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ICC, with the support of its Commission on Environment and Energy, co-hosted an official side event on Dispute Resolution under the Paris Agreement in the margins of the recent COP23 Climate Change Negotiations in Bonn, Germany. Nicola Swan, associate at Debevoise & Plimpton LLP in London and Nicola Peart, associate at Three Crowns LLP, London, report on the discussions relating to the significance of the international climate regime for state-state, investor-state and commercial dispute resolution and the ways in which those legal mechanisms can contribute to achieving the objectives of the Paris Agreement.
COP23, Bonn, 16 November 2017
Since the adoption of the Paris Agreement two years ago in December 2015, there has been increasing focus by signatory States on the mechanisms that can enable implementation of, and promote compliance with, the Paris Agreement – a multilateral agreement, ratified by 174 of the 197 Parties to the agreement, that paves the way for reducing global greenhouse gas emissions and tackling the impacts of climate change. In line with this focus, ICC co-hosted, along with the International Bar Association (IBA), the Permanent Court of Arbitration (PCA), and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), an official side event at the recent COP23 international climate negotiations in Bonn, Germany.1
The catalyst for hosting this official event within the United Nations Framework Convention on Climate Change (UNFCCC) negotiation venue itself was to engage treaty negotiators and other stakeholders in conversation with lawyers and academics that specialise in international dispute resolution.
In respect of inter-state dispute resolution, both the 1992 UNFCCC and the 2015 Paris Agreement already contain matching provisions for the resolution of disputes between state parties.2 These include negotiation, the appointment of a conciliation commission, the formal reference to the International Court of Justice (ICJ), and resolution through arbitration. An ‘Annex’ on arbitration is proposed in the treaties but has never been drafted, nor has any Party so far invoked the contentious or advisory jurisdiction of an international court or tribunal to resolve a dispute specifically concerning climate change. Nonetheless, there are, as the COP23 panel discussed, real opportunities for dispute resolution procedures to be used by states to incentivize compliance with and enable enforcement of the Paris Agreement and to develop norms that complement the international negotiations. Dispute resolution involving non-state actors, including investors in climate change mitigation or adaptation projects, can also be utilised in a way that reinforces the international treaty framework and spurs ambitious development and implementation of domestic law on climate change.
These opportunities were foreshadowed in the IBA’s Taskforce on Climate Change Justice and Human Rights 2014 Report, which recognized that international courts and tribunals provide important fora for the resolution of inter-state disputes on climate-related matters.3 The potential utility of an ICJ advisory opinion was supported by Professor Philippe Sands at a lecture at the UK Supreme Court in 2015,4 and by Professor Daniel Bodansky in a paper published in August 2017.5 In similar terms, the potential role for arbitration of climate related disputes was considered at a conference hosted by the major arbitral institutions in the margins of the Paris Agreement negotiations in December 2015,6 and the role for international law and arbitration in supporting the ‘climate change policy gap’ was the subject of a further conference hosted by the SCC in November 2016.7
Building on this momentum, the focus of the COP23 panel, chaired by Wendy Miles QC, Vice President of the ICC Court and Partner at Debevoise & Plimpton LLP in London, was how to ensure and incorporate a legitimate dispute resolution process under the Paris Agreement, the pros and cons of recourse to different types of international dispute settlement, the significance of international dispute resolution involving a variety of actors, and the perspectives of developed and developing states on these issues.
First, Kate Cook, barrister at Matrix Chambers and Board Member of Legal Response International (LRI),8 presented a proposed ‘checklist’ of issues that are likely to implicate the legitimacy of any dispute resolution process under the UNFCCC and the Paris Agreement, including:
Cook highlighted the importance of monitoring the impacts of all types of dispute settlement on delivery of pledges made by State Parties to reduce national emissions and adapt to the impacts of climate change (‘Nationally Determined Contributions’ or ‘NDCs’), including in particular investor-state arbitration. Cook suggested principles recognised under the Paris Agreement that could be relevant to the conduct and outcomes of arbitration, such as:
Cook proposed a study that assesses the extent to which different types of dispute resolution mechanisms are contributing to, or detracting from, attainment of the goals of the Paris Agreement.
Professor Daniel Bodansky, Professor of Law at Arizona State University and former climate change coordinator and attorney-advisor at the US State Department, then articulated the potential benefits and challenges of requesting the ICJ to provide an advisory opinion on climate change, recognising that, while adjudication has much to recommend it, climate change could not be solved through adjudication alone and that the political agreement of states was paramount. For similar reasons, an advisory opinion would bring a paradigm shift in international climate law, but it could make progress on certain issues that depend on an international legal analysis, such as defining the duty to prevent transboundary harm in the climate context, or elaborating procedural criteria for states’ commitments to greenhouse gas emissions reductions.
Judith Levine, Senior Legal Counsel at the Permanent Court of Arbitration, next provided a thorough overview of existing and ongoing environment related arbitrations involving states. Levine mentioned inter-state cases including the Indus Waters Kishenganga arbitration between Pakistan and India in which the arbitral tribunal engaged with complex scientific information when solving a dispute on transboundary natural resource allocation between two states. She also referred to the recent PCA-administered South China Sea arbitration in which the tribunal made use of independent scientific experts when determining environmental claims and considered the interpretation of a number of environmental obligations under the UN Convention on the Law of the Sea (UNCLOS), including by reference to other international environmental treaties. At least one independent commentator has noted that this might pave the way for arbitral tribunals to interpret UNCLOS with reference to the UNFCCC and the Paris Agreement. Levine also noted that three state parties have already made declarations under the UNFCCC agreeing to submit disputes to formal dispute resolution, namely, the Netherlands (confirming it accepts compulsory jurisdiction before either the ICJ or in arbitration), Tuvalu and the Solomon Islands (both electing arbitration). Finally, Levine mentioned that conciliation is already an option for all states under the Paris Agreement and reflected on the PCA’s experience administering recent interstate and mixed conciliations.
Annette Magnussen, Secretary General of the Arbitration Institute of the SCC identified relevant examples of investor-state dispute resolution dealing with environmental issues, particularly in the context of promoting sustainable investment. Magnussen reiterated that economic development should complement, and not compete with, ambitious responses to climate change. To encourage cross-fertilisation of ideas and expertise amongst the international investment and climate change communities, the SCC has recently launched the Stockholm Treaty Lab Competition,9 which challenges multidisciplinary teams to design a multilateral treaty that encourages investment in climate change mitigation and adaption.
Finally, Dr. Annemarieke Vermeer-Künzli, Legal Counsel at the Ministry of Foreign Affairs of the Netherlands, commented on the discussion from the perspective of the Dutch Government. The Netherlands is one of three states to have formally made an election under the dispute resolution provisions of the UNFCCC, confirming its acceptance of both ICJ jurisdiction and arbitration for resolution of disputes arising under that treaty. This determination reflects an obligation in the Dutch Constitution to contribute to the development of the international legal order through the promotion of peace and justice. The Netherlands has also publically stated that its preference is for judicial settlement under multilateral agreements, with the ICJ being particularly suitable for dealing with disputes between states.
Alongside increasing interest in these issues, the leadership of the ICC Commission on Arbitration and ADR announced the creation of a Task Force on Arbitration of Climate Change Related Disputes at its annual Paris meeting on 26 April 2017.
The Task Force, to be co-chaired by Wendy Miles QC and Patrick Thieffry (Partner, Thieffry & Associés), will work closely with the ICC Commission on Environment and Energy. The Task Force will explore how ICC Arbitration and other dispute resolution services are currently used to resolve climate change related and associated energy and environmental disputes. It will also consider whether it would be appropriate for ICC to adopt any additional guidance and/or a standard arbitration clause or any other dispute resolution clauses to assist future users of ICC Arbitration and other dispute resolution services dealing with climate related disputes.10
See the ICC press release of the event at https://iccwbo.org/media-wall/news-speeches/role-dispute-resolution-supporting-paris-climate-agreement/. ICC is the UNFCCC Focal Point for business and industry, acting as a liaison between the Parties and business at UN climate negotiations. ICC was granted Observer Status at the UN General Assembly in 2016 and is the first private-sector organisation to be admitted formally into the UN system. For more information on ICC’s position on climate change see the policy statement available at https://iccwbo.org/publication/icc-perspective-on-undccc-climate-negotiations-at-cop23/.
United Nations Framework Convention on Climate Change, 9 May 1992, Article 14.2)(b); Paris Agreement, 12 December 2015, Article 24.
International Bar Association, Climate change Justice and Human Rights Task Force Report ‘Achieving Justice and Human Rights in an Era of Climate Disruption’, July 2014, p.13, available at: https://www.ibanet.org/PresidentialTaskForceCCJHR2014.aspx.
P. Sands QC, United Kingdom Supreme Court Lecture, ‘Climate Change and the Rule of Law: Adjudicating the Future in International Law’, at p.16, available at: https://www.supremecourt.uk/docs/professor-sands-lecture-on-climate-change-and-the-rule-of-law.pdf.
D. Bodansky, ‘The Role of the International Court of Justice in Addressing Climate Change’, Arizona State Law Journal, Volume 49, 2 August 2017, at pp.23-24.
International Bar Association, Summary Note, ‘Arbitration has a greater role to play in climate change disputes’, 7 December 2015, available at https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=5bac3a2d-de37-4d69-992a-aa974fb4fabb. A collection of the papers presented at the conference in December 2015, edited by Wendy Miles QC, is available at http://store.iccwbo.org/dispute-resolution-and-climate-change and is featured in the ‘Book Review’ section of this issue of the Bulletin.
Arbitration Institute of the Stockholm Chamber of Commerce, Summary Note, ‘Bridging the climate change policy gap: how investment protection and arbitration can promote green investments', 25 November 2017, available at http://www.sccinstitute.com/about-the-scc/news/2016/bridging-the-climate-change-policy-gap-how-investment-protection-and-arbitration-can-promote-green-investments/.
Legal Response International is a charity that provides free legal support to poor and particularly climate vulnerable developing countries as well as civil society observer organisations attending the international negotiations on climate change. For more information see http://legalresponseinitiative.org/.
For further information on the Stockholm Treaty Lab, see http://stockholmtreatylab.org/.
ICC National Committees & Groups have been requested to nominate members for the newly formed ICC Task Force on Climate Change Related Disputes. For more information on the new ICC Task Force on Arbitration of Climate Change Related Disputes please contact Dr. Hélène van Lith, Secretary to the ICC Commission on Arbitration and ADR at email@example.com.