Transcript Climate litigation & insurance issues - British Institute of International

Climate litigation & insurance issues
The Future of Mass Tort Claims
British Institute of International and Comparative Law
London, 6 February 2009
Prof. Dr. Ina Ebert, Munich Re
Climate litigation
● Litigation related to property damage
● Litigation related to new technologies in connection with the consequences
of climate change
● Litigation based on (man-made) climate change as such or on the violation
of regulation related to climate change
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Climate Change Litigation
● Potential plaintiffs
◦ US-states/-cities, NGOs, Industry suffering from global warming (e.g.
fishing, forestry, skiing), Inuit, victims of NatCats (Katrina)
● Potential Claims
◦ can be based on statutes or Common law
◦ Statutes: e.g. Clean Air Act (CAA), National Environmental Policy Act
(NEPA), Endangered Species Act (ESA), Kyoto Protocol
◦ Common law: normally public nuisance, conspiracy (other options: private
nuisance, unjust enrichment, negligence)
◦ claims for damages because of greenhouse gas emissions, enabling
greenhouse gas emissions or failure to avoid liability, warn or disclose
information or claims aiming at injunctive relief
● Potential defendants
◦ Oil, utility, coal companies, car manufacturers, chemical industry, meat
industry and financial institutions financing these branches of industry
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Climate Change litigation: Legal issues
● Political question, not to be decided by courts? (jurisdiction up to now)
● Who is allowed to sue? US-Supreme Court: e.g. US-states
● Causation: Who exactly causes exactly what damage to exactly whom?
● Liability denied because defendants were „doing nothing more than lawfully
engaging in their respective spheres of commerce“?
● Preemption: Does federal regulation prevent liability?
● Assessing the damage (positive side-affects, contributory negligence)
● Liability related to climate change but not for emissions as such
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Cases of Climate Litigation so far
◦ Connecticut v. American Electric Power: 8 states, City of New York etc.
demand order to reduce carbon dioxide emissions (emissions as public
nuisance, injunctive relief). Verdict 2005 Federal Court New York: Dismissed
(political question that has to be answered by legislation), appeal pending
◦ Friends of the Earth v. Mosbacher: NGOs and 3 cities sue financial institutions for contributing to global warming by financing overseas facilities that
burn fossil fuels and for violation of NEPA (failure to complete Environmental
Impact Statement). Decision March 2007 Court for the Northern District of
California: Defendants´ motion for summary judgement denied (case not
considered completely hopeless)
◦ California v. General Motors: Claims for billions of $ as damages against 6
car manufacturers because their cars make up for 20 % of human-generated
carbon dioxide emissions in the US (public nuisance). Verdict Sept. 2007
Federal Court California: Dismissed (political question not to be decided by
courts, defendants cannot be blaimed “for doing nothing more than lawfully
engaging in their respective spheres of commerce”)
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Cases of Climate Litigation so far
◦ Massachusetts v. EPA: 12 states, several cities and NGOs sued EPA for
not regulating carbon dioxide emissions from motor vehicles under the CAA
(EPA: CAA does not give EPA authority to do so, even if it did, it would be
ineffective and not appropriate),
Verdict April 2007 US-Supreme Court: EPA has authority to regulate greenhouse gases under CAA (greenhouse gases are pollution), states are
allowed to sue EPA (special status for state sovereigns), EPA should reevaluate reasons for action/inaction
◦ Comer v. Murphy Oil: Katrina-victims claim damages for personal injury,
loss of property and business interruption (based on public/private nuisance,
unjust enrichment, conspiracy etc.), Verdict April 2007 Federal Court
Mississippi: Dismissed (non-justiciable political question that has to be
addressed by legislation/executive branches of government)
◦ NGOs on behalf of Inuit village Kivalina (Alaska) v. 5 oil companies, 14
electric utilities and coal company (e.g. BP, Chevron, Peabody, Exxon Mobil,
American Electric Power): Claims for up to 400m.$ for relocating village
which is about to “fall into the sea” because of global warming, claims are
based on public nuisance and conspiracy (filed February 2008)
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Coverage issues
● Lines of business affected: D&O, PI, in cases of property/
bodily injury (not just pure economic loss) also general
liability/product liability
● Occurance (coverage only for emissions caused by an
accident, not for regular, intentional emissions?)
● range of Pollution Exclusion (US-Supreme Court: greenhouse
gas = pollution)
● Defence costs
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Consequences
● “direct liabity” for CO2 emissions as such:
◦ Unlikely, but higher defense costs for likely defendants
● “indirect liability” (= liability related to climate change):
◦ likely to increase in importance:
▫ Stricter regulation leading to stricter liability/standards of care
▫ Growing public awareness due to intensive media coverage
▫ Growing consensus about man-made global warming
◦ examples: failure to warn/report/inform, conspiracy, wrong reaction to
emergency situations, improper claims handling, failure to (sufficiently)
consider consequences of climate change (e.g. construction industry)
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Consequences
● Losses directly caused by emissions should not be carried by the insurance industry. Who should pay for the costs of climate change is a political
question. It should be decided by politics (legislation), not by civil courts/
liability law.
● Losses indirectly related to climate change are a standard topic for liability
insurance (e.g. PI, D&O). Therefore insurance coverage is generally
available. However, it might be necessary to examine certain risk groups
more closely (and adjust pricing).
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Thank you very much for your attention!