Liability and compensation

Legal assistance paper

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Date produced: 05/11/2009

1. Which is the appropriate international forum to deal with the consequences of residual climate change impacts, which cannot be avoided by mitigation and adaptation?

2. If this forum/process is outside the UNFCCC, how and where should a provision in the Copenhagen Agreed Outcome be included to start such a process in another fora?

1. There are a range of possible fora which may address the consequences of residual climate change impacts, including national courts and international courts and tribunals. However in each case there may be complex issues to resolve in order to be able to bring a claim including whether the tribunal in question has jurisdiction, identifying the appropriate defendant, causation, scope of damage and so on. The prospects for successfully bringing claims are unclear and may vary enormously depending on the particular facts, circumstances and tribunal before which a potential claim is brought. We can provide further detail on particular fora/cases if required.

2. The possibility of bringing claims before domestic/international tribunals exists even in the absence of any provision in a new agreement. However, as stated above the outcome of such proceedings is very uncertain at present.
The options are: (a) to seek to put specific new rules in a new agreement (the AOSIS proposal), (b) defer elaboration of new rules until later (through an enabling clause) and or (c) rely on existing potential mechanisms outside the framework of the new agreement/UNFCCC. These options may not be mutually exclusive but an enabling clause has generally been used where no progress has been made on agreeing specific rules on the issue of liability and compensation.

(a) Specific Rules: The parties to a new agreement could agree to elaborate specific rules in the agreement, for example in the form of the AOSIS proposal mentioned, which would bring greater certainty as to the likelihood of appropriate compensation for at least certain types of claim. The relationship between such a specific new mechanism and any other existing potential claim before other fora would depend on the rules drawn by the Parties (and possibly the rules of the fora in question). There are examples of compensation regimes which are operational. Specific arrangements for compensation funds have been adopted under the oil pollution regime, the 3 international oil pollution compensation funds are funded by levies on certain types of oil carried by sea. These are operational and function alongside a 1992 civil liability convention.

(b) Enabling clause: In the absence of agreement on a specific measure (which is the course that would bring greatest certainty and clarity within a known timeframe), a fall-back position might be for developing countries to propose some form of enabling provision requiring Parties to the new agreement to start a process to agree rules on liability and compensation (however see caveat below). The form of such wording could be more or less specific as to: the timeframe within which Parties should act; the steps they should take; the issues that should be addressed and the expected outcome of such a process.

This approach has been adopted in a number of other MEAs including the Basel Convention on the transbounday movement of hazardous and other wastes and the Cartagena Protocol on Biosafety (see language below).
Article 12 of the Basel Convention provides: The Parties shall co-operate with a view to adopting, as soon as practicable, a protocol setting out appropriate rules and procedures in the field of liability and compensation for damage resulting from the transboundary movement and disposal of hazardous wastes and other wastes.

Article 27 of the Cartagena Protocol provides: “The Conference of the Parties serving as the meeting of the Parties to this Protocol shall, at its first meeting, adopt a process with respect to the appropriate elaboration of international rules and procedures in the field of liability and redress for damage resulting from transboundary movements of living modified organisms, analysing and taking due account of the ongoing processes in international law on these matters, and shall endeavour to complete this process within four years.”

However it should be noted that in both cases there followed a protracted and complex process of negotiation. Neither process has yet resulted in a regime which has entered into force: in the case of Basel, a protocol was eventually adopted in 1999 following 6 years of negotiation, but has not yet entered into force (as of March 2009 there were 9 Parties and 20 ratifications are required for entry into force). A number of EU member states have signed the Protocol but none have ratified it. In the case of Cartagena, the process is ongoing. An ad-hoc working group on liability and redress held its first meeting in 2005 and met five times. On the basis of its work the COP/MOP has referred the matter to a Friends of the Chair group which met in 2009 and is due to meet again in February 2010. It will be for the COP/MOP to decide whether or not to adopt a text produced by that group.

An enabling provision is, at best, a fall-back which provides only an uncertain basis for resolving the issue of liability and compensation in an effective and timely way. Even if an instrument is eventually adopted (as in the case of Basel) it is of little effect if it does not receive sufficient support to enter into force and if developed countries with greater financial resources do not support it.

Clearly, the decision on which approach to take is policy one, but from a legal perspective, it may be said that this is a highly complex area both in terms of bringing claims outside the scope of the agreement and in terms of attempting to elaborate a new regime through a general enabling clause and the precedents for the latter are not promising in terms of timely and effective resolution of how to address claims relating to climate change. If agreement can be reached on specific proposals of the type being put forward by AOSIS, to cover at least some eventualities, this would appear to be the best option on the basis that the provision of compensation, access to the mechanism and timeliness of response will all be clear on the face of the new agreement. Depending on the wording of the proposal, there may still be other legal options in terms of bringing claims as mentioned in (1) above, particularly for matters not covered by the new mechanism.