29th ICCML Lecture

Panel disussion on the Shell decision and its ramifications 

On 29 June 2021, the Institute for Corporate and Capital Markets Law (ICCML) hosted a virtual panel discussion on the landmark ruling in re Friends of the Earth v Royal Dutch Shell and on its ramifications for German and international law. The debate focused on the question whether tort law should be used to enforce public welfare.

Having welcomed panelists and audience, the managing director of the ICCML, Prof. Dr. Thilo Kuntz, LL.M. (University of Chicago), gave a brief introduction to the topic. Afterwards, Professor Elbert de Jong from Utrecht University outlined the background and the reasoning of the ruling: The District Court of The Hague had to adjudicate on a case brought by the Dutch Friends of Earth (“Milieudefensie”) and other NGOs against the oil company Royal Dutch Shell (RDS) on the issue of whether Dutch law required RDS to limit its CO₂ emissions. The court ordered Shell to cut back on its emissions by 45 % relative to the 2019 level until 2030. According to the court’s reasoning RDS violated an unwritten duty of care arising from Dutch tort law. The court held RDS responsible not only for its own emissions, but also for environmental detriment caused along its supply chain and by its customers. According to Professor de Jong the most astonishing fact about the judgement was how the court specified the company’s duty of care. Since RDS complied with codified environmental laws, the Dutch judges resorted to soft law such as the Paris Climate Convention and the UN Guiding Principles on Business and Human Rights in order to outline the standard of care.

De Jong’s introducing remarks were followed by a lively debate among the panelists. Prof. Dr. Gerhard Wagner, LL.M. (University of Chicago), from Humboldt University argued that it was hardly possible to determine RDS’ specific contribution to a global problem like climate change. In his opinion, it is arbitrary to hold single companies responsible and to cause market distortions in doing so. Instead, for the sake of climate protection, a concerted action by governments was necessary.

Wagner’s critique was joined by Dr. Hans-Patrick Schröder, litigation attorney from Freshfields Hamburg. He pointed to the legal uncertainty that followed from the Shell ruling for companies in Germany and beyond. Moreover, he predicted more climate activists to follow suit seeking legal actions against large companies.

Dr. Miriam Saage-Maaß from the European Center for Constitutional and Human Rights in Berlin considered the Shell ruling another proof for the growing importance of human rights for private market players. She explained that this dynamic process was recently evidenced by the Supply Chain Act passed by the German parliament in June 2021. The Act constitutes an enforceable responsibility for human rights violations that were perpetrated along a company’s supply chain.

Professor de Jong argued in favor of the Dutch court’s reasoning. He endorsed the argument that a tort law claim against a single company cannot be ruled out just because its relative contribution to the global CO₂ emissions is little. However, he casted doubts on the court’s ability to practically enforce the ruling against a globally operating group of companies.

Following the controversial debate, the panelists answered questions from the audience. In his concluding remarks Prof. Dr. Kuntz emphasized that, despite diverging assessments of the legal solidity of the Shell ruling, its impact on future climate litigation and enterprise policies is beyond doubt.