Climate Litigation against companies

The article takes the spectacular Shell ruling from The Hague as an opportunity to identify cross-jurisdictional problems of civil climate change litigation. The Shell case was the first climate action between private parties that was successful in the first instance and led to Shell’s obligation to drastically reduce its greenhouse gas emissions, including its Scope 3 emissions. From the perspective of legal realism, the Dutch ruling provides a momentum for climate litigation worldwide. However, from the perspective of potential lawsuits for the reduction of CO2 emissions against companies in Germany, one must assert that the Shell ruling cannot simply be transposed into the German legal order.


Introduction
There is growing pressure on the "carbon majors" 1 to change their course in the fight against climate change. This pressure is also being exerted by the private sector. 2 In 2021, several developments attracted a great deal of attention: (1) ExxonMobil's shareholders elected candidates of the activist hedge fund "Engine No.1" to the executive board of the American oil corporation despite fierce opposition from the company. 3 These candidates are supposed to bring about an "ecological transformation" (grüne Wende) of the group, which has largely insisted on maintaining the concept of fossil fuels. 4 (2) Management of the energy group Chevron was taken by surprise when 61% of its shareholders voted in favour of a motion demanding that Chevron reduce its greenhouse gas emissions (including the so-called Scope 3 emissions). 5 Scope 3 emissions include all indirect emissions that result from a company's distribution, products or value chain. Thus, the product-related emissions of Chevron's business partners and customers, which result

Open Access
Climate Action Milieudefensie et al. v. Shell marked a spectacular turning point. For the first time, a climate action under private law brought by private parties against private parties ("private enforcement" 8 )-an action that did not concern a specific project (linked to an industrial plant) but was directed against the effects of private action on the global climate as such-was successful.
The following discussion will address the ways in which this judgement may act as a catalyst. We will begin by outlining the concept of Climate Litigation, categorising climate actions into vertical (public-law) and horizontal (private-law) categories and the methodology (the "Climate Litigation" section). Then, we will summarise the salient points of the Shell decision (the "An overview of the Shell judgement of 26 May 2021" section) and identify those problem areas that span individual legal orders in horizontal climate actions, contextualising the statements of the Dutch judgement in the process (the "Crossjurisdictional issues" section). Finally, we will discuss the effects of the Shell ruling on German companies (the "Can the statements of the Shell case be applied to German law?" section).

The concept of Climate Litigation
The term Climate Litigation has no fixed legal contour. 9 However, it is usually understood as including all legal proceedings related to the causes and consequences of anthropogenic climate change. 10 It includes cases that are directed against a single climate-damaging project as well as cases that concern the global climate as such. Climate Litigation forms part of the broader concept of climate action including all activities of various actors aiming to prevent or reduce climate-related damages to society. 11

Types of Climate Litigation
Based on the person of the defendant in climate claims, a distinction can be made between vertical and horizontal climate claims.

Vertical climate actions
Vertical climate actions concern the relationship between private individuals and the state and address the question of sufficient state climate policy. They generally belong to the area of public law, i.e. they are brought before the administrative and constitutional courts. The state's duties to protect fundamental and human rights as well as its obligations under international law resulting from ratified international agreements constitute the yardstick of review. 12 The most prominent example of a successful vertical climate action is the Urgenda case. This decision was ground-breaking because it was the first time that a court enjoined a state to comprehensively reduce CO 2 emissions: In 2019, the Hoge Raad ordered the Dutch state to reduce the country's greenhouse gas emissions by 25%compared to 1990-by the end of 2020. 13 This action has already been replicated successfully in neighbouring 9 Rodi/Kalis, Klimaklagen als Instrument des Klimaschutzes, KlimR 2022, p. 5, 5. 10  Milieudefensie took this success as an opportunity to launch a campaign in mid-January 2022, demanding another 29 companies to publish plans for a far-reaching reduction in greenhouse gas emissions (at least 45% compared to 2019 levels by 2030), see https:// en. milie udefe nsie. nl/ news/ logo-the-solut ion-is-less-pollu tion-milie udefe nsie-frien ds-of-the-earth-nethe rlandsdeman ds-clima te-plan-from-30-major-clima te-pollu ters (1.3.2022).
Belgium. 14 There are similar attempts currently underway in Italy 15 and Poland 16 .
In Germany, the Constitutional Court's decision of 24 March 2021, which declared parts of the Federal Climate Protection Act unconstitutional, 17 is already considered "epoch-making". 18 It belongs in the category of vertical climate actions. The association Environmental Action Germany (Deutsche Umwelthilfe e.V.) has also filed constitutional complaints against several federal states. 19 By decision of 18 January 2022, however, the Constitutional Court did not accept any of the constitutional complaints for decision. 20 Still pending is a second constitutional complaint at the federal level, which children and young adults filed with the support of the association Environmental Action Germany on 24 January 2022. 21 It aims at a further tightening of the Federal Climate Protection Act. 22

Horizontal climate actions
Horizontal climate actions brought by individuals against companies focus on the question of what responsibility private greenhouse gas emitters bear for the consequences of anthropogenic climate change. They are generally brought before civil courts and are typically based on claims under private law-usually torts-that protect the body, health, or property. 23 Fundamental and human rights as well as international agreements do not impose obligations on companies directly, but they do have an indirect horizontal effect. They allow, through the interpretation of general clauses and open elements of offences under tort law (such as "faute" or unlawfulness), for the further legal development of new duties of care and duties of care towards third parties that protect the climate. 24 Already in the early 2000s, in various proceedings, individual states and private individuals in the USA triedalbeit unsuccessfully-to assign responsibility for climate change and damage resulting from climate change to the "carbon majors". 25 More recently, there has been a new wave of litigation, 26 which has now also reached Europe. 27 In Germany, for instance, the case of the Peruvian farmer Saúl Ananías Luciano Lliuya against RWE AG (RWE), which is currently pending before the Higher Regional Court of Hamm (OLG Hamm), has attracted a great deal of media attention. At its core, Lliuya's action is based on the claim for removal and injunction pursuant to § 1004 of the German Civil Code. 28 It seeks the declaration that RWE will assume pro rata costs that Lliuya For an overview of these and similar proceedings, see http:// clima tecas echart. com/ clima te-change-litig ation/ case-categ ory/ commonlaw-claims/ (1.3.2022). 27 Setzer/Byrnes, Global trends in climate change litigation: 2020 snapshot, Policy report, July 2020, S. 12, https:// www. lse. ac. uk/ grant hamin stitu te/ wpconte nt/ uploa ds/ 2020/ 07/ Global-trends-in-clima te-change-litig ation_ 2020snaps hot. pdf (1.3.2022), p. 18 ff. (Figure 2.2). 28 § 1004 of the German Civil Code: "(1) If the ownership is interfered with by means other than removal or retention of possession, the owner may require the disturber to remove the interference. If further interferences are to be feared, the owner may seek a prohibitory injunction. (2) The claim is excluded if the owner is obliged to tolerate the interference. " incurred for measures to protect his property which, he argues, is at risk of flooding due to the threat of glacier melt caused by climate change. 29 The requested costreimbursement rate of 0.47% is based on a 2014 study that provides a quantitative analysis of the historical emissions of the ninety largest private and state actors in the fossil fuel and cement industry, including RWE, for the period from 1854 to 2010. 30 While the RWE proceedings concern the impending violation of an individual legal interest (property), an action that parallels the Shell proceedings has been pending in France since the beginning of 2020 against Total S.A. (Total). It involves the protection of a general interest, namely the global climate, independently of a violation of an individual legal interest. On the basis of the French Due Diligence Act of 2017 (the so-called loi de vigilance) 31 , the plaintiffs (NGOs and individual municipalities) are demanding that Total be ordered to reduce its future emissions. 32

Methodology
As it is not the first time that the Dutch courts have taken the lead in matters of climate protection-the Urgenda decision inaugurated the worldwide success of vertical climate actions, the Shell judgement prompts an analysis, using the means of comparative law, of whether it may also serve as a source of inspiration for horizontal climate actions in other legal orders. The method of comparative law is supplemented by a dogmatic discussion from the perspective of German law to examine the effects of the Shell ruling on German companies.

An overview of the Shell judgement of 26 May 2021
The Shell action was the first successful horizontal climate action (at least in the first instance) that focused on the protection of the global climate. The plaintiffs were the long-established Dutch non-governmental organisation Milieudefensie as well as other environmental associations and 17,379 individuals. The defendant was the parent company of the Shell Group, Royal Dutch Shell plc, headquartered in The Hague.
Concerning the question of admissibility, the District Court first addressed the admissibility of the class actions brought by Milieudefensie and the other environmental associations. 33 In the Netherlands, Art. 3:305a of the Dutch Civil Code allows foundations or associations to bring actions to protect the similar interests of other persons, to the extent that these interests correspond to the statutory purpose. At first, the court rejected the argument that the entire (future) world population shares a similar interest, on the grounds that this population would be affected by climate change in too many different ways. 34 But it assessed the interests of the Dutch population's present and future generations otherwise: In the court's view, their interests were suitable for bundling in a class action. 35 On this basis, it declared the class actions of virtually all the environmental associations participating in litigation admissible. 36 The court declared the actions of the 17,379 individuals inadmissible, 37 stating that they lacked a sufficiently concrete individual interest compared to the interests pursued by the class action. 38 On the merits, the Hague District Court first reviewed the applicable law. Based on the connecting factor "event giving rise to the damage" (place of action) in Art. 7 of the Rome II Regulation, it arrived at Dutch tort law, since Shell makes its group-wide management decisions-at least to date 39 -in The Hague. 40 As a basis for the claim, the court turned to the general clause of Dutch tort law (Art. 6:162 of the Dutch Civil Code). 41 It focused its review on the question of whether it was possible to construct, from the unwritten tort standard of care, a duty 31 On this, see Nasse, Devoir de vigilance -Die neue Sorgfaltspflicht zur Menschenrechtsverantwortung für Großunternehmen in Frankreich, ZEuP 2019, p. 773 ff.; in detail, Nasse, Loi de vigilance, 2022 (forthcoming). 32 39 Following the judgment, Shell announced that it would move its administrative headquarters from The Hague to London. It cited taxation as the official reason for doing so. Yet there has been conjecture that the climate action pending on appeal in the Netherlands also has something to do with it. The extent to which the transfer of the registered headquarters ex nunc changes the applicable law under Article 7 of the Rome II Regulation (the so-called change of applicable law) must be the subject of another contribution. 40  for Shell to reduce the greenhouse gas emissions of the entire group. 42 The court affirmed this by combining and condensing various aspects into a duty of care, including (i) the group-wide corporate policy determined by Shell's parent company; (ii) the CO 2 emissions that can be attributed to the group; (iii) the consequences of CO 2 emissions for the Netherlands and, in particular, for the Wadden region; (iv) the right to life and the right to respect for the private and family life of Dutch residents that follows from the ECHR; (v) the UN Guiding Principles on Business and Human Rights (the so-called 'Ruggy Principles'); (vi) Shell's control and influence over the CO 2 emissions of the Shell group and its business partners; (vii) necessary measures to curb climate change; (viii) possible reduction pathways; (ix) the relationship between climate protection and growing energy demand; (x) emissions trading schemes, operating permits and Shell's role in providing the population with energy (…). 43 After a 45-page review, the court finally ordered Shell to reduce its greenhouse gas emissions by 45% by 2030 compared to the reference year of 2019. 44 Even though Shell has now appealed the judgement, 45 it must nevertheless begin to implement the District Court's decision, since the judgement has been declared provisionally enforceable. 46

Cross-jurisdictional issues
From the proceedings pending so far, we can identify, across various legal orders, a number of comparable legal questions and issues of climate liability under Private Law.

Private International Law
Environmental pollution knows no borders: This holds especially true for climate damage. 47 Ideally, therefore, the law should offer a global response. However, there is no harmonised global uniform law in tort law that is relevant here. Instead, questions of the forum and applicable law are regulated autonomously by the states concerned or by the EU. For cross-border climate actions, the courts must therefore first assess their international jurisdiction and decide which of the competing substantive laws shall apply in casu. 48 Prima facie, the Shell case, unlike the RWE case, did not involve any cross-border element. The plaintiffs were primarily Dutch NGOs 49 , Shell's main office is located in the Netherlands (at least to date), 50 and the plaintiff 's accusation concerned a corporate policy established in The Hague. 51 However, the action's objective was to reduce CO 2 emissions worldwide, in particular, also those produced by group companies and business partners located abroad (Scope 3 emissions). It is therefore convincing that the Hague Court addressed questions of Private International Law.

International jurisdiction
In the EU, actions against legal entities can be brought at their registered seat, administrative seat, or the seat of their headquarters. The courts in these places have international jurisdiction pursuant to Art. 4 para. 1, 63 para. 1 of the Brussels Ibis Regulation. In addition, the special jurisdiction for torts under Art. 7 No. 2 of the Brussels Ibis Regulation allows the plaintiff to choose further places of jurisdiction at the place of action or the place of the effect of the contested tort. Here already, the questions arose that then became critical again in determining the applicable law under Art. 4 and 7 of the Rome II Regulation.
The first matter in dispute concerned the question whether the place of the corporate management decision or the establishment of a fundamental corporate policy should be regarded as the place of action within the meaning of Art. 7 No. 2 of the Brussels Ibis Regulation and should therefore be considered determinative of jurisdiction. To date, company decisions (contrary to the pollution itself by industrial plants) have been classified, for the most part, as mere preparatory acts, and thus not as the place of action. 52 The Hague District Court did not comment on this in the Shell judgement. But it also did not need to do so, since the place where corporate policy is decided is typically identical with one of the jurisdictions already covered under Art. 4 para. climate damages threaten to arise globally, companies fear that they can be taken to court worldwide. Scholars have therefore attempted to interpret the jurisdiction of the place of effect restrictively, 53 for instance, by turning to the mosaic theory developed for dispersed losses. 54 While the reasoning is not sufficiently convincing from a doctrinal perspective, 55 it is also not necessary in practical terms, since the territorial scope of the Brussels Ibis Regulation is limited, in any case, to the Member-State courts. 56 Therefore, companies in the EU need not fear being sued in a third state on the basis of Art. 7 No. 2 of the Brussels Ibis Regulation. 57

The applicable rules of tort law
The rule of tort law applicable to climate damages must be determined pursuant to the Rome II Regulation. The general provision under tort law in Art. 4 of the Rome II Regulation is based on the place where the damage occurred (in other words, the place where the legal interest was violated or the place of effect). But there is a special rule for "environmental damage" in Art. 7 of the Rome II Regulation. It follows the so-called principle of ubiquity (Ubiquitätsprinzip) and allows the plaintiff to deviate from the law of the place of effect by instead unilaterally invoking the law "of the country in which the event giving rise to the damage occurred"-that is, the law of the place of action. 58 The Hague District Court first stated succinctly that climate change is environmental damage. It thus affirmed the substantive scope of Art. 7 of the Rome II Regulation. 59 This subsumption presupposed that not only concrete pollution (e.g. due to a chemical accident) but also global warming caused by anthropogenic CO 2 emissions as such should already be qualified as environmental damage. Yet this stance is controversial. 60 The Hague Court then came to the application of Dutch tort law by taking recourse to the place of action under Art. 7 of the Rome II Regulation. 61 This is remarkable insofar as the primary point of reference in climate liability constellations until now has been the place of the concrete greenhouse gas emission (e.g. the site of the power plant). 62 To date, previous corporate decisions of the management board have been disregarded as mere preparatory acts. 63 The Hague Court chose a different approach. It argued that the place where Shell's board of directors established the group's emissions and climate policy was an independent place of action. 64 Even though Art. 7 of the Rome II Regulation refers to "the harmful event", the Court maintained that in those situations in which multiple acts contribute to environmental damage, there is leeway to qualify each of these events as an independent place of action. 65 In the alternative, the Court elaborated that Art. 4 of the Rome II also led to the application of Dutch substantive law due to domestic violations of legal interests as a result of climate change. 66 Since the plaintiffs in the Shell proceedings only claimed present and future emissions as the matter in dispute, it was not necessary to review the intertemporal applicability of the Rome II Regulation. 67  German Introductory Act to the Civil Code), in force prior to the Rome II Regulation, in order to determine the applicable tort rule. 68 The special rule pursuant to Art. 17 of the Rome II Regulation can be used to loosen or modify the tort rule in Art. 4 and 7 of the Rome II Regulation. 69 This rule establishes that the rules of safety and conduct in force at the place of action shall be taken into account. However, they are only considered at the level of substantive law (local and moral data approach 70 ). Accordingly, the Hague Court discussed the provision's significance in connection with emissions certificate trading and operating permits issued at the location of the plant only at the level of the applicable substantive law (here Dutch law). 71

Tortious liability
From a plaintiff 's perspective, substantive law presents the greatest hurdles for climate actions.

Bases for claims
Cross-jurisdictionally, the applicable rules of tort law offer most of the bases for claims for the liability of private greenhouse gas emitters. From a conflict of laws classification perspective, these rules also include provisions for claims to prevent property damage (e.g. § 1004 of the German Civil Code). 72 Considered from a comparative functional angle, various legal orders mostly have parallel prerequisites of tortious liability. 73 Differences may emerge if a legal order has strict rules of liability, independent of fault (Gefährdungshaftung), that can be utilised for climate actions. 74 The Shell lawsuit is based on Art. 6:162 of the Dutch Civil Code, the general clause of Dutch tort law. In France, the loi de vigilance passed in 2017, which imposes the duty on large companies to draw up a risk and action plan focused on human rights and environmental protection and serves as the basis for the lawsuit pending against Total, explicitly refers to the tort law of the French Civil Code. 75 Lliuya has based his action against RWE on § 1004 of the German Civil Code, the claim to removal and injunction in cases of property infringement. 76

The problem of violations of legal interest
Climate change as a problem of the commons 77 raises the question of the scope of the protection of legal interests because global warming as such does not involve a violation of individual legal rights. The institution of the "public nuisance" under common law serves as a legal institution that can establish liability under private law if common interests have been violated. 78

Causation and attribution
Much of the debate on climate liability law revolves around the question of the causation and attribution giving rise to liability. 83

The relationship of cause and effect (attribution)
The first problem is whether a sufficiently close relationship of cause and effect can be established between individual damaging events and the emissions of a specific company (attribution or imputability). Such a causal link was denied, for example, in Comer v. Murphy Oil USA. 84 In these proceedings, the plaintiffs sought to hold the oil industry liable for damages caused by Hurricane Katrina, claiming that the hurricane was a manifestation of extreme weather events due to climate change. The Court held that there was not sufficient proof of a close link between the defendants' emissions and the hurricane damage. 85 Since then, considerable progress has been made in attribution science tracing regional and local environmental changes back to global earth warming, 86 which needs to be translated into law. 87 One example is a study conducted by the University of Oxford and the University of Washington related to the RWE case concluding that the flood risk to Huaraz, the home town of the plaintiff in the RWE case, is almost entirely caused by anthropogenic climate change. 88 The Court in the RWE case is still taking evidence on the multi-stage chain of causation from greenhouse gas emissions to global temperature increases and local climatic changes to concrete (impending) individual damage. 89 In the Shell proceedings, the Hague District Court chose not to hear evidence. In its decision, it referred instead to the reports of the Intergovernmental Panel on Climate Change (IPCC) and the Royal Netherlands Meteorological Institute. 90 The courts in the Urgenda case had already referred to the findings of such specialised institutions, which collect and assess the current state of global climate research. 91 In its decision of 24 March 2021, the German Constitutional Court also relied on IPCC reports as well as on reports of the German Environment Agency and the German government's scientific advisory body on environmental issues. 92 There is an essential difference between these three proceedings and the RWE case: In the Shell, Urgenda, and Karlsruhe cases, it was not necessary to consider the last stage of causation because each of these decisions focused on the question of future emissions. Consequently, there was no need to trace an individual violation of legal interests back to a defendant's concrete emissions. It was enough that the courts, by referring to the IPCC reports, affirmed the causal link between greenhouse gas emissions and climate damage in general.

Multiple emitters
The plaintiff 's side faces another problem of imputability due to the fact that the greenhouse effect is a consequence of the combined actions of countless emitters whose individual contribution to the total emissions is negligible.
Like the Dutch state in Urgenda and the German Bundestag in its response to the constitutional complaints that led to the Karlsruhe Court's climate decision, Shell, too, tried to deny responsibility for climate change by citing the large number of emitters: It argued that its own contribution is negligible and that the obligation to reduce emissions is ineffective. 93 Moreover, Shell claimed that the space it would vacate in the energy sector in order to meet emission targets would be taken up immediately by competitors (substitution). 94 The District Court did not accept this objection of alternative behaviour (which would not have any impact on climate change) 95 on the grounds that it presupposed a "business as usual" scenario, failing to recognise that competitors were increasingly forced, both internally and externally, to make their business models (more) climate-friendly. 96 The court stated that even if Shell could not solve the global problem of climate change alone, it had to contribute to solving the problem. 97 The Hoge Raad had already advanced this reasoning in Urgenda by ordering the Dutch state "to do its part". 98 The German Constitutional Court also did not accept the argument that other states' emissions should relieve the Federal Republic of its responsibilities. 99

Unlawfulness: the duty of care towards third parties to reduce CO2 emissions?
Private Climate Litigation revolves around the question of whether or to what extent private emitters have a duty to reduce their greenhouse gas emissions. Either such a reduction obligation is the direct subject of the claim, as in the Shell case, or it is derived from an unwritten duty of care towards third parties that aims to adopt measures against the "source of danger CO 2 emissions".
Many German legal scholars remain sceptical about a duty of care towards third parties (Verkehrspflicht) to reduce CO 2 emissions. 100 They argue that greenhouse gas emissions are (still) an inevitable component of ensuring a stable energy supply for society. 101 A reduction obligation would threaten the general public's stable energy supply, which the German Constitutional Court has in fact recognised as the basis of a dignified existence. 102 Moreover, emitters have permits and emission allowances under public law. 103 Scholars argue that the unity of the legal order requires that these be respected. 104 Cross-jurisdictionally, disregarding permits would mean running the risk that the judgement would not be recognised and enforced in the state that issued the permits under its Public Law. 105

Shell: the duty to reduce CO2 emissions derived from Art. 6:162 of the Dutch Civil Code
In contrast to the prevailing opinion in German law, the Hague District Court, basing itself on the Dutch tortious general clause, derived a "duty of care" to reduce CO 2 emissions. 106 In the grounds for the decision, it referred to the climate agreements under Public International Law. These include:

Climate protection under Public International Law
The states-as the addressees of human rights catalogues under Public International Law and, in particular, the 1992 UN Framework Convention on Climate Change of Rio de Janeiro 107 , the Kyoto Protocol of 1997 108 , and the Paris Agreement of 2015 109 -bear the primary responsibility for reducing greenhouse gas emissions and for adopting climate-friendly measures. Private companies, on the other hand, are not subjects of Public International Law and are therefore not bound by regimes of international conventions. 110 The Hague District Court did not want to challenge this traditional conception prima facie. First, it stated that the Paris Agreement was not directly binding on Shell. 111 Yet, it promptly followed this assertion with a "but", arguing that the climate protection goals of the Paris Agreement reflected a broad international consensus on the actions required to prevent dangerous climate change. 112 The Court cited this consensus as an argument for concretising the unwritten tortious standard of care and deriving from it a duty to reduce CO 2 emissions. 113 It took up the Urgenda judgement 114 by also basing its reasoning on the right to life and limb entrenched in Art. 2 ECHR and the right to respect for private and family life guaranteed in Art. 8 ECHR. In the Dutch Court's opinion, these human rights also included a climatic component. 115 The mandate for energy supply as a counterargument?
Energy suppliers have a duty under public law to ensure the population's energy supply. 116 The Hague District Court used the catchphrase "the twin challenge" 117 to address the tension between the energy supply mandate on the one hand and the duty to reduce CO 2 emissions on the other hand. While it recognised the importance of access to reliable and affordable energy, especially in the light of Goal 7 of the 17 UN Sustainable Development Goals 118 , it refused to conclude that Shell should have a diminished set of duties as a result. 119 Instead, it invoked Goal 13, which calls on the global community to "take urgent action to combat climate change and its impacts". 120 The Court reasoned that the global demand for energy could not be pitted against climate protection but had to be satisfied within the framework established by the climate protection goals of the Paris Agreement. 121

Operating permits and concessions for the extraction of raw materials (Art. 17 of the Rome II Regulation)
The District Court discussed the role that Shell's operating permits and long-term concessions for oil and gas production should play in establishing a tortious duty to reduce CO 2 emissions. 122 Pursuant to Art. 17 of the Rome II Regulation, local "rules of safety and conduct" at a place of action that is not the place of effect 123 must be considered within the scope of the applicable (here: Dutch) tort statute. Following the will of the EU legislator and prevailing opinion, these rules also include (foreign) permits and authorisations. 124 The Hague District Court followed this view 125 but left open the question of where it located the place of action. In determining the applicable tort statute according to Art. 7 of the Rome II Regulation, it held that the place of action was the place where Shell had established its emissions and climate policy (pursuant a board decision at Shell's headquarters which to date are in The Hague). 126 Were we to assume that (only) this same place of action was decisive in cases involving Art. 17 of the Rome II Regulation, then only permits and concessions issued under Dutch law could be taken into account. But in fact, in cases involving Art. 17 of the Rome II Regulation, the source of emissions in question (e.g. the power plant) must be considered the place of action because permits fall under public law and consequently follow the principle of territoriality. For a company with several emitting industrial plants worldwide, there are several places of action within the meaning of Art. 17 of the Rome II Regulation. The respective place of action (location of the plant) then determines the substance and scope of the operating permit(s).
In terms of substantive law, the Hague District Court denied that permits and concessions could have any indemnifying effect with regard to a CO 2 reduction obligation. 127 It merely stated that "it is not apparent that CO 2 emissions have played any role whatsoever in these permits and concessions. " 128 This falls short. The Rome II Regulation follows the principle of the unity of the applicable law (Statutseinheit) 129 (Art. 15 of the Rome II Regulation). The tort statute comprehensively governs the grounds and consequences of liability, including the question of whether and to what extent permits affect or exclude a person's tortious liability. 130 Under Dutch law, too, public law permits must be taken into consideration. According to the case law of the Hoge Raad, it is necessary to consider issued building permits when determining tortious liability. 131 Pursuing the logic of this case law further, we maintain that the court should have scrutinised the substance of the permits and concessions issued to the Shell group companies in question, as well as the regulatory objectives of the provisions on which they are based.
Furthermore, Dutch and Austrian courts have developed the criteria for dealing with foreign permits in other cases of environmental liability. The courts hold that foreign permits must be considered domestically if (i) the emissions are permissible under international law, (ii) the licencing requirements abroad are functionally comparable to those of the lex fori and (iii) the foreign affected parties could have been involved in the licencing procedure. 132 While the third criterion may be a good fit for neighbours close to a border (e.g. when a power plant is being built), it is not suited for global climate liability cases. 133 Nevertheless, the legal institution of substitution should serve to make productive use of the second criterion of functional comparability: If the licencing requirements are functionally comparable, foreign permits could have the same effects before a domestic court as domestic permits. 134

European emissions trading
Under international law, Art. 17 of the Kyoto Protocol (1997) contains the first reference to emissions trading as an optional instrument for reducing greenhouse gases. 135 The EU implemented this option under Community law with Directive 2003/87/EC (which has since been modified several times) and created a system for trading greenhouse gas emission certificates. 136 In the EU, plant operators can no longer use the environmental medium air unlimitedly but require a permit to do so. 137 The permit is linked to the purchase of corresponding emission certificates. 138 While the Paris Agreement (2015) still excluded global emissions trading, 139 the Parties, meeting in November 2021 at the "26th Conference of the Parties (COP 26)" in Glasgow, agreed on cornerstones for the worldwide expansion of emissions trading. In contrast to the European emissions trading system, the scheme is an international trade in emissions reduction credits, not a trade in allowances to emit a certain amount of greenhouse gases. 140 It is linked to the obligations of the countries to reduce their greenhouse gas emissions and allows the transfer of emissions reductions between them. 141 In the Shell judgement, the Hague District Court declared that, in principle, acquired EU emissions trading certificates-unlike plant operating permits-have an indemnifying effect. 142 It based its reasoning on the Hoge Raad's case law concerning a building permit's effect on private law. 143 If a person who acted in accordance with a permit they had been issued caused damage or nuisance to third parties in the process, their tortious liability would depend on the nature of the permit and the regulatory objective of the provisions on which it was based. 144 The concrete matter at hand involved the interests of the neighbour, who had complained of a nuisance caused by 129   an approved construction of an annexe, which interfered with the amount of light he received and with his view. The Hoge Raad held that this case required a review to determine whether the statutory regulations on which the building permit was based (Housing Act, Spatial Planning Act) represented a final reconciliation of interests. If this was the case, the Court maintained, a (possibly divergent) reconciliation of interests by means of tort law was precluded. 145 The Hague District Court accordingly examined the objective and scope of the emissions trading scheme. 146 It asked whether the authorities issuing emission allowances had weighed Shell's interests against the opposing interest of reducing emissions to protect the climate. 147 The court specified limits to the emissions trading system. First, it stated that because only EU companies participate in the European emissions trading system, it could only have an effect within EU borders. 148 Second, it maintained that emission allowances only applied to companies' Scope 1 emissions, 149 i.e. only to a company's direct emissions from sources that it owned or controlled. 150 Thus, they did not have a preclusive effect on Scope 2 and 3 emissions. Third, the court held that the latest emission reduction targets were not sufficient to achieve the objectives of the Paris Agreement. 151 Accordingly, only a small part of Shell's corporate emissions would benefit from the indemnifying effect of EU emissions trading. 152

Scope of the reduction obligation
The parties' most contested issue concerned the scope of the reduction obligation. The dispute focused on whether Shell's reduction obligation also extended to its Scope 3 emissions, which account for 85% of its total emissions. 153 The Court argued in favour. 154 It derived responsibility for all emissions, including Scope 3 emissions, from the UN Guiding Principles on Business and Human Rights. 155 The principles establish that companies have the duty to respect human rights throughout the entire supply chain. The Hague Court applied this assessment to the issue of emissions. 156 In our opinion, however, extending the reduction obligation to include Scope 3 emissions goes too far. 157

Separation of powers and justiciability
Climate Litigation provides an occasion to discuss the separation of powers as well as the competences and capability of the judiciary. 158 This applies primarily to public-law proceedings in which a state's climate policy is the subject under dispute. 159 However, the controversy does not stop at public law disputes. 160 In Climate Litigation, civil courts also decide indirectly on a society's climate policy. 161 In German private law, the question of justiciability is embedded in traditional legal institutions of tort law or of property law. Thus, the issue of justiciability influences individual elements that establish liability, such as adequacy and attributability, the doctrine of the duty of care towards third parties (Verkehrspflichtendogmatik), or the concept of the disturber (Störer) under § 1004 of the German Civil Code. 162 US courts address the problem more explicitly and sometimes invoke the political question doctrine to dismiss climate litigation. 163 Shell tried to play this card before the Hague District Court. 164 But since Dutch law does not have any admissibility constraints comparable to the political question doctrine, the Court had to rule on the merits of the pending case. 165 Can the statements of the Shell case be applied to German law?
The widespread international impact of the Urgenda judgement raises the question of whether Milieudefensie et al. v. Shell has established momentum for similar litigation worldwide. A strong network of NGOs that positions individual cases in order to pressure market participants to act, thereby prompting a change towards greater climate protection in society as a whole (so-called "strategic litigation" 166 ), would lead us to expect corresponding litigation activities. 167 Greenpeace and the association Environmental Action Germany have already brought actions against VW, Daimler, and BMW as well as the oil and gas producer Wintershall Dea in the second half of 2021. They are demanding that the automotive groups phase out internal combustion engines by 2030. Furthermore, Wintershall Dea should commit to refrain from tapping any new oil and gas fields from 2026 at the latest. 168 From the perspective of domestic companies, the pressing question is likely to be whether actions brought in Germany could lead to comparable judgements.

Private International Law
Pursuant to Art. 288 of the TFEU, the Brussels Ibis and Rome II Regulations are also directly applicable law in Germany. Consequently, German courts could certainly co-opt The Hague Court's reasoning. However, in the absence of a preliminary ruling by the CJEU, the reasoning does not have a binding effect. 169

The admissibility of actions by NGOs
On the other hand, from a procedural perspective, it bears noting that the provision of Art. 3:305a of the Dutch Civil Code, on which the NGOs Urgenda and now also Milieudefensie could base their standing to sue, has no equivalent in German law. 170

Tortious liability
Unlike Private International Law and International Civil Procedure Law, which are harmonised or even unified throughout Europe, there are sometimes considerable differences between national tort laws. Nevertheless, all states have comparable basic categories of tortious liability. 171 In particular, this holds true for the general tortious standard of care. 172 As an "autonomous 'generator of rules' in tort law", it joins the programme of duties standardised by the legislature. In Germany, this takes the form of the duties of care towards third parties (Verkehrspflichten). 173

Duties of care towards third parties
In the Netherlands, Art. 6:162.2 of the Dutch Civil Code 174 regulates when a person has committed misconduct that is relevant to liability. 175 It specifies three forms: (i) the violation of another person's rights, (ii) the violation of a protective law and (iii) the violation of the unwritten standard of care, which is the focus here. The latter is a standard that is open to further legal development, the substance of which the courts must establish in each individual case. 176 The German counterpart is the duties of care towards third parties, developed in case law within the framework of § 823 para. 1 of the German Civil Code. 177 Many aspects that are taken into account across various legal orders determine whether there is a duty of care or a duty of care towards third parties and what its substance is. These aspects include the foreseeability and probability of the occurrence of damage, the severity of the impending consequences, the extent of the damage and the significance of the threatened right, the possibility of reducing or avoiding the danger, the costs of doing so, the economic acceptability of taking these measures, the social utility of the conduct causing the damage, and justified expectations of care towards third parties. 178 In this flexible system, which resembles a collection of general clauses, normative assessments under constitutional and administrative law and private regulations provide orientation. 179 The "indirect third-party effect" (mittelbare Drittwirkung) of fundamental rights in German law 180 is the doctrinal counterpart to the Hague District Court's consideration of the European Convention on Human Rights. The Court turned to the Convention because, in Dutch law, it even has primacy over national constitutional law. 181 Instruments of soft law can also be used to concretise the duties of care towards third parties. 182 The expectations of conduct expressed in soft law can help shape the relevant standard of care. 183 The UN Guiding Principles on Business and Human Rights, which the Hague Court employed to concretise the standard of care, 184 belong to soft law. 185 However, the Court should have explained first to what extent this soft law reflected current expectations of care towards third parties. In the next step, the latter could then have been used to establish a duty of care towards third parties. However, the Hague Court omitted this two-step process without further ado by applying the UN Guiding Principles with binding effect to Shell's detriment. 186

The interface between public and private law
There are also parallels between various legal orders where the interface between public law and private law is concerned. Standards of conduct and conditions contained in the permit must be considered when determining the duties of care towards third parties under German law, but in individual cases, the addressee may be required to exercise greater care under private law. 187 Yet the Dutch decision did not undertake such a caseby-case analysis, thus reducing its potential persuasive power as a source of inspiration for a German court. The same applies to the area of emissions trading, whose relationship to tortious liability under private law the Hague Court did not address.

Scope of the reduction obligation (Scope 3)
The scope of the reduction obligation continues to be problematic. The Hague Court stated that Shell is also responsible for Scope 3 emissions and must reduce them. 188 An analogy to product liability law could serve as grounds for such a statement 189 : Considering its climate impact, an energy package that relies largely on fossil fuels is not constituted to avoid impairment of third-party legal interests when used in foreseeable ways. In this sense, we could speak of a "construction defect" (Konstruktionsfehler) 190 .
However, product liability law also presupposes concrete and clearly imputable violations of legal interests, which, for CO 2 emissions, would have to be attributed to a specific energy package. This seems (too) far-fetched. From the perspective of German tort law, a comprehensive attribution of greenhouse gas emissions along the entire supply chain, including the emissions of final consumers who fill their tanks with Shell fuel, cannot be doctrinally persuasive. 191 First, in principle, tortious liability only encompasses an individual's own actions and sphere, not the actions and sphere of third parties. 192 Buyers and final consumers act autonomously, thereby terminating tortious imputability in supply chains as well as the first trader's responsibility to act (in this case Shell). If one wanted to push back certain products for political reasons, the steering instruments of public or tax law would be required instead. Considering that its telos is compensation, tortious liability is not the right instrument.
What is more, Scope 3 liability is at odds with the concept of European emissions trading as a cornerstone of European climate policy. European emissions trading follows the so-called downstream approach, 193 meaning that the actor who concludes the value or pollution creation chain-in this case, the final consumer of fossil fuels-must hold emission permits. 194 But the Hague District Court attributed primary liability to the fuel producer (the so-called upstream approach). 195 Finally, the recently adopted Act on Corporate Due Diligence in Supply Chains (Lieferkettensorgfaltspflichtengesetz) 196 limits corporate responsibility to comply with human rights and environmental duties of care to companies' own legal sphere and (only) to the first downstream level, i.e. direct suppliers (the so-called Tier 1 principle). 197 Putting private climate change responsibilities alongside this recent legislative decision in the area of supply chain governance for a tier 1 limitation, it seems too broad for the former to follow the Dutch example and include Scope 3 emissions. After all, if the concrete responsibility to protect human rights is already limited to the level of the first business partner, climate liability, which is vaguer in comparison, cannot encompass further levels.