Further climate claims dismissed - on the "E" in ESG litigation

Rulings by the Regional Courts of Stuttgart, Munich I and Braunschweig: Mercedes, BMW and VW may in principle sell vehicles with combustion engines also beyond 2030

Three of the current five German "climate lawsuits" have been dismissed and three different regional courts have rejected the civil enforcement of climate protection targets by private individuals against companies. Most recently this week, the plaintiffs supported by Greenpeace Deutschland e.V. failed in their action against VW before the Braunschweig Regional Court (judgement of 14 February 2023, case no. 6 O 3931/21). Last week, the managing directors of Deutsche Umwelthilfe also failed in their action for injunctive relief against BMW before the Regional Court of Munich I (judgement of 7 February 2023, case no. 3 O 12581/21). The Regional Court of Stuttgart had already dismissed the injunction action against Mercedes on 13 September 2022 (case no. 17 O 789/21).

According to the applications, the car manufacturers sued should refrain from selling vehicles with combustion engines beyond 2030. For the first time, the decisions bring some clarity to the debate as to whether civil courts in Germany can "force" private companies to do more in protecting the climate, especially if the legislator does not take sufficient measures. An overview and categorisation of the procedural and substantive legal problems of these injunctions can be found here, here and here.

You can also find a discussion of the decision in the proceedings against Mercedes-Benz in the KlimaRZ of October (Meike von Levetzow/Nils Schmidt-Ahrendts, Klimaschutz vor den Zivilgerichten? Sind Gerichte im demokratischen Rechtsstaat die richtigen Instanzen, um über Zeitpunkt und Umfang der Begrenzung von Treibhausgasemissionen zu entscheiden?, KlimaRZ 2022, p. 151).

Reasons for dismissal by the Regional Court of Stuttgart

On 13 September 2022, the Regional Court of Stuttgart was the first German court to dismiss a so-called climate action. The court essentially based its decision on the following two reasons.

Firstly, the Regional Court denies any interference with the rights of the claimants. If the legislator were to take measures to further restrict CO2 emissions, which would be necessary as a result of the emissions attributable to Mercedes and which would restrict the personal lifestyle of the claimants, this could at most be an indirect interference with the future civil liberties of the claimants. However, the effects on the (future) organisation of the plaintiffs' lives are from today’s point of view that uncertain that they do not permit a balancing of interests with the opposing rights of Mercedes under Article 12, Article 14 and Article 2(1) of the German Constitution. In particular, no statement can be made as to whether and what (fundamental rights) restrictions are to be expected if conventional vehicles with combustion engines continue to be sold.

Secondly, a judicial ban on the sale of vehicles with combustion engines would contradict the division of powers and therefore the division of responsibilities between the legislative and judicial branches. The Regional Court assumes that the "constitutional principle of environmental protection (...) enshrined in Article 20a of the Constitution is primarily directed at the legislature". Therefore, the legislator has to make "the essential decisions for the organisation of social life and living conditions" and ultimately set the framework conditions for climate protection, not the civil courts.

Reasons for dismissal by the Regional Court of Munich I

The Regional Court of Munich I also based its dismissal of the climate action brought against BMW primarily on the separation of powers and division of responsibilities between the legislative and judicial branches. In the opinion of the Regional Court, no imminent unlawful interference with the scope of protection of the so called “general personal rights” of the claimants can be established because, in the required balancing of interests, the large number of regulations that the German and European legislators have enacted in order to achieve the goals of the Paris Climate Protection Agreement must be taken into account. Since BMW complies with these legislative requirements and these abstract-general regulations are already based on a comprehensive weighing of the interests and concerns of all parties involved, the legislator has also made the necessary balance between the relevant interests of BMW and the civil liberties of the claimants, in particular their general right of personality. This is because the process of decision-making by the parliamentary legislature is designed to capture the interests of the public in their entire scope and to achieve a balance.

The Regional Court of Munich I also refers to the so-called "Climate Decision" of the Federal Constitutional Court (hereinafter "FCC") (FCC, decision of 24 March 2021, case no. A BvR 2656/18). The FCC expressly stated that the German legislator had taken protective measures that were not obviously unsuitable. The legislator had made efforts to contribute to limiting climate change, not least with the provisions of the Climate Protection Act (hereinafter "CPA") that were challenged before the FCC. The parliamentary legislature was called upon to further concretise these regulations. Climate protection is the responsibility of parliament and the government because the conversion of economy and society to climate neutrality is a highly complex task that allows for different strategies.

Legal classification of the judgements based on the standard of the FCC

The decisions of the regional courts are to be welcomed because they are in line with the jurisprudence of the FCC on the principle of separation of powers.

According to the FCC, the legislator itself must make the relevant regulations for the realisation of fundamental rights. The civil courts also have the task of developing the law. However, the power to "creatively find and develop the law" is limited by the binding nature of case law to the law and justice (FCC, decision of 23 May 2016 - 1 BvR 2230/15, r+s 2016, 407, para. 37).

As a result, the development of the law is only permissible if "it does not set aside the recognisable will of the legislature and replace it with an autonomous judicial balancing of interests" (FCC, loc. cit., para. 38).

In view of these principles, the decisions of the regional courts are obvious. This is because the legislator expressed its intention as to how the German reduction targets are to be achieved in June 2021 with the amendment to the CPA. It defined the relevant sectors and their permissible annual emission quantities by law and prescribed the annual collection of emission data by the Federal Environment Agency (Section 5 (1) and Annexes 1 and 2 to the CPA). In this statutory system, civil court decisions authorising legal action against individual companies from individual sectors would have the effect of a foreign body and would appear to run counter to the intention of the legislator.

This is also supported by the regulations on emissions trading and the reduction of pollutants as part of type approval. Here, the limit values are continuously being set and tightened due to the legislative will to reduce pollutants (in particular Regulation (EC) No. 715/2007 of the European Parliament and of the Council of 20 June 2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6); EC Vehicle Approval Regulation (EC-TOP); Regulation (EU) 2019/631 of the European Parliament and of the Council of 17 April 2019 setting CO2 emission standards for new passenger cars and for new light commercial vehicles).

Against this background, it is obvious that the civil courts would replace the will of the – German and European – legislator formulated in this way in the event of individual companies being sentenced to more far-reaching CO2 savings "with an autonomous judicial weighing of interests" and thus violate the rule of law.

The Stuttgart Regional Court's argument that it is not possible for the civil courts to weigh up the opposing rights is also understandable because the effects on the (future) lives of the parties to the lawsuit are still uncertain. The uncertainty encompasses countless factors influencing the climate and future CO2 savings, from possible further measures by the federal government under the CPA and the state governments to technical progress through geoengineering or investments in climate-protecting industries. In any case, over the 10-year period covered by the climate lawsuits, the impact on the future lives of the parties to the lawsuit may change as a result. To impose further restrictions on companies in a specific industrial sector on the basis of such uncertain effects through civil law proceedings would contradict the largely legally regulated environment in which car manufacturers and energy companies operate. Especially since the plaintiffs are not accusing the companies of violating any statutory or regulatory obligations.

The decisions are therefore correct in the end, even if more climate protection is urgently needed. Censuring individual companies would at best take the pressure to reduce emissions away from competitors and shift emissions (so-called carbon leakage). This can only be countered by sector-specific regulation by the legislator.

Conclusion and outlook: More climate protection but different

The claimants have already announced their appeal against the judgements of the Regional Courts of Stuttgart, Munich I and Braunschweig. The judgements of two other civil courts of first instance are also pending. In view of the novelty of the constitutional starting point and the substantive legal construction, it is to be expected that the Federal Court of Justice will also deal with the issue of "climate protection under civil law" and finally the FCC.

Irrespective of the civil climate lawsuits, Mercedes, for example, has already announced that it will become fully electric by the end of this decade, albeit with market-related restrictions. The aim is to have a climate-neutral vehicle fleet by 2039. In addition, the CO2 footprint per car will be reduced by more than half by 2030 compared to 2020. Stricter laws and further climate protection measures are also expected at both federal and EU level in the near future (e.g. Carbon Border Adjustment Mechanism, tightening of greenhouse gas emissions trading).

The requirements in this changing regulatory environment remain challenging for companies. Further lawsuits are to be expected.