement mechanisms regulating emitting conduct may place a State in breach of its due diligence obligations. For example, in the recent Verein KlimaSeniorinnen Schweiz and Others v. Switzerland case, the European Court of Human Rights found that the Swiss Government had failed to effectively protect its people from the adverse effects of climate change. In reaching that decision, the Court noted that States must undertake measures to reduce greenhouse gas emissions, observing:

“By failing to act in good time and in an appropriate and consistent manner regarding the devising, development and implementation of the relevant legislative and administrative framework, the respondent State exceeded its margin of appreciation and failed to comply with its positive obligations in the present context. ([573])”

It is clear that a lack of action in respect of legislative, administrative, and enforcement action in relation to climate change will fall short of the due diligence standard expected of States. Therefore, we may see States proactively amending their legislative frameworks to reflect a stronger stance on emissions reductions and protection of the marine environment.

However, the flipside of increasing the stringency of climate legislation and NDCs is that such changes to the regulatory environment might trigger an investor-state claim (as discussed below).

IMPLEMENTING A MORE ROBUST APPROVALS PROCESS FOR EMITTING PROJECTS

While the Tribunal’s findings do not prohibit the approval and development of new projects or expansions to existing projects that are likely to generate GHG emissions, it may be that such projects are subject to more stringent approvals, including environmental approvals under domestic legislation. The Tribunal’s decision to allow States to assess cumulative emissions impact and a project’s interaction with other emitting activities, together with the shift in public sentiment to demand greater action against climate change, may see more public objections lodged to projects which generate substantial emissions.

Take for example the recent Living Wonders case⁴ in Australia where the Environmental Council of Central Queensland challenged two proposed coal mine expansions on the basis that the Minister made key legal errors when she refused to accept the serious and irreversible climate harm these projects were likely to cause. In her reconsideration of the decision to approve the expansions, the Minister indicated that even if the projects were to cause a net increase in emissions “any contribution from the proposed action to global GHG emissions would be very small. It is therefore not possible to say that the proposed action will be a substantial cause of the physical effects of climate change”.⁵ This is also known as the ‘drop in the ocean’ argument. Such an argument contends that the proposed expansion of these coal mines is insignificant relevant to the global problem of climate change and total emissions, and therefore cannot be directly responsible for the climate change or environmental impacts. The Full Federal Court of Australia upheld the Minister’s original decision to allow the expansions to proceed, permitting the ‘drop in the ocean’ argument to stand.

Now armed with the backing of the ITLOS Advisory Opinion and the position adopted in relation to the cumulative effects of projects, defences such as the ‘drop in the ocean’ argument may become harder to maintain.

Projects and project expansions that do not contribute, or contribute substantially less, to the realisation of a State’s NDC and contribute to cumulative impacts may face greater hurdles. Coupled with potential objections from the public, the evaluation of projects in light of the cumulative impacts of emissions may cause project delays or may cause companies to re-evaluate whether the project’s expected returns support the investment and time commitment to clear these regulatory hurdles. This may, in turn, slow the pipeline of projects for the private sector, and provide a greater push for only ‘green’ projects.

RISK OF INCREASED INVESTOR CLAIMS UNDER INVESTMENT TREATIES

As noted above, the Tribunal’s findings in relation to the due diligence obligation require States to adopt a national system of legislation, administrative procedures, and enforcement mechanisms to regulate activities that are likely to generate adverse effects on the marine environment resulting from greenhouse gas emissions.

A State’s adoption of more robust climate legislation may, however, increase the risk of potential claims from foreign investors under bilateral and multilateral investment treaties. For example, in 2023, Canada faced an investor claim by Westmoreland Mining Holdings LLC (Westmoreland) brought under the North American Free Trade Agreement. Westmoreland alleged that the Province of Alberta’s Climate Leadership Plan (CLP), which sought to phase out all electricity generated from coal by 2030, had reduced the lifespan of Westmoreland’s mines in Alberta and treated the claimant unfairly. Westmoreland further alleged that Alberta had treated it unfairly and in a discriminatory manner by providing transition payments to three coal-fired generating unit owners impacted by the CLP, and not providing such a payment to the claimant for its coal mine assets.

Several States in the ITLOS proceedings and the written statements in the ICJ climate change advisory opinion made submissions on the interaction of the advisory opinions with investment treaties and investor claims. Many argued that States must be able to enjoy a wide ‘margin of appreciation’ to regulate in the public interest, including with respect to the protection and preservation of the environment. As such, States should have the right to decide the domestic measures to be taken to limit temperature rise in line with their international obligations. Arguably, without recognising such a right, States will be disincentivised from taking actions required to address emissions reduction for fear of being subject to an investor-State claim.

AN OPPORTUNITY FOR STATES TO POTENTIALLY NEGOTIATE NEW CLIMATE AGREEMENTS WITH FURTHER OBLIGATIONS

Both the UNFCCC and UNCLOS are framework treaties. The nature of such treaties suggests that the agreement marks the start of cooperation, with further arrangements contemplated to be arrived at under the treaty. For example, in the case of the UNFCCC, the Paris Agreement was negotiated under its umbrella; in the case of UNCLOS, for example, there is the recently concluded Agreement on the Conservation and Sustainable Use of Marine Biological Diversity of Areas beyond National Jurisdiction (BBNJ treaty).

The Tribunal’s findings may encourage States to negotiate new climate agreements with obligations that go beyond those articulated in current agreements. Such an approach may help to strengthen climate action in ensuring that the agreements negotiated are ‘purpose-built’ to respond to the complexities of regulating GHG emissions and have international support.

 

Where to now?

In addition to the ITLOS Advisory Opinion, a further advisory opinion is being sought from the ICJ. The United Nations General Assembly, by consensus, has requested the ICJ provide an advisory opinion on the obligations of States under international law to protect the climate system from the adverse effects of anthropogenic greenhouse gas emissions for States and for present and future generations. The ICJ has also been asked to consider the legal consequences for States that have caused significant harm to the climate.

The ITLOS Advisory Opinion will play an important role in shaping States’ submissions and the Court’s response in the ICJ climate change advisory opinion. The question put to the ICJ is significantly broader than the question put to ITLOS. While the ITLOS Advisory Opinion was limited to the interpretation of UNCLOS, the ICJ has been asked to consider its question in light of general international law, including obligations under international human rights law, biological diversity, law of the sea and questions of State responsibility and liability. If the ICJ endorses ITLOS’ findings, the wave of greater climate action building from the ITLOS Advisory Opinion will only gain momentum, turning the tide on emissions reduction and public and private sector accountability.

 

DLA Piper’s Experience

DLA Piper was proud to appear before ITLOS in its climate change advisory opinion on a pro bono basis for the Democratic Republic of Timor-Leste in the most significant legal proceeding to date in relation to climate change. Our advocacy in the ITLOS Advisory Opinion resulted in DLA Piper being shortlisted for the Innovation in Responsible Business Award at the FT Innovative Lawyers Asia Pacific 2024 Awards.

The DLA Piper team at ITLOS comprised Stephen Webb (Partner, Brisbane), Gitanjali Bajaj (Partner, Sydney), The Hon. John Middleton AM KC as Senior Counsel (former judge of the Federal Court of Australia and Senior Advisor at DLA Piper, Melbourne), Eran Sthoeger Esq. as Junior Counsel (New York), and Claire Robertson (Solicitor, Brisbane).

DLA Piper is also advising the Governments of Timor-Leste, Tonga, and Solomon Islands in separate submissions in the ICJ climate change advisory opinion.

DLA Piper has a depth of experience in high profile public international law matters of historical significance. DLA Piper is a leader in understanding and advising on legal liability and the legal risks associated with the impacts of climate change. We advise governments and the private sector on climate change related matters, including being the provider of legal services for COP26 - United Nations Framework Convention on Climate Change Conference of the Parties. On commercial projects, the firm has been ranked No. 1 for turnover of closed renewable projects and M+A deals closed for a number of years now. If you would like further information about the advisory opinions proceedings before the international courts, please contact Stephen Webb or Gitanjali Bajaj.