Reparation for Climate Change: The Successes and Limits of Litigation

Part Four Corporate Liability for Climate Change

Valentin Jentsch

Chapter 15: Climate Change Litigation against Carbon Majors

1.Introduction

From a private law perspective, different avenues are available to hold corporations responsible for GHG emissions.¹ However, it must be clearly stated that the hurdles for such lawsuits to be successful are extremely high. Arguably the most popular approach to realize corporate liability for climate change is to recur to tort law in combination with human rights law. This is what has essentially been done in the Dutch Shell case, decided by a court of first instance (Rechtbank Den Haag), so far the only “successful” climate lawsuit against a corporation, which was recently overturned by the competent court of second instance (Gerechtshof Den Haag).² Put simply, the case relies — S. 300 —on a legal basis in Dutch tort law (Art. 6:162 of the Dutch civil code), according to which anyone who violates an — unwritten, but generally considered to be proper social conduct — duty of care is liable for damages. It draws on human rights instruments (in particular Articles 2 and 8 ECHR and Articles 6 and 17 ICCPR), international standards (in particular the UN Guiding Principles on Business and Human Rights), and climate science (in particular the reports by the IPCC) to concretize the relevant standard of care. It goes without saying that this case is based on notable public law disputes in climate matters (the Dutch Urgenda case) which have been emulated in many other jurisdictions, but that it is so far without a clear-cut outcome.³

Another approach to realize corporate liability for climate change is not directed against the corporation itself, but against its directors and officers.⁴ The British Shell case concerned whether Shell’s directors breached their fiduciary duties in respect of Shell’s climate strategy and its response to the Dutch Shell case. The derivative claim⁵ was based on corporate law, namely section 172 of the British Companies Act (2006), pursuant to which a director of a company must, inter alia, also consider the impact of the company’s operations on the community and the environment. In the written procedure, the High Court of Justice in London concluded that plaintiff had not met its burden of proof for a prima facie case in the proceedings for admission of the action for a number of reasons.⁶ Following an oral hearing requested by plaintiff, the High Court of Justice confirmed its opinion once again.⁷ The High Court of Justice further refused permission to continue a derivative claim.⁸

At the broadest level, two types of climate lawsuits can be distinguished: injunctions and actions for performance.⁹ There is already case law in both of these areas.

Injunctions are aimed at ensuring that corporations emit fewer GHG emissions in the future.¹⁰ The Dutch Shell case belongs to this category. Other injunction-based cases include the Italian Eni case, the German Volkswagen, BMW, Mercedes-Benz, and Wintershall Dea cases, and, at least partly, the Swiss Holcim case.

Actions for performance may include compensation for climate damage that has already occurred and/or reimbursement of costs for the installation of protective measures for impending climate damage. A well-known case in this category, which was rejected both in the first instance (Landgericht Essen) and in the second instance (Oberlandesgericht Hamm), is the German RWE case.¹¹ Another case, which also includes compensatory elements, is the Swiss Holcim case, currently pending at Kantonsgericht Zug; at the time of writing (end of June 2025), the main hearing in this case was scheduled to start on 3 September 2025.¹²

This chapter offers an international and comparative understanding of legal and practical realities and the role of courts with regard to climate change litigation against carbon majors. The line of argument of this text is essentially based on relevant court decisions, selectively enriched with further literature on the topic. After presenting a few typical case studies on horizontal (privatelaw-based) climate change litigation, distinguishing adaptation, mitigation, and other cases, the relevant legal concepts of such litigation are introduced, namely the general notions of damage, unlawfulness, duties of care, causality, and proof, and the duty to reduce emissions in particular. In addition, pitfalls of litigation and corporate responses are highlighted before the public-private divide and the institutional context are addressed. A concluding section rounds off the chapter.

2.Case Studies

a.Adaptation Cases

The German RWE case concerned the liability of a GHG emitter for harms arising in a different jurisdiction. A Peruvian farmer, who lives in Huaraz, filed claims for declaratory judgment and damages against the German multinational energy company RWE in November 2015. On 15 December 2016, a district court (Landgericht Essen) dismissed both the requests for declaratory and injunctive relief and the request for damages.¹³ This case failed at first instance primarily due to a lack of causality. On 30 November 2017, however, a higher regional court (Oberlandesgericht Hamm) admitted the complaint and allowed the case to move into the evidentiary phase, and on 1 February 2018, this order was confirmed.¹⁴ On 28 May 2025, the higher regional court (Oberlandesgericht Hamm) ultimately dismissed the case, finding that the plaintiff’s property was not in concrete danger; the judgment is final, as no further appeal was permitted.¹⁵

The Swiss Holcim case is likewise about the civil liability of a major GHG emitter for climate change-related damages suffered in a different jurisdiction. In addition, the case is about the financing of anti-flooding measures. The legal basis for this claim is, in particular, redress for unjust harm. The case is pending at the court of first instance in Zug (Kantonsgericht Zug).

b.Mitigation Cases

In the Dutch Shell case, it is at issue whether Shell violated a duty of care and human rights obligations by failing to take adequate action to curb contributions to climate change. On 26 May 2021, a Dutch district court (Rechtbank Den Haag) ordered Shell to reduce emissions by 45% by 2030, relative to 2019, across all activities, including its own emissions (scopes 1 and 2) and end-use emissions (scope 3).¹⁶ On 12 November 2024, however, the competent Dutch court of appeal (Gerechtshof Den Haag) overturned the district court’s judgment and denied the claims of Milieudefensie, the plaintiff organization.¹⁷ The court of appeal essentially ruled that Shell is obliged to reduce its GHG — S. 303 —emissions, but that it was unable to determine which percentage of emissions reductions should apply. At the time of writing (end of June 2025), an appeal in cassation against this ruling may still be brought before the Dutch supreme court (Hoge Raad).

The Italian Eni case is about the same issue, namely whether Eni (a multinational energy company headquartered in Rome) violated a duty of care and human rights obligations by failing to take adequate action to curb contributions to climate change. This case in fact attempts to replicate the Dutch Shell case, with further complications such as the allegation of early knowledge of the climate crisis. The first hearing took place t the Ttribunale di Roma on 16 February 2024.

In Germany, several climate lawsuits are pending. One German Volkswagen case was brought by a farmer, Ulf Allhoff-Cramer, and supported by Greenpeace Germany. In this case, it is at issue whether Volkswagen’s business activities constitute a violation of Allhoff-Cramer’s rights, and whether Volkswagen can be ordered to reduce its emissions to avoid further and future infringements of rights. Allhoff-Cramer basically argues that Volkswagen is partly responsible for the damage climate change has caused to his farm in the form of droughts and heavy rains. On 24 February 2023, however, the relevant court (Landgericht Detmold) rejected his claims seeking a declaration that a maximum of 25% of Volkswagen’s passenger cars and light commercial vehicles sold may operate on an internal combustion engine between 2021 and 2029, and none at all from 2030 onwards; and that Volkswagen must reduce its GHG emissions by 65%, compared to 2018 emissions.¹⁸ The court’s reasoning in particular points out that Allhoff-Cramer could not establish that the alleged damage to his property, health, and rights could be remedied by the measures he demanded alone. The case is pending at a higher regional court (Oberlandesgericht Hamm).

In addition, three individuals associated with Greenpeace Germany and Fridays for Future Germany on the one hand and a German non-governmental organization (Deutsche Umwelthilfe) on the other hand have initiated climate-related proceedings against several German car manufacturers.¹⁹ In the Mercedes-Benz, BMW and Volkswagen cases, it is at issue whether Mercedes- — S. 304 —Benz, BMW and Volkswagen are infringing on the right to climate protection by not committing to achieve carbon neutrality in the production and intended use of internal combustion engine cars. These cases are interesting because the claim is grounded in German tort law (in particular §§ 823 and 1004 of the German civil code) and the Paris Agreement, and it relies on the earlier decision by the German Federal Constitutional Court on the German Climate Protection Act.²⁰ As a matter of fact, however, all these cases were rejected by German courts of first and second instance: the Mercedes-Benz case was dismissed by a district court (Landgericht Stuttgart) on 13 September 2022 and a higher regional court (Oberlandesgericht Stuttgart) on 8 November 2023; the BMW case was dismissed by a district court (Landgericht München I) on 7 February 2023 and a higher regional court (Oberlandesgericht München) on 12 October 2023; and the Volkswagen case was dismissed by a district court (Landgericht Braunschweig) on 14 February 2023 and a higher regional court (Oberlandesgericht Braunschweig) on 6 May 2024 and 24 June 2024.²¹ The Mercedes-Benz and BMW cases are pending at the German Federal Court of Justice (Bundesgerichtshof) at the time of writing (end of June 2025).²²

Similarly, three individuals supported by a German non-governmental organization (Deutsche Umwelthilfe) have initiated proceedings against the oil and gas company Wintershall Dea. In the resulting German Wintershall Dea case, it is at issue whether Wintershall Dea is violating fundamental rights by not adhering to a “fair” carbon budget. In this case, plaintiffs sought to prevent Wintershall Dea from exploring new oil and gas fields beyond 2025. There has not yet been a court ruling on this matter in the first instance (Landgericht Kassel).

The Swiss Holcim case is likewise about GHG emission reductions. The legal basis for this claim is an infringement of personal rights. As noted above, the case is pending at the court of first instance in Zug (Kantonsgericht Zug).

c.Other Cases

The French Total case is about an inadequate environmental assessment of a proposed oil project in Uganda and Tanzania. In this case, six non-governmental organizations allege that Total failed to adequately assess the project’s threats to human rights and the environment. The legal basis of this claim is the French Duty of Vigilance Law (2017), according to which French companies are obliged to identify and prevent serious violations of human rights and to the environment that could occur as a result of their business practices, including foreign subsidiaries and subcontractors. After a rather long-lasting battle on various competence issues, the interim relief judge at Tribunal judiciaire de Paris published two decisions in a summary procedure on 28 February 2023.²³ This judgment is devoid of any res judicata in the main proceedings; the judge on the merits can give a different judgment.

The French BNP Paribas cases are likewise about disclosure, in particular violations of the French Duty of Vigilance Law (2017). It should be pointed out that these cases are not directed against a carbon major, but against a financial institution that is accused of contributing to climate change by lending to fossil fuel companies on the one hand and providing financial services to companies that allegedly contribute to the deforestation of the Amazon rainforest on the other hand. Both cases were filed in 2023 and are still pending at Tribunal judiciaire de Paris.

In the British Shell case, it was disputed whether there was a prima facie case for permission to continue a derivative claim against Shell’s directors for breach of their duties in respect of Shell’s climate strategy and its response to the Dutch Shell case. The High Court of Justice in London dismissed the case and confirmed its refusal of plaintiff’s application for permission to appeal to the Court of Appeal.²⁴

The British USS case follows the same line of argument. In this case, it was at issue whether the investments in fossil fuels by a large pension fund in the United Kingdom breach directors’ fiduciary duties and duties towards contributors of the pension fund. Although the High Court of Justice accepted that plaintiffs had standing to bring a derivative claim, the court refused — S. 306 —permission.²⁵ As plaintiffs secured permission to appeal, the Court of Appeal dismissed the fossil fuel risk claim for procedural reasons, without addressing it in substance.²⁶

3.Legal Concepts

a.General Notions

i.Damage

Damage is generally understood to be an involuntary loss of assets (damnum emergens) or an unintentional loss of profit (lucrum cessans). In the context of climate change litigation, damages can take many forms, such as a harm that has already occurred or protective measures to prevent an imminent threat.

In a German Volkswagen case, Landgericht Detmold essentially held that plaintiff cannot demand from defendant to stop placing cars and light commercial vehicles equipped with an internal combustion engine on the market or force them to reduce their annual aggregated GHG emissions.²⁷ The court further points out that it must generally be left to Volkswagen to decide how to eliminate an impairment that has already occurred, or to prevent a serious threat of impairment, because the rights of a disturber should not be restricted any further than is necessary to protect the entitled party from impairment of their rights. Moreover, and most notably, the court also rejects the right to GHG-related freedom referred to by plaintiff.

ii.Unlawfulness

An act or omission is considered unlawful if it violates a general duty of care or a protective law (Schutzgesetz). The only decisive factor is thus the presence of behavioral injustice (Verhaltensunrecht), and not whether harm was effectively caused (Erfolgsunrecht). In the climate context, unlawfulness is not unproblematic in several respects.²⁸

In the German Mercedes-Benz case, Landgericht Stuttgart did not find that there had been any unlawful acts: the production of vehicles with internal combustion engines by Mercedes-Benz has no impact on the personal rights or the way of life of plaintiff, but may contribute to or lead to measures being taken by the legislator which restrict the personal way of life of plaintiff; Mercedes-Benz can at most indirectly interfere with plaintiff’s right of personality or way of life, but this must be rejected on the basis of a weighing of interests, as the consequences for plaintiff resulting from the prohibited conduct are not foreseeable.²⁹ Oberlandesgericht Stuttgart follows that same line of argument: the placing of new combustion engines on the market is lawful and does not lead to an unlawful situation, even if indirect third-party effects of fundamental rights against private parties were taken into consideration; third-party effects of fundamental rights against private parties cannot go any further than direct third-party effects, which obligate the state itself.³⁰ The court left it open, however, whether a fundamental right to an ecological minimum subsistence level or a right to a humane future flows from Art. 20a of the German Constitution (environmental protection) and whether direct claims against the legislator can be derived on these grounds. Nevertheless, the court acknowledged that the impact of fundamental rights on private law relationships must be taken into account in certain circumstances.

In the German BMW case, Landgericht München I clarifies that a possible interference with the scope of the general right of personality does not at the same time indicate that the interference is unlawful; it is rather necessary that a positive determination of unlawfulness is made through a comprehensive weighing of the interests affected in the individual case.³¹ Oberlandesgericht München confirmed this decision and clarified that BMW sells its cars in accordance with the law and does not violate applicable law.³² The court further noted that the protection of individuals from the consequences of climate change has not yet been established as being within the scope of protection of the general right of personality against interference by third parties.³³ In the court’s view, extending the scope of this right to require protection against legislative measures that became necessary because of the conduct of third parties is currently neither constitutionally required nor recognizable as an obligation under civil law that goes beyond this.³⁴

In a German Volkswagen case, Landgericht Braunschweig argued that Volkswagen is acting in accordance with the law and, therefore, not unlawfully.³⁵ The court basically ruled that Volkswagen’s obligation cannot go beyond the state’s duty of protection arising directly from fundamental rights. The court further noted that Volkswagen complied with the applicable public law regulations. Oberlandesgericht Braunschweig also denied unlawfulness: as the legislator had created regulations in the transport sector that conform to the constitution and lead to climate neutrality, it had fulfilled its obligation to reduce GHG emissions, and since Volkswagen indisputably complied with the statutory requirements and regulation in this regard, neither the marketing of new passenger cars with internal combustion engines nor the associated emissions could be unlawful.³⁶ In addition, the court argued that Volkswagen is likewise not in breach of its traffic safety obligations.

iii.Duties of Care

Duties of care are a fundamental concept to establish unlawfulness in tort law, at least based on a continental understanding. Generally speaking, a duty of care is a legal obligation imposed on an individual, requiring adherence to a standard of reasonable care to avoid careless acts that could foreseeably harm others. This requirement is the substantive gateway for climate change litigation against corporate actors.

In the Dutch Shell case, Rechtbank Den Haag, in its own understanding, interpreted an unwritten standard of care, which was found to be applicable to Shell, based on the facts of the case, widespread consensus, and internationally accepted standards.³⁷ Pursuant to this standard, acting in conflict with what is generally accepted accordig to unwritten law is unlawful. Int its judgment, the court concluded that Shell is obliged to ensure through the group’s corporate policy that the GHG emissions of the group, its suppliers, and its customers are reduced. The court further notes that it is generally accepted that companies must respect human rights; this entails an individual responsibility of companies (obligation of result), which is separate from states’ actions, and also extends to suppliers and customers (significant bestefforts obligation), namely by using its influence through the corporate policy for the group (by setting requirements on suppliers in its purchasing policy). It is noteworthy that, according to the court, Shell has complete freedom in — S. 309 —how it meets its reduction obligation and shapes the group’s corporate policy. In the court’s words, the required sacrifices outweigh the interest served by fighting dangerous climate change.

Gerechtshof Den Haag took another approach: the court discussed that protection against dangerous climate change should be considered a human right; examined the direct effect of the right to protect against dangerous climate change in private relationships; and addressed how Milieudefensie’s claims relate to existing climate legislation.³⁸ Based on these considerations, the court answered the question concerning the extent to which it can be established that Shell has a legal obligation to limit its GHG emissions.³⁹ In the court’s understanding, the social standard of care in relation to climate is thereby not only defined through human rights, but also through soft law such as the UN Guiding Principles and the OECD Guidelines.⁴⁰ It follows from these instruments, the argument goes on, that the social duty of care implies that companies also have an obligation to contribute to the mitigation of dangerous climate change.⁴¹ More specifically, the court considered whether new investments in oil and gas violate the social standard of care; discussed Shell’s obligations regarding scope 1 and 2; and covered Shell’s obligations with regard to scope 3.⁴² With regard to scope 3 emissions, the court concluded that Shell cannot be bound by a 45% reduction standard (or any other percentage) agreed by climate science because this percentage does not apply to every country and every business sector individually.⁴³ The court further held that no sectoral standard for oil and gas can be established based on scientific consensus, wherefore no 45% reduction obligation applies to Shell in respect of scope 3.⁴⁴ Furthermore, it could not be established that an obligation on Shell to reduce its scope 3 emissions by a certain percentage is effective.⁴⁵

iv.Causality

In order to create liability, there must be a causal link between the unlawfulness of an act or omission (a breach of duties of care) and damage. In the Germanspeaking — S. 310 —world, a distinction is made between natural and adequate causality. Proving causality is often seen as the biggest hurdle for climate lawsuits.⁴⁶

In the German RWE case, Landgericht Essen made interesting statements on causality in the climate context.⁴⁷ The pollutants emitted by the energy company are only a part of countless other pollutants that are and have been emitted by a large number of small and large emitters. Even the emissions of RWE as a carbon major are not so significant in view of the millions and billions of emitters worldwide that anthropogenic climate change, and thus the alleged flood risk from the Laguna Palcacocha glacier lake, would not exist without the individual emissions of RWE. By applying the forest damage judgment (BGHZ 102, 350) to the present case, the court concluded that it is no longer possible to identify even an approximately linear chain of causation from a specific emission source to a specific damage when countless large and small emitters release GHG that are indistinguishably mixed with each other, change each other, and ultimately cause climate change via a highly complex natural process. In addition, the share of an individual GHG emitter’s contribution to global climate change is so small that the individual emitter, even a carbon major such as RWE, does not significantly increase the possible consequences of climate change.

v.Proof

The burden of proof is on plaintiff, who has to prove the existence of damage, an unlawful act or omission, and causation between the damage and breach of law. In tort law, plaintiff has to prove his or her case by a preponderance of evidence. The preservation of evidence poses particular problems in the climate context.⁴⁸

In the German RWE case, Oberlandesgericht Hamm initially took (from the plaintiff’s perspective) a more favorable position to compensation: in the court’s view, it is in line with the legal system that even those who act lawfully must be liable for any damage to property caused by them, and the operation of energy companies can also give rise to liability.⁴⁹ Against this backdrop, the court commissioned two technical expert opinions. One opinion — S. 311 —examined whether there is a serious threat of flooding and/or mudslide to plaintiff’s residential property as a result of the significant increase in the glacier lagoon located above the property. Another opinion was supposed to quantify RWE’s contribution to the chain of causation, which was claimed to amount to 0.47%. In its final judgment, Oberlandesgericht Hamm ruled that the plaintiff’s action to establish RWE’s obligation to reimburse the costs of protective measures against an imminent glacier flood from Laguna Palcacocha was unfounded.⁵⁰ RWE is not obligated to bear the costs in proportion to its contribution to the cause, as there is no serious threat of impairment of the plaintiff’s property within the meaning of § 1004 of the German civil code. The probability of the plaintiff’s property being endangered by flooding or mudslides in the next 30 years is around 1%, which is considered to be too low to justify a risk of first occurrence. In addition, experts have established that the plaintiff’s property would not be affected by any of the hazard scenarios examined. Even a possible lowering of the water level of Laguna Palcacocha would further reduce the risk. Therefore, the plaintiff is not entitled to reimbursement of the costs for protective measures by RWE.

In the British Shell case, High Court of Justice decided that the breaches alleged did not establish a prima facie case.⁵¹ Firstly, very little weight could be given to plaintiff’s witness evidence, which did not amount to expert evidence. Secondly, that evidence did not support a prima facie case that there is a universally accepted methodology as to the means by which Shell might be able to achieve its reduction targets. And most notably, plaintiff’s case ignored the fact that the management of a business of the size and complexity of Shell requires the directors to take into account a range of competing considerations, the proper balancing of which is a classical management decision, with which the court is simply ill-equipped to interfere. In corporate law jargon, this is what we call the business judgment rule.

b.Duty to Reduce Emissions

The Dutch Shell case elaborates where the duty to reduce emissions begins in time and space. On 26 May 2021, Rechtbank Den Haag ordered Shell to limit or cause to be limited the aggregate annual volume of all GHG emissions into the atmosphere (scopes 1 to 3) due to the Shell group’s business operations and sold energy-carrying products, to such an extent that this volume will have reduced by at least net 45% at the end of 2030, relative to 2019 levels.⁵² On — S. 312 —12 November 2024, Gerechtshof Den Haag overturned that judgment and denied the claim for a reduction in Shell’s GHG emissions.⁵³ As a matter of principle, however, the court ruled that Shell is obliged to reduce its GHG emissions, but that it was unable to determine which percentage should apply.⁵⁴

In its judgment in the appeal proceedings between Milieudefensie and Shell, Gerechtshof Den Haag argues that everyone has a responsibility to combat the dangers posed by climate change; the focus thus does not exclusively lie on states, but also and especially on companies whose products have contributed to the creation of the climate problem.⁵⁵ Therefore, companies like Shell have an obligation to limit GHG emissions in order to counter dangerous climate change — even if this obligation is not explicitly laid down in (public law) regulation of the countries in which the company operates.⁵⁶ However, existing climate legislation in the EU does affect Shell’s obligations under the unwritten social standard of care.⁵⁷ Moreover, the content and scope of such reduction obligations may vary from one company to another, depending on a company’s contribution to climate change and its capacity to counter climate change.⁵⁸ Against this background, more can be expected of Shell — a major player in the fossil fuel market for over 100 years with a prominent position in that market even today — than of most other companies.⁵⁹

4.Pitfalls of Litigation and Corporate Responses

a.Separation of Powers

From a theoretical perspective, the main critique of climate change litigation refers to the principle of separation of powers in a modern state.⁶⁰ State power is divided into three branches: executive (government), legislative (parliament), and judicial (courts). This principle must also be observed in a climate context. In the same spirit, Landgericht Stuttgart held that an overall framework covering all areas of economic and social life is required in order to meet climate protection targets, whereas the implementation of such a framework — S. 313 —is the responsibility of the democratically elected legislator in accordance with constitutional law.⁶¹ The court basically upheld the constitutional division of tasks between parliamentary legislation and judicial case law, thereby assigning the essential decisions for the organization of social life and living conditions to the legislator. Landgericht München I acknowledged that the transformation of the economy and society to climate neutrality is a highly complex task that allows for different strategies and requires constant consideration of conflicting political objectives in terms of scope and time; and this is why the performance of this task is entrusted to the legislator and the government (the political process).⁶²

With regard to the separation of powers, corporations generally respond that the solution to the energy transition should not be provided by a court, but by the legislator and politics.⁶³ Rechtbank Den Haag and Gerechtshof Den Haag did not follow this argument in the Dutch Shell case, but Landgericht Stuttgart and Oberlandesgericht Stuttgart did so in the German Mercedes-Benz case and Landgericht München I and Oberlandesgericht München in the German BMW case.⁶⁴ Gerechtshof Den Haag took a somewhat intermediate position in this regard, on the one hand proclaiming that it is primarily up to legislators and governments to take measures to minimize dangerous climate change, and on the other hand noting that companies may also have a responsibility to take measures to counter dangerous climate change.⁶⁵

b.Interaction of Legal Norms

From a doctrinal perspective, the sound interaction of different legal norms is at least questionable.⁶⁶ Several levels of regulation are involved in climate lawsuits against corporations. However, no solid legal basis can be claimed for an individual reduction obligation for individual companies, as the interplay between various legal norms is not or at least not sufficiently harmonized. Rechtbank Den Haag obviously sees this point differently, as it refers to human — S. 314 —rights instruments, international standards, and climate science in order to concretize a general duty of care.⁶⁷

Regarding the interaction of legal norms, corporations typically argue that there is no legal basis for a reduction obligation imposed by a court.⁶⁸ In the German BMW case, both the district court (Landgericht München I) and the higher regional court (Oberlandesgericht München) were quite persuasive in pointing out that BMW complies with applicable laws on climate protection.⁶⁹

c.Interpretation and Customary Law

From a methodological perspective, the boundaries between interpretation and customary law become somewhat blurry.⁷⁰ In almost all points, Rechtbank Den Haag referred to an international consensus in one form or another.⁷¹ With regard to climate science, it assumed a “consensus” on the necessity of non-state action in the climate context and the relevance of the Paris climate targets. The “consensus” was further extended to the fact that GHG emissions must be reduced by 45% by 2030 and by 100% by 2050. In its reasoning, the court relied mainly on the so-called Oxford report and adopted the “consensus” described there.⁷² Strictly speaking, however, the court did not interpret the report, but assumed the existence of an international consensus and thus customary law. However, individual reduction obligations of corporations cannot be based on customary law, as there is neither a continuous practice nor a longer tradition in this regard.

In relation to the interpretation of international treaty and customary law, corporations usually point out that there is no consensus on what steps various stakeholders must take in order to prevent certain dangers or risks resulting from climate change. Although there is indeed a broad agreement that something needs to be done here (the Paris climate goals), this agreement does not extend to the ways and means of achieving these goals.

d.Tragedy of the Commons

From a law and economics perspective, climate change serves as a real-world example of the tragedy of the commons.⁷³ The climate is a public good, characterized by the criteria of non-excludability and non-rivalry. As a result, we can observe an incentive problem in the form of a prisoner’s dilemma: protection of the climate cannot be achieved through the voluntary restraint of individual persons or corporations; their usage behavior has hardly any influence on the climate, it is simply balanced out by the greater use of others. Accordingly, neither voluntary nor judicially enforceable restraint by individuals or companies are effective measures for climate protection.

With respect to the tragedy of the commons, corporations regularly argue that the reduction obligation will have no effect, or even be counterproductive, because the place of a carbon major will be taken by competitors.⁷⁴ Although this argument may be theoretically sound, Rechtbank Den Haag rightfully pointed out in the Dutch Shell case that carbon majors may not use it for exonerating purposes.⁷⁵

e.Distortions of Competition

From a political perspective, it must be taken into consideration that courtordered reduction obligations can sometimes lead to significant distortions of competition that may be irreparable.⁷⁶ Individual reduction obligations lead to significant distortions of competition within a certain industry sector, as they mean that different requirements apply to different corporations operating within that sector. At the same time, all corporations operating in a certain industry sector may be disadvantaged, as the individual reduction obligations may in fact have industry-wide significance, since courts tend to rule the same way in similar cases. Finally, an individual reduction obligation for a corporation that has links to a certain country and thus falls under the jurisdiction of that country put this (domestic) company at a disadvantage compared to other (foreign) companies that do not fall under that jurisdiction. In this light, it is also interesting to note that Shell relocated its headquarters from The Hague to London following the far-reaching Dutch ruling of first instance.

In view of distortions of competition, corporations tend to argue that imposing a reduction obligation on a carbon major will lead to unfair competition and a disruption of the “level playing field” of the market.⁷⁷ In an efficient market, however, the view that everyone can be affected by such a judgment will prevail.

f.Corporate Social Responsibility

From a comparative perspective, the issue of holding carbon majors accountable is not only one of corporate social responsibility, but also relates to society at large.⁷⁸ This view was taken by Landgericht Stuttgart, which held that an overall framework covering all areas of economic and social life is required in order to meet climate protection targets, and it would be incompatible with this view to grant individuals injunctive relief against individual corporations on the basis of their personal rights or the EU Charter of Fundamental Rights.⁷⁹

Concerning corporate social responsibility, corporations argue that the energy transition required for achieving the goals of the Paris Agreement demands a concerted effort by society as a whole, and not by just one private party.⁸⁰ This is true, but non-state actors must arguably also make their contribution.⁸¹

5.Public-Private Divide

The audience of public international law, public law, and private law is very different. While public international law regulates the relationships between states, public law focuses on the relationship between the state and a person. In contrast, private law structures the relationships between persons without reference to the state. In the process of the application of the law, we must not forget about these fundamental differences between the respective sets of legal rules.

In the Dutch Shell case, Rechtbank Den Haag applied public law together with and in the same way as private law rules.⁸² Gerechtshof Den Haag further clarified that protection from dangerous climate change is a human right that — S. 317 —can have an impact on private law relationships by giving substance to open standards (the social standard of care), concluding that Articles 2 and 8 ECHR are decisive for the interpretation of the social standard of care and for clarifying what can be required of large and international companies under that standard.⁸³ However, this symbiosis of public law (human rights, international standards) and private law (torts) requires more in-depth analysis.

In a German Volkswagen case, Landgericht Braunschweig made some interesting observations on the third-party effects of fundamental rights.⁸⁴ Most notably, the court held that a high level of emissions cannot lead to a direct effect of fundamental rights towards a private actor. Moreover, the court held that the indirect effect of fundamental rights in civil law constellations cannot lead to a higher protection of rights than that guaranteed by the direct effect towards the state. Similarly, the higher regional court (Oberlandesgericht Braunschweig) clearly highlighted that although fundamental rights, which as a rule have an exclusively indirect effect on the relationship between citizens and the state, must be taken into account when interpreting civil law norms, but that the indirect third-party effect of fundamental rights does not extend any further than their defensive function towards the state.⁸⁵

In the German BMW case, Oberlandesgericht München further clarified that compliance with public law limits is an indication of the insignificance of an interference emanating from another property, but this does not in itself constitute a statement on the legality of the interference.⁸⁶

6.Institutional Context

A pivotal question remains as to whether there is scope for judicial discretion and creativity in this context. Generally speaking, if a broad consensus in society demands for such jurisprudence, and this is in line with the current legal system, judicial discretion and creativity are arguably not out of place. However, courts should not usurp legislative authority, but continue to serve as complementary institutions.

Oberlandesgericht Braunschweig concludes that the fundamental question raised in these proceedings, namely whether the statutory climate protection requirements are to be regarded as sufficient, may be subject to further — S. 318 —societal and political discourse, but cannot be decided in a civil law dispute, which relates exclusively to the bilateral relationship between the two parties involved.⁸⁷

The desirable role for courts to play in the climate crisis is not obvious. Courts are supposed to interpret the law, not create new law in the first place. But this distinction is not that clear-cut in practice. Courts should in any case not usurp legislative authority but continue to serve as complementary institutions. It is further important to distinguish between vertical and horizontal climate change litigation: while there is certainly room for the former, the latter is hardly in accordance with the applicable legal system. In any case, tort law with its all-or-nothing approach is arguably the wrong instrument for combatting the consequences of climate change.

Landgericht Stuttgart already clarified that it is basically up to the courts to apply the applicable laws in compliance with constitutional requirements, and it is not compatible with this role for the courts to take over the decisions reserved for the legislator in the context of an individual action.⁸⁸

Other bodies should play a central role in the climate crisis, namely politics in general and parliaments in particular. Our society needs guidance on how to deal with climate change, and so do corporations (including carbon majors).

Landgericht Stuttgart has also argued that the principle of environmental protection, enshrined in many national constitutions, is primarily directed at the legislator, who must set the framework conditions that prevent further global warming.⁸⁹ This view further corresponds to the understanding of the Bundesverfassungsgericht, according to which Art. 20a of the German Constitution (environmental protection) leaves the legislator considerable leeway and it is generally not the task of courts to derive concretely quantifiable limits to global warming and corresponding emission levels or reduction targets from the open wording of this constitutional provision.⁹⁰

7.Conclusions

In this chapter, legal and practical realities of climate change litigation against carbon majors are discussed in order to better understand the role of courts in this regard. Based on the analysis of relevant case law, it can be stated that so far there is only one precedent, from a court of first instance in the Netherlands, which holds a private actor liable for climate change, and this precedent has since been overturned by the competent court of second instance. In Germany, civil courts are particularly cautious when assessing private-lawbased climate claims against the automotive industry. For the reasons outlined above, it is highly unlikely that climate change litigation against carbon majors will turn out to be “successful” in the near future from a purely legal point of view. Nevertheless, this type of strategic litigation has without doubt raised considerable awareness among private actors on climate change as one of the most important and urgent issues of our time. Together with existing rules and regulations on sustainable corporate governance, namely corporate sustainability reporting and corporate sustainability due diligence, the legislator and politics are challenged not only to discuss those issues, but to build solid and lasting solutions in order to take decisive action against climate change for the benefit of future generations.