Shell plc v Vereniging Milieudefensie

3 February, 2025

Shell plc v Vereniging Milieudefensie

Author: Francis Cardell-Oliver

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The decision

On 12 November 2024, the Hague Court of Appeal handed down its judgment in Shell plc v Vereniging Milieudefensie, reversing an order of the Hague District Court requiring Shell plc (and through it, the broader Shell group) to reduce its greenhouse gas emissions by 45% (relative to 2019 levels) by 2030. The Court ordered the claimants, led by a Dutch environmental activist association, to pay Shell’s costs.

Although Shell’s appeal against the particular order made by the District Court was successful, the Court of Appeal did confirm that (i) there is a fundamental human right, derived inter alia from articles 2 and 8 of the ECHR, to be protected from the dangerous effects of anthropogenic climate change; and (ii) in Dutch law that right can operate horizontally, so as to confer legal rights on individual citizens against companies such as Shell. The Court also left open the possibility that investment in new oil and gas projects might breach Shell’s duty. It held, however, that it could not be satisfied on the evidence that Shell’s legal duty included an absolute obligation to reduce its emissions (including ‘downstream’ or ‘scope 3’ emissions) by the particular percentages sought by the plaintiffs (45%, alternatively 35% or 25%, relative to 2019 levels).

It remains to be seen if the claimants will appeal to the Dutch Supreme Court.

Comment

The Court of Appeal’s conclusion that there is a fundamental human right to be protected from harmful effects of climate change is unsurprising and consistent with a growing body of European jurisprudence, including Netherlands v Stichting Urgenda (Dutch Supreme Court, 20 December 2019) (previously analysed here) and Verein Klimaseniorinnen Schweiz v Switzerland [2024] ECHR 304.

The novel aspects of the Court’s decision are (a) its finding that this right had ‘horizontal’ implications and (b) the difficulty it found, having held that Shell had a legal duty to combat climate change, in giving specific content to that duty.

The means by which the Court in Milieudefensie gave the right horizontal effect was the ‘social standard of care’ under article 6:162(2) of the Dutch Civil Code. This is a very broad provision on tort in the French civilian tradition and has no equivalent in English law. The particular reasoning is therefore unlikely to have any direct application in England. Any ‘horizontal’ (private) rights against a company in English law (e.g. under the tort of negligence) would likely be much more limited and fact-specific.

More broadly, the appellate judgment in Milieudefensie illustrates the problems claimants are likely to face under any system of law in establishing the exact content of legal duties to take steps to combat climate change. A similar point is illustrated in an English law context by ClientEarth v Shell Plc [2023] EWHC 1897 (Ch), in which Trower J refused leave to bring a derivative claim for breach of Shell’s directors’ duty to promote the best interests of the company (by taking steps to address climate change). Again, one major hurdle for the claimant was that Shell’s board had a broad discretion as to how to comply with its duty: see at [64], [72].

To succeed (assuming a relevant duty to combat climate change can be established), future claimants will likely need sophisticated expert evidence which addresses the defendant’s particular business and identifies what sort of steps are or should be required of businesses of that kind to achieve widely accepted environmental targets (e.g. the 1.5C target under the Paris Agreement). The claimants’ approach in Milieudefensie – which essentially took the IPCC’s global emissions reduction target of 45% and contended that an oil major from a developed country must be required to do at least that much – is unlikely to be forensically adequate.