The English courts are emerging as a "hotspot" for environmental and ESG-related claims

Insurers can expect to continue to see an uptick in environmental and mass tort group litigation in the English courts and elsewhere in Europe, against the backdrop of climate change-related, plastics and other environmental risks

This article was originally published in Insurance Day on 8 March 2023

It is fair to say during the past 10 years we have seen a marked uptick in cross-border litigation concerning environmental harms and claims related to environmental, social and governance factors.

The English courts are rapidly emerging as a “hotspot” for environmental litigation against multinationals, claims concerning global operations and supply chains and claims brought in relation to climate change-related harms allegedly caused elsewhere in the world on ubiquitous nuisance grounds. The willingness of the courts to hear such claims has shifted and the potential grounds/legal mechanisms for bringing them continue to be developed.

New era

The Supreme Court decisions in Vedanta v Lungowe (2019), concerning pollution caused by a copper mining operation in Zambia, and Okpabi v Royal Dutch Shell (2021), concerning pollution caused by oil exploration in Nigeria, heralded a new era of cross-border environmental litigation in the English courts, with the prospect of establishing parent company control and ensuring access to justice being fundamental to whether such claims will be allowed to proceed.

Following the decision in Okpabi, claims brought by the Ogale and Bille communities in Nigeria are proceeding against Royal Dutch Shell, which allegedly failed to prevent wide-scale oil pollution as a result of its Nigerian subsidiary’s operations.

In July 2022, the Court of Appeal in Municipio de Mariana v BHP (2022) ruled an estimated 400,000 individuals and businesses who suffered damage as a result of the 2015 Fundão dam collapse could bring claims against BHP in the English courts (BHP’s parent company is domiciled in England), despite parallel litigation and compensation schemes being established in Brazil.

The Brazilian claims against BHP are now progressing through the High Court and damages are estimated at approximately £10bn ($11.83bn). This is an unprecedented case in the English courts in terms of size but the court was undeterred by how unwieldy the case management may prove to be or by the potential for duplication with Brazilian litigation.

Hot on the heels of the BHP decision, Brazilian petro¬chemical giant Braskem has been targeted with litigation in the Netherlands (where its European headquarters is located). At the end of 2022, the Dutch courts ruled claims by Brazilian inhabitants affected by wide-scale subsidence allegedly caused by Braskem’s salt mining activities over several decades in the Maceio region could proceed.

The court considered claims in tort can be brought against both the Dutch-incorporated subsidiary and the Brazilian-domiciled parent company on the grounds that group-level decisions are taken in the Netherlands’ branch and the claims against both companies are inextricably linked (considering environmental indirect polluter liability principles under Brazilian law).

At the end of March 2023, in Jalla v Shell (2021), the Supreme Court will consider whether a 2011 oil spill off the coast of Nigeria that has allegedly caused on¬going pollution constitutes “continuing nuisance” with new actions accruing or whether the nuisance event occurs only once. In various jurisdictions, litigants are seeking to bring environmental damages claims (including in relation to climate change, plastic pollution, PFAS and other types of air pollution) on nuisance grounds. The court’s decision on limitation issues will therefore be of significant importance for potential claimants suing in relation to the ongoing effects of pollution and greenhouse gas (GHG) emissions.
 
‘Historic emissions’ cases

In terms of liability for historic GHG emissions causing alleged damage elsewhere in the world, there are two European cases (Lliuya v RWE and Asmania et al v Holcim) which will be watched closely in other jurisdictions. The case of Lliuya v RWE is the first “historic emissions” case to be brought in Europe. Proceedings have been brought against RWE in the German courts in relation to the melting of a glacier in Huarez, Peru. It is regarded as a test case for whether a private corporation can be held liable for historic GHG emissions.

Lliuya is bringing a claim against RWE on nuisance grounds and claims RWE should be held liable for its percentage contribution to global emissions (relying on attribution science to calculate RWE’s 0.47% share).

In February 2023, in Asmania et al v Holcim, islanders from Pari island, Indonesia brought a case against Switzerland-based building company Holcim in the Swiss courts on the basis that man-made climate change has caused sea levels to rise and the island is at extreme risk of flooding. The claimants seek both damages for historic GHG emissions (to refortify the island’s defences) and also a commitment Holcim will reduce its CO2 emissions 43% by 2030.

Value chain litigation

Value chain litigation (companies being targeted in relation to the sustainability of their global supply chains) is also gathering pace. France has become a key jurisdiction for supply chain litigation on the basis of the duty of vigilance and the French Supply Chain Due Diligence Act, which provides a mechanism for civil claims and redress.

The Enrol Vert v Casino case has been brought by 11 non-governmental organisations (NGOs) against super¬market chain Casino, alleging environmental and human rights harms, due to deforestation caused by the cattle industry in Brazil and Colombia.

The case concerns the obligations of Casino and its Brazilian and Colombian subsidiaries (which have allegedly been purchasing beef from deforested areas) to reduce deforestation and the responsibility of all parties in the production and supply chain for environmental damage.

In January 2023, three NGOs (ClientEarth, Surfrider Foundation Europe and Zero Waste France) filed a lawsuit in the French courts against France-headquartered Danone concerning its contribution to global plastic pollution and failure to engage with the life cycle of its plastic products. It is alleged Danone’s vigilance plan fails to address plastics, despite Danone being one of the top 10 plastic polluters worldwide. Given the prevalence of plastics in our everyday lives and global supply chains, we can only expect to see more such cases brought (whether pursuant to legal doctrines/mechanisms such as duty of vigilance or parent company liability).

In the context of value chains, we are also likely to see modern slavery and other safety-related claims brought against corporates concerning their global operations. At the end of 2022, it was announced a group of Ghanaian children intended to bring claims against Olam Cocoa group, in relation to alleged use of child labour and breach of common law duty of care. Similar claims have previously been intimated against other multinationals, including Nestlé, Mars and Hershey, in the US courts.

While the courts, legal arguments and procedural mechanisms for bringing claims are still evolving, we can certainly expect to continue to see an uptick in environmental and mass tort group litigation in the English courts and elsewhere in Europe, against the backdrop of climate change-related, plastics and other environmental risks.

Lucy Dyson is a partner specialising in complex casualty re/insurance coverage and litigation at RPC