International climate change disputes: current trends and future prospects

Abstract

International climate change disputes are becoming increasingly frequent, and the debate surrounding them is growing for two main reasons. On the one hand, because of the global scale of climate change issues and, on the other hand, as a result of the increasing importance of international courts' and tribunals' decisions in defining environmental policies and strategies for the near future. 

This article analyses the cases of Rockhopper v Italy (ICSID), Eco Oro Minerals Corp. v Republic of Colombia (ICSID), Daniel Billy and others v Australia (UNHRC) and the very recent Verein Klimaseniorinnen Schweiz and Others v Switzerland (ECHR), providing an overview of the current trends and direction in which international rulings are taking climate change litigation and arbitration – in terms of both substantive and procedural matters.

Finally, we also briefly discuss the future prospects of international climate change disputes. 

International climate change disputes

Climate change represents one of the greatest challenges of the 21^st century, with profound and wide-ranging international implications. The pressing need to address this overarching issue is resulting in an increase in litigation and arbitration around the world.[1]

Litigation and arbitration have emerged as vital tools for resolving climate change disputes in two main contexts. The first is when investors bring actions against governments for blocking their business activities in the name of climate change. The other is when actions are brought against sizeable corporations carrying out and developing large-scale projects that contribute to climate change.

International litigation and arbitration regarding climate change is a complex and dynamic field where international law, environmental policies and the rights of private parties (such as large corporations) intersect. Regarding international law, a significant portion of these international disputes are based on bilateral or multilateral treaties.[2] Such treaties are thus proving to be important instruments – both substantively, by granting the protection of rights to individuals and investors, and procedurally, by providing mechanisms for dispute resolution (such as international arbitration) – to the issue of climate change, in a context where national legal systems do not yet provide adequate solutions.

But international climate change litigation and arbitration are not without challenges. Although they foster a deeper understanding of the legal obstacles and opportunities around the global climate crisis, complex issues arise concerning jurisdiction, the adequacy of substantive law standards, and procedural transparency. There is also a growing concern centred around ensuring that the outcomes of these proceedings contribute to sustainability and do not actually perpetuate harmful environmental practices.

This article analyses some of the most important current international cases dealing with climate change as well as the decisions that have shaped the field. The selected cases provide an overview of the current state of international litigation and arbitration in this space and an analysis of the position of arbitral tribunals (particularly in investment arbitration) and important international institutions (such as the United Nations and the European Court of Human Rights) concerning climate change. We also outline their potential implications for international law and global climate policy, while looking at how international climate change disputes are an opportunity to develop environmental policies and public awareness of global climate issues. 

Eco Oro Minerals Corp. v Republic of Colombia (ICSID)[3]

Eco Oro Minerals Corp. v Republic of Colombia[4] was an ICSID arbitration brought by Eco Oro Minerals Corp ('Eco Oro'), headquartered in Canada, against the Republic of Colombia ('Colombia'). The case Eco Oro is a prominent thread that highlights the complex interaction between environmental protection measures and state responsibility. Although the case does not directly address climate change policies, it is an example of how environmental considerations can influence the legal landscape of foreign investments and how the environmental card does not always lead to a result of non-responsibility for states.

Eco Oro had held a mining exploration licence for gold deposits since 1994 and was involved in the development of a gold and silver mining project in the Colombian region of Santander ('Proyecto Angostura'), having made a significant investment.

The dispute between the parties arose in 2016 when the National Mining Agency of Colombia approved environmental regulations[5] aimed at protecting the Páramo de Santurbán, also located in the Santander region, designating it an environmental reserve. The Páramo de Santurbán is an ecosystem of immense environmental significance[6] located in the Andean region of Colombia. One of the paramount environmental roles of the Páramo de Santurbán is its function in water regulation[7]. Additionally, the Páramo de Santurbán plays a critical role in carbon sequestration[8]. Since mining activities can have devastating effects on Páramo de Santurbán, including deforestation, soil erosion, water contamination, and the disruption of the natural water regulation function, the Colombian government has taken steps to ban mining in order to safeguard their fragile ecosystems and the vital services provided by Páramo de Santurbán.

Approximately 54.7% of the new Páramo de Santurbán environmental reserve overlapped with Eco Oro's project area.

According to Eco Oro, this negatively affected its mining rights, making the development of its investment unviable. Eco Oro therefore sued Colombia, claiming that it had violated its obligations under the Free Trade Agreement between Canada and the Republic of Colombia (the 'Canada-Colombia FTA').[9] The obligations in question were:

1. the guarantee of fair and equitable treatment; and
2. the prohibition of indirect expropriation of Eco's property rights over mineral reserves.
   
   Colombia argued that its decision complied with the parties' agreed terms under the FTA and that it had the right to regulate in the public interest, namely, because FTA includes provisions that allow each party to regulate within their territory to protect legitimate public welfare objectives, such as public health, safety, and the environment[10]. Colombia maintained that its decision was aimed at protecting and preserving the ecosystems of the Santurbán region, the interests of local communities and promoting sustainable development. Eco Oro requested compensation of USD 696,000,000.

In 2021,[11] the tribunal ruled that Colombia violated the Canada-Colombia FTA. Specifically, the tribunal punished Colombia because of the inconsistent treatment between the mining-environment ministries and policymakers, and, therefore that:

• Colombia had infringed the minimum standard of treatment as the measures adopted to delimit and protect the ecosystem had an adverse economic impact on the investment made by Eco.
• Colombia's conduct was arbitrary and disproportionate because it had failed to respect Eco's legitimate expectations and denied Eco Oro a reasonable opportunity to complete its exploration phase.

An important factor in this decision was that Colombia had previously encouraged foreign miners to invest in the country and had granted Eco Oro a mining concession that was valid for 30 years. As a result, the tribunal concluded that Eco Oro was entitled to compensation. However, the tribunal did not consider that Colombia's conduct amounted to 'indirect expropriation' since the decisions it made were a legitimate exercise of its State police powers to protect public welfare. Nevertheless, although Colombia's actions were considered legitimate, as noted the Tribunal concluded that it had infringed the minimum standard of treatment standard since they were implemented in a manner that was inconsistent or unfair to the investor.[12]

The decision on the quantum of compensation is still pending. The tribunal requested the parties to submit additional evidence and arguments on various aspects of the valuation of Eco Oro's losses. 

Rockhopper v Italy (ICSID)[13]

Rockhopper v Italy[14] was an international investment arbitration brought by the energy company Rockhopper Exploration PLC, headquartered in the United Kingdom, Rockhopper Italia S.p.A. and Rockhopper Mediterranean Ltd ('Rockhopper') against the Republic of Italy ('Italy'). It is a significant dispute as it reflects tensions between investors' commercial interests and States' public policies, particularly in sensitive areas such as the environment and management of natural resources.

The dispute arose when in 2015 Italy reintroduced a ban on oil and gas exploration and production activities within 12 miles of the Italian coast. According to Rockhopper, this prohibition negatively affected its interests because the company held exploration rights in the Ombrina Mare oil field[15].

Rockhopper initiated arbitration proceedings against Italy, claiming that it had violated its obligations under the Energy Charter Treaty[16]. Rockhopper argued, in essence, that Italy had (i) breached its obligation to protect investors from indirect expropriation, because the prohibition deprived the company of adequate compensation; and (ii) violated the rule of fair and equitable treatment of foreign investors by treating Rockhopper less favourably than other investors.

Italy, in its defence, argued that the ban was based on environmental concerns and the need for marine conservation. Furthermore, it argued that the prohibition was a legitimate expression of its sovereignty and public policy.

The tribunal concluded that Rockhopper's investment had been directly expropriated, leading to an immediate and complete deprivation of its investment. The tribunal's award[17] included an analysis of international law issues, an interpretation of the Energy Charter Treaty[18] and an assessment of damages:

• The tribunal declared it had jurisdiction to resolve the dispute, highlighting the role of international arbitration in resolving investment-related disputes.
• The tribunal ordered Italy to pay Rockhopper compensation of EUR 184,000,000 – which was its assessment of the damage suffered by Rockhopper due to Italy's breach of its obligations under the Energy Charter Treaty to protect the company's investment.

This award will significantly impact the energy sector, particularly in terms of how the balance is struck between a State's sovereignty in regulating environmental and public interest policies, on the one hand, and the protection of foreign investments, on the other. This is for two reasons: (i) since the award found in favour of Rockhopper, it may signal to States that regulatory changes impacting foreign investments will be closely scrutinised and potentially lead to liability; and (ii) the fallout from this award will also be closely watched by stakeholders in the energy sector looking for indications of how tribunals will view measures taken by States in response to environmental concerns, particularly in the context of the transition to renewable energy sources.  

Daniel Billy and others v Australia (UNHRC)[19]

In Daniel Billy and others ('Group') v Australia a group of indigenous inhabitants of the Torres Strait Islands brought a complaint against Australia, through the United Nations Human Rights Committee, for an alleged violation of articles 2, 6, 17, 24(1) and 27 of the International Covenant on Civil and Political Rights ('ICCPR').[20]

The Group argued that (i) it was particularly affected by climate change, primarily due to rising sea levels (among other issues related to global warming) causing recurrent flooding and erosion, putting the viability of the low-lying islands themselves at risk, which could lead to them becoming 'completely inundated and uninhabitable';[21] and (ii) Australia had failed to 'implement an adaptation programme to ensure the long-term habitability of the islands'.[22]

In its defence Australia argued, in essence, that (i) violations of international climate change treaties fall outside the scope of ICCPR; (ii) the Group's claim was not substantiated, as it was not demonstrated that the Group was a victim;[23] and (iii) the Group's claim was meritless, because 'it is not possible under international human rights law to attribute climate change to the State party'[24] and, in any case, Australia was indeed adopting several mitigation measures to fight climate change.

On the admissibility of the Group's claim, the tribunal concluded that as the Group was extremely vulnerable and particularly sensitive to the effects of climate change,[25] Australia was required to take the appropriate mitigation measures itself, so the objections raised by Australia should not apply in this case.

Concerning the merits, the tribunal determined that Australia had violated the Group's right to privacy, family and home life and right to enjoy their own culture, as a minority, protected under the ICCPR.[26] It determined that Australia must 'provide adequate compensation' and, specifically, continue to adopt measures to prevent and combat the impact that climate change has on populations, especially those in the most vulnerable situations.[27] 

Verein Klimaseniorinnen Schweiz and Others v Switzerland (ECHR)[28]

In Verein Klimaseniorinnen Schweiz and Others v Switzerland a non-profit association established in the Swiss Confederation ('Switzerland') and some of its members took Switzerland to the European Court of Human Rights ('ECHR') after exhausting all national remedies available. This is considered a landmark case, as the ECHR ruled that a State's failure to take necessary measures to fight climate change is a violation of the European Convention on Human Rights ('Convention').[29]

According to the claimants, Switzerland had failed to implement necessary measures to fight climate change, specifically relating to increasing temperatures, heatwaves and greenhouse gas emissions, which pose a serious health risk,[30] and 'women aged above 75 were at greater risk of premature loss of life, severe impairment of life and of family and private life'[31]. Thus, the claimants argued that their rights to life, to a fair trial, to respect for private and family life (including the home) and to an effective remedy as set out in the Convention had been breached.[32]

The ECHR first concluded that the Verein Klimaseniorinnen Schweiz association had victim status under Article 34 of the Convention.[33] After a detailed analysis of the State's positive obligations in the context of climate change, which include a 'duty to adopt, and to effectively apply in practice, regulations and measures capable of mitigating the existing and potentially irreversible, future effects of climate change'[34] and some of the measures taken by Switzerland in this context, the ECHR concluded that 'there were some critical lacunae in the Swiss authorities' process of putting in place the relevant domestic regulatory framework',[35] which amounted to a violation of Article 8 of the Convention. As for the right to a fair trial as set out in Article 6 of the Convention, the ECHR determined that State courts have an essential role in the matter of climate change and that, by failing to guarantee an adequate response, there had also been a violation of the Convention in this regard.[36] 

Current trends and future prospects 

As stated in the final decision issued in Verein Klimaseniorinnen Schweiz and Others v Switzerland 'climate change is one of the most pressing issues of our times'.[37]

The causes of climate change are so diverse and globalised that it is difficult to mount a unified response across borders. However, international litigation and arbitration have emerged as useful mechanisms for those affected (whether investors, whose rights are affected by measures adopted by States, or individuals, who are increasingly suffering the harmful effects of climate change) to ensure effective protection of their fundamental rights in this area.

From this brief analysis of the above decisions, it can be concluded that international litigation and arbitration place a special duty on States to fight climate change in an appropriate and fair manner, which protects not only the most vulnerable (such as ethnic minorities or the elderly, who particularly suffer from the effects of climate change), but also the rights of investors (who must be considered when adopting new measures).

The trends seen in the most recent decisions also lead to the conclusion that climate change disputes will increase exponentially in the coming years. Of course, it will be up to States themselves to adopt adequate measures to deal with one of the most imposing scientific, social and political challenges of the coming years.

______________

[1] As of 2021, the Grantham Research Institute on Climate Change and the Environment, together with the Sabin Center for Climate Change Law, reported over 1,800 cases of climate litigation filed since 1986 in over 39 countries – information available at https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2021/07/Global-trends-in-climate-change-litigation_2021-snapshot.pdf, accessed 14 April 2024.

[2] Such as the Paris Agreement, the Energy Charter Treaty, the Canada-Colombia Free Trade Agreement, the International Covenant on Civil and Political Rights and the European Convention on Human Rights.

[3] Case materials available at https://www.italaw.com/cases/6320, accessed 14 April 2024.

[4] Eco Oro Minerals Corp. v. Republic of Colombia, ICSID Case No. ARB/16/41.

[5] The regulations followed a decision by Colombia's Constitutional Court that expanded restrictions on mining exploration in high-altitude ecosystems, overturning legal provisions that had stabilised mining project rights in those areas and that were negotiated before 2010.

[6] The Páramo de Santurbán are known for their rich biodiversity and are home to many endemic species, which means that these species are not found anywhere else on Earth.

[7] The Páramo de Santurbán acts as a natural sponge, absorbing precipitation and slowly releasing it into rivers and streams.

[8] The vegetation and soils in these high-altitude ecosystems capture and store carbon dioxide, helping to mitigate the effects of climate change

[9] The Canada-Colombia FTA was signed on 21 November 2008 and entered into force on 15 August 2011 (available at https://wits.worldbank.org/GPTAD/PDF/archive/canada-columbia.pdf, accessed 14 April 2024).

[10] Colombia asserted that it had the sovereign right to regulate in the public interest and that such regulation should be respected under the FTA's provisions.

[11] Eco Oro Minerals Corp. v. Republic of Colombia, ICSID Case No. ARB/16/41, Decision on Jurisdiction, Liability and Directions on Quantum, 9 September 2021.

[12] In our opinion, the tribunal must balance the State's right to regulate in the public interest with protecting the investor's legitimate expectations.

[13] Case materials available at https://www.italaw.com/cases/5788, accessed 14 April 2024.

[14] ICSID Case No. ARB/17/14 – decision available at https://jusmundi.com/en/document/decision/en-rockhopper-exploration-plc-rockhopper-italia-s-p-a-and-rockhopper-mediterranean-ltd-v-italian-republic-final-award-wednesday-24th-august-2022, accessed 20 May 2024.

[15] The Ombrina Mare oil field is located off the coast of Abruzzo, Italy, and was discovered in 2007.

[16] The Energy Charter Treaty, signed in 1991, is an international agreement that establishes a multilateral framework for cross-border cooperation in the energy sector, primarily in fossil fuels. Available at https://www.energycharter.org/fileadmin/DocumentsMedia/Legal/ECTC-en.pdf, accessed 14 April 2024.

[17] The tribunal's 23 August 2022 award is available at https://jusmundi.com/en/document/decision/pdf/en-rockhopper-exploration-plc-rockhopper-italia-s-p-a-and-rockhopper-mediterranean-ltd-v-italian-republic-final-award-wednesday-24th-august-2022, accessed 14 April 2024.

[18] See paragraphs 191 and 193 of the tribunal's award: 'The Tribunal has found, as a matter of fact, that the Claimants had a right to be granted a production concession which was engaged as of 14 August 2015 (...) the Claimants' right to be granted the production concession came to an end due to two specific matters, namely, the Respondent passing the law published on 30 December 2015 and then sending the letter dated 29 January 2016 (based on that law) denying the actual grant of the production concession'.

[19] Case materials available at https://climatecasechart.com/non-us-case/petition-of-torres-strait-islanders-to-the-united-nations-human-rights-committee-alleging-violations-stemming-from-australias-inaction-on-climate-change/, accessed 14 April 2024.

[20] The provisions in question protect the right to life; the right to be free from arbitrary interference with one's privacy, family and home life; the right not to be discriminated against; and the right to enjoy one's own culture. The full text of the ICCPR is available at https://www.ohchr.org/en/instruments-mechanisms/instruments/international-covenant-civil-and-political-rights, accessed 14 April 2024.

[21] See paragraph 2.2 of the decision.

[22] See paragraph 2.7 of the decision.

[23] According to Article 1 of the Optional Protocol to the ICCPR, '[a] State Party to the Covenant that becomes a Party to the present Protocol recognizes the competence of the Committee to receive and consider communications from individuals subject to its jurisdiction who claim to be victims of a violation by that State Party of any of the rights set forth in the Covenant'.

[24] See paragraph 4.3 of the decision.

[25] See paragraph 7.10 of the decision.

[26] These rights are protected in Article 17 (right to privacy, family and home life) and Article 27 (right to enjoy one's own culture, as a minority) of the ICCPR.

[27] See paragraph 11 of the decision. At the time of writing, there has been no confirmation that Australia has paid compensation to any members of the Group, and it has actually 'refused the UN Committee's recommendation to award compensation to the claimants'. See the most recent news at https://www.clientearth.org/latest/press-office/press/one-year-on-from-historic-torres-strait-un-climate-victory-no-compensation-despite-legal-finding/, accessed 7 May 2024.

[28] Case materials available at https://climatecasechart.com/non-us-case/union-of-swiss-senior-women-for-climate-protection-v-swiss-federal-council-and-others/, accessed 14 April 2024.

[29] On the same date – 9 April 2024 – two other cases (Câreme v France and Duarte Agostinho and Others v Portugal and 32 Others) were declared 'inadmissible on procedural grounds'. See the Câreme v France decision at https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2024/20240409_Application-no.-718921_decision-1.pdf, accessed 14 April 2024 and the Duarte Agostinho and Others v Portugal and 32 Others decision at https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2024/20240409_3937120_decision.pdf, accessed 14 April 2024.

[30] See paragraphs 64 to 68 of the decision, available at https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2024/20240409_Application-no.-5360020_judgment.pdf, accessed 14 April 2024.

[31] See paragraph 67 of the decision, available at https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2024/20240409_Application-no.-5360020_judgment.pdf, accessed 14 April 2024. See also paragraphs 45 and 311 of the decision on this matter.

[32] These rights are protected in Article 2 (right to life), Article 6 (right to a fair trial), Article 8 (right to respect for private and family life, including the home) and Article 13 (right to an effective remedy) of the Convention. See paragraphs 26, 27, 43, 46 to 51, 296 to 304 and 312 to 318 of the decision, available at https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2024/20240409_Application-no.-5360020_judgment.pdf, accessed 14 April 2024.

[33] Article 34 of the Convention provides that '[t]he Court may receive applications from any person, non-governmental organization or group of individuals claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention or the Protocols thereto. The High Contracting Parties undertake not to hinder in any way the effective exercise of this right'. As for the individual applicants, the ECHR concluded that they did 'not fulfil the victim-status criteria under Article 34 of the Convention' and therefore 'their complaints should be declared inadmissible as being incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3'. For further details, see paragraphs 527 and 535 of the decision.

[34] See paragraph 545 of the decision.

[35] See paragraph 573 of the decision. The ECHR further added that '[b]y failing to act in good time and in an appropriate and consistent manner regarding the devising, development and implementation of the relevant legislative and administrative framework, the respondent State exceeded its margin of appreciation and failed to comply with its positive obligations in the present context'.

[36] See paragraphs 629 to 640 of the decision.

[37] See paragraph 410 of the decision.