By: Jie Ouyang
This submission has been posted as part of a blog series that seeks to profile the NNHRR Working Group on Human Rights & the Climate Crisis blog series, its vision and plans, and to highlight the expertise of its members, showcasing their research and/or contributions to mission of the group.
Introduction
Private law features prominently in corporate climate litigation around the world. Tort-based claims, either seeking injunctions (e.g. Milieudefensie v Royal Dutch Shell) or damages (e.g. Lliuya v RWE), are among the most well-known. Company law also lends itself to putting directors’ duties under judicial scrutiny (e.g. ClientEarth v Directors of Shell). Moreover, EU (private) law is increasingly mandating pro-climate corporate behaviours and provides new legal catalysts for addressing greenwashing, disclosure and reporting requirements, due diligence obligations and transition plans. Among these developments, one notable trend is the influence of human rights norms in shaping interpretations of private law doctrines. In this context, I argue that climate change cases not only use private law as an instrument for litigation but also litigate private law itself, unsettling its seemingly immutable tenets, revealing their contingency and exploring credible alternatives.
Why (Not) Private Law?
There are several technical reasons that can explain both the strengths and limitations of private law as an instrument in climate litigation. On the one hand, unlike human rights norms, private law doctrines are directly binding on private actors, with open norms such as good faith, public order and good morals, and duty of care abundantly available in most legal systems. These norms obviate lengthy democratic law-making processes while remaining conveniently flexible to accommodate diverse interpretations. On the other hand, stringently conditioned private law remedies do not always align well with the context of climate cases (e.g. the attribution of climate change to a single emitter), while the individualist nature of civil adjudication may be too modest in the face of the mass-scale impact of climate change.
Beyond these doctrinal technicalities, private law plays a fundamental role in structuring the underlying forces driving climate change – by conferring private power, configuring market order, empowering capital accumulation and co-producing collective imaginaries of prosperity. These outcomes are often tied to (a specific understanding of) the classic tenets that organise private legal orders. For example, the absolute conception of private property allows the ‘Haves’ to do whatever they want with their possessions: to invest and keep the returns, to waste and destroy, and to pass to their heirs so that the Haves remain the Haves. Under the banner of contractual freedom, private parties can devise all sorts of high-risk, polluting transactions to maximise economic benefits while shielding themselves behind privity from accountability for the material impacts of their actions on human rights and the climate. Limited liability, a purely legal fiction, becomes sanctified as a moral argument to absolve shareholders, who enjoy virtually unlimited claims to dividends, from answering to corporate harm. Directors are also conveniently insulated from judicial oversight by the so-called ‘business judgment rule’, as if their decisions are made in a social and ecological vacuum driven solely by capitalist logic. Sure, we need legal certainty; sure, we value entrepreneurship – But for whom? And at what cost?
Litigating Private Law in the Shell Case
As we can see, by enabling unbounded private transactions while externalising their climate impact, private law is constitutive of climate change. This entanglement may cast private law as a culprit, yet it also reveals its potential as an ally. That is, by inviting courts to review the fundamental tenets of private law through a climate-sensitive and climate-embedded lens, climate cases are litigating the forms of private law as such and playing a transformative role in disrupting the good old ‘business as usual’.
The Shell case decided by Dutch courts provides an illustrative example. First, both the District Court of the Hague and the Hague Court of Appeals unequivocally confirmed that private companies have human-rights-based obligations to address climate change (District Court, para 4.4.9 et seq; Court of Appeals, para 7.6 et seq). These obligations, through the indirect horizontal effects of human rights, can be channelled into private law reasoning and challenge the strict and somewhat outdated division between private and public law. This shift disallows the (ab)use of private law instruments to violate human rights. Second, the Court of Appeals dismissed Shell’s private law obligation to reduce scope-3 emissions (the emissions created by third parties when using Shell’s products) for failure to pinpoint a percentage and establish its effectiveness. Nonetheless, the relevance of scope-3 emissions in assessing a company’s duty of care was unequivocally acknowledged, especially the substantial scale of adverse impacts of leading companies across their value chains (para 4.4.18 et seq). After all, scope-3 accounts for around 95% of Shell’s carbon emissions. This legal reasoning constitutes a serious climate and social re-qualification of private autonomy and contractual freedom. Third, as an obiter dictum, the Court of Appeals suggested that Shell’s planned investments in new oil and gas fields may conflict with its climate obligations (para 4.5.2). This implies that business models and decisions can no longer be driven solely by profits but must also be embedded in planetary thinking – a legal strategy Milieudefensie appears to be pursuing against ING Bank.
Future Prospect
In all, climate litigation is challenging the mainstream narratives of private law which pivots on a socially and ecologically disembedded notion of private autonomy. Private law doctrines are not as fixed as often presumed; effective strategies should thus focus on revealing the contingency of an abstract and absolute notion of private autonomy and business freedom while exploring socially and ecologically embedded alternatives. An important approach is to historicise the dominant private law norms that have been taken for granted. For example, contractual freedom has no natural scope and was not always an ally of laissez-faire historically. Corporate personhood (and shareholder limited liability) was a quite recent human invention, while shareholder primacy is not even a prescription of black-letter law. Moreover, jurisdictions like China and Argentina have incorporated an overarching ‘green principle’ into their Civil Codes to redefine what are (not) the externalities in private activities.
Examples abound, and at the end of the day, climate litigation is only one venue to unsettle the liberal iteration of private law. Climate litigation has always extended beyond the courtroom to raise visibility and awareness, motivate activism and movements, and even promote legislative interventions; it reshapes the story we tell about our relationship with the planet. It can also contribute to the new story we tell about private law – one that respects both human rights and planetary boundaries.
Bio:
Jie Ouyang is a PhD candidate and Lecturer at the University of Groningen. His research explores the constitutive and transformative role of private law, with a special focus on the legal construction of sustainable consumption at the intersection of European consumer law, fundamental rights and planetary thinking.