Juliana climate change case. Ninth Circuit full of sympathy but dismisses suit for failure to establish redressability.

The last few years have seen several public law suits against governments by NGOs seeking, not unreasonably, that they do more to combat global warming. The one victory so far has been that in the Netherlands with the Supreme Court’s decision in the Urgenda case in December 2019 upholding the decisions of the lower courts that the Dutch Government must cut greenhouse gas emissions by 25% over 1990 levels by the end of 2020. Apart from that, it has been supportive words and defeats all the way. That trend has continued with last Friday’s majority decision by the Court of Appeals for the Ninth Circuit in Juliana v US, the so-called Childrens’ Climate case.

The case was brought in 2015 by various schoolchildren who asserted that the US Government’s conduct in relation to global warming constituted violations of: their substantive rights under the Due Process Clause of the Fifth Amendment;  their rights under the Fifth Amendment to equal protection of the law; their rights under the Ninth Amendment; and the public trust doctrine. The plaintiffs sought declaratory relief and an injunction ordering the government to implement a plan to “phase out fossil fuel emissions and draw down excess atmospheric [carbon dioxide].”

The district court denied the government’s motion to dismiss, concluding that the plaintiffs had standing to sue, raised justiciable questions, and stated a claim for infringement of a Fifth Amendment due process right to a “climate system capable of sustaining human life.”

The Court of Appeals noted the evidence supporting the fact that the world now faces an imminent climate catastrophe, evidence supported by government scientists. Judge Hurwitz stated:

“As early as 1965, the Johnson Administration cautioned that fossil fuel emissions threatened significant changes to climate, global temperatures, sea levels, and other stratospheric properties. In 1983, an Environmental Protection Agency (“EPA”) report projected an increase of 2 degrees Celsius by 2040, warning that a “wait and see” carbon emissions policy was extremely risky. And, in the 1990s, the EPA implored the government to act before it was too late. Nonetheless, by 2014, U.S. fossil fuel emissions had climbed to 5.4 billion metric tons, up substantially from 1965. This growth shows no signs of abating. From 2008 to 2017, domestic petroleum and natural gas production increased by nearly 60%, and the country is now expanding oil and gas extraction four times faster than any other nation

The record also establishes that the government’s contribution to climate change is not simply a result of inaction. The government affirmatively promotes fossil fuel use in a host of ways, including beneficial tax provisions, permits for imports and exports, subsidies for domestic and overseas projects, and leases for fuel extraction on federal land.”

The majority of the Court of Appeals however dismissed the claim on the grounds that to establish redressability under Article III of the Constitution, the plaintiffs must show that the relief sought is (1) substantially likely to redress their injuries; and (2) within the district court’s power to award. The crux of the plaintiffs’ requested remedy was an injunction requiring the government not only to cease permitting, authorizing, and subsidizing fossil fuel use, but also to prepare a plan subject to judicial approval to draw down harmful emissions. This would draw the judiciary into policy making, a matter which was something for the ballot box. Judge Hurwitz stated:

“There is much to recommend the adoption of a comprehensive scheme to decrease fossil fuel emissions and combat climate change, both as a policy matter in general and a matter of national survival in particular. But it is beyond the power of an Article III court to order, design, supervise, or implement the plaintiffs’ requested remedial plan.

These decisions range, for example, from determining how much to invest in public transit to how quickly to transition to renewable energy, and plainly require consideration of “competing social, political, and economic forces,” which must be made by the People’s “elected representatives, rather than by federal judges interpreting the basic charter of Government for the entire country.”

…the plaintiffs’ request for a remedial plan would subsequently require the judiciary to pass judgment on the sufficiency of the government’s response to the order, which necessarily would entail a broad range of policymaking.”

Judge Staton, dissenting, stated:

“In these proceedings, the government accepts as fact that the United States has reached a tipping point crying out for a concerted response—yet presses ahead toward calamity. It is as if an asteroid were barreling toward Earth and the government decided to shut down our only defenses.”

And

“What sets this harm apart from all others is not just its magnitude, but its irreversibility. The devastation might look and feel somewhat different if future generations could simply pick up the pieces and restore the Nation. But plaintiffs’ experts speak of a certain level of global warming as “locking in” this catastrophic damage. Put more starkly by plaintiffs’ expert, Dr. Harold R. Wanless, “[a]tmospheric…warming will continue for some 30 years after we stop putting more greenhouse gasses into the atmosphere. But that warmed atmosphere will continue warming the ocean for centuries, and the accumulating heat in the oceans will persist for millennia” (emphasis added). Indeed, another of plaintiffs’ experts echoes, “[t]he fact that GHGs dissipate very slowly from the atmosphere and that the costs of taking CO2 out of the atmosphere through non-biological carbon capture and storage are very high means that the consequences of GHG emissions should be viewed as effectively irreversible” (emphasis added). In other words, “[g]iven the self-reinforcing nature of climate change,” the tipping point may well have arrived, and we may be rapidly approaching the point of no return.”

 

Indeed.

 

The current concentration of CO2 in the earth’s atmosphere is 413.25 ppm. To have a 67% chance of keeping global warming to 1.5 degrees over pre-industrial levels, the  CO2 concentration in the earth’s atmosphere should not exceed 430 ppm. The annual mean rate of increase of CO2 in the earth’s atmosphere in the last ten years is around 2.5ppm.

Another Nail in the Coffin? Rotterdam Rules One for the Shelves?

When introduced more than a decade ago, the Rotterdam Rules were welcomed with great enthusiasm and many were optimistic that the Rules, which introduce a modern carriage regime suitable for the new century, would soon replace the old-fashioned Hague-Visby regime.

Not many believe that this is a genuine prospect any more. As of today only 4 countries have ratified the Rotterdam Convention, namely Cameroon, Congo, Spain and Togo and the Netherlands have recently taken the first steps towards ratification and implementation of the Rotterdam Rules by submitting two draft bills to Dutch Parliament. However, there seems to be no urgency amongst the trading nations to ratify the Rotterdam Rules. For example, the current administration in the US does not seem to be interested. The same is true for UK government which is at the moment consumed with BREXIT and its implications. Norway has appointed a law commission to review the Rotterdam Rules and its possible ratification, and the commission was in principle in favour of incorporating the Rotterdam Rules, but recommends that Norway does not ratify the convention before the US or any larger EU states do. Germany and Belgium expressed strong objections to the Rules. And China seems to be watching the developments at this stage showing no interest in ratifying the Convention but instead engaged in a review of its Maritime Code which will possibly introduce some aspects of the Rules into its national law.

But life goes on! And the news that Malaysian law makers decided to implement the Hague- Visby Rules into Malaysian domestic law is a very interesting one indeed. The Carriage of Goods by Sea (Amendment) Bill 2019 is expected to come into force in 2020. The amending bill does not set out the provisions of the Hague-Visby Rules but states that the Minister is entitled to amend the Schedule to the Act by order published in the Gazette (the Schedule presently sets out the provisions of the Hague-Visby Rules). So, the Rules will become part of Malaysian law after the Act comes into force and the Minister issues an order. The process might seem complicated for those who are not familiar with the constitution and public law of Malaysia but the step is important as it is a clear indication that emerging trading nations are now working under the assumption that no fundamental change will happen in this field and Hague Visby Rules will continue to dominate international carriage. There is no doubt that Rotterdam Rules introduce several sensible solutions to modern problems, i.e. electronic documents, which can be utilised when reforming national legal systems (and it is believed that China will do that) and some of its aspects might be introduced by contractual agreement into a carriage contracts, but it is also becoming clear that the Rules will probably not become part of international legal system.

For a legal analysis of Rotterdam Rules, you can read an article that the author wrote together with late Dr Theodora Nikaki:

A New International Regime for Carriage of Goods by Sea: Contemporary, Certain, Inclusive, and Efficient or Just Another One for the Shelves?’ (2012) 30 Berkeley Journal of International Law pp 303-348

Dr-Theodora-Nikaki

Dr Nikaki talking about Rotterdam Rules at IISTL’s 10th International Colloquium

Arbitration Enforcement and Jurisdiction in a Commercial Setting: Anglo, Euro and Chinese Perspectives – An International Seminar (21 February 2020) in London

To register please follow:

https://www.eventbrite.co.uk/e/arbitration-enforcement-and-jurisdiction-in-a-commercial-setting-tickets-82597672863

English law and jurisdiction are commonly used in relation to shipping, insurance and other trade contracts. Nevertheless, commercial law is overwhelmingly transnational in character; delicate questions of interaction are unavoidable between choice of law, jurisdiction and arbitration clauses on the one hand, and the activities of courts and arbitrators in other jurisdictions on the other.

This is particularly true of cases with a connection to China, London, Singapore and New York arbitrations very frequently involve Chinese parties, or other parties with assets or accounts in China; how such awards can be transformed into hard cash is a top concern of any lawyer involved with them. Similarly, the European ‘torpedo action’ aimed at preventing claimants suing in their own, or indeed their chosen, jurisdiction is well-known worldwide and deserves a thorough examination.

To this end, HFW and Swansea Law School’s Institute of International Shipping and Trade Law, a top law firm and law school for shipping and commercial law, have teamed up with the China-Europe Commercial Collaboration Association to offer a one-day seminar on arbitration and jurisdiction in the commercial context, with particular reference to developments in the UK, China and Europe.

The following topics will be discussed at the event:

  1. The recognition and enforcement of foreign arbitral awards in China
  2. The recognition and enforcement of foreign arbitral awards in Turkey
  3. Recognition and enforcement of interim arbitral awards in Germany
  4. European “torpedo actions”; the present position and possible future developments.
  5. How to ensure that agreed jurisdiction clauses are honoured in shipping contracts.
  6. The approach of the English courts to appeals from arbitration awards on jurisdictional grounds.
  7. The Impact of Brexit on maritime disputes and dispute resolution.
  8. The impact of cultural differences on the effect of evidence
  9. Public policy exception and enforcement of arbitration awards – a comparative approach
  10. China International Commercial Court – Construction of Arbitration Clauses

Speakers and chairpersons include:

  • Professor Lia Athanasiou, National and Kapodistrian University of Athens, Athens
  • Professor Simon Baughen, Institute of International Shipping and Trade Law, Swansea University
  • Simon Croall QC, Head of Quadrant Chambers, London
  • Paul Dean, Partner and Global Head of Shipping, HFW, London
  • Dr Tobias Eckardt, Partner, Ahlers & Vogel; Senior Member, China-Europe Commercial Collaboration Association, Germany
  • Dr Shengnan Jia, Co-founder, China-Europe Commercial Collaboration Association; Partner, Tahota Law Firm
  • Professor James Hu, Shanghai Maritime University, Shanghai
  • Associate Professor George Leloudas, Institute of International Shipping and Trade Law, Swansea University
  • Mr Justice Picken, Judge of the Commercial Court
  • Nicholas Poynder, Partner and Head of Shipping, HFW, Shanghai
  • Simon Rainey QC, Quadrant Chambers, London
  • Professor Bülent Sözer, Piri Reis University, Istanbul
  • Professor Andrew Tettenborn, Institute of International Shipping and Trade Law, Swansea University
  • Ms Shihui YU, Law School, Dalian Maritime University
  • Professor Jiang Yuechuan, Law School, Dalian Maritime University
  • Dr Lijun Zhao, Co-founder, China-Europe Commercial Collaboration Association; Senior Lecturer, Middlesex University, London
  • Patrick Zheng, Partner and Head of Dispute Resolution Practice, Llinks Law Offices, Beijing
  • Associate Professor Rui Zheng, Law School, Shanghai Maritime University

—————————————————————————-

For any enquiries please contact: Alicia on a.a.mckenzie@swansea.ac.uk

Exceptions to the Running of Laytime- “Wording” is the Key (Bad Weather?)- London Arbitration 21/19

Ship1

In commercial contracts, exclusion clauses are often construed narrowly. In the context of voyage charterparties, this could create significant difficulties for charterers who attempt to rely on an exclusion clause to stop the running of laytime or demurrage.

In the contract in question, it was expressly stipulated that … if … loading… [was] … suspended: [a] due to bad weather (including… storms, high winds…) or [b] for other reasons not attributable to charterers or their shippers/receivers, laytime and demurrage would not count.

At the port of loading, the laytime period started on 25 August. A tropical storm was approaching to the loading port but loading continued and the terminal indicated at 13.00 hours on 26 August that there was no present intention to shut-down due to the fact that the approaching hurricane’s land fall remained uncertain. However, at 15.30 hours on the same day, the terminal stopped loading and the vessel was advised to leave for anchorage. The terminal informed the vessel that they had no alternative but to vacate the vessel as weather conditions would make anchorages scarce and they had to consider the safety of their docks, fleet and terminal. The port remained closed for the next few days and on 29 August the vessel re-berthed and completed loading. The main legal issue was whether laytime stopped when the vessel was ordered off the berth.

It was held that the laytime was not suspended when the vessel left the berth on 26 August as for laytime to be suspended under a clause of this nature it was necessary to show that time was lost due to bad weather. The tribunal observed that it was impossible to calibrate the imminence and nature of bad weather when the vessel sailed away on 26 August but was adamant that the facts did not suggest that loading as suspended due to bad weather. What led tribunal to this conclusion was the fact that the hurricane was still at least 2 days away and there was no immediate danger to shipping. The terminal’s decision to close the facility was based on its desire to ensure the safety of its barges and there was also concern that vessels would find it difficult to find anchorages if they stayed any longer in the terminal.

However, the charterers managed to convince the tribunal that the running of laytime was suspended for “reasons not attributable to charterers or their shippers/receivers”. They got the decision of the tribunal in their favour on this point as they successfully argued that they had no connection with the terminal so the actions of the terminal were not attributable to them. It was stressed by the tribunal that shippers and the terminal were separate legal entities with no agency relationship.

The first part of the decision is in line with the precedent set in a number of authorities most notably Compania Crystal de Vapores v. Herman [1958] 2 QB 196 where the chartered vessel ordered from the berth by harbour master due to threat of bad weather. There, it was held that time lost as a result of measures taken for safety of the ship as a result of bad weather does not count. It is vital that bad weather should potentially prevent the loading/discharge. Therefore, to suspend the running of laytime in a case like this, charterers would need to show that the relevant clause refers not only to “bad weather” but also to “steps taken due to bad weather”. The finding on the second part of the clause was fact based and the decision went in favour of the charterer as the owner failed to show that there was any organic relationship between the charterers/shippers and the terminal. However, it is evident that the wording adopted makes this a very broad exception and could potentially provide relief to charters in most instances.

Demurrage time bar. Do documents and claim have to come together?

 

Following a recent decision on a time charter time bar clause, we now have another time bar decision, this time by Peter MacDonald Eggers QC, in The Amelie Essberger [2019] EWHC 3402 (Comm). The vessel was chartered on amended Asbatankvoy form for a voyage from Rotterdam to Castellon in Spain. At Castellon the receiver refused to accept delivery of part of the cargo carried in one of the vessel’s tanks (tank 5S), because that cargo was contaminated with mono ethylene glycol. After discharge of the remainder of the cargo at Castellon the vessel then shifted to an anchorage off Castellon, remaining there for nine days before sailing to Valencia for discharge of the cargo in tank 5S.

The charter contained a demurrage time bar clause in the rider.

5) TIME BAR

Any claim for demurrage, deadfreight, shifting expenses or other charges or invoices shall be considered waived unless received by the Charterer or Charterer’s broker in writing with all supporting calculations and documents, within sixty (60) 90 days after completion of discharge of the last parcel of Charterer’s cargo (es). Demurrage, if any, must be submitted in a single claim at that time, and the claim must be supported by the following documents:

  1. Vessel and/or terminal time logs; B. Notices of Readiness; C. Pumping Logs; and D. Letters of Protest …

The Charterers applied for summary judgment pursuant to CPR rule 24.2 on the ground that the Owners had no real prospect of succeeding in their claim for demurrage because of the time bar defence. The demurrage claim was submitted in time but did not include two of the specified documents – (a) the Vessel’s pumping log at Rotterdam and (b) a letter of protest issued by the Master of the Vessel dated 30th November 2017, noting that the Charterers’ and the shippers’ surveyor had not supplied the Vessel with sealed samples of the cargo upon completion of loading. Owners had already provided the charterers with these documents before submitting their demurrage claim.

The Judge was inclined to adopt either a construction of the time-bar clause that requires the Owners to submit documents on which they relied in support of their demurrage claim or one that required the submission of documents which taken at face value established the validity of the demurrage claim. The clause required the submission of “all” such supporting documents. Furthermore, the four listed documents had to be supplied whether or not the listed documents might be said to be “supporting documents”  as this was clear from the mandatory language of the second sentence (“must be supported”).

However, there was no express requirement that the supporting documents must be provided at one time and at the same time as the demurrage claim. The word “Demurrage” at the beginning of the second sentence was to be construed as a reference to the demurrage claimed and not as a reference to the demurrage claim and supporting documents The requirement that the demurrage claim “with” all supporting documentation must be received by the Charterers within 90 days after the completion of discharge meant no more than that the claim and supporting documents must be received before the expiry of the 90 day period. The reference to a “single claim” means that only one claim may be submitted. In other words, separate demurrage claims, for example at loadport or at each discharge port, were not permitted.  The commercial purpose of Clause 5 did not require the simultaneous submission of the demurrage claim and the supporting documents, but merely the submission of the claim and the supporting documents before the end of the 90 day period.

Accordingly, the claim was not time barred. Had supporting documents not been supplied to charterers within 90 days, the entire demurrage claim would have been barred and not just that part to which those documents related. The clause did not provide that only a part of the demurrage claim will be waived if anything less than “all supporting … documents” are provided and contemplated only a “single claim”. However, the Judge could see the sense of “an approach that if there are two parts of the demurrage claim which are unrelated and if a supporting document is relevant for one part of the demurrage claim, but not the other, there is no pressing reason why the unaffected part of the claim should be time-barred [62].”

 

 

New year, new sulphur cap.

The Sulphur cap is here. If you’re a shipowner still running on High Sulphur Fuel Oil (HSFO) you need to trust to your Fuel Oil Non-Availability Report (FONAR), unless you are fitted with scrubbers. If you’re running on Low Sulphur Fuel Oil (LSFO) now you still need to get any HSFO off your vessel by 1 March 2020 due to the Carriage Ban. Apart from increasing the cost of running a vessel, the IMO’s two regulation are likely to see various additional costs being incurred by shipowners: costs of disposal of remaining onboard HSFO including costs of tank and line cleaning to avoid residual HSFO mingling with LSFO and pushing the Sulphur level over 0.5%; time lost in performing such operations; effect of LSFO on owners’ performance warranties under time charters; fines and detention due to inability to get remaining HSFO off the vessel by 1.3.2020 (there is no equivalent of a FONAR to cover this eventuality). A report from S&P Global Platts last week reveals that a lot of debunkering is going to have take place between now and 1.3.2020. https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/122719-shipowners-rush-to-de-bunker-hsfo-as-imo-2020-looms

Added to that there is the greater risk of engine damage due to use of LSFO. Today Reuters carries a report that testing companies examining newer, low-sulphur marine blends acquired in Antwerp, Belgium, Houston and Singapore have found sediment at levels that could damage the engines of ocean-going vessels. Depressing news with which to welcome in the new year. https://uk.reuters.com/article/uk-shipping-imo-fueloil/tests-raise-alarms-over-fuel-blends-coming-for-ocean-going-vessels-idUKKBN1YZ1ED

It is likely that the new decade will see a spate of claims arising out of the sulphur cap and the carriage ban, particularly under time charters, with renewed interest by owners in the indemnity as a means of clawing back costs from time charterers.

“All supporting documents” in time charter time bar clause means what it says.

 

Mur Shipping BV v Louis Dreyfus Company Suisse SA [2019] EWHC 3240 (The Tiger Shanghai) concerned the construction of the following time bar in additional clause 119 of a time charter on NYPE form.

“[Owners] shall be discharged and released from all liability in respect of any claim or claims which [Charterers] may have under Charter Party and such claims shall be totally extinguished unless such claims have been notified in detail to [Owners] in writing accompanied by all available supporting documents (whether relating to liability or quantum or both) and arbitrator appointed within 12 months from completion of charter”.”

The charter was terminated due to a problem with the feeder holes in the hatch covers which were positioned so that the loading crane at the loading port, Carbenaros, was not quite long enough to reach those on the starboard side of the Vessels. To solve this problem the Charterers wanted to cut new cement feeder holes into the hatch covers. Disponent owners refused permission for the work to be done. Shortly after the vessel arrived at the load port, a survey was conducted at charterer’s request by CSS on the cutting of new cement holes in the hatch covers. The following day disponent owners stated that their refusal was final and non-negotiable and  charterers terminated the charter.

The express basis for that termination was that the cutting of additional feeder holes fell within the ambit of Clause 46 which provided “The Charterers, subject to the Owners’ and Master’s approval which is not to be unreasonably withheld, shall be at liberty to fit/weld any additional equipment and fittings for loading … cargo. Such work shall be done at the Charterer’s expense and time, and the Charterers shall remove such equipment and fittings at their expense and time prior to redelivery, if so required by the Owners …” Charterers argued that Owners’ refusal for permission to cut such holes had been unreasonably withheld, so that Owners were in repudiatory breach and Charterers were entitled to terminate.

Charterers appointed their arbitrator within 12 months of the termination of the charter and claimed in respect of “all disputes connected with the Charterparty” which was stated to include claims for:

  1. i) The return of hire and value of delivery bunkers paid in advance,
  2. ii) costs incurred on the Owners’ behalf;

iii) damages in respect of claim from the sub Charters for the termination of the Charter; and

  1. iv) the Owners’ failure to obey instructions/ breach of Clause 46 of the Charter.

Nearly a year later charterers served claim submissions to which was attached the CSS Report dealing with the feasibility of drilling cement holes in the hatch covers, and relied on it to allege that disponent owners had unreasonably withheld consent to the works

The submission of the CSS report led disponent owners to take the timebar point, arguing that it went to the heart of the issue of liability and that had it been presented it was likely that the parties could have resolved the dispute without the need for arbitration. Charterers argued that the CSS Report was a document compiled for the purposes of the arbitration in the light of the dispute and that expert reports and other arbitration documents fell outside the category of “supporting documents” that are to be provided and Clause 119

The majority of the Tribunal found that this document was a “supporting document”, that it was not privileged; and that the claim was consequently time barred. On appeal two issues arose.

i) Is a document which would otherwise be a supporting document one which should not be counted as such if it was arguably privileged?

This point concerned arguably privileged documents as opposed to actually privileged documents. This was because: (i) Charterers accepted that the document was not privileged and (ii) Owners are prepared to proceed on the assumption that the clause does not require provision of a privileged document. Charterers submitted that if a document is reasonably arguable to be privileged, then its disclosure is not required by an “all supporting documents” time bar clause and it does not matter even if, in the final analysis, it is held not to be privileged. Cockerill J rejected this submission as the argument was “profoundly uncommercial”. Such an approach would sit very ill with the requirements of certainty which underpin clauses of this sort

ii) Is a document which is not at least at the time of commencement of the arbitration of relevance to either the identification of or support for a relevant claim as referred to arbitration, a “supporting document”.

Cockerill J held that the CSS report was a supporting document and it could not be the case that simply because a document emerges later it cannot give rise to a time bar argument. An “all documents” clause is naturally geared to the provision of more than the bare essentials; and even in the simpler cases it may be the case that the party receiving the documents may not know the full extent of the documentation available.

The question of “supporting documents” had to look to the claim being advanced. If for some reason the claim somehow changed in essence at a later stage, for example, if a timing point not previously apprehended was made, or a correction needed to be made, this should not mean that documents later relied on became retrospectively relevant at the point of the time bar. However, here, there was no change in the case or correction. Charterers’ claim was predicated on the refusal by disponent owners having been wrongful, because unreasonable. Without that, the termination was not valid. The material in the CSS Report went to this question of reasonableness.

If the reasonableness of the refusal was in play at the time when the claim was made, this document was relevant and supportive. It was significant that the clause combined both specific reference to “all” and specific reference to “liability and quantum”, while not confining itself to any particular sort of claim. The parties intended the clause to cover all disputes under the Charterparty, including inferentially claims arising out of wrongful termination. While the case had not refined itself so far as it had done at the time of the hearing, the claim (at least as to quantum) in fact depended on the date of termination and the date of termination depended on being entitled to terminate, which itself depended on unreasonable refusal on the part of the Owners. Therefore, the report was on its face within the ambit of the claim that charterers advanced and supportive of it.

The appeal against the Award was therefore dismissed.

A tale of targets. Dutch Supreme Court decides on climate change and State’s duty to protect its citizens.

 

 

A new feature of the legal landscape is climate change litigation – be it tort claims against carbon majors in the US, investor fraud allegations in the US, and public law challenges in Europe. The last of these yielded an interesting decision just before Christmas when the Dutch Supreme Court gave its decision in the Urgenda case, reported in this blog on 25 October 2018, upholding the judgments of the lower courts that the Dutch State must reduce GHG emissions by 25% over 1990 levels by the end of 2020.

 

The Dutch Supreme Court has summarised its decision as follows (an English translation of its judgment is not yet available).

 

  • The Supreme Court based its judgment on the UN Climate Convention and on the Dutch State’s legal duties to protect the life and well-being of citizens in the Netherlands, which obligations are laid down in the European Convention for the Protection of Human Rights and Fundamental Freedoms (the ECHR).
  • There is a large degree of consensus in the scientific and international community on the urgent need for developed countries to reduce greenhouse gas emissions by at least 25% by the end of 2020. The Dutch State has not explained why a lower reduction would be justified and could still lead, on time, to the final target accepted by the Dutch State.
  • The Dutch State has argued that it is up to politicians to decide on the reduction of greenhouse gas emissions. According to the Supreme Court, however, the Dutch Constitution requires the Dutch courts to apply the provisions of the ECHR. This role of the courts to offer legal protection is an essential element of a democracy under the rule of law. The courts are responsible for guarding the limits of the law. That is what the Court of Appeal has done in this case, according to the Supreme Court.
  • Therefore, the Supreme Court ruled that the Court of Appeal was allowed and could decide that the Dutch State is obliged to achieve the 25% reduction by the end of 2020, on account of the risk of dangerous climate change that could also have a serious impact on the rights to life and well-being of residents of the Netherlands.

The decision is the first successful climate change challenge to a government’s targets for reducing GHG emissions. In May 2019 a challenge to the EU’s targets of a 40% reduction by 2030 over 1990 levels in Carvalho v European Parliament and Council of EU, Case T-330/18 failed, and a similar challenge to the UK’s targets under the Climate Change Act 2008 in the Plan B case, reported here on 3 September 2018, also failed.

 

A “RISK CHARACTERISTIC TO AIR TRAVEL” AND ARTICLE 17 OF THE MONTREAL CONVENTION 1999: IS THE TALMUDIC DEBATE RESOLVED BY THE CJEU?

When a judgment begins with references to the importance of protecting the interests of air passengers, it is a foregone conclusion that it will not go the way of the air carrier. The case of GN v ZU, Case C-532/1819 December 2019 proved to be no different.

The case was referred to the Court of Justice of the European Union (CJEU) by the Austrian Supreme Court which was faced with the following set of facts: a minor who was travelling with her father from Mallorca to Vienna suffered second-degree scalding when a cup of coffee that was placed upon the tray table of her father tipped over either due to a defect of the table or a turbulence. There was no doubt that the injury was caused by an unusual and unexpected event that was external to the minor, satisfying the widely used definition of the term accident in Art 17 of the Montreal Convention 1999 (MC) as was construed in the American case of Air France v Saks 470 U.S. 392 (1985).

In doubt was whether the term accident is “limited to cases where a hazard typically associated with aviation materialize[s]”. If there is such a requirement, the injuries of the minor were not recoverable under the MC as the spilling of the coffee “has no connection to aviation activity and …[is] likely to occur in other circumstances”.  

Surprisingly, this conundrum was not authoritatively resolved until today. In the German-speaking world there is a preference for risks characteristic to air carriage to constitute accidents. An expression of such preference can be found in the judgment of the Austrian Higher Regional Court of Vienna in this case (which heard the appeal from the Regional Court of Korneuburg).

In the English-speaking world there is no principled approach with two passenger-to-passenger assault cases under the Warsaw Convention System (WCS) demonstrating the divergence of opinion between English and US courts. In both cases female passengers were sexually assaulted during their respective flights. In the case of Morris v KLM Royal Dutch Airlines [2001] EWCA Civ 790 (the issue was not raised in the House of Lords) Lord Phillips rejected any link between accident and the operation of the aircraft under Art. 17. He noted that such a requirement is foreign to the aforementioned definition of the term accident and it was imposed by subsequent to Saks passenger-to-passenger assault cases. As such, it does not stand to judicial scrutiny.

In the case of Wallace v Korean Air 214 F 3d 293 (2nd Cir, 2000) the majority of the Court of Appeals for the Second Circuit held that a weak link between the unusual and unexpected event and the operation of the aircraft should exist in order to have an accident. The Court found that the link was existent in this case as the female passenger “took her seat in economy class on the KAL flight, she was cramped into a confined space beside two men she did not know, one of whom turned out to be a sexual predator. The lights were turned down and the sexual predator was left unsupervised in the dark”.

In the case at hand, the CJEU sided with the analysis of Lord Philips and held that Art 17MC does not contain a requirement that the accident is the result of a “risk characteristic to aviation”. In a judgment that is ridden with policy arguments, the CJEU decided that it contradicts the proclaimed aim of the MC to protect passengers, does not fit into its system of strict and unlimited liability and is superfluous to the ordinary meaning of the term accident.

A significant element for the CJEU is that the carrier can only be exonerated from liability in the first tier or liability of the MC (up to 113,000SDRs/128,800SDRs as of 28 December 2019) in cases of contributory negligence. Imposing such a requirement would give the air carrier additional means to be exonerated, an addition that runs against the system of strict liability of the first tier. Inevitably, this would make recovery for passengers more difficult and breach the celebrated aim of the MC to safeguard their interests. In addition, it is foreign to the definition of accident as an “unforeseen, harmful and involuntary event”.

This decision should not come as a surprise. For the CJEU the requirement of “risk characteristic to air travel” provides an additional layer of protection to air carrier that does not fit into the system of liability of the MC. What is surprising, though, is that the court’s reasoning is rather weak; for example, the Court explains in three lines why the said requirement is foreign to the ordinary meaning of the term accident. It further provides no analysis of the Saks case which remains the main authority on what constitutes accident. Instead, it provides a policy-based decision which confirms that the CJEU has developed a keen interest in distancing the interpretation of the MC from its predecessor. In the Wallace case the Court described the whole debate as a Talmudic one and the CJEU resolved it in a passenger-friendly way.

THE NEW LIABILITY LIMITS OF THE MONTREAL CONVENTION 1999 TAKE EFFECT ON 28 DECEMBER 2019

The main criticism of the Warsaw Convention System (WCS) after the Second World War was the low liability limits in personal injury claims. An increase of the limits required an amendment of the WCS via diplomatic procedures which took considerable time as States had different views on how much a human life was worth. The outdated limits eventually led to the implementation of the Montreal Convention 1999 (MC) which has not replaced the WCS yet, but is applicable to most parts of the world (136 State Parties as of 28 December 2019).

To avoid a similar fate, Art 24MC provides that its limits of liability will be reviewed by the International Civil Aviation Organisation (ICAO) at 5-year intervals (“escalator clause”). They will be increased, if the inflation factor measured by the weighted average of the annual rates of increase or decrease in the Consumer Price Indices of the States whose currencies comprise the SDR (USA, Japan, EU, China and the UK), exceeds 10% since the previous revision. The increase becomes effective six months after ICAO notifies all State Parties of its intention, unless most of the States Parties disapprove it within three months of the notification. No such disapproval has ever occurred. There is also an extraordinary procedure that permits the revision to take place at any time provided that the inflation rate exceeds 30% since the previous revision and one-third of the State Parties express such desire. This procedure has not been used yet.

Since the MC came into force on 4 November 2003, ICAO has reviewed the limits in 2009, 2014 and 2019. The first review led to their increase since 30 December 2009, yet the second one did not trigger an increase as the inflation rate was below the 10% threshold.

The third review took place this year (2019) with ICAO willing to increase the limits as the inflation rate amounted to 13.9%. No disapprovals were registered within the 6-month period and the following new limits will take effect on 28 December 2019 (the table is provided by ICAO @  https://www.icao.int/secretariat/legal/Pages/2019_Revised_Limits_of_Liability_Under_the_Montreal_Convention_1999.aspx) :

 

Montreal

Convention

of 1999

Original limit (SDRs) Revised limit (SDRs)

as of 30 December 2009

Revised limit (SDRs)

as of 28 December 2019

       
Article 21

passenger claims for bodily injury or death

 100 000 113 100 128 821        
Article 22, paragraph 1

claims for delay

4 150 4 694 5 346        
Article 22, paragraph 2

claims for LDD of baggage

1 000 1 131 1 288        
Article 22, paragraph 3

claims for LDD of cargo

17 19 22        

 

Existing claims will not be affected by the 2019 limits but will be governed by the 2009 ones. The new limits will apply to incidents that take place on or after the 28th December 2019. The International Air Transport Association (IATA) has already amended Resolution 600B, which contains the standard air waybill conditions of contract, to apply the new limit of 22 SDRs per kg to all international carriage of goods (condition 4).