Lliuya v. RWE AG

For European rights-based climate litigation, the Lliuya v. RWE case represents an important development: it is the first lawsuit filed against a private company in Europe by a person facing climate impacts elsewhere in the world. The case echoes the classic David and Goliath tale: a Peruvian farmer – Lliuya – takes on an energy giant in its home courts.

In 2015, Saúl Lliuya filed a lawsuit in Germany against RWE AG, a German electric power company and Europe‘s largest carbon dioxide (CO₂) emitter. Lliuya lives in a city in the Peruvian Andes – Huaraz – located within the flood path of Lake Palcacocha. Due to the glacial retreat induced by climate change, the lake’s volume has increased and threatens to overflow or break its dam, posing a serious flood risk to Lliuya’s house and the city of Huaraz.

In his petition, Lliuya alleges that RWE, by emitting substantial volumes of greenhouse gases (GHGs), has knowingly contributed to the climate change driving this glacial melt and, as a result, should pay compensation proportionate to RWE’s contribution to global emissions to cover the cost of protective measures. More specifically, since the flood prevention measures needed in Huaraz amount to an estimated $4,000,000 USD and a scientific study attributes 0.47 percent of historic global GHG emissions to RWE, Lliuya asked the Court to order RWE to pay $20,000 USD (or 0.47 percent of $4,000,000 USD).

In 2016, the District Court in Essen rejected the claim, finding that a causal link between the GHG emissions of a single emitter and specific climate change impacts could not be proven.

On appeal in November 2017, however, the Higher Regional Court accepted Lliuya’s legal arguments as sufficiently founded in law in a decision it rendered on the admissibility of the case. The Court, moreover, rejected every defense raised by RWE, including both RWE’s assertion that the law does not cover climate change since it’s too complex and its claim that individual emitters can’t be held liable for climate impacts.

This decision marks an important first: it’s the first time that a court acknowledged that a private company is, in principle, responsible for its share of climate damages resulting from its emissions. The lawsuit also raised a host of other issues that will have to wait until the merits stage for resolution, including the liability of energy companies and other GHG emitters for nuisance as a result of damages to private property from climate change.

So far, the Court has only decided the admissibility of the case. Having found it admissible, the Court has now moved onto assessing the factual evidence and legal arguments supporting Lliuya’s claims.

Applying a developed body of law in the context of climate change

In this case, Lliuya argues that a GHG emitter in one jurisdiction can be held liable for climate damages in a different jurisdiction in part on the basis that the law of nuisance provides that the use of one’s property shouldn’t impair the ability of others to enjoy their own property.

The Court used this principle of nuisance as well as tort law generally to find that there was indeed a familiar and well-founded legal basis to support holding a corporation responsible for its effects on property located 11,000 kilometers away from the corporation.

Affirming country / corporate responsibility for their ‘fair share’ of emission reductions, regardless of the actions of other countries or corporations.

The petitioner innovatively uses the theory of market share liability – developed in the 1980s through lawsuits in the U.S. over defective medication – to assert the amount of money RWE should be liable for in damages. The theory of market share liability provides that manufacturers who produced an interchangeable and unidentifiable product can be held liable in proportion to their market share of the product.

In this case, Lliuya argues that RWE should be liable for damages proportionate to its share of historic global GHG emissions – essentially, its market share of global greenhouse gas emissions.

Emphasizing the urgency of taking climate action now, given the compounding and permanent effects of climate change as time progresses

There’s one notable potential complication in this case: the petitioner hasn’t yet suffered any harm – he’s seeking money from RWE to put towards measures that prevent damages from flooding.

To overcome this potential complication, Lliuya reminded the Court that risk to property is assessed according to both the probability that damage will occur and the scope of the possible damage. In other words, the Court will measure the significance of a risk by looking at how likely damages are to occur and how big those damages would be if they did occur.

Lliuya offered extensive scientific evidence demonstrating how the high chance of a heavy flood – induced by climate change – would damage his property. And even if the probability of a flood were low, Lliuya explained, it would be hugely destructive if it happened. This justifies a finding that the risk of damage interferes with his property, which is necessary in order to hold someone liable for nuisance under German law.

The geographic scope of climate liability is large, as illustrated by the fact that, in this case, an individual in one country can bring a claim against a carbon major in another – 11,000 kilometers away – for damages caused by climate change.

As long as scientific evidence can demonstrate that corporate emissions at least partially caused the damages or risks of damage alleged, it is possible to hold corporate GHG emitters in one country responsible for damages experienced by an individual in another.

In terms of the proof provided to support claims made in climate cases like this, climate models have generally been accepted as appropriate tools for providing evidence.

Lawsuits like this can help reimpose on corporations the costs that they have imposed on the public through pollution, including greenhouse gas emissions. In doing so, it may help fossil fuels reflect their true social cost, thus promoting a faster transition to cheaper and cleaner renewable energies.