By Jörn Kassow and Patrick Braasch

A German appeals court has indicated in a groundbreaking civil action that major CO2 producers may be directly liable for global environmental damage caused by climate change.

Mr Saúl Luciano Lliuya, a Peruvian farmer, has alleged that RWE AG, Germany’s second-largest electricity producer, is responsible for the impact of climate change in the Peruvian city of Huaraz — even though RWE does not operate in Peru. His claim invokes German civil law rules, according to which, property owners may claim damages from the person responsible for causing the pollution to the extent that the pollution in question would constitute unlawful interference. These rules generally correspond to the “polluter pays” principle that polluters should bear the costs of managing pollution to prevent damaging human health or the environment. Although the relevant legal principles are firmly established in German case law, the courts have not yet applied them to hold a single emitter of fossil fuels financially responsible for climate change impacts.

Mr Lliuya asserts that RWE’s emissions are increasing the flooding risks in his home country. In particular, he seeks damages for measures to protect his home from Laguna Palcacocha, a glacier lake that is at risk of overflowing due to melting ice and snow. He claims that RWE (which is Europe’s top CO2 emitter, according to 2015 data) caused 0.47% of global CO2 emissions. Therefore, he claims that RWE is liable for 0.47% of the estimated cost of flood defenses. The District Court (Landgericht) of Essen dismissed his initial suit against RWE on 15 December 2016, partially on admissibility grounds and partially on merits. In particular, the District Court held that RWE was not legally accountable for consequences of climate change because the contributions of every single emitter could not be distinguished.

Mr Lliuya’s appeal against the judgment is currently pending at the Higher Regional Court (Oberlandesgericht) of Hamm. Several media outlets have reported that the Higher Regional Court indicated during oral hearings on 13 November 2017 that the court would likely proceed to take evidence. Under German procedural rules, courts will only take evidence if – hypothetically – the plaintiff’s claim would be founded in law if the facts claimed by the plaintiff are proven to be true. Therefore, the Higher Regional Court may presumably hold RWE liable for damages if Mr Lliuya is able to prove that RWE’s emissions contributed to glacial melting in Peru.

The court — which has not made its analysis available in writing — will likely issue an order on 30 November 2017 regarding the taking of evidence. Because the decision could go to the Federal Court of Justice on appeal, a final judgment could take several years. Whilst the outcome of the proceedings is still unclear, a judgment in favour of the plaintiff would mark a significant precedent with severe consequences for CO2 producers in Germany and potentially elsewhere.