The Future Lawyer Weekly Briefing – W/C 31st July 2023

IS LEGAL ACTION THE KEY TO CLIMATE JUSTICE?

As extreme heat increases in many different parts of the world, people are turning to the courts for answers; there have been approximately 2,180 climate-related lawsuits filed in 65 jurisdictions as of December 2022, many of which are high-profile climate litigation cases brought against states such as Urgenda v. Netherlands (2019), Neubauer v. Germany (2021) as well as Milieudefensie v Royal Dutch Shell (2021).

Milieudefensie v Royal Dutch Shell is said to be the first climate change litigation ruling against a major corporation. In this case, the District Court of The Hague ordered Shell to reduce its global carbon emissions by 45% of its 2019 emissions by 2030.

The 2023 Global Climate Litigation Report

As per the 2023 Global Climate Litigation Report by the UN Environmental Programme (UNEP), and the Sabin Center for Climate Change Law at Colombia University, climate litigation is becoming an essential part of setting a global precedent for climate justice.

The head of the international environmental law at UNEP states that ‘climate litigation…has become an undeniably significant trend in how stakeholders are seeking to advance climate action and accountability’. This comes as climate policies have been criticised as being too far behind in terms of what is needed to keep global temperatures below the 1.5 °C threshold required to sustain the extreme weather events and searing heat that affect people in all continents, according to Inger Andersen, Executive Director of UNEP.

Among the notable victories in climate litigation is the French case of Notre Affaire à Tous and Others v. France, in which the courts ordered the French government to step up climate action to carry out its international commitments to reduce carbon emissions on a global scale. They also ordered the French government to make up for the emissions it exceeded between 2015 and 2018 by reducing emissions planned for 2021 and 2022.

Another successful case involved a marketing claim whereby a court ordered the European dairy company, Arla Foods, to stop misleading consumers by marketing their goods as ‘net zero climate footprint’ when promoting them in Sweden.

Critical Issues of Climate Litigation

Although LSE’s latest annual review of climate litigation has revealed that only approximately 55% of the 549 cases in which courts had reached a judgement had a climate-positive outcome, several studies have claimed that litigation seems to be perceived as a primary concern by many corporations and financial institutions.

Also, the LSE analysis discovered that even futile legal action ‘can shape narratives around climate action, encouraging decision-makers to change their approach’.

Conclusion

The UN report emphasises the necessity of an environmental rule of law to battle large corporations and governments that have had the most influence on climate change, pollution and biodiversity. The report concludes that access to justice encourages accountability in governmental institutions while enabling the preservation of environmental law and human rights.

In addition, climate litigation success stories make it evident that international law firms should not be discouraged from accepting climate litigation cases going against governments’ multi-billion corporations to combat climate change, and assisting in setting a precedent for climate justice.

Briefing by Rusul Alfawaz

THE REFORM OF THE IDENTIFICATION PRINCIPLE IN CORPORATE LAW

‘The National Crime Agency assesses it is a realistic possibility that over £100 billion are laundered every year through the UK or through UK corporate structures’, and it is challenging to hold to account those who commit such crimes within large corporations.

Economic misdeeds, such as fraud, false accounting, bribery, and forgery, account for well over 40% of UK crimes, and the primary legislation for managing their effects, the Economic Crime and Corporate Transparency Bill, is deemed antiquated for engendering accountability.

In June 2023, the government proposed amendments to the Bill by expanding the jurisdiction of corporate offences and persons prosecutable under economic crime legislation. In doing so, the government bestows the identification principle with equal statutory status to economic crimes.

What is the Identification Principle?

It is a legal test first established in Tesco Supermarkets Ltd v Nattrass [1972] AC 153, which affirms that dishonest acts or serious offences which do not impose strict liability, but which do impose non-vicarious liability as committed by a ‘natural’ person, could be attributed to a legal entity, that is, a company.

These persons are those with a ‘directing mind and will’, that is, executives, senior persons and directors who oversee the management of a business and who have the final say in the all-important decisions, thus embodying the company they are employed by.

For attribution, there must be proof of mental capacity, that is, of a guilty mind (mens rea) along with complicity or participation, as well as the persons to be acting on behalf of the company, thereby proving corporate criminal liability.

However, there are several limitations to establishing such liability, and subsequently, remediating it. For instance, a company, although prosecutable, cannot be imprisoned, therefore can only be fined, and although a company can be deemed a conspirator in criminal offences, there must be at least two natural persons, with one at least of a ‘directing mind and will’ who had acted within the authority afforded to them by their employer.

Reform

Common law currently dictates the identification principle concerning corporate criminal liability limits attribution to executives and directors. The multi-faceted nature of businesses, especially that of larger ones and their apex hierarchical structures, often presents difficulties in establishing who has complete autonomy over which sector of a business; therefore, the executives, not management, are instead held accountable for employee and corporate wrongs.

In the Corporate Manslaughter and Corporate Homicide Act 2007, ‘senior management’ is defined as ‘the persons who play significant roles in the making of decisions about how the whole or a substantial part of the organisation’s activities are to be managed, or the actual managing or organising of the whole or substantial part of those activities’. The proposed reform aims to introduce a test encompassing the above definition when it comes to attributing to a business.

This means that depending on their influence within a company, the criminal acts of senior managers are soon to be ensnared within the identification principle’s scope and resultantly held to the same account as executives.

Societal and legal impact

Financial crimes erode public trust in corporations and the justice system, as those committers are, according to some, not held fully accountable owing to the legislative shortfall.

The UK government and other businesses suffer potentially incalculable revenue loss, resulting in broader societal impacts such as deprivation of public services and local communities. Such crimes also affect domestic and international market stability and investor confidence, all factors detrimental to GDP growth, thus threatening the UK’s global economic standing.

Responsively, the proposed amendments aim to combat these ramifications, and their implementation would undoubtedly lead to an increase in criminal prosecutions and prosecution finalities.

The procurement of the services of corporate and criminal law firms will therefore be in greater demand. The relevant sectors must be proficient with the amendments and their application to increasingly complex corporate structures to ensure the provision of the best advocacy and counsel services for their clients.

Briefing by Aqua Koroma