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Copyright © International Chamber of Commerce (ICC). All rights reserved.
( Source of the document: ICC Digital Library )
by Wendy Miles QCPartner, Debevoise & Plimpton, London; Vice Chair, IBA Arbitration Committee;Chair, IBA Arbitration Committee Working Group on Climate Change Justice and Human Rights;Vice-President, ICC Court of Arbitration
“[A]s members of the IBA you are not only lawyers, you are also “internationalists”; a group that understands the importance of coming together across countries and expertise to share experiences and forge solutions to common challenges.” Christine Lagarde, Managing Director, IMF IBA, Washington DC, 2016
Climate change is a global issue that demands a multinational approach to change. As “internationalists” and lawyers, we are uniquely placed to contribute to combating climate change on a global level. It is incumbent upon us to come together with other global professional communities from scientists to politicians, academics to engineers, to address this challenge, and in particular, to share our experiences and to forge solutions.
To that end, an extraordinary group of international dispute resolution lawyers came together during COP 21 in Paris in November 2015 to explore the role of international arbitration in facilitating the implementation of climate change objectives. This was the inaugural UNFCCC Conference of the Parties (“COP”) side event focussed on the role of international arbitration. As a group of international lawyers, the participants brought new perspectives and the problem solving skills for which they are renowned to the complex and potentially overwhelming challenges inherent in addressing climate change. As individuals, they innovated, created and inspired new perspectives and new approaches to dispute resolution challenges in this field.
In lectures and essays prepared for this COP 21 event and publication, each one of these international lawyers has explored ways in which climate change issues might be factored into existing processes and systems of international dispute resolution, in particular international arbitration.
The ensuing studies and chapters in this book follow the three conference segments: Chapters 2 to 6 introduce the challenges and opportunities presented by climate change for international dispute resolution lawyers; Chapters 7 to 9 explore existing contractual climate change obligations and commitments incorporated in international contractual agreements; Chapters 10 to 13 explore climate change obligations of states (and potentially investors) arising out of bilateral and multilateral investment treaties; Chapters 14 to 17 look at the broader practice of international law and examine how the enforcement mechanisms of the Paris Agreement interpreted in light of international law, are to be given effect by states through treaty implementation, monitoring and enforcement mechanisms and by non-state actors through human rights, self-determination and other international law protections of individuals or groups; and finally, Chapter 18 provides a prologue of sorts with a retrospective from COP 12, demonstrating the extent of the now urgent challenge facing the international community.
It is evident from Chapters 2 to 6 that international law and policy issues arising out of both the effects of climate change and the global community’s response to it will directly impact on the practice of international dispute resolution. The ongoing work of the IBA Task Force on Climate Change Justice and Human Rights highlights the particular role of international arbitration, described by David Rivkin in Chapter 2 as “an important catalyst in the wider movement”. International arbitration provides a neutral and flexible form of international dispute resolution, which upholds party autonomy. It offers a form of credible, final and binding dispute resolution that may allow for participation of all stakeholders, not just state parties. It may arise in the context of climate change related issues by virtue of corporate or state contractual responsibility and risk [Page9:]allocation, pursuant to bilateral or multilateral investor state dispute settlement claims, or in a state-state context to the extent provided for in treaties or other international instruments.
In order to legitimise international arbitration in the context of climate change, where disputes may involve control and ownership of natural resources and territory, international boundaries, fundamental environmental protection and the human rights of individuals and entire groups of indigenous peoples or affected populations, the role of transparency and the participation of all stakeholders, where appropriate, must be given careful consideration. Rivkin explores the opportunity to expand the reach of investment and trade protection to improve transparency, accessibility (of non-investor or state parties) and the scope of disputes under future fair trade agreements and bilateral investment treaties, in an effort to provide a single dispute resolution forum capable of addressing climate change issues in this context. To that end, the Stockholm Chamber of Commerce Court (“SCC”) recently launched the Stockholm Treaty Lab prize, a focused initiative to draft a model international investment treaty that would maximise the potential to increase the flow of green foreign direct investment, encourage investments in climate change adaptation and mitigation, and deal with accessibility and transparency issues.
Whereas Chapter 2 sets out the case for international arbitration as a suitable dispute resolution mechanism for potential future climate change related disputes, Chapter 3 provides a comprehensive survey of recent arbitration cases that already have resolved or are resolving predominantly environmental disputes through international arbitration. Judith Levine, of the Permanent Court of Arbitration (“PCA”), introduces the PCA’s Optional Rules for Arbitration of Disputes Relating to Natural Resources and/or the Environment, and outlines the multitude of cases already administered by the PCA under these Rules. These cases range from inter-state disputes, where parties have selected the PCA by treaty or agreement instead of an alternative form of dispute resolution, such as the International Court of Justice (“ICJ”), as well as investor state disputes pursuant to bilateral or multilateral investment agreements, other multilateral agreements, and contractual disputes.
One such multi-lateral agreement is the United Nations Framework Convention on Climate Change (“UNFCCC”); Levine discusses the PCA’s administration of disputes pursuant to the UNFCC's Kyoto Protocol involving the Clean Development Mechanism and joint implementation claims, pursuant to the arbitration clause in the International Emissions Trading Association’s Model Emissions Trading Agreements. Similarly, investments funded by the Green Climate Fund, also pursuant to the UNFCCC, provide for arbitration in their model contracts (as discussed at Chapter 9). In terms of future potential of PCA arbitration in relation to climate change, Levine observes that the Abyei Arbitration involved an intra-state territoriality and natural resources dispute between a state and a people within its borders, and was successfully arbitrated pursuant to the PCA Rules for Arbitration Involving One State Party.
Despite an existing international dispute resolution framework being firmly in place procedurally to address climate change related disputes, in particular in the context of contractual or investment and trade treaty disputes, the nature of the substantive causes of action that are not based on a contract or treaty remain challenging. Affected populations, groups and individuals, the stakeholders often most severely impacted by the effects of climate change, do not, in the ordinary course, have contractual or investment treaty protections. Protections in that context are limited to protections of individual rights and indigenous peoples under international law, subject to human rights bodies including the Inter-American Court of Human Rights, for example. Roger Martella, in Chapter 4, reviews existing national and international court claims commenced by such groups, and analyses the nature of the underlying non-contractual or treaty causes of action. These are grounded in tort, national statutory obligation or a form of public trust or guardian responsibility of the state and, more recently, human rights.
Recent cases including Urgenda v The Netherlands, Kelsey Juliana & Ors. v. the United States of America (the “Our Children’s Trust” litigation), and Philippines v Chevron et al, demonstrate the broad scope of possibility for climate change claims, engaging numerous causes of action and fora. Non-governmental organisations (“NGOs”) and other human rights organisations continue to pursue enlargement of such litigation. Many of these and investment treaty claims relating to environmental and climate change issues, including those in which the claimants are unsuccessful, are starting to build a body of international law to complement and supplement international policy that underlies the Paris Agreement.
As to the enforceability of the rights and obligations contained in the Paris Agreement itself, this too presents challenges, as set out in Chapter 5 by Antonio La Vina and Earl Rivera-Dolera. La Vina and Rivera-Dolera, who represented the Philippines in the COP 21 negotiations, analyse the nature and enforceability of the Paris Agreement provisions from the point of view of one of many vulnerable island states. The people of the Philippines stand to be significantly affected by climate change due to the geography of the islands, and are constrained in their ability to deal with its consequences alone. La Vina and Rivera-Dolera explore potential claims within the framework of [Page10:] the Paris Agreement and arbitration, that could be brought by climate change vulnerable countries against large industrialised states or corporations that have been responsible for large portions of greenhouse gas emissions.
Regarding the mechanism for those claims, Article 14 of the UNFCCC expressly provides for resolution of disputes between parties by the ICJ or arbitration, based on an arbitration annex to be entered into by the state parties to the UNFCCC. To date, no arbitration annex to the UNFCCC has been agreed. Nevertheless, the provision for settlement of disputes under the Paris Agreement, at Article 24, stipulates that “[t]he provisions of Article 14 of the Convention [i.e. the UNFCCC] on settlement of disputes shall apply mutatis mutandis to this Agreement.“
It is clear that the Paris Agreement contains significant substantive commitments by state parties, both in terms of the ultimate goal of global temperature rise to well below 2 degrees celsius and in states‘ obligations to take action to achieve that goal. Without a clear dispute resolution framework for the resolution of disputes, their binding and enforceable nature remains uncertain. Moreover, as explained in Chapter 5, without a framework for non-state actors to participate in claims under the Paris Agreement, affected peoples and populations will be unable to hold states accountable, at least directly pursuant to the Paris Agreement, for their Paris Agreement commitments and corporations will be unable to be held accountable for conduct that puts a state in breach of the Agreement (i.e., causing it to fail to meet its emissions targets). However, a carefully drafted arbitration annex could ensure that Paris Agreement claims involve all stakeholders in achieving climate change objectives and able to participate in proceedings.
The broader implementation and enforceability framework of the Paris Agreement and UNFCCC, is explored against the global enforcement framework of the OECD Anti-Bribery Convention by Nicola Bonucci, Legal Director, Organisation for Economic Cooperation and Development (“OECD”), at Chapter 6. The success of the OECD Convention in changing not just international policy, but also practice in relation to bribery and corruption, is attributable to the comprehensive monitoring and enforcement regime put in place by the administering body. Parallel national statutes in key investing states, including the Foreign Corrupt Practices Act in the US and the Proceeds of Crime Act and Bribery Act in the UK, also play a major contributing role to changing international behaviour. Such a model, involving domestic regimes implementing international commitments, could be applied to the global challenge of climate change.
The OECD Convention itself heralded a change in international policy by state parties. The same international policy has been adopted and applied by several, but no means all, arbitral tribunals in cases that gave rise to corruption and bribery issues. World Duty Free v Kenya is perhaps the most well-known of these; the tribunal refused to permit the investor to benefit from investment treaty protections on the basis that it had procured its investment opportunity by virtue of a bribe, which was inconsistent with international public policy. By refusing to condone behaviour in breach of international policy on bribery and corruption, the tribunal advanced the objectives of the OECD Convention.
Similarly, in the recent Phillip Morris v Uruguay arbitral award, the tribunal referred to international policy reflected in the WHO Framework Convention on Tobacco Control, to which both the investor’s home state and the host state were parties, as impacting the legitimate expectations of the investor. By analogy, in light of the obligations and commitments contained in the Paris Agreement, there is scope for investor state and commercial arbitral tribunals to advance the Agreement’s objectives by ensuring claimant and respondent parties behave consistently with the international policy reflected therein.
Chapters 7 to 10 move to the specific opportunity to advance global climate change objectives through environmental and/or climate change related commitments within commercial contractual terms. Such contractual commitments may be driven by state parties to investment agreements, international financial institutions (including in particular development banks) in providing financing or guarantees, or insurance companies as a prerequisite to coverage. Increasingly, corporate investors are themselves including specific environmental protection representations and warranties, akin to anti-bribery and corruption representations and warranties. In part, corporate investors are responding to demands from counterparties, but often the provisions are driven by the investors. Some seek clearly to allocate risk arising out of climate change, especially where a state party is involved. Others are simply capitalising on a market opportunity, acting as necessary to retain and attract investors and shareholders, based on their ‘green’ credentials, for example their compliance with the Principles on Responsible Investment. Many corporate investors are investing in climate change mitigation and adaptation projects that require contractual commitment to attaining climate change objectives, such as projects funded by the Green Climate Fund.
The world’s largest business representative body, the ICC, devised its corporate sustainability principles over a decade ago, in the ICC Business Charter for Sustainable Development. At Chapter 7, Andrea Bacher explains how this and other ICC initiatives, driven by the ICC’s corporate members, advance climate change objectives through either corporate social responsibility (“CSR”) standards or through express and binding contractual commitments. Corporate commitment is critical; representatives of international institutions, development funds and policymakers agree that in order for the Paris Agreement objectives to be attained, corporate investors must drive that change and capital markets must respond in order to fund it.
As to current practice in negotiating and enforcing actual environmental and climate change related contractual obligations, at Chapter 8 Martin Wilder offers some practical observations as to the types of projects that commonly incorporate such terms and challenges to their enforcement. Some of the observed challenges apply more broadly in relation to contracts/contractual terms, such as different cultural approaches to the finality of contractual terms. Others are unique to the climate change context. Wilder gives examples of several climate change initiatives originating with international institutions, such as the Clean Development Mechanism under the Kyoto Protocol. He points out that the intersect between international treaty making and private contractual negotiation may give rise to challenges in respect of choice of law, enforceability expectations and enforcement mechanisms. These are not new challenges to investment treaty arbitration lawyers, and clearly the learning and jurisprudence in investor state arbitration will be tremendously important going forward as private-public international partnerships seek to implement the Paris Agreement commitments.
One such partnership initiative is the Clean Climate Fund, established pursuant to the UNFCCC. At Chapter 9, Gerd Droesse, legal counsel for the Green Climate Fund, explained the special features of the Fund’s role and work. The Green Climate Fund enters into agreements with governments and international organisations governed by international law. The Fund’s role is to “promote the paradigm shift towards low emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change”. This stated objective broadly encompasses much of the work conducted by the private and public sectors, separately or in partnership, in relation to the Paris Agreement. Through initiatives such as this, it is envisaged that corporate and state behaviour will change to permit the necessary transition from high greenhouse gas emitting activities to more sustainable development, provided that all stakeholders are accountable for their action and inaction. As to enforcing accountability, the Green Climate Fund provides for PCA arbitration in its agreements, as discussed in Chapter 2.
Regarding environmental and climate change related contractual obligations between states and private parties, at Chapter 10 Crenguta Leaua provides a thorough and comprehensive analysis of privatization agreements, concession agreements, private-public partnerships and public procurement agreements. Frequently, these types of agreements relate to use of natural resources or land, infrastructure or provision of power. These are all potentially high greenhouse gas emission enterprises, and require specific monitoring and attention by state parties in order to meet their new nationally determined contributions under the Paris Agreement. Even prior to the Paris Agreement, the vast majority of these agreements appear to have contained some form of environmental obligations on the part of the investor and protection on the part of the state. Existing environmental obligations in this context are usually subject to commercial arbitration agreements, meaning some precedent exists also for arbitrating environmental or climate change related disputes arising out of these projects.
A major challenge for climate change related claims is that, as opposed to environmental claims, it is not a straightforward exercise to isolate causation and ascertain harm because the damage is not localised (or even necessarily local). Climate change harm is first and foremost caused by increased greenhouse gases detrimentally affecting the entire atmosphere over time. The harm to the atmosphere is itself not localised and its cause is not specifically identifiable. The effect of the damaged atmosphere is to increase climatic temperatures, which may have devastating weather and environmental consequences in particular localities that are otherwise unrelated to where the greenhouse gas emitting project took place. Going forward, it will be interesting to observe how states adapt these private contracts to enlarge investor obligations and state rights in order to ensure that specific investments do not unduly, excessively and unexpectedly contribute to the host state’s own greenhouse gas emissions so as to threaten the state’s ability to meet its new nationally determined contribution obligations under the Paris Agreement.
Leaua observes that environmental protections in investor-state contracts are already enlarging and suggests potential incorporation of international public policy obligations through a potential ‘reverse umbrella clause’. For investor state arbitration, it is sometimes argued that umbrella clauses should be interpreted as having the effect of incorporating the parties’ private contractual obligations as treaty obligations; Leaua suggests that a reverse phenomenon may arise from effective incorporation of state international policy obligations into private contracts.
As to investor state treaty obligations themselves, Chapters 11 to 14 consider the existing landscape in drafting and implementation of bilateral and multilateral investment treaties in the context of climate change. As explained by Anna Joubin-Bret at Chapter 11, a balance must be struck between the state’s duty to protect the environment (and now, post-Paris Agreement, to comply with its new nationally determined contribution commitments) and the foreign investor’s legitimate expectation of and right to protection of its investment. As Joubin-Bret points out, the concept of sustainable development has already found its way into new generation international investment agreements with the “central objective of protecting the environment against negative impact of foreign investment projects on the environment and on exhaustible natural resources.” It is the finely tuned balance between attracting foreign investment for continued development against the need to protect local environmental aspects and meet international climate change objectives that appears to be emerging in modern investment treaties.
However, Joubin-Bret further observes that even traditional bilateral investment treaties only extended protection to those investments made “in accordance with the laws and regulations” of the host country. If the host state has ratified the Paris Agreement, its obligations thereunder form part of its laws and its features are incorporated into domestic law. This opens the door for loss of protection in respect of investments that are inconsistent with or cause the host state to be in breach of its new nationally determined contributions commitments under the Paris Agreement. The global coordination of each Paris Agreement State Party’s national commitments may even alleviate trade and investment concern that high polluting industries deliberately establish their plant infrastructure in those states with the lowest environmental standards.
There is an important distinction between ensuring that investors proceed in accordance with environmental (and increasingly climate change) obligations in the course of their investments and the use of international investment treaties as a means to impose on investors and state parties an overarching international environmental tribunal. According to Joubin-Bret, this is not the role of investment treaties; investment protections can and should be enforced in a manner that is consistent with environmental and climate change objectives and commitments, while continuing to focus on the protection of the investment.
Potential future trends in international investment agreements are explored by Jeremy Sharpe at Chapter 12. Sharpe reiterates the challenges involved in drafting treaties to provide for environmental (and climate change) protections. Focused on a US perspective, he examines recent experiences under NAFTA and likely approaches under newer US treaties. Sharpe concludes with observations about future trends, including that the landscape going forward is likely to be influenced by the fact that “an increasing number of States have both foreign investors and domestic prerogatives to protect”, due to the global economy no longer being “as neatly divided between capital-importing and capital-exporting States”.
Laurence Boisson de Chazournes expands the international investment agreement discussion at Chapter 13 to consider the World Trade Organisation (“WTO”) and Global Agreement on Trade Tariffs (“GATT”). Like Joubin-Bret, Boisson de Chazournes explores the preambular treaty language, here in GATT, and the meaning of its all-encompassing wording for climate change protections. She discusses the environmental norms and standards that have been taken into account by international courts and tribunals in the interpretation of broader trade treaties, focusing on several pertinent ICJ cases. The general exceptions to environmental protection under Article XX of the GATT have led to a body of jurisprudence that is potentially relevant to the Paris Agreement and climate change objectives generally. Poignantly, this jurisprudence reveals an evolutionary approach to interpretation of treaty obligations, underlining that “the [GATT] Treaty is not static, and is open to adapt to emerging norms of international law.” This is consistent with the approach of the ICJ in environmental cases. The fast-paced development of climate change science and technology demands an evolutionary approach to the law governing international objectives and policy.
Again, in the context of international courts and tribunals under broader trade agreements, the jurisprudence supports interpretation of treaty obligations to reflect current international law and policy. International policy has moved in relation to climate change, reinforced by the Paris Agreement, and it is enormously encouraging to observe that precedent already exists in international awards and judgments that is broad enough to permit application to climate change obligations.
Boisson de Chazournes goes on to consider the use of experts in environmental dispute resolution cases, traversing cases where they have been used as counsel, independent experts and to assist the tribunal. The PCA Optional Rules for the Arbitration of Disputes Relating to the Environment and/or Natural Resources also provide for election of environmental experts, including non-lawyers scientists or geographers, as tribunal members. She also examines counterclaims in investment treaty arbitration, analysing the Perenco v Ecuador case as a useful precedent in the context of [Page13:] climate change claims. Finally Boisson de Chazournes considers res judicata and environmental claims, citing the Indus Waters Kishenganga Arbitration as an example of an arbitral tribunal going beyond res judicata to permit its Partial Award in the future to take into account future variations and minimum water flow requirements in a changing environmental landscape.
Chapters 14 to 17 expand the analysis from private and public rights and obligations pursuant to contract or treaty, and examine rights and obligations by states and non-state actors under public international law. At Chapter 14, Thomas McInerny examines treaty effectiveness more broadly and considers the framework for ensuring that the global and country specific commitments of the Paris Agreement are achieved. Compliance, implementation, enforcement and dispute resolution are identified as the chief approaches to ensuring international treaty objectives are met. McInerny observes that multi-lateral treaties (outside trade and investment), often employ procedures for non-compliance, including monitoring and reviewing the state’s implementation objectives, which are facilitative rather than coercive.
The Kyoto Protocol provided for both reporting, monitoring and review through its Facilitative Branch and a distinct enforcement mechanism through its Enforcement Branch. The COP 21 negotiations firmly leaned towards the more facilitative approach for the Paris Agreement. McInerny distinguished enforcement from dispute resolution, noting that “the former relates to securing states’ observance to the rules, while the latter pertains to disputes between two or more states that may occur within a treaty regime.” As indicated earlier, the UNFCCC provides for a dispute resolution mechanism at Article 14(2), providing for disputes to be submitted either to the ICJ or to arbitration. McInerny suggests that despite the high stakes in climate change and the fact that climatic conditions and regulatory imperatives will likely grow, “it seems unlikely that the tendency to diplomacy will give way to much greater levels of formal interstate dispute resolution.” This perhaps does not take into account the imperatives of the most vulnerable, low lying island states for which diplomacy will not suffice in time. Notably, it is low lying island states that have notified their preference for an arbitration annex pursuant to the UNFCC and this may accelerate under the Paris Agreement.
As to the role of non-state actors, McInerny observes that they “can have as much – if not far greater – influence on the achievement of regulatory aims as those of state actors.” This is achieved through “[d]omestic regulation and enforcement of treaty norms’ at state level as against individual actors. McInerny’s observation that “[t]he role of private actors in advancing treaty norms and goals is gaining increased recognition in international law”, accords entirely with the experience of the OECD in relation to enforcement of bribery and corruption norms and, more recently, in the area of business and human rights.
At Chapter 15, Kate Cook focuses her analysis of the Paris Agreement on the importance of a progressive approach to its implementation and enforcement. Cook points out that meeting the nationally determined contributions alone will not, based on current scientific evidence, keep global temperatures “well below 2˚C above pre-industrial levels” or indeed “limit the temperature increase to 1.5˚C above pre-industrial levels.” Cook notes that the Paris Agreement acknowledges the significant gap in existing targets and the Agreement’s objectives, and argues that in order to achieve the stated objective there needs to be a progressive direction of travel. That direction must continue to apply the best science available but, in addition, individual states must increase their targets over time and accelerate pace towards a low carbon economy.
Such increasing ambition is inherent in the Paris Agreement itself. In this context, Cook reiterates the destination of the Paris Agreement as being “to achieve, in accordance with the relevant provisions of the Convention, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.” The Paris Agreement is intended to “aim to strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty.” Cook also points out that the language of the Paris Agreement is forward facing: “Parties may not act regressively, or even stand still, beyond what is permitted in the Agreement.” In particular, each nationally determined contribution must set more ambitious targets than any earlier one.
Cook acknowledges that the language of the Paris Agreement is also aspirational, stating that Parties “intend to achieve”, “pursue mitigation measures” and “should take the lead”, but also points to the mandatory language of the preparation, communication and maintenance requirements in terms of national determined contributions and their follow-on. Whilst there is no specific timescale, Article 4(1) does refer to the need for rapid reduction “in accordance with best available science”. Ultimately, progress will be monitored by the global stocktake provided for at Article 14 of the Paris Agreement. As Cook notes, the outcome of the global stocktake “shall inform Parties in updating and enhancing, in a nationally determined manner, their actions and support in accordance with the relevant provisions of this Agreement, as well as in enhancing international [Page14:] cooperation for climate action.” The first stocktake is scheduled for 2023, then every 5 years thereafter. In turn, underpinning the global stocktake, are specific transparency measures. These, according to Cook, “will clearly be critical in allowing Parties to have confidence in each other individually and collectively and to meet best practice or learn from other’s experience in an open way.”
Cook goes on to examine guiding principles under the Paris Agreement and UNFCCC, the responsibility not to cause damage to the environment of other states, prevention, precaution and sustainable development and equity, all key principles enshrined in the Paris Agreement that are consistent with its progressive approach. Moreover, Cook considers the duty to cooperate and progress that is inherent in all international environmental regimes, and refers to the Pulp Mills ICJ decision. She points out that “[i]n the case of climate change, there was early and explicit recognition that effective action could only be taken on a cooperative and collective basis.” Cook also considers the duty of good faith and transparency, both of which are recognised in the Paris Agreement and central to its success. She states that transparency principles are “buttressed by international principles”, but the same could be said for duties to cooperate, progress and act in good faith.
Cook finally examines the legal implications of delay, discussing the Urgenda v Netherlands decision in that context, which found that “the State has a duty of care to mitigate as quickly and as much as possible”, and also the right to regulate. Regarding the latter, she considered the impact of foreign investors on a State’s exercise of its right to regulate to meet its nationally determined contribution requirements, highlighting Parkerings-Compagniet v Republic of Lithuania, which found that “an investor must anticipate that the circumstances could change, and thus structure its investment in order to adapt it to the potential changes of legal environment.”
In Chapter 16, Professor Michael Gerrard discusses the array of disputes arising out of climate change regulation, including mitigation, energy transition, adaptation, liability and compensation and geoengineering. Under each of these heads, Gerrard considers the current landscape and disputes that are likely to arise in the future. In the context of mitigation, he identifies the significant event of adoption of a carbon market in several States, and the likelihood of more disputes arising out of those. He too refers to the Urgenda v Netherlands decision as an example of national court litigation challenging the State’s failure adequately to mitigate climate change. Gerrard warns that the transition from fossil fuels to renewable energy sources will give rise to disputes as “[m]any existing facilities will need to be closed” because “[u]nder most of the [Paris Agreement] projections, the world is going to have to stop burning fossil fuels before the end of the century”. Adaptation will lead to more litigation arising out of state failure to adapt, as seen in the Leghari v Federation of Pakistan case.
Gerrard anticipates interruption to agricultural activities, crops and livestock, and movement of food production and shipping patterns worldwide. All of this trade change and disruption opens the way for new and more international disputes. As to liability and compensation, the most vulnerable and detrimentally affected States affected by climate change will require some form of resettlement or accommodation, perhaps accompanied by compensation.
At Chapter 17, Justice Baragwanath casts the net most broadly, exploring other international fora to uphold the legitimacy and enforceability of the Paris Agreement. Baragwanath refers to the singular success of the Montreal Protocol 1987 (which is accompanied, as of 2016, by a powerful protocol in the form of the Kigali Agreement) in reducing chloroflourocarbons affecting the ozone layer. He compares the magnitude and complexity of the problem of dealing with CO2 in the atmosphere, with that of chloroflourocarbons, in order to illustrate the magnitude of the challenge.
Baragwanath calls “[t]he invisible CO2 problem … more insidious than terrorism”. He points out that “deficiencies in the international response to terrorism illustrate both the difficulty and the urgency of creating effective systems to deal with” climate change. He then proceeds to explain how there has been a singular failure to “make and enforce international criminal law” and “agree on a simple definition of a crime of terrorism at international law that would allow across those State borders a properly coordinated international response by legal process.” The same “sluggishness” in response to climate change will be disastrous warns Baragwanath.
He identifies three fundamentals for progress: the need for action; pledges or commitments; and imposition of an obligation. In order to attain each of those, Baragwanath identifies the need for systems to identify and deal with problems. Drawing upon experiences in multiple fora, from commissions of inquiry to advisory tribunals, to national courts, he stresses that we must: recognise the problem; recognise that we are the decision-makers; focus on adequate systems; educate; recognise and deal with the reality of self-interest; recognise that all law is about people; and acknowledge the responsibility of governments for their people. In terms of all law being about people, Baragwanath cited the English Court of Appeal decision in Belhaj v Straw where the Court referred to a “fundamental change [that] has occurred within public international law”. The traditional view that it regulated States “has been discarded” and “[i]n its place has emerged a [Page15:] system which includes the regulation of human rights by international law, a system of which individuals are rightly considered subjects.” Given the significance of non-state actors in relation to climate change justice in particular, this evolution of public international law will prove to be key.
Baragwanath goes on to consider potential future pathways, including the application of general principles of international and common law, treaty and legislation, and advocates the deployment of all three in response to climate change, in addition to multiple other proposals. Plainly, the problem is critical and the response requires fluidity and creativity of thought, coupled with experience and wisdom from Baragwanath and the many other contributors to this work
Finally, Chapter 18 did not form part of the conference presentations but is included for the poignancy of a perspective on the same problem – climate change has been on the agenda for decades – at COP12 in 2007. Edna Sussman attended the 2007 COP and produced a comprehensive analysis of national legislative, regulatory and judicial responses, as well as steps required at an international law level at the time. The troubling reality is that Sussman refers to the Intergovermental Panel on Climate Change having reported in 2007 that “‘warming of the climate is unequivocal,’ bringing the certainty that global warming is caused by human activity to 90%, and predicting dire consequences if significant greenhouse gas emission reductions are not achieved.” It has taken a decade to get from that departure point to the Paris Agreement; similar delay over the next 10 years is simply not an option.
Sussman traverses through the environmental harm and climate change related US litigation cases at the time, including Massachusetts v EPA and many others. It is somewhat comforting to recall that environmental lawyers have, for decades, been pursuing environmental protection claims arising out of national legislation and regulation in the context of climate change. As to such efforts on an international dispute resolution plane – which is critical in dealing with climate change – progress has been much slower. However, given the distinct international policy commitment in respect of climate change, as reflected in the Paris Agreement, this body of law may yet (belatedly) provide the precedent for global enforcement of climate change obligations and thus requires careful consideration.
As to the future climate change disputes suggested by Sussman in 2007, many of these have in fact come to pass and will continue to do so with increasing regularity, both in the US and beyond. Corporate disclosure disputes, emissions reductions disputes and insurance coverage disputes in particular have featured in 2016. Sussman, like many of the contributing authors to this book, advocates the use of ADR, including arbitration, to resolve climate change related disputes. Sussman identifies the obvious limitation; arbitration is a creature of contract and requires the agreement of all parties.
Nonetheless, Sussman concludes that “arguments that favor the use of arbitration over litigation are even more persuasive in the context of climate change issues.” She refers to the fact that issues are very specialised and complicated requiring environmental and scientific expertise, parties are often in ongoing relationships, confidentiality is attractive (although today, transparency is probably more critical), and future disputes are likely to be international. She advocates “a neutral forum with known procedures, the availability of adjudicators with cross cultural sensitivity and cross border legal backgrounds.” She also underscores the importance of mediation, perhaps even more relevant in the context of the facilitative framework of the Paris Agreement.
Sussman’s 2007 conclusion could not be more relevant today:
“The political, regulatory, litigation and transactional responses to the threat and impacts of climate change will inevitably give rise to a wide range of disputes and will create numerous opportunities for alternative dispute resolution. There will be a significant advantage to utilizing arbitration, mediation and collaboration and other processes that will lead to a consensus outcome. The availability of ADR of specialized subject matter expertise, of the opportunity for creative party-generated solutions, of greater confidentiality, party control of the process and the alleviation of cross border concerns will often make ADR the dispute resolution mechanism of choice.”
With the Paris Agreement now in force, it seems that global political will is finally advancing toward a framework of binding and enforceable climate change related rights and obligations. It regulates the vast majority of states, including those previously segregated as ‘developing’ states under the Kyoto Protocol. In order to be effective, and to benefit those who need it the most, such a framework needs to accommodate rights and obligations that are enforceable by, and where necessary against, states, investors and affected populations. This requires a robust dispute resolution forum and mechanism. International arbitration has, for centuries, provided such a mechanism for resolving disputes involving all stakeholders in the international realm. There is every reason for it to be utilised for climate change justice and the enforcement of climate change related international rights and obligations.
Three major arbitral institutions, together with the IBA, played a critical role in organising, hosting and bringing together this group of experts. The International Chamber of Commerce (“ICC”) hosted the event in its Paris offices, in conjunction with its many other COP 21 activities, and facilitated this publication. Senior representatives from the ICC Court of Arbitration, Permanent Court of Arbitration (“PCA”) and Stockholm Chamber of Commerce (“SCC”) Court of Arbitration organised the event and moderated the speakers and panels. The IBA provided considerable support throughout the planning and event itself. And finally the SCC Court of Arbitration has continued the initiative by organising and hosting a second joint IBA/ICC/PCA/SCC event – “Bridging the Climate Change Policy Gap - The Role of International Law and Arbitration” – in Stockholm during COP 22 in November 2016.1 It is hoped that a third side event will proceed in Bonn during COP23 in 2017.
On behalf of the IBA, ICC, PCA and SCC, I wish to express our gratitude to the individuals behind this initiative and publication. First, Mary Robinson, former UN High Commissioner for Human Rights, inspired the IBA Climate Change Justice and Human Rights Task Force Report, and turned the collective minds of the international legal community not just to the challenge but to our role in working toward a solution. Secondly, Baroness Kennedy QC as co-chair of the IBA Task Force and Report (together with David Estrin), kindly provided the Foreword to this publication. Thirdly, a number of significant individuals contributed to the inception and organisation of the event, including Nicola Peart, former Assistant Legal Counsel at the PCA, who initially proposed this joint conference and together with Nicola Leslie, Debevoise & Plimpton, Judith Levine, PCA and Nathalie Allen Prince, Boies Schiller & Flexner, worked tirelessly in bringing it to fruition, Annette Magnussen, Secretary-General, SCC Court of Arbitration, who provided great support, moderated the innovative investment treaty panel and has driven the 2016 follow-up event in Stockholm, John Danilovich, ICC Secretary-General, who hosted the event at the ICC in Paris, Alexis Mourre, President, ICC Court of Arbitration and Andreas Carlevaris, Secretary-General, ICC Court of Arbitration, both of whom superbly moderated panels, Stephanie Goubelle, ICC Court Marketing and Promotion, who facilitated a seamless event and Aisling Achoun and Marie-Dominique Fraiderik, both from ICC publications who worked tirelessly to finalise this book. The ICC and its vast corporate membership plays a vitally important role in progressing the themes in this publication.
As for the other speakers and authors, each has contributed something significant and potentially game-changing to the issue of climate change justice and the role of international dispute resolution lawyers. These established leaders in their fields who made the COP 21 event a rich agora of ideas include: David Rivkin, President IBA, Partner, Debevoise & Plimpton, New York; Roger Martella, Sidley Austin, Washington DC, Vice Chair, IBA Task Force on Climate Change Justice and Human Rights; Nicola Bonucci, Legal Director, OECD, Paris; Judith Levine, Senior Legal Counsel, Permanent Court of Arbitration, The Hague; Martijn Wilder, Partner, Head of Global Environmental Markets, Baker & McKenzie, Sydney; Crenguta Leaua, Managing Partner, Leaua & Asociatii, Romania, Vice President ICC Court of Arbitration; Gerd Droesse Legal Counsel, Green Climate Fund, The Netherlands; Anna Joubin-Bret Former, Senior Legal Advisor, Division on Investment, Technology and Enterprise Development, UNCTAD, Avocat, Paris; Thomas McInerney, Distinguished Scholar in Residence, Loyola University of Chicago School of Law, Founder, Treaty Effectiveness Initiative; Jeremy Sharpe, Partner, Shearman & Sterling, Former Chief of Investment Arbitration, US State Department; Professor Laurence Boisson de Chazournes Professor of Law, University of Geneva; Kate Cook, Matrix Chambers, Chair, The Legal Response Initiative; Professor Michael Gerrard, Andrew Sabin Professor of Professional Practice, Director, Sabin Centre for Climate Change Law, Columbia Law School, and Justice David Baragwanath, Member and Former President of the Special Claims Tribunal on Lebanon. Finally, the last essay is a look back in time: “Post COP 12: A 2007 Snapshot of Climate Change Litigation, Potential Disputes and Alternative Dispute Resolution” by Edna Sussman, Independent Arbitrator. This is a poignant reminder that the climate change challenge is not a new one but it needs our urgent attention now more than ever.
It remains my firm personal belief that international dispute resolution lawyers can stand with corporations, governments, NGOs and affected populations to address the climate challenge. I am encouraged by the ideas that emerged from this event and publication and the progress of the Paris Agreement and beyond. I remain confident that many of the ideas contained in this book will help to shape the climate change dialogue in the wider legal community going forward. After all, as Ban Ki-moon, Secretary General, United Nations reminds us:
“We are the first generation to be able to end poverty, and the last generation that can take steps to avoid the worst impacts of climate change. Future generations will judge us harshly if we fail to uphold our moral and historical responsibilities.”