AS the need to tackle dangerous climate change becomes ever more urgent, activists have turned to courts to force governments and private actors to take more radical action. In the ground-breaking Stichting Urgenda v Netherlands, the District Court of the Hague held that the Netherlands must cut CO₂ emissions by 25 per cent by 2020 compared with 1990 emission levels (C/09/456689/HA ZA 13–1396, 24 June 2015; upheld by the Netherlands Supreme Court, which ruled that dangerous climate change engages Articles 2 and 8 of the European Convention on Human Rights). Now, in Milieudefensie et al. v Royal Dutch Shell, the same district court has ordered Royal Dutch Shell (hereafter “RDS”) to reduce its CO₂ emissions by net 45 per cent, relative to 2019 levels, by the end of 2030 (C/09/571932/HA ZA 19-379, 26 May 2021). This “reduction obligation” encompasses not only an obligation of result for the Shell group's own activities but also a “significant best-efforts obligation” to reduce emissions throughout its value chain and any entity directly linked to its business operations, products, or services, including end-users (at [4.4.39]). This decision marks the first time that a court has held a major transnational corporation responsible for climate change and is remarkable for its extensive use of international norms and standards in giving content to a domestic private law obligation.

RDS is the parent company for the Shell group, established in the Netherlands but with headquarters in the UK, which includes 1,100 companies operating in 160 countries across the world. The case was brought by seven NGOs, including Milieudefensie; 17,379 individuals also brought claims. The individual claims were not accepted because they did not establish a concrete interest that was distinct from the common one in the class action (at [4.2.7]), and the court only allowed claims of Dutch residents and the inhabitants of the Wadden Sea area, since the differences in time and manner in which global populations are affected by global warming were considered to be too great for non-residents to form part of the class action (at [4.2.3–4]). Thus, the collective claim of ActionAid, whose “operations in the Netherlands are geared towards developing countries” was not allowed.

The relevant law in the case was determined by Article 7 of the Rome II Regulation (non-contractual obligations), which provides that the applicable law is that of the state in which the damage occurs unless the claimant chooses the law of the country in which the event giving rise to the damage occurred. RDS argued that the “event giving rise to the damage” was not the mere adoption of corporate policy of the Shell group, but rather the actual CO₂ emissions, which are global and may therefore lead to the applicability of numerous legal systems (at [4.3.2–6]). However, the court held that Article 7 allows for situations in which “multiple events giving rise to the damage in multiple countries can be identified”; and that corporate policy as determined for the Shell group by RDS in the Netherlands is an “independent cause of the damage”, which may contribute to the harm experienced by Dutch residents (at [4.3.6]). Dutch law was therefore the applicable law. The legal basis of the decision was the “unwritten standard of care” in the Dutch Civil Code (art. 162, Book 6), which is comparable to the common law tort of negligence. In interpreting this standard, the court considered 14 normative standards (including international norms, human rights, the Paris Agreement of 2015), contextual factors (including the policy-setting position of RDS, the group's emissions, and the influence of RDS on business relations) and “scientific consensus” (on action to curb dangerous climate change).

The court covers a great deal of ground in its judgment, although its reasoning is sometimes too compressed. A few broad themes stand out. First, there is – perhaps unsurprisingly – an uncomfortable tension between the court's recognition that its authority is limited territorially and by nationality, and the fact that the harm is global (albeit with differential effects) and the actor responsible is a transnational corporate group. Shell's global policy was the event that gave rise to the relevant harm for determining the applicable law, yet only claims on behalf of Dutch citizens could be accepted for the purpose of standing. Moreover, in identifying the standard of care, the judgment relies on international standards, and imposes a general obligation on RDS to reduce CO₂ emissions for the group, its value chain and its end-users. In other words, the obligation applies globally, even if the responsibility is at least notionally “national”.

Second, the court's reliance on “soft” international norms and standards, together with the “consensus” of scientific bodies, to interpret – and thus fashion – a domestic law obligation that essentially requires private actors to achieve the goals set out by the Paris Agreement is striking. The orthodox position is that the Paris Agreement – and other international standards applicable to state conduct – are not as a matter of positive international law binding on private actors. The Dutch Court acknowledges this point (at [4.4.49]), but since it is also empowered – like many domestic courts – to rely on international norms and principles when applying ambiguous domestic law, the question whether these norms are binding as a matter of international law is largely beside the point. This approach stands in sharp contrast to the corporate responsibility cases in US federal courts, where judges have declined to recognise a cause of action for breaches of international norms on the basis that such norms are not binding on corporations.

The court avoided the tired debate over whether corporations are bound by international human rights law by relying on the UN Guiding Principles on Business and Human Rights (the “UNGP”), noting that “[d]ue to the universally endorsed content of the UNGP, it is irrelevant whether or not RDS has committed itself to the UNGP, although RDS states on its website to support the UNGP” (at [4.4.11]) and “it can be deduced from the UNGP and other soft law instruments that it is universally endorsed that companies must respect human rights” (at [4.4.14]). Like the UNGPs, the Paris Agreement was important in the interpretation of the standard of care. The court considered there to be a “broad international consensus about the need for non-state action” (at [4.4.26]), although it also noted that the “concrete implementation of responsibilities for companies is still unclear” (at [4.4.35]). The court's use of international standards and norms to give content to the domestic law standard of duty is a compelling example of how soft law can be concretised by courts. The UNGPs provide a global standard for the building of consensus around corporate responsibility, which helps empower substate actors (this is not the first time in the field of environmental protection: see e.g., the Supreme Court of India in Vellore Citizens Welfare Forum v Union of India [1996] 5 S.C.C. 647). Given the extensive role of non-state actors in developing the UNGPs, Milieudefensie is an example of soft law acting through domestic courts as a counterbalance to the exclusive sovereign territorial authority of states and the dominance of executives in exercising that authority.

Third, the 45 per cent reduction obligation is not so much remedial as it is forward-looking, although the soundness of this exact figure, and why this approach specifically was taken, may be questioned. The court draws on the Paris Agreement and, in particular, on the Intergovernmental Panel on Climate Change's report's, Global Warming of 1.5^oC (2018), to reach the 45 per cent figure, although it chose 2019 as the base year, instead of 2010, because that was when the summons was issued, concluding in a sweeping statement that this goal is broadly in line “with the widely endorsed consensus that limiting global warming to 1.5^oC requires a net reduction of 45% in global CO₂ emissions in 2030 relative to 2010, and a net reduction of 100% in 2050” (at [4.4.38]). According to the court, RDS has “leeway to develop its particular reduction pathway and to differentiate as it sees fit” but an important consequence “may be that [it] will forgo new investments in the extraction of fossil fuels and/or will limit its production of fossil resources” (at [4.4.39]). Finally, although the responsibility to respect human rights applies to all corporations, the court considered that “the scale and complexity of the means through which enterprises meet that responsibility may vary according to [their size, sector, operational context, ownership and structure] and with the severity of [their] adverse human rights impacts”. Given its past emissions, its global dominance, and its policy-setting role, “much may be expected of RDS” (at [4.4.16]). Such an approach could ensure that there is a fairer distribution of responsibility among corporations.

The extent to which this judgment is enforceable, or whether it will be overturned on appeal, remains to be seen. Nevertheless, this is a ground-breaking decision, not just because a national court was willing to do the heavy lifting to find a major transnational corporation responsible for reducing its CO₂ emissions – throughout its group and value chain – but also because it did so by drawing substantially on “soft law” international law standards and targets, and “scientific consensus”. This is a case about the responsibility of private actors, but it is also an example of how non-state actors play a crucial role in shaping international standards that other substate actors can adopt with the force of domestic law. Whether we will see similar decisions by the courts of other states will largely turn on whether they feel comfortable – in constitutional terms but also politically – to develop domestic tort law by drawing on international standards and common goals. Milieudefensie will make that task easier, potentially paving the way for “bottom up” multilateralism.