The number of climate change-related cases has more than doubled globally since 2015. Research from 'The Grantham Research Institute on Climate Change and the Environment' shows that just over 800 cases were filed between 1986 and 2014, whilst over 1,200 cases have been filed in the eight years since. The Institute has calculated that around a quarter of the total number of cases were brought between 2020 and 2022.
In this article we consider current trends in climate change-related litigation and take a closer look at recent actions against British multinational oil and gas company, Shell.
Increasing diversity of defendants
Recently published analysis shows that while fossil fuel companies remain a primary target of activist litigation, climate litigants are beginning to cast their net more broadly. Of the 38 climate cases filed in 2021 against private sector actors, more than half were filed against companies not involved in fossil fuel production. Companies in the food and agriculture and the plastics sectors are examples of others now being targeted. In Last Beach Cleanup v TerraCycle, for example, the claimant challenged the marketing of single-use plastics and other materials that are difficult to recycle, as ‘recyclable’.
In the transport sector, Deutsche Umwelthilfe (DUH), a German environmental and consumer protection association, brought cases against BMW and Mercedes-Benz. DUH claimed that in failing to commit to phasing out the sale of cars with internal combustion engines by 2030, BMW and Mercedes-Benz are violating the fundamental right to climate protection and impinging upon the rights and freedoms of future generations.
Despite these examples, the number of cases against fossil fuel companies remain significant. 16 out of the 38 cases filed in 2021, were against major energy companies involved in the extraction of fossil fuels. One company that has faced a slew of lawsuits is Shell.
Case Study – Shell's environmental record in Nigeria
In February 2023, more than 11,000 residents from the Niger-Delta area of Ogale, a petroleum-rich region in Nigeria, filed a damages claim against Shell at London's high court. The claimants are seeking compensation for the loss of their livelihoods on the basis that Shell's operations have resulted in oil spills that have contaminated drinking water, harmed air quality and ruined farmland and fishing stock.
This claim follows one brought by the Bille community of the Niger-Delta in 2015 and brings the total number of individuals from this region seeking compensation from Shell to over 13,500. The case comes at a time when Shell is seeking to exit its local operations and could establish precedent in the UK for the responsibility of international oil and gas companies for past pollution.
Suing in the UK for pollution in Nigeria
The cases have been able to reach the High Court due to a 2021 ruling from the English Supreme Court in the case of Okpabi v Shell [2021] UKSC 3. The Court determined that the London parent company could be held legally responsible for the actions of its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria (SPDC).
Shell tried to argue that, as the damage took place in West Africa, an area under the management of SPDC, the case should be heard by the Nigerian courts. However, the communities successfully argued that UK-listed Shell exercised significant control over SPDC. The Supreme Court ruled that "there is a good arguable case" that the claims could be pursued in London.
That parent companies can be held liable for the polluting activities of their foreign subsidies had also been confirmed by the Supreme Court in the 2019 case of Vedanta v Lungowe [2019] UKSC 20.
The latest in a string of court cases against Shell
Shell's environmental record has come under scrutiny on a number of other occasions recently.
In 2019, Shell was ordered to pay damages of $2 billion by a Nigerian court after being found liable for an oil spill. It is currently appealing this penalty. As a result of this case, Shell's exit from its onshore operations in Nigeria has been paused after a Nigerian court barred Shell from selling its assets whilst the appeal is ongoing.
In January 2021, a Dutch court ordered Shell to pay €15 million in damages to Nigerian farmers and their communities for oil spills that occurred in the Niger Delta area. The decision ended a 15-year lawsuit brought by the farmers, together with Milieudefensie (Friends of the Earth Netherlands), against the headquarters of Shell (at that time in The Hague). Shell was held responsible for the actions of SPDC for failing to maintain pipelines and reacting too slowly when it came to fixing pipelines and cleaning up spills. Shell denied responsibility, stating that crude oil theft, illegal refining and sabotage was the cause of environmental damage in the area. Shell also argued that it was not responsible for the actions of its subsidiary.
Significantly, Shell's directors now also find themselves in the frame. Environmental charity ClientEarth, a shareholder in Shell since 2016, is seeking to bring a derivative claim against the 11 directors of Shell at London's high court. ClientEarth alleges that Shell's climate strategy is insufficient to meet climate targets and puts the company at risk as the world switches to clean energy. ClientEarth state that this is the first case in the world where corporate directors may be held liable for failing to properly prepare their company for the net zero transition. However, the court must first grant permission for the action to proceed.
Climate change litigation as an instrument for change
As these examples illustrate, litigation is increasingly becoming an instrument used by activists to encourage climate change mitigation efforts. Such cases have the potential to play an important role in the movement towards the phase-out of fossil fuels. For example, the recent litigation against Shell in Nigeria may be a contributing factor to the company's decision to shut down its operations there.
In the Guyanese case of Thomas & de Freitas v. Guyana, the claimants (two Guyanese citizens) appealed against Guyana's decision to approve oil exploration licences. They argued that this could lead to billions of tonnes of new emissions which was a violation of their constitutional rights to a healthy environment, sustainable development, and the rights of future generations. Similarly, in the American case of Friends of the Earth v. Haaland, the claimants successfully obtained an injunction preventing the largest ever sale of offshore oil and gas in the country’s history. The federal district court invalidated the sale on the grounds that it violated the National Environmental Policy Act.
These litigation trends correspond with an increasing awareness that tackling fossil fuels is an essential ingredient in achieving climate action. At the 2021 United Nations Climate Change Conference, signatories of the Glasgow Climate Pact committed to the acceleration of “efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies”. These types of commitments are ripe pickings for potential claimants, who will be scrutinising the actions of the signatories with a view to enforcing the commitments made.
Conclusion and future trends
This area of law is continuing to develop as novel issues arise. Claims concerning the individual responsibility of company directors is one such example. Another is the issue of compensation for the loss and damage suffered by individuals and communities as a result of changes in the environment.
Loss and damage can result from slow-onset changes such as sea level rise, glacial retreat and land degradation, and proving liability in these types of cases is an evolving issue. Whilst cases concerning carbon offsets or the targeting of specific sectors such as transport or agriculture are emerging, it remains the case that the brunt of litigation is borne by fossil fuel companies, as the world continues its reliance on their energy.
This article has been co-written by Luke Barden de Lacroix (Associate) and Gabi Luknar (Paralegal).
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