The Shell case, decided by the Hague District Court on 26 May 2021, is part of a growing body of climate cases. So far, the successful cases within the EU had been brought against states. In different legal contexts, the Netherlands, Ireland, France, and Germany were required by their national judiciaries to further reduce emissions. The Shell case extends this obligation to a private party, but not any private party. Royal Dutch Shell is one of the 5 biggest multinational oil companies.
I argued before that the Urgenda case in the Netherlands and the Climate Protection Act case in Germany defended rather than undermined separation of powers and furthered rather than threatened the legitimacy in modern constitutional democracies. The Shell case raises the question: Can courts also require private parties to take urgently necessary climate action or does this go one step too far? (For the latter view see here and here)
This is also an issue of separation of powers, because the critics do not question whether emission reduction obligations may be imposed at all (for example in national legislation) but whether it is for the court to do so. I argue here that the Shell case is justified in light of separation of powers.
National judiciaries must be able to act also against private parties in order protect the function of the judiciary in constitutional democracies. What the Shell case does is that it liberates the political-decision maker from the suffocating grip of investor state dispute settlement (ISDS) mechanisms, in particular the mechanism under the Energy Charter Treaty (ECT).
Reliance by energy companies on the ECT has drawn disputes away from constitutionally embedded, independent national judiciaries into the questionable twilight of investment arbitration. Whenever taking climate actions, national governments need to consider the ECT. Compensation paid is paid with the possibility in mind that companies turn to international arbitration. This is also the case in the implementation of climate cases against states. By stepping up and demanding compliance with human rights, also from private parties, national judiciaries could effectively intervene and stop this process of hollowing-out the institutional structures that ensure the democratic will-formation process.
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