Beyond the Litigation Narrative: The Place and Roles of ADR in Climate change Disputes
Reporter: Iris Ng
In Ernest Hemingway’s novel The Sun Also Rises (1926), one of the characters explains how he became bankrupt. “Two ways. Gradually and then suddenly.” This description of a slow lead-up to precipitous decline aptly describes the scenario Earth currently faces. It is at a tipping point. The impact of human-induced climate change is hitting home hard, triggering a flurry of fault-finding and mutual blame. So far as the inevitable legal claims are concerned, an enduring narrative is that of the environmental crusader making a stand for justice in the courts. Yet, that narrative is incomplete, for there is no single paradigm of dispute or disputant that is amenable to a ‘one size fits all’ approach. Because the reality is much more complex, there is plenty of room for alternative dispute resolution (ADR) in the forms of arbitration and mediation. ADR can play important alternative, supportive and transformative roles in resolving climate change disputes, which may be defined broadly as disputes arising out of or in relation to the effects of climate change and climate change policy.
The litigation narrative
Court litigation of climate change disputes is on the rise, galvanised by a spate of recent successes. In May 2021, the Hague District Court ruled that Royal Dutch Shell had to “reduce its CO2 output and those of its suppliers and buyers by the end of 2030 by a net of 45 per cent based on 2019 levels”. In February 2021, in the wake of several rulings by the highest French administrative court that revealed “an intensification of control and compliance with the State’s obligations” in connection with climate change, the Paris Administrative Tribunal ruled that the French government had failed to meet its carbon emission reduction commitments under the Paris Agreement 2015. The Tribunal ordered a further investigation to determine the mitigation and prevention measures that it could enjoin the government to adopt.
There have also been ‘losses’, though even court losses count as publicity ‘wins’; the public nature of court hearings means that the mere fact of having launched an action and having it heard can raise awareness and exert pressure on regulators or corporations.
The full story
The litigation narrative presents an incomplete, and therefore inaccurate, picture of reality because it disregards the complexity of climate change disputes. In truth, there is no quintessential ‘climate change dispute’ and even while climate change disputes share common features, the interplay of these in each case is fact-specific. Thus, depending on the circumstances, the parties involved may prefer litigation over ADR or vice versa.
(1) No quintessential climate change dispute or disputant
Climate change can feature directly or indirectly in a dispute. In either situation, the rights allegedly breached can arise under varied branches of law, ranging from the international (eg, under human rights law, bilateral investment treaties) to the domestic (eg, under constitutional, contract or tort law).
‘Direct’ cases involve claimants, who have allegedly suffered the ill-effects of climate change or climate change policy, and brought claims against respondents for either their regressive actions (doing too little for, or actively undermining, the environment) or allegedly unfair affirmative actions (preferring ‘green’ options to the detriment of less environmentally-friendly alternatives). The former type of claim arose in Lliuya v RWE AG, in which a farmer sued an energy company for its role in global warming and contribution to sea level rise and increased flood risk for his locality. An example of the latter type of claim is Rockhopper Exploration Plc v Italy, in which a foreign investor with interests in a hydrocarbon deposit sued the Italian government for denial of its concession following domestic environmental reforms.
‘Indirect’ cases refer to those in which claimants do not seek redress for harm arising from climate change but in which the dispute otherwise has a climate change nexus. As an illustration, a party may allege that a sea level rise constitutes a force majeure event that releases it from its previously negotiated contractual rights or excuses its conduct from being an internationally wrongful act. Disputes may also be brought over the use of resources endangered by climate change, or for breach of environment-related disclosure or reporting obligations.
The above discussion also illustrates how there are a range of actors, including States, corporations, individuals and non-governmental organisations. Each actor has different priorities and goals, which collectively influence its assessment of the appropriate form of and forum for dispute resolution.
(2) No fixed inference can be drawn from shared characteristics
Climate change disputes frequently involve scientific uncertainty in proving causation of existing damage or predicting future impacts, a strong public interest element, and polycentricity. Even so, the mere presence of these characteristics cannot support the inference that disputants would prefer one type of dispute resolution mechanism over another.
First, the argument goes that scientific uncertainty nudges parties towards mediation. If parties are uncertain about the strength of their position and ability to persuade judges or juries, they would prefer mediation because it offers increased control over the outcome. This analysis, however, ignores how respondents can thrive on uncertainty, especially if they have the financial resources to outspend and outlast claimants. If they cast sufficient doubt on the claimants’ case, the latter cannot discharge their burden of proof. An infamous example is how the tobacco industry “manufacture[d] uncertainty” by commissioning research to question the validity of scientific evidence, thereby delaying regulation for decades.
Secondly, it is thought that a strong public interest element lends itself to litigation, due to considerations of transparency that promote public awareness, and legitimacy of decision-making by formal officer-holders. Transparency is not, however, unique to court proceedings. Confidentiality in ADR is imposed for the parties’ benefit and can be waived. Additionally, legitimacy is not a given, even for courts. ‘Captive’ courts or tribunals that are answerable to the agencies whose decisions they review - such as the United States Environmental Appeal Board - are vulnerable to the perception that they lack independence and impartiality, regardless of whether this is true in practice. The concern of legitimacy is even more acute for ‘gatekept’ courts, such as the Dhaka Environmental Court, which only hears claims that pass the pre-selection/referral process of the Bangladesh Department of Environment.
Thirdly, some contend that where issues are polycentric, in the sense of the decision-maker having broad discretion as to policy considerations, adjudicative mechanisms are inappropriate due to the lack of legal or justiciable standards. Even accepting the soundness of this general proposition, as a matter of litigation strategy claimants can isolate a specific aspect of a decision-maker’s decision for challenge on procedural grounds rather than taking issue with the merits. An example is the court challenge to the British government’s plans to expand London Heathrow Airport, mounted on traditional judicial review grounds. This rendered a prima facie polycentric decision amenable to adjudicative resolution.
Accordingly, the complexity of climate change disputes means there is no way to conclude categorically that court litigation is always best.
The roles of ADR in climate change disputes
Having argued that there is room for ADR in climate change disputes, it is necessary to identify three specific ways in which ADR has a role to play - as an alternative to litigation, as a supportive mechanism, or as a transformative agent.
(1) ADR as an alternative to litigation
Adjudicative ADR (arbitration) can serve as a genuine alternative or substitute where court litigation is unavailable or undesirable but parties require a legal solution.
Recourse to courts may be unavailable or undesirable for a variety of reasons. Parties may fail to meet standing requirements making it more challenging to establish standing in climate change disputes because of the difficulty in demonstrating sufficient connection to harm. Alternatively, parties may not be comfortable with bringing their disputes to court because of actual or perceived partiality, as discussed above. Yet another factor against court dispute resolution is lack of judicial expertise with regard to complex climate change science. This can be a significant deterrent, as may be seen from the cautionary tale of the Environmental Chamber (Chamber) of the International Court of Justice. The Chamber was established to hear environmental cases in 1993. It was abolished in 2006 without having determined a single case. The Chamber’s under-utilisation has been partially attributed to how parties could not choose the judges, so that there was no guarantee of proficiency vis-à-vis scientific and technical issues.
Where court proceedings are not an option, arbitration is a viable alternative. The advantages of arbitration are manifold. Since these have been comprehensively discussed elsewhere, this section addresses three perceived problems which demonstrate how arbitration should not be ruled out as an alternative.
Because arbitration is consensual, there is little hope of arbitrating with a non-consenting party. Consent is, however, no hurdle where there is a pre-existing arbitration agreement (in this regard, ADR is already frequently adopted in commercial contracts concerning energy, land use, urban development, infrastructure and industry). Where there is no pre-existing agreement, however, it is up to the prospective respondent to agree to arbitrate. Yet, there is some cause for optimism that prospective respondents will see benefits to arbitrating climate change disputes. These include (1) prevention of multiple proceedings by agreeing to arbitrate with claimants collectively, (2) risk minimisation by opting for the ‘known quantity’ of international arbitration, and (3) reputational benefits from coming across as reasonable corporate citizens ready to shoulder responsibility if held liable.
(b) Transparency and public participation
Confidentiality is for the parties’ benefit and may be waived, such as by agreeing to open hearings or publication of the award. In this regard, the promulgation of the Hague Rules on Business and Human Rights Arbitration 2019 (BHR Rules) has made it easier for parties to adopt transparent procedures. The BHR Rules contain extensive provisions addressing transparency and public participation modelled on the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration 2014. Documents are made available by default. Hearings are generally public. Provision is made for non-party participation, with the arbitral tribunal being empowered to accept non-parties’ written submissions even if arbitrating parties disagree.
Given that costs are routinely identified as the worst feature of arbitration, one might assume that high expenses are a practical obstacle to arbitration. Before jumping to conclusions, however, the following counter-arguments should be considered.
(1) Litigation costs vary significantly by jurisdiction, with features of the legal environment (eg, common law versus civil law, extent of discovery obligations) being relevant to costs. In that light, arbitration may not always come off worse, especially considering how parties have a hand in crafting arbitral procedure (hence the efficiency of proceedings or the incurrence of costs) through their choice of tribunal, lex arbitri and institutional rules.
(2) Costs depend also on the principle of costs allocation that is applied, such as ‘costs follow the event’ or ‘pay your own way’. Compared to litigation, parties likewise have a greater say in arbitration as to the applicable principles.
(3) While legal aid may be available for domestic suits, the liberalisation of third-party funding regimes for arbitration in leading arbitral seats such as Hong Kong and Singapore offers possibilities for arbitration funding too. In light of these, cost considerations alone should not foreclose the choice of arbitration.
It is recognised that non-arbitrability of subject matter can limit the use of arbitration in climate change disputes. Regardless, not every case implicates non-arbitrable subject-matter: in fact, ‘indirect’ climate change cases are highly unlikely to do so. Thus, for many climate change disputes, arbitration remains a viable alternative.
(2) ADR’s supportive role
Facilitative and non-mandated ADR (mediation) serves as a useful complement to litigation.
Under the ‘multi-door courthouse’ approach, ADR services are offered alongside judicial ones. A prominent example is the New Zealand Environment Court (EC) constituted under the Resource Management Act 1991 (RMA). Under s 268 of the RMA, at any time after proceedings are lodged, the EC may “for the purpose of facilitating the resolution of any matter ask a member of the [EC] or another person to conduct an ADR process”, including mediation. Through the EC’s “pragmatic approach to ADR”, about 75% of the EC’s cases are resolved without litigation.
The benefits of an integrated approach to litigation and ADR are manifold. The early use of non-adjudicative forms of ADR can save time and costs. Mediation also permits parties to devise ‘win-win’ solutions outside of the usual judicial remedies, in a way that promotes ownership over the dispute and its outcome, and preserves the parties’ relationships. Even where disputes cannot be entirely resolved, mediation can narrow the issue for judicial attention and encourage parties to assess their options realistically.
Admittedly, mediation is not always appropriate. A clear instance in which it cannot deliver is where parties seek a binding legal precedent. Another situation is where the dispute arises from incompatible fundamental values, such that meaningful compromise becomes impossible. Again, however, leaving aside these categories of case, parties can benefit from harnessing the synergies of litigation and mediation for more holistic and satisfactory dispute resolution.
(3) ADR’s transformative potential
Finally, ADR can play a transformative role to broaden and deepen the prevailing climate change discourse, by moving away from the strict dichotomy of commercial or contractual rights on the one hand and environmental issues on the other, so as to acknowledge the reality of interconnectedness instead.
The role of the private sector in climate change mitigation has moved “from marginal to central”; the sheer size of corporations and the magnitude of capital and investment flows means that priorities established and initiatives implemented by private actors can have decisive impacts. It cannot suffice to disclaim responsibility by asserting the pursuit of ‘private’ goals as distinct from the furtherance of ‘public’ agenda items like climate change.
To that end, through ADR a new legal counter-narrative of interconnected rights and obligations can be developed. Arbitral jurisprudence can be developed in a climate-conscious way by referencing environmental considerations as appropriate. Techniques include discussing industry best practices as part of the lex mercatoria, or referencing domestic environmental legislation as a limit on what are ‘lawful investments’ (an approach upheld in a recent challenge). In mediation, greater attention may be paid to ‘unrepresented interests’ such as the environment. Responsibility falls on the mediator, as the architect of the process, to encourage fuller consideration by parties of the true extent of the climate change repercussions at issue.
This is not to say that individual arbitrators or mediators have a moral responsibility to decide in a ‘pro-environment’ way. Rather, their responsibility lies in “promoting the reasoned discourse that sows the seeds for increasingly rational responses”. In this way, ADR facilitates incremental building of momentum in support of climate change action.
Climate change is a “wicked problem”, involving great scientific and economic complexity, pervasive uncertainty and profound ethical issues. Multi-pronged creative solutions are necessary, which is precisely what ADR offers. Accordingly, the answer to whether there is room for ADR in climate change disputes is a resounding “yes”.
This is the winning article of the inaugural HK45 Essay Competition in 2021. This article was first published in the Asian Dispute Review, 2022, Volume 24, Issue 1 at pp. 20-27.
 ICC Arbitration and ADR Commission, Report on Resolving Climate Change Related Disputes through Arbitration and ADR (2019) (ICC Report), para 2.1, available at https://iccwbo.org/publication/icc-arbitration-and-adr-commission-report-on-resolving-climate-change-related-disputes-through-arbitration-and-adr/.
 J Setzer & R Byrnes, Global trends in climate change litigation: 2020 snapshot, Grantham Research Institute on Climate Change and the Environment (2020) (Grantham Report), p 1.
 Shell ordered to slash carbon emissions in landmark Dutch ruling, The Straits Times (27 May 2021). See also State of the Netherlands v Urgenda Foundation (2019), in which the Netherlands Supreme Court held that the Dutch government was obliged to reduce carbon emissions by at least 25% by 2020 compared with 1990 levels: Civil Division No 19/00135 (20 December 2019), available at http://climatecasechart.com/climate-change-litigation/wp-content/uploads/sites/16/non-us-case-documents/2020/20200113_2015-HAZA-C0900456689_judgment.pdf (accessed 22 May 2021). (Unless otherwise stated, all online articles referred to below were accessed on this date.)
 N Autet et al, The Case of the Century: The French Administrative Court issues a groundbreaking ruling on state responsibility for climate change, Gibson Dunn (26 February 2021), available at https://www.gibsondunn.com/the-case-of-the-century-the-french-administrative-court-issues-a-groundbreaking-ruling-on-state-responsibility-for-climate-change/.
 CM Baker, H Stebbing & C Dowling, Climate-related disputes: Adaptation and innovation, Norton Rose Fulbright International Arbitration Report (October 2018), p 14.
 L Elborough, International Climate Change Litigation: Limitations and Possibilities for International Adjudication and Arbitration in Addressing the Challenge of Climate Change (2017) 21 New Zealand Journal of Environmental Law 89 at 125 (Elborough).
 F Bonke, Tuesday for Future - Arbitration and Climate Change: DIS40 Autumn Conference, Kluwer Arbitration Blog (2 October 2019) (Bonke), available at http://arbitrationblog.kluwerarbitration.com/2019/10/02/tuesday-for-future-arbitration-and-climate-change-dis40-autumn-conference/?doing_wp_cron=1576593707.7617468833923339843750.
 See also R de Paor, Climate Change and Arbitration: Annex Time before there won’t be A Next Time (2017) 8 Journal of International Dispute Settlement 179 at 188 (de Paor).
 Case No 2 O 285/15, Essen Regional Court, available at http://climatecasechart.com/climate-change-litigation/non-us-case/lliuya-v-rwe-ag/.
 Rockhopper Exploration Plc et al v Republic of Italy, ICSID Case No ARB/17/14 (extant).
 J Levine & N Swan, ‘Climate Change Dispute Options’, in MJ Moser & C Bao (Eds), Managing ‘Belt and Road’ Business Disputes: A Case Study of Legal Problems and Solutions (2021, Kluwer Law International), p 330 (Levine).
 International Law Commission (ILC) Articles on Responsibility of States for Internationally Wrongful Acts (2001, UN General Assembly, A/RES/62/61), art 23.
 See disputes concerning resources cited in Bonke (note 8 above): eg, Iron Rhine Arbitration (Belgium v Netherlands), Award of 24 May 2005; Indus Waters Kishenganga (Pakistan v India), Award of 20 December 2013.
 Grantham Report (note 2 above), p 19.
 J Harder, Environmental Mediation: The Promise and the Challenge (1995) 19 Environmental Law and Policy Journal 29 at 30.
 To consider just one example, even the archetypical ‘concerned individuals’ are not a homogenous group. Some may predominantly seek individual redress, such as compensation or an apology. Others may seek to drive broader change, whether by nudging governments toward more ambitious climate change mitigation targets or pursuing the repeal of legislation. Yet others commence proceedings for purely strategic reasons, such as delay tactics to render time-sensitive issues moot.
 M Hawkins, Local Government Mediation - The Ugly Duckling of RMA Resolution (2016) 20 New Zealand Journal of Environmental Law 239, at 247–248 (Hawkins); E Davies, Recommendations for Effectively Resolving Climate Change Disputes against Investors (2020) 1 Carbon & Climate Law Review 49, at 50; T Foley, Non-Adversarial Resolution of Environmental Disputes Mediation in the Land and Environment Court of New South Wales: A Case Study (1999) 8 Griffith Law Review 333, at 344.
 A Knaster, Resolving Conflicts Over Climate Change Solutions: Making the Case for Mediation (2010) 10 Pepperdine Dispute Resolution Law Journal 465, at 479.
 D Michaels & C Monforton, Manufacturing Uncertainty: Contested Science and the Protection of the Public’s Health and Environment (2005) 95 American Journal of Public Health Supplement S1, at S40.
 For example, parties sometimes agree to the publication of awards without redaction, or the unsealing of the relevant court case file in setting aside or enforcement proceedings.
 BJ Preston, Characteristics of successful environmental courts and tribunals (2014) 26 Journal of Environmental Law 365 (loose-leaf version at 9) (Preston).
 Ibid, at 4.
 Lord Harry Woolf et al, De Smith’s Judicial Review (8th Edn, 2018, Sweet & Maxwell), para 1-044.
 Principally, failure to take climate obligations into account as relevant considerations: R (on the application of Plan B Earth Ltd) v Secretary of State for Transport and others  UKSC 52 (UK Supreme Court).
 International Bar Association (IBA), Climate Change Justice and Human Rights Task Force Report (July 2014), Achieving Justice and Human Rights in an Era of Climate Disruption, p 68 (IBA Report).
 Although this might be alleviated by recourse to specially constituted environmental courts, defendants may view such tribunals “with suspicion as being excessively pro-environment, similar to how the WTO is often accused of being excessively pro-trade”: de Paor (note 9 above), p 199.
 IBA Report (note 27 above) at pp 84–85.
 For example, ability to appoint arbitrators with climate change expertise, and factors promoting procedural flexibility and efficiency (such as the appointment of emergency arbitrators and the issuance of multiple partial awards to deal with time-sensitive matters): IBA Report (note 27 above), Part V; T Cummins, T Karalis & L McKenzie, Making the most of Arbitration to resolve Green Technology Disputes, Ashurst International Arbitration Update (4 February 2020), available at https://www.ashurst.com/en/news-and-insights/legal-updates/making-the-most-of-arbitration-to-resolve-green-technology-disputes/ .
 IBA Report (note 27 above).
 ICC Commission Report (note 3 above), para 5.1.
 Ibid, para 5.82.
 BHR Rules, art 40.
 Ibid, art 41.
 There is no restriction on the types of non-party that may be involved, with States, public interest groups and other interested parties all having the potential to be heard.
 Article 28 of the BHR Rules permits the tribunal to call for submissions “[a]fter consultation with the parties”, which suggests that parties do not have a veto.
 Queen Mary University of London and White & Case, 2018 International Arbitration Survey: Evolution of International Arbitration, p 2. See also the 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration. The 2021 International Arbitration Survey: Adapting Arbitration to a Changing World did not, however, pose the same question to participants.
 US Chamber Institute for Legal Reform, International Comparisons of Litigation Costs Canada, Europe, Japan, and the United States (June 2013) at p 5, available at https://instituteforlegalreform.com/wp-content/uploads/media/ILR_NERA_Study_International_Liability_Costs-update.pdf; SA Cueto, International Litigation Costs: A Comparative Study, Cueto Law Group (4 June 2013), available at http://internationalbusinesslawadvisor.com/international-litigation/.
 SD Franck, Arbitration Costs: Myths and Realities in Investment Treaty Arbitration (2019, Oxford University Press), p 184.
 LS Chan, Third-Party Funding - Taking Stock, Singapore Law Gazette (November 2018), available at https://lawgazette.com.sg/feature/third-party-funding-taking-stock/.
 For example, adjudication on breach of constitutional rights. See Alexander v Gardner-Denver Co, 415 US 36 (1974) at 58 (“the resolution of statutory or constitutional issues is a primary responsibility of courts”).
 Harder (note 16 above), p 30; S Higgs, The Potential for Mediation to Resolve Environmental and Natural Resources Disputes (2007) 1 American Journal of Meditation 101, at 124.
 Preston (note 23 above), p 20.
 RMA s 268(4).
 Hawkins (note 18 above), p 256.
 Preston (note 23 above), p 20.
 C Voigt, Environmental Mediation and the Resource Management Act 1991 (2002) 8 Auckland University Law Review 912, at 924.
 D J Amy, The Politics of Environmental Mediation (1983) 11 Ecology Law Quarterly 1, at 15–16.
 A Magnusson, ‘New Arbitration Frontiers: Climate Change’, in JE Kalicki & MA Raouf (Eds), Evolution and Adaptation: The Future of International Arbitration (2019, Kluwer Law International) p 1027.
 ICC Commission Report (note 3 above), para 5.64.
 Cortec Mining Kenya Ltd, Cortec (Pty) Ltd and Stirling Capital Ltd v Republic of Kenya, ICSID Case No ARB/15/29, Award (22 October 2018) at . Upheld in the Decision on Application for Annulment of 19 March 2021 at  (reading an implicit legality requirement into the bilateral investment treaty was not “so untenable that it cannot be supported by reasonable arguments” as to amount to a manifest excess of powers).
 R Lyster, Should We Mediate Environmental Conflict: A Justification for Negotiated Rulemaking (1998) 20 Sydney Law Review 579, at 591.
 Preston (note 23 above), at p 23.
 A Wicked Problem: Controlling Global Climate Change, World Bank (30 September 2014), available at https://www.worldbank.org/en/news/feature/2014/09/30/a-wicked-problem-controlling-global-climate-change.