Governments are liable for failing to regulate polluting companies, rules international court
ICJ’s opinion hailed as ‘ground-breaking’ and ‘historic’, with implications for future climate law-making around the world
Governments may be held liable for failing to regulate polluting companies, under a major new legal ruling.
The International Court of Justice (ICJ) concluded on Wednesday that states have a duty under international law to mitigate climate change, which includes clamping down on emissions from the private sector.
The landmark advisory opinion, which ran to 133 pages, said countries that failed to prevent climate-related damage may have to pay compensation.
Nicolas Lockhart, an ESG lawyer at Sidley Austin, described the ruling as “groundbreaking” and “historic”, adding that it may empower some countries to pursue sustainability laws.
“In the current circumstances, where some countries are having second thoughts about pushing ahead on sustainability regulation, this will give them a push, as there are legal requirements under international law for them to do so,” Lockhart told Real Economy Progress.
The opinion says a state “needs to provide sufficient regulation and oversight over emissions caused by or resulting from private actors’ activities,” he explained.
Specifically, the ruling concludes that “a State may be responsible where, for example, it has failed to exercise due diligence by not taking the necessary regulatory and legislative measures to limit the quantity of emissions caused by private actors under its jurisdiction.”
Earlier this month, the Inter American Court of Human Rights published its own advisory opinion on the climate emergency and human rights, which included a range of actions states should force companies to undertake.
They should require “business enterprises to take measures to reduce such emissions” and “adopt a range of regulations to discourage greenwashing and undue corporate influence in the political and regulatory domains in this regard”, the court wrote.
“The ICJ is a little bit more cautious,” Lockhart noted, as its opinion avoids prescribing any actions.
Dominic Coppens, who advises governments, companies and civil society on international trade rules at Sidley, said it was significant that all ICJ judges supported this week’s ruling.
“The challenge of unanimity is that you often end up with the lowest common denominator, and the problem with the most common denominator is that you often lose robustness,” he explained.
“What is remarkable here is that the court has spoken unanimously and robustly.”
While not aimed directly at companies, Coppens said large issuers should seek to understand “the potential implications for them for national and international regulation and litigation around climate change”.