Milieudefensie et al. v. Royal Dutch Shell
Case name: Milieudefensie et al. v. Royal Dutch Shell
Jurisdiction: Netherlands
Type of claim: Lawsuits against private companies
Summary of result: The District Court found that Royal Dutch Shell (Shell) owed a duty of care to Dutch citizens to prevent injury due to climate change and ordered Shell to reduce their global CO2 emissions by 45% from 2019 levels by 2030.
Judgement final: Appeal in process
Court instances:
| Court | Type of decision | Summary of decision |
|
Hague District Court of the Netherlands Judgement of May 26, 2021 Case number C/09/571932 |
Trial judge’s decision on summons of claim served against Shell | Order granted |
Sources of claims: Article 6:162 Dutch Civil Code
Summary of Judgement:
Introduction
In a landmark ruling, the Hague District Court in the Netherlands found that the Royal Dutch Shell (Shell) owed a duty of care to Dutch citizens to prevent injury resulting from the carbon emissions associated with their activities and products. The court ordered Shell to reduce their carbon dioxide (CO2) emissions by 45% from their 2019 levels by 2030. This order includes the emissions associated with the company’s operations and the emissions from the use of its products.
On April 5, 2019, Shell was served a court summons in the Hague District Court, alleging that the company had violated their duty of care under Dutch law for failing to take adequate action to curb their contribution to climate change. The action was brought by a number of environmental organizations in the Netherlands, and more than 17000 citizens. The plaintiffs sought an order from the court that Shell must reduce their CO2 emissions by 45% by 2030, relative to their 2019 emission levels.[1]
In November 2019, Shell filed a statement of defence with the court. The company claimed that there was no legal basis to hold them liable for failing to reduce CO2 emissions by the demanded percentage. They also argued that the issue before the court should be decided by the legislature and politics rather than the judiciary[2].
Claims by the parties
a) Plaintiffs
The plaintiffs submitted that Shell owed a duty of care to Dutch citizens to prevent injury resulting from the CO2 emissions associated with Shell’s operations and products. They relied heavily on Urgenda Foundation v State of the Netherlands (2019), an earlier case in which the Supreme Court of the Netherlands found that the Dutch government had violated its duty of care to citizens by not acting on climate change[3]. The plaintiffs argued that given the goals of the Paris Agreement, and the scientific evidence regarding the dangers of climate change, the duty of care should be expanded to private companies.
According to the plaintiffs, Article 6:162 of the Dutch Civil Code contains an unwritten standard of due care. Article 6:162 articulates the definition of a “tortious act” as 1. “a person who commits a tortious act (unlawful act) against another person that can be attributed to him, must repair the damage that this other person has suffered as a result thereof”, 2. “as a tortious act is regarded a violation of someone else’s right (entitlement) and an act or omission in violation of a duty imposed by law of what according to unwritten law has to be regarded as proper social conduct, always as far as there was no justification for this behaviour”, and 3. “a tortious act can be attributed to the tortfeasor (the person committing the tortious act) if it results from his fault or from a cause for which he is accountable by virtue of law or generally accepted principles (common opinion)”[4].
To determine the extent of the unwritten standard, the court must weigh all the relevant facts and circumstances of the case. The plaintiffs argued that article 6:162 created an unwritten standard for Shell that prohibited the company from causing major danger to others when measures could be taken to prevent that danger from occurring[5]. They drew from the Netherlands international obligations to interpret the standard of care, specifically, the European Convention on Human Rights Article 2 (right to life) and 8 (right to a private life, family life, home, and correspondence)[6]. Their interpretation also relied on the United Nations Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises.
European Convention on Human Rights
The European Convention on Human rights is an international treaty that was signed by all 47 members states of the Council of Europe. The Council of Europe is an international organization, separate from the European Union, which was created to protect human rights and the rule of law in Europe after the second world war[7]. The Convention outlines 16 rights that member states must act to protect. It is a legal commitment to abide by certain standards of behaviour to protect the basic freedoms of ordinary people[8].
UN Guiding Principles on Business and Human Rights
The UN Guiding Principles on Business and Human Rights were endorsed by the UN Human Rights Council in 2011. The principles provide a guiding framework for responsible business conduct to address human rights abuses in business operations and global supply chains[9].
OECD Guidelines for Multinational Enterprises
These are non-binding principles and standards created to be applied by government to multinational enterprises. They outline how multinational enterprises should conduct business responsibly in global contexts. The aim of the guidelines is to promote positive contributions by enterprises to economic, environmental, and social progress worldwide.[10]
The plaintiffs sought a remedy in the form of a court order that would require Shell to reduce its emissions by 45% relative to 2019 levels. Alternatively, they sought an order requiring the company to reduce emissions by at least 35% relative to 2019 levels, and further in the alternative, by at least 25% relative to 2019 levels[11]. The reduction sought by the plaintiffs referred to the reduction of CO2 emissions from the Shell group’s entire global energy portfolio.[12] The numbers chosen by the plaintiffs are based on research conducted by the Intergovernmental Panel on Climate Change estimating that to limit global warming to 1.5 degrees Celsius a net reduction of 45% of global CO2 emissions must happen by 2030[13].
b) Defendants
Shell submitted a statement of defence in November 2019 that outlined a number of defenses. Their primary argument was that there was no unwritten standard of care that required them to reduce their emissions. They submitted that there was no legal basis, statutory or otherwise, to hold them liable for failing to reduce emissions by the demanded percentage. They argued that this was a political issue that was best addressed by the legislature and politics rather than by the judiciary[14]. To further this point, Shell’s defence argued that energy companies cannot compel behavioural changes in consumers and that to do so, the government must enact legislation to alter consumer demand[15].
Shell furthermore argued that any obligation to reduce their CO2 emissions would not have the intended effect and would actually be counterproductive to the goal of mitigating climate change. Other companies would act to meet the demand, thereby replacing any emissions reduced by Shell[16].
Decision by the Hague District Court
The court accepted the plaintiffs’ argument and found that article 6:162 of the Dutch Civil Code did place a standard of care on Shell to reduce emissions to avoid injury through climate change. They wrote “[Shell’s] reduction obligation ensues from the unwritten standard of care laid down in Book 6 Section 162 Dutch Civil Code, which means that acting in conflict with what is generally accepted according to unwritten law is unlawful”[17]. In interpreting the scope of the standard of care, the court consulted international obligations and agreements including the European Convention on Human Rights, specifically articles 2 and 8, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises.
The court rejected Shell’s argument that the existing EU emissions trading system pre-empted further emission cuts ordered by the court. The existing emissions trading system only applies to scope 1 emissions, where the order before the court would require Shell to reduce scope 1, 2 and 3 emissions[18]. Moreover, the trading system only covers emissions in Europe that Shell is responsible for, while the standard of care requires Shell to reduce any global emissions that will harm Dutch citizens[19].
Scope 1, 2 and 3 emissions
The World Resources Institute Greenhouse Gas Protocol categorizes greenhouse gas emissions as either scope 1, 2, or 3. Scope 1: Direct emissions from sources that are owned or controlled in full or in part by the organization; 2. Indirect emissions from third-party sources from which the organization has purchased or acquired electricity, steam, or heating for its operations; and 3. All other indirect emissions resulting from activities of the organization, but occurring from greenhouse gas sources owned or controlled by third parties, such as organizations or consumers, including emissions from the use of third-party purchased crude oil and gas[20].
Additionally, the court did not accept Shell’s argument that any obligation to reduce their CO2 emissions would not have any impact. Shell’s claim that emission reductions would be counterproductive was an unjustified assumption that had not been proven to be correct. Additionally, if their argument was correct, it did not absolve Shell from the responsibility they had to do their part to reduce injury from dangerous climate change[21].
Shell was ordered to reduce their CO2 emissions by 45% relative to their 2019 levels by 2030. This includes not only the emissions from Shell’s own operations, but also the so-called “end-use” emissions, which are the emissions others produce through their use of Shell’s oil products. The reduction ordered by the court refers to a reduction of CO2 emissions from the company’s entire global energy portfolio.[22] The court did give Shell flexibility in allocating emissions cuts between scope 1, 2, and 3, so long as the total emissions from the company and its subsidiaries were reduced by 45%.
The District Court’s decision is provisionally enforceable, which means that Shell will be required to meet its reduction obligations even if they choose to appeal the decision[23].
Appeal
Shell started appeal proceedings on 23 August, 2021, and filed its statement of appeal with the Dutch Court of Appeal on March 22, 2022.
[1] Hague District Court, judgment of May 26, 2021, (“Milieudefensie”), Case number C/09/571932, at para 3.1.
[2] Hague District Court judgment, para 4.3.4.
[3] Hague District Court judgment, para 2.4.13.
[4] Dutch Civil Law Code, Article 6:162. Retrieved from http://www.dutchcivillaw.com/legislation/dcctitle6633.htm.
[5] Hague District Court judgment, para 3.2.
[6] Hague District Court judgment, para 4.4.10.
[7] Equality and Human Rights Commission. What is the European Convention on Human Rights? Retrieved from https://www.equalityhumanrights.com/en/what-european-convention-human-rights.
[8] Amnesty International UK. What is the European Convention on Human Rights? Retrieved from https://www.amnesty.org.uk/what-is-the-european-convention-on-human-rights.
[9] United Nations Development Program. United Nations Guiding Principles on Business and Human Rights. [Brochure], retrieved from https://www.undp.org/india/publications/united-nations-guiding-principles-business-and-human-rights.
[10] OECD. (2011). OECD Guidelines for Multinational Enterprises. OECD Publishing. https://doi.org/10.1787/9789264115415-en.
[11] Hague District Court judgment, para 3.1.
[12] Hague District Court judgment, para 4.4.39.
[13] Hague District Court judgment, para 2.3.5.2.
[14] Shell Statement of Defence, November 13, 2019, Case number C/09/571932, paras 2.2.5. 83-90.
[15] Shell Statement of Defence, November 13, 2019, Case number C/09/571932, para 2.2.5. 84.
[16] Hague District Court judgment, para 4.4.49.
[17] Hague District Court judgment, 4.4.1.
[18] Hague District Court judgment, para 4.4.45.
[19] Hague District Court judgment, para 4.4.46.
[20] Hague District Court judgment, para 2.5.4.
[21] Hague District Court judgment, para 4.4.49.
[22] Hague District Court judgment, para 4.4.39.
[23] Hague District Court judgment, para 4.5.7