“Climate lawsuits” against German companies under scrutiny

Environmental Action Germany (EAG) (Deutsche Umwelthilfe) is getting serious. Just recently, as Noerr reported, the national heads of EAG and Greenpeace Germany, plus an activist from the Fridays for Future movement, called on three well-known German car manufacturers, BMW, Mercedes-Benz (EAG) and Volkswagen (Greenpeace), and the energy group Wintershall Dea (EAG) to sign a cease-and-desist undertaking with a penalty clause committing them to specific climate protection measures. Since the companies, as expected, did not do so, in September 2021 EAG brought actions against BMW and Mercedes-Benz and, in early October 2021, against Wintershall Dea. In particular, EAG wants to legally oblige car manufacturers to stop placing passenger cars with combustion engines on the market from 2030 onwards and also wants Wintershall Dea to no longer exploit new oil or gas fields, especially from 2026 onwards.

The civil-law “climate lawsuits” now filed against private sector companies, as opposed to public-law actions against public authorities, are a novelty in Germany. They therefore raise a number of new questions of civil procedure as well as of substantive law, which are summarised and assessed below.

If we look at EAG’s reasoning in the Mercedes-Benz case in more detail, it is clear the prospects of success are doubtful. Nevertheless, the lawsuits will step up the pressure on companies to avoid such actions as far as possible through their own climate protection measures, if only for the sake of their reputation.

The claimants’ arguments

To gain a better understanding of the further explanations, we will briefly outline the claimants’ arguments using the example of the action brought against Mercedes-Benz. The claimants warn urgent action is needed both politically and socially. Based on the calculations of Germany’s Council of Experts on the Environment, they calculate Germany has a remaining national CO2 budget of just under 4.2 gigatonnes from January 2021. This would mean the (national) CO2 budget would be completely used up by 2029 at the latest if emissions remain the same, or by 2038 if there is a straight-line reduction. According to the claimants’ arguments, the urgently needed reduction in CO2 emissions is not only the responsibility of the state based on the “advance effect” of fundamental rights, on which the Federal Constitutional Court based its climate protection ruling of 24 March 2021. Instead, private-sector companies as “interferers” should also be obliged to comply with the constitutional task of climate protection via the indirect third-party effect of fundamental rights. According to the claimants, a corresponding right derives from sections 1004 and 823(1) German Civil Code analogously applied, due to infringement of the (future) general personal rights of the claimants as private individuals. The claimants state in their motions of the lawsuit that the global market share of Mercedes-Benz, rather than its national market share, was taken into account “in a manner conserving fundamental rights”, since otherwise Mercedes-Benz would have no CO2 budget left at all.

The claimants demand on this basis that car manufacturers cut their CO2 emissions by reducing their sales of combustion engines by 2029 and completely phasing out the combustion vehicle business by 2030.

Civil-law CO2 ultimatum meets with rule-of-law concerns

A closer examination of the situation will cast light on key aspects that are not included in the claimants’ narrative. Although climate change is one of the key challenges of our time, the question is whether recourse to the civil courts by individual economic players based on a civil-law CO2 ultimatum is legally possible and effective. What argues against this assumption is that the companies being sued are not being accused of a breach of the obligations of conduct laid down by law or by the public authorities. Instead, the obligation called for in the lawsuit to reduce greenhouse gas emissions goes beyond national and European legal requirements. Such a CO2 ultimatum, outside the legal framework for individual private sector companies, does not appear to be effective or legally viable. As regards the climate policy challenges, it is the state that has the political-constitutional responsibility for governance.

The Federal Constitutional Court has held in its settled case law that primarily the legislature is obliged to make the essential provisions itself for the realisation of fundamental rights of the citizens concerned, in particular “in multidimensional, complex fundamental rights situations in which competing freedoms clash and whose boundaries are fluid and difficult to identify” (Fed. Const. Court 108, 282 (311) = NJW 2003, 3111; see Pagenkopf, NVwZ 2019, 185 (187 f.)). Given the multiple factors affecting global climate change, the numerous companies involved in global and German CO2 emissions, and their importance to the economy and prosperity, such a multidimensional, complex setup can hardly be denied. Therefore, if the courts were to slip into the legislator’s role, this would seem incompatible with the principles of democracy and the rule of law and, in particular, with the separation of powers. Consequently, with respect to the rule of law, the judiciary is not responsible for resolving this conflict.

Globally coordinated policy measures would make sense

The need for action at state level is also demonstrated by the fact that globally coordinated policies would only be possible at that level. For example, since a reduction (forced by legal action) in greenhouse gas emissions by a German company would lead to competitive advantages for other companies, possibly also in other countries, it would be useful if an international solution were agreed at state level, which is the objective of the Paris Agreement on Climate Change. This is the only way to avoid the CO2savings of one company being offset by additional emissions elsewhere (known as carbon leakage). However, courts in individual states are not in a position to take such concerted measures. This also shows that the attempts to limit anthropogenic climate change via “climate lawsuits” are a task for the original state governance and should not be decided by civil courts.

No legal protection needed for climate lawsuits

Irrespective of this, there are already serious doubts about the admissibility of the actions brought. In particular, it would already seem doubtful whether the required need for legal protection, or the power to litigate, exists at all. This concerns the legitimate interest of the claimants in bringing proceedings before a civil court in order to obtain the legal protection sought.

For example, Berlin Administrative Court (Berlin AC, judgment of 31/10/2019 – 10 K 412/18 – NVwZ 2020, 1289 (1293)) dismissed an action for performance against the federal government, in which the claimants wanted the federal government to be ordered to introduce stricter climate protection measures. The court pointed out that each individual was affected in one way or another by climate change, so the claimants did not differ from the rest of the population. It said there was none of the “special degree of affectedness” required to distinguish the claimants from the general public. Berlin Administrative Court also referred to a judgment of the EU General Court, in which a climate lawsuit against the European Parliament and the Council had also been dismissed for lack of standing to bring proceedings.

This line of reasoning would also lead to the dismissal of EAG’s “climate lawsuits”. If the right to bring proceedings is already lacking in the vertical relationship between the citizen and the state, this must apply a fortiori to the need for legal protection in the horizontal citizen-to-business relationship.

No disguised group action

The claimants will also have to defend themselves against the assertion that no specific individual infringement of legal rights is seriously and tangibly to be feared, but that the action instead qualifies as a kind of “disguised group action” in which private individuals appear as claimants, but ultimately the interests of all citizens living in Germany are invoked. This is illustrated by the following test: According to the general principles of civil procedure, a judgment has, in principle, only an effect inter partes, meaning between the parties to the proceedings. However, the cease-and-desist undertaking sought by the claimants would not only have an effect between the claimants, but also for and against any citizen living in Germany, and even beyond.

Actions are also not viable in the substance

Apart from this, there are a number of substantive law concerns about the claimants’ cease-and-desist actions.

• The risk alleged by the claimants of undermining their general personal rights through the sale of vehicles with internal combustion engines is already inevitably vague because it lies in the medium-term future, which depends on many factors. It is true that state climate protection measures may, according to the Federal Constitutional Court’s climate protection ruling, in principle interfere with the future personal development of citizens, which is protected under general personal rights. However, it is still uncertain whether and how they will be restricted in their personal development in future. In particular, it is not yet foreseeable what measures will become necessary later to meet climate targets and when, and whether, these will be introduced. The standard for the burden of presentation and proof in civil procedure requires, however, that the claimants present with substantiation a future infringement of general personal rights that is to be feared seriously and tangibly. Insofar as they refer to possible, generally applicable future restrictions and insofar as the discussion centres on extensive, all-round restrictions covering all fellow human beings in all areas of human life, then such a blanket, universally applicable submission in civil procedure will probably not be successful.
  
  
• The central issue of the actions will also be the interferer capacity and the causality that is required for such capacity to exist. It is already doubtful within the meaning of what is known as “equivalent causality” whether the (scope 3) emissions of the vehicles manufactured and sold by Mercedes-Benz can be disregarded without the outlined restrictions on freedom being removed. Given the large number of global emitters of greenhouse gases, equivalently causal contributions to causation by individual players are virtually impossible to pinpoint. For example, as early as 1987 the Federal Court of Justice, regarding the creation of air pollutants by a large number of emitters, held that due to the mixing of the contributions to causation, it is virtually impossible to attribute the harm caused to any particular emitter (aggregate damage) (Federal Court of Justice, judgment of 10/12/1987 – III ZR 220/86, NJW 1988, 478). If these legal concepts were applied to the assertion of an impairment of legal interests caused by Mercedes-Benz in the context of the claims filed for cease-and-desist undertakings, then the action should already be dismissed for that reason. Given the international and multifaceted dimension of climate change and the carbon leakage risk outlined, causality will be a key aspect to be clarified.
  
  
• Another aspect to be considered is that the civil court will have to assess hypothetical alternative causal processes. The claimants’ calculated total budget cannot be viewed as a static parameter, nor do they take into account that, for example due to technological progress, greenhouse gases could in future be absorbed, deposited, stored or otherwise made use of. For example, there is already the option now of using direct air capture to remove CO2 from the atmosphere and to convert it via a complex process into synthetic and ultimately CO2-neutral fuels.
  
  
• It is also doubtful that there is actually a breach of a security obligation which would be necessary for the liability of indirect interferers. The (scope 3) emissions referred to by the claimants, resulting from the use of the manufactured individual vehicles placed on the market, are covered by the legalisation effect of the type approval issued. The approved emissions figures stem from fully harmonised European law, which in turn specifies the civil-law standard of care.
  
  
• Finally, it is also to be examined with a critical eye whether the claimed infringement of legal interests is actually unlawful. The required reconciliation of interests will have to consider that the companies sued face serious competitive disadvantages compared to non-sued competitors and that the constitutional guarantees in their favour (i.e. Article 12 and Article 14 German Basic Law) also carry considerable weight. In the case of Mercedes-Benz, it is to be feared that competitors whose production is not to be regulated by way of civil-law court actions would take over the market share of Mercedes-Benz. In that respect, the effects of CO2 reduction by the sued company on climate change will have to be assessed, along with all doubts about the hypothetical development to be assessed, for example with regard to the risk of carbon leakage. Although courts may hope for a positive effect of a “good example” and there is much to say for Germany and Europe setting a good example, such an effect is vanishingly small, not least given the reports about CO2 emissions in Saudi Arabia (Saudi Aramco), the USA (Chevron) and Russia (Gazprom) and therefore, if provable at all by the claimants, in any case unsuitable for making a success of a civil action as part of a reconciliation of interests.

“Climate compliance” before “climate lawsuits”

Although the “climate lawsuits” against companies will come up against the legal reservations described above, the legal situation will not be clarified until the first rulings by the highest courts. Until then, further lawsuits are likely. Companies will have to identify their environmental risks and assess the likelihood of corresponding actions in order to minimise the risk of successful “climate lawsuits” with this type of “climate compliance”.