Climate Change Law Climate Change Lawsuits Climate Change Litigation Paris Agreement

Obligations of Private Enterprises Towards the Paris Agreement: The Landmark Decision of a Netherlands Court

This article analyses a judgment of a Netherlands court (that ordered a private company to comply with the objectives of the Paris Agreement) with special emphasis on the grounds on which the judgment has been delivered and its significance in the contemporary world. Written by Nabil Iqbal & Syeda Mehar Ejaz, law students from Jamia Millia Islamia, New Delhi, India.

The district court of Netherlands on May 26, 2021 pronounced a judgment in MILIEUDEFENSIE ET AL. V. ROYAL DUTCH SHELL PLC that orders the Royal Dutch Shell (RDS), a leading oil manufacturer, to cut its carbon emission by 45% (from its 2019 level) by the year 2030. The decision has been applauded by the environmental activists who have remarked it as a landmark judgment in the domain of environmental litigation.

The case was filed in April 2019 by several Dutch NGOs and more than 17,000 individual co-claimants against the Royal Dutch Shell (RDS), requesting a declaratory judgment against the RDS for its failure to obligate with the target of net zero carbon emission by 2050, which was set as the objective to reach the goal of Paris Agreement that has been ratified by various countries including the Netherlands. The allegations made by the claimants were based on the report mentioned in the RDS website that states the company’s current aim of 20% reduction in carbon emission by 2030, which is less than the global set level of 45%.

The court after analyzing the allegations, directed the RDS to reduce its carbon emission as per the global limit on the basis of the following observations –

Duty of CareThe court observed that RDS owes a duty of care towards the citizens as per the provisions of unwritten standard of care mentioned in Book 6 Section 162 of Dutch Civil Code. This provision marks the activities which is contrary to the rule of unwritten law pertaining to proper social conduct as unlawful. RDS failure to consider the duty of care towards its citizen while making its policies has been considered as one such activity. The court also discusses the UN Guiding Principles (UNGP) on business and human rights, which talks about the role of businesses and states towards the human rights. Analyzing both the provisions, the court held that the RDS policy of 20% carbon emission reduction, which is less than the global set level of 45%, is contrary to the provision of standard of care of Dutch Civil Code. Further, the court observed that RDS owes a larger individual duty of care since it is one of the major carbon emitters of the world and its emission has more impact on climate change than some of the countries.

Violation of Human Rights – Right to Life of Individual and his family have been recognized in the European Convention for the Protection of Human Rights (Articles 2 and 8) and International Covenant on Civil and Political Rights (Articles 6 and 17). Further, rulings of Urgenda v. The state of Netherlands;  López Ostra v Spain; Őneryildiz v Turkey and the UN Human Rights Committee discussion on the global warming expressly states that global warming as a consequence of carbon emission amounts to violation of the above provisions of ECHR and UDHR. Applying both these observations, the court held the RDS failure to comply with the global set level of reduction as a violation of ECHR and ICCPR. On the question whether these provisions are applied to private corporations, the court relies on the OECD Guidelines for Multinational Enterprises and United Nations Guiding Principles on Business and Human Rights, which states that businesses owe an obligation to protect human rights.

The judgement is considered as a landmark due to various reasons. Firstly, it is for the first time that a private enterprise has been ordered to comply with the targets of the Paris agreement. Previously, in urgenda foundation case and Neubauer, et al. v. Germany, the court has ordered the states to comply with the zero-carbon emission target, but it is for the first time that a private enterprise has been ordered to do so. Secondly, it will set a precedent for other countries to mandate the large businesses to comply with the target of zero carbon emission. However, the judgment does not have any authoritative value, but the decision demonstrates a benchmark for obligations on emissions reductions and analysis of norms related to human rights and IEL. Peculiar to the Netherlands, the decision would positively increase the class of actions before the different courts for seeking climate justice on the grounds of human rights violations pursuing damages for detriments caused by excessive emissions.

By Nabil Iqbal & Syeda Mehar Ejaz

Nabil Iqbal & Syeda Mehar Ejaz are law students from Jamia Millia Islamia, New Delhi, India.

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