A green legal revolution: focus on Arbitration

A green legal revolution: focus on Arbitration

The recent unveiling of Prime Minister Boris Johnson’s Green Industrial Revolution has once more put the fight against climate change at the forefront of government policy. While much of the focus of Johnson’s plan and climate action generally is on the development and commercialisation of new technologies (such as carbon capture and storage, and hydrogen fuel), lawyers have also quietly been playing their part in making contemporary business transactions more environmentally friendly. As the drafters of contracts and arbiters of disputes, lawyers have immense power to help protect our environment through the introduction of environmentally friendly clauses and practices; after all, small actions performed often, and by many, yield big results.

Enter green legal initiatives such as The Chancery Lane Project (TCLP), whose vision is a world where ‘every contract and law enable solutions to climate change’. TCLP is by no means the only climate initiative founded by lawyers to fight against climate change; the Campaign for Greener Arbitrations, for example, is an initiative to reduce the environmental impact of international arbitrations. It is, however, novel in that it brings lawyers together to re-imagine mundane and traditional contract clauses (such as boilerplate clauses) in a climate-friendly manner, with the aim of making their use standard practice.

The Big Hack

This year, to coincide with Pro Bono week, TCLP held its Big Hack, a two day virtual hackathon bringing lawyers from across the world (including members of the Lexis®PSL team) together to brainstorm new contract clauses and strategise over how to incorporate clauses published within the TCLP’s Climate Contract Playbook into their firms’ precedent banks. During the event, various hacking sessions took place covering specific legal ‘themes’, including the aptly named 'Coolerplate' session, which saw lawyers come together to rethink boilerplate clauses.

These clauses are generally not given much thought, yet they can have a significant impact on the other clauses in an agreement and on an agreement as a whole as they deal with important issues such as the interpretation, validity and enforcement of an agreement, making them valuable candidates for the introduction of environmental considerations.

Interesting ideas discussed during the 'Coolerplate' session included a force majeure clause which would integrate an evaluation of the party’s actions to avoid or mitigate a climate change event, and a clause where environmental rights are an exception to a third party rights clause pursuant to the Contracts (Rights of Third Parties) Act 1999. Of particular interest to the authors, however, were the clauses focused on arbitration, which we believe to be an area that has a lot of potential for green reinvention.

Arbitration ‘Coolerplate’ clauses

There is a surprising lack of literature relating to ‘green’ arbitration clauses, with even the TCLP’s latest Climate Contract Playbook only containing three general arbitration-related clauses, and no specific arbitration boilerplate clause. As is traditional for TCLP publications, each clause is named after a child known to the author, to remind readers of the impact these clauses might have on the next generation, for whom these changes are so important. The existing arbitration clauses cover green arbitration protocols (Emilia’s clause), low carbon arbitration hearings (Mia’s Clause), and green arbitration processes (Toby’s clause).

These three clauses encourage the reduction of carbon intensive activities such as printing off unnecessary paperwork or travelling to different locations for hearings. The relative technical ease of implementation of these clauses has therefore been demonstrated during the coronavirus (COVID-19) pandemic, notably with virtual hearings (other barriers are covered in this blog post). While it represents an important first step, the legal community still needs to do more in the current state of climate emergency (situation notably recognised by the European Parliament, see here). 

Notably, a potentially impactful development in this space may come out of the recent Big Hack: A group of lawyers had the interesting idea to develop a green governing law clause for arbitration agreements. Instead of focusing on issues which are secondary to the substantive part of the arbitration (eg consumption of paperwork), the choice of green governing law clause has an impact on the core element of the dispute resolution. This clause aims to allow parties to select an ‘eco-friendly’ jurisdiction for the governing law of the arbitration agreement and incorporate additional ‘green’ principles, climate objectives, and environmental regulations to be respected in the event of an arbitration. While currently in development, this clause will hopefully be available in the next edition of the Climate Contract Playbook. Green arbitration guidelines are also being considered. 

Next steps

In the near future, we particularly hope to see arbitration institutions integrating environmental provisions into their arbitration rules and lawyers adopting them for use in their clients’ contracts. Before then, it is the responsibility of the legal community to integrate existing environmental principles and considerations into alternative dispute resolution processes and to mainstream this tool. After all, lawyers are the driver of the green legal revolution. 

If anyone is interested in sharing their views or getting involved in the development of green clauses, feel free to email Elodie Fortin (elodie.fortin@lexisnexis.co.uk) and Marie-Gabrielle Williams (marie.williams@lexisnexis.co.uk). 

Written by Elodie Fortin and Marie-Gabrielle Williams.  

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About the author:
Marie-Gabrielle Williams is a Paralegal in the Lexis®PSL Paralegal Hub. She recently graduated with a law degree from King’s College London, where she was an Editor for the King’s Student Law Review. She has experience working In-house and in private practice abroad, in particular with the blockchain division of a leading Indian technology firm. She has a particular interest in New Technologies, Environmental law and International Arbitration.