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Climate arbitration for better law enforcement

  • Published at 02:23 pm August 29th, 2020
CT_August 2020_Page 5
Photo: Pixabay

Like all international laws, climate agreements suffer from the problem of enforceability

The factors that determine the effectiveness of any international treaty are its provisions for implementation by the state parties via their national laws and states-compliance with their treaty obligations (understood as the adherence to the obligation). 

The compliance is usually insured by adequate sanctions and mechanisms to recognize the breach of its international obligation by a given state party. However, in the case of the Paris Agreement, given the lack of specific sanctions intended in the agreement, does this make its implementation less effective?

There is no specific judge dedicated to hearing climate claims on the international level, and with the lack of enforceability of the Paris agreement obligations, how can we aim to obtain climate justice when it is required? 

This raises the question on the necessity to reflect on alternative ways to go around the missing pieces of the legal systems on the international level to obtain climate justice in order to deal with climate impacts, allow the affected population to make their voices heard and finally to ensure that appropriate actions are taken to prevent further global warming. 

One of the main alternative ways of dispute resolution that is predominantly used, alongside the formal international court systems, is arbitration. Indeed, current globalization and cross-border activities have led to the development of new types of relationships (between states, states and private persons, international organizations and states or private persons), in sectors where climate change questions are becoming more and more present (such as energy, retails, international investments, international insurance, etc). 

Indeed, commercial parties can engage in a dispute against each other on the basis that one activity is contributing to climate change and thus affecting the ability of the other to pursue their own operations. 

Private parties or States could also use the force majeure argument on the basis of climate change in order to justify their non-compliance with their obligations resulting from a specific international contract or treaty. As not all relations are meant to last, disputes arise and parties must consider the best method to settle their disagreement. 

“The 1958 New York Convention on the enforcement of arbitral awards to which more than 150 states are parties, increased the potential for the enforcement of arbitral decisions worldwide”

Since many specific sectors treaties or international contracts contain clauses on dispute resolution through the use of arbitration, and since climate consideration can arise in a variety of contexts and in different forms against carbon emitters or governments, climate arbitration could become a predominant way to ensure the implementation of climate obligations for adaptation and mitigation.

Additionally, if we decide to define international climate change laws as part of the internal law system in general and not simply the legal framework defined by the UNFCCC, then the possibility to use arbitration as a way of taking into account climate consideration to settle a dispute in various activity sectors increases significantly. Therefore, instead of having a formalized court specialized in climate litigation, we could resort to the use of arbitration in order to promote compliance with international climate change laws.

We should note that the article 14 of the UNFCCC provides the possibility to use arbitration but only in case of state dispute over the treaty interpretation thus having a limited scope of climate litigation that could be settled using this method. 

Furthermore, in the recent years, it has not been uncommon to see the development of the use of environmental and climate language in arbitration treaties, investment treaties (ie the 2016 Morocco-Nigeria bilateral investment treaties referring to sustainable development) or have specific working groups created by the main arbitration courts such as the 2019 International Chamber of Commerce Task Force on Arbitration of Climate Change Related Dispute that aims at analyzing the implication of climate change in the arbitration sphere and provide guidelines on how to incorporate climate consideration in arbitration settlements. 

Finally, recent arbitration awards (equivalent to the judgement in a court) shows that climate consideration is becoming more and more important in arbitrators' reasoning.

The previous considerations allow to explain the foreseeable expansion in the use of arbitration to obtain climate justice, however we also need to mention the main characteristic of this method in order to fully grasp its advantages over the normal court system. 

It is not to say that arbitration does not have some drawbacks and not all disputes should be settled using this method. But there are several points that clearly show that arbitration could lead to a more effective climate justice system. 

Firstly, the 1958 New York Convention on the enforcement of arbitral awards to which more than 150 states are parties, increased the potential for the enforcement of arbitral decisions worldwide. Indeed, national court judgments or even some international court judgments are mostly limited in scope in terms of the jurisdiction. 

Thus, an arbitration decision can be more easily enforced and recognized by most of the countries, providing for a wider spectrum of protection against climate change impacts for affected entities. Moreover, since most national laws recognize arbitration and hold it as a mutually exclusive method to normal court litigation, an arbitration award is often regarded as a final way of resolving a dispute. 

Additionally, arbitration offers a neutral space for both parties to make their claims. Indeed, arbitration allows the parties to not be subjected to either jurisdiction (which would require both parties to have a significant understanding of the legal system of the other one, which is usually not the case) due to its procedural flexibility. 

This means that parties are free to determine by themselves the arbitrations rules and applicable laws, place of dispute resolution (which could be especially beneficial for the poorer population if the chosen place is closer to their homes, since in many instances they might not be able to bear the cost of travelling abroad) and fixes the duty and the scope of the power of the arbitration tribunal.

“The procedural flexibility allows arbitration to be an easier process to follow by parties from different nationalities and with different capacities as well as a faster one than a court procedure”

The procedural flexibility allows arbitration to be an easier process to follow by parties from different nationalities and with different capacities as well as a faster one than a court procedure which is especially important when urgent climate mitigation actions are required. 

It is also important to note that despite the parties fixing the rules for their dispute resolution, an arbitration tribunal always has the obligation to follow a due process in order to ensure that both parties have the equal chance to present their case and to defend themselves, thus giving additional insurance of neutrality. 

Another important characteristic of the arbitration process lies in the possibility for parties to designate the arbitrators that will hear their case and thus have some control over who is hearing the case. Considering the fact that scientific expertise is critical in the area of climate change and that most law practitioners often do not possess a deep enough understanding of climate related questions, allowing the parties to have a decisive impact on the choice of their arbitrators is of significant importance. 

Indeed, parties can select arbitrators with significant technical expertise, skills and experience in climate change and therefore do not run the risk to have their case being heard by a judge with little climate change understanding. This also permits to avoid making climate change questions secondary in dispute settlements which could be the case if a judge is not comfortable enough to decide on climate issues. 

The consequences of climate change impacts often lead to the question of knowing if a third party, not directly involved in the dispute per se, can also have an interest in participating in the arbitration process. 

Indeed, certain advocating groups, NGOs or other intergovernmental organizations representing the interest of civil society and the population most affected by climate change impacts should be able to participate in climate disputes as additional parties. Arbitration allows parties to express their consent for a third relevant party to join their dispute and could help them gain some important support in the process of settling their dispute. 

Especially in cases involving developing nations where having an additional ally to support their cause and provide them with additional arguments or capacity to make their claim stronger can be used as a tremendous advantage. 

Finally, by being specifically planned, arbitration allows for more predictability and certainty and therefore leads to the development in some fields of uniform standards in international law of acceptable behaviour. 

Therefore, the use of arbitration in climate litigation could lead to the development of similarly recognized standards of behaviour by the various international entities, contributing to better climate mitigation and adaptation practices. Arbitrational courts would then become the main protector of the public interest in the area of climate justice and set the trend of action to combat climate change. 

Anne-Laure Pilat has a background in public and European environmental law and is currently working in Bangladesh on issues related to climate and agriculture. Her main research interest lies in the use of law and regulation to help mitigation and adaptation actions to climate change. 

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