Climate change a key priority for disputes practitioners—views from LIDW22

Climate change a key priority for disputes practitioners—views from LIDW22

Climate change considerations have become mainstream throughout the last few years. Negative stereotypes of climate change activists have faded away following the rise of climate change awareness among the general population. As proven by this year’s edition of the London International Dispute Week 2022 (LIDW22) featuring climate change as part of its first joint keynote, discussions on this topic among legal practitioners are no longer confined among environmental lawyers nor within companies’ environmental employee resource groups (ERGs). Other events at the LIDW22 also included reflections about sustainability, the impact of climate change within the legal market and climate change as a mainstream issue for investors, corporations, and states.

This blog post will briefly present elements discussed during three sessions of the LIDW22 main conference held at Central Hall, Westminster, on 10 and 11 May 2022. The first was the joint keynote address by Lucy Greenwood, independent arbitrator at Greenwood Arbitration and founder of the Campaign for Greener Arbitrations; Jenny Hindley, Associate at Mishcon de Reya and Co-Convenor of Greener Litigation; and John Sturrock QC, CEO and Senior Mediator at Core Solutions and Founder of the World Mediators Alliance on Climate Change. The second one was the keynote address by I. Stephanie Boyce, President of the Law Society of England and Wales. The third one was ‘Climate change: a new disputes landscape’ chaired by Luiz Aboim, Partner at Mayer Brown, Annette Magnusson, Consultant and Co-Founder of Climate Change Counsel; Piers Rake, Managing Director at FTI Consulting; and Thanasi Trantas, Associate General Counsel on Litigation and Regulatory Enforcement at HSBC.

Climate change: the first topic 

Following opening remarks from Richard Bamforth, Chair of the LIDW Strategy Group and Partner at CMS, the LIDW22 core conference programme began with a joint keynote addressing climate change, shortly followed by a discussion on the mental health wellness among dispute professionals. Greatly appreciated among attendees, the LIDW organisation’s decision to draw attention to these topics at the beginning of the core conference programme was perceived as an audacious statement – the priorities within the legal community are indeed changing. It must be welcomed, as discussions need to happen now for changes to be put in place tomorrow.

The growing awareness of climate change issues and environmental responsibility can be witnessed across the main methods of resolution of disputes. Practitioners involved in litigation, arbitration and mediation now all have access to guidance helping them to make greener practical choices. Inspired by the Campaign for Greener Arbitrations launched in 2019 by Lucy Greenwood and pushed by the need to adjust to the global restrictions amid the coronavirus (COVID-19) pandemic, speakers have shared their respective “Green Pledge” where practitioners promise to commit to “the journey towards net zero”. These initiatives also outline concrete actions that practitioners can put in place to reduce their impact on the environment. Changes range from simple actions such as using reusable bottles to more burdensome measures like switching exclusively to remote meetings or hearings.

Considering climate change as an integral factor in deciding which dispute resolution method choosing was also highlighted by Sturrock QC. In his address, he highlighted that mediation was intrinsically more environmentally friendly than green arbitration proceedings. Andrew Miller QC FCIArb, Arbitrator and Mediator, published a LexisNexis article entitled “Arbitrators, make mediation your new year’s resolution” (subscription required) earlier this year which made a similar argument: “Mediation provides the opportunity for the early or at least earlier resolution of a dispute, which stating the obvious would reduce the energy consumption and the waste involved in running an arbitration (…) Following a mediated settlement there would be no more fact finding expeditions, witness and expert meetings, production of witness statements and expert reports, copious printing, meetings with clients, experts and lawyers and of course no further arbitration hearings.”

The seriousness of climate change makes it now morally compulsory for legal practitioners to question their habits and bring changes to their practice. For further information about each initiative, see the Campaign for Greener Arbitrations, Greener Litigation, and the World Mediators Alliance on Climate Change. Another useful resource is the Chancery Lane Project (TCLP) – a collaborative effort of multiple volunteers leading to the development and publication of contractual clauses which aim at tackling climate change.

Climate change: the President of the Law Society of England and Wales’ keynote address

I. Stephanie Boyce provided an informative keynote address on the work accomplished by the Law Society of England and Wales. Introduced by Barry Fletcher of the LIDW Strategy Group, her speech addressed topics fundamental to the Law Society and the legal community including the access to justice, the Rule of Law, the leading role of London and England and Wales as a global centre for international dispute, diversity and inclusion within the legal profession, and climate change. As per LIDW22’s events, it is reassuring to see these topics at the heart of the Law Society’s concerns.

Boyce pointed out that climate change was the greatest challenge since the coronavirus (COVID-19) pandemic. She rightly added that no one will be able to avoid climate change and it will have a direct impact on the legal profession. We already notice a growing trend in climate change litigation involving corporate greenwashing allegations, failure to respect public net zero commitments, expropriation claims against states from foreign investors, etc. Further examples have been included in a Horizon Scanning report entitled “Climate change risks – the Future of Law as we know it?” published by the Law Society.

Boyce highlighted other initiatives recently undertaken by the Law Society. Ahead of the UN Climate Change Conference in Glasgow (COP26), the Law Society published a climate change resolution aiming at encouraging solicitors, in-house counsels, and law firms “to develop a climate-conscious approach to legal practice”. Several other resources including “Net zero: what solicitors can do” have been published and can be found below the topic of climate change.

Boyce’s intervention at LIDW22 confirmed that climate change is no longer a matter pertinent to environmental lawyers only. All actors within the legal community must feel concerned as they will be affected in their practice by this global issue one day or the other.

Climate change: a new disputes landscape

As mentioned above, new types of disputes have begun to arise from climate change and energy transition. One growing trend involves investor-state disputes on climate issues, including from “green” measures affecting investments in fossil fuels. Luiz Aboim, the moderator of the event entitled “Climate change: a new disputes landscape” began by asking Annette Magnusson whether states could be liable for doing too much.

Magnusson highlighted that it was not an easy position for states as they need to navigate between climate change claims brought against them by citizens for failing to meet their commitments to net zero, and claims (or the risk of claims) arising from investment treaties brought by investors on the grounds of expropriation, non-discrimination, or fair and equitable treatment. She continued by adding that when the main objective of states was to tackle climate change by reducing emissions, two options were being offered to them: (1) encouraging low emission investments; (2) introducing legislation that phase out industries with high emissions. As we know that the latter can be expensive, she suggested that the first option would be better for states.

Aboim also asked Magnusson whether from an investment law perspective it was indeed possible to make a transition from fossil fuels to renewable energy considering constraints imposed by investment treaties. Magnusson responded that due to investment treaty protections, governments may be reluctant to impose such transition as they were afraid by the number of cases that could be filed against them. However, she highlighted that from her perspective, this was not a solid argument – “uncomfortable actions need to be taken”. A passive position will surely incur further costs than if we act now.

A recent study by researchers from Boston University, Colorado State University and Queen’s University published in the journal Science on the fifth of May 2022 highlighted that States could face up to US$340bn in investor-state dispute settlement (ISDS) claims for limiting fossil fuels. According to the authors, investor-state disputes are a real threat to a just and sustainable global transition and different measures should be taken by governments to prevent fossil fuel investors to gain access to this type of protection, including a complete withdrawal from these treaties. While it is an arguable position, the unilateral termination of investment treaties would not be without financial consequences (and ethical questions).

When asked by Aboim whether the entire system should be left aside, Magnusson responded that time should be the main factor guiding our decision. As we need to reach net zero by 2050, she believed it would be difficult to create a new system in a such short period of time. When referring to the 2021-22 study of arbitral awards rendered under the Energy Charter Treaty (ECT) undertaken by the boutique law firm Climate Chance Counsel, she mentioned that none of the 64 awards studied had “weighed the ECT investor protections against a host state’s right to regulate for climate or energy transition” and that of the 20 awards related to fossil-based energy investments, none covered issues of climate change, energy transition or obligations under climate law. As highlighted by Magnusson, arbitral tribunals will very soon have to interpret the treaties’ investment protections in light with obligations related to climate change. She concluded by highlighting two key factors essential to a successful transition: (1) the stability of the regulatory landscape and (2) the due diligence from investors.

Conclusion

Climate change has become a priority among the legal community. However, changes and decisions must be taken sooner rather than later if we want to achieve our goals, including reaching net zero by 2050. Legal practitioners must rethink their practice, the legal market needs to prepare and adapt to the imminent surge of new claims, and finally, states, investors, and legal and arbitration practitioners involve in ISDS will have to innovate and find ways to respond to the climate emergency while juggling with other conflicting principles such as their accountability for legally binding treaties.

Note: this is a summary of the discussions and does not purport to be a full account of the event. While I have only briefly shared some highlights of the LIDW22 relating to discussions about climate change, all sessions have been informative and valuable and I wish to thank all panellists for their time and enlightening thoughts.

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About the author:
Elodie Fortin is a Paralegal in the Lexis®PSL Paralegal Hub. She earned her Bachelor of Civil Law (BCL) and Bachelor of Laws (LLB) degrees from McGill University in Canada, pursuant to which she completed her specialist Master of Laws (LLM) in Public International Law at the London School of Economics. She undertook several legal internships abroad, notably in Italy at the International Institute for the Unification of Private Law (UNIDROIT). She has a particular interest in International Arbitration.