Milieudefensie et al. v. Royal Dutch Shell plc.

In April 2019, Milieudefensie (Friends of the Earth Netherlands) and co-plaintiffs (more than 17,000 individuals, ActionAid NL, Both ENDS, Fossielvrij NL, Greenpeace Netherlands, Young Friends of the Earth NL, Waddenvereniging) served Royal Dutch Shell (RDS) a court summons alleging its contributions to climate change are in breach of its duty of care under Dutch law and human rights obligations. The case was filed in the Hague Court of Appeals. The plaintiffs seek a ruling from the court that Shell must reduce its CO2 emissions by 45% by 2030 compared to 2010 levels and to zero by 2050, in line with the Paris Agreement.

On 13 November 2019, Shell filed a Statement of Defence, arguing that there is no legal standard that RDS is breaking by failing to comply with emissions restrictions. Shell further maintained that the plaintiffs' claims are too broad to be covered by Articles 2 and 8 of the ECHR.

The parties presented their evidence for factual and legal justification in September and October 2020, with hearings taking place in December 2020.

Background
This case builds on the landmark Urgenda decision which found that the Dutch government’s inadequate action on climate change violated a duty of care to its citizens. Following the landmark Supreme Court ruling in the Urgenda case, the chances of success for this case against Shell have increased. In the suit against Shell, plaintiffs extend this argument to private companies, arguing that RDS has a duty of care to take action to reduce its greenhouse gas emissions consistent with the Paris Agreement’s goals and scientific evidence.

Relevant Laws and Principles

 * ECHR Articles 2 and 8
 * Dutch Civil Code, Book 6 Section 162

Ruling
On May 26, 2021, the Hague District Court ordered Shell to reduce its emissions by a net 45% by 2030, relative to 2019, across all activities including both its own emissions, those originating from Shell's own operations, and end-use emissions, those emerging from the use of the oil Shell produces. As the Court declared its order provisionally enforceable, RDS will be compelled to meet its reduction requirements even if the case is challenged.

Plaintiffs argued that Shell had an obligation under this standard of care to prevent dangerous climate change through its policies, and the Court applied the standard of care to the company's policies, emissions, consequences of its emissions, human rights, and international and regional legal obligations. The Court determined that firms must accept responsibility for Scope 3 emissions, particularly "where these emissions constitute the majority of a company's CO2 emissions, as is the case for companies that manufacture and sell fossil fuels." Shell was given leeway in assigning emissions reductions between Scope 1, 2, and 3 emissions as long as aggregate emissions were lowered by 45 percent.

Shell's assertions that the EU Emissions Trading System (ETS) preempted further emissions cuts ordered by the court, as well as arguments that the reduction duty would have no effect, were both rejected by the Court. The former was rejected since the ETS only applies to the portion of the emissions that Shell is accountable for in Europe, and the ETS does not cover emissions outside of the EU. Instead, Shell is required by the norm of care to minimise any global emissions that will harm Dutch citizens. Furthermore, the Court rejected the argument that a reduction mandate would have no effect since other companies would replace the emissions. The Court ruled that it is unclear whether other businesses will step in to replace Shell's production in light of the Paris Agreement's responsibilities, and that the causal relationship between production limits and emission reductions should be taken into account. The Court argued: "The court acknowledges that RDS cannot solve this global problem on its own. However, this does not absolve RDS of its individual partial responsibility to do its part regarding the emissions of the Shell group, which it can control and influence."

Takeaways
Paul Benson, a lawyer at Brussels-based NGO Client Earth, which specialises in environmental litigation, says this case "sought to apply the same reasoning [from the Urgenda case against the Dutch government] to a corporate body. That was very novel, and I think a lot of commentators and people in our fairly enclosed legal circle weren't entirely sure what way the court would interpret [that]. I was thrilled for a court to find that a company's climate policy is in effect inadequate," he continues, calling the judgment "ground-breaking". The case was also the first time that a company was ordered to comply with the Paris climate agreement: "[It] shows the Paris agreement has teeth – not just against governments, but against companies."

This case has paved the way for other lawsuits aimed at forcing corporations to comply with the treaty; Verheyen is currently working on a case against German carmakers BMW, Mercedes-Benz, and Volkswagen that, if successful, would force them to phase out combustion engines by 2030, in line with the Paris goals.

Links

 * https://www.ciel.org/news/historic-climate-case-against-shell-filed-in-the-netherlands/ Shell climate case
 * https://en.milieudefensie.nl/news/the-11-most-important-points-from-the-verdict-in-the-climate-case-against-shell