Loss and Damage in the new climate agreement

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer- client relationship. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

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Date produced: 03/12/2015

  1. Is the US argument that there is no legal basis in the Convention for a separate article on loss and damage correct?
  2.  Would the inclusion of a separate article on loss and damage create liability of parties (for loss and damage from climate change)?
  3.  Would an article on loss and damage in the new agreement potentially affect and limit liability for climate change damage under general law?
  4.  Where the issue of loss and damage is raised in the negotiations but, subsequently not included in the new climate agreement, is there a risk that its non-inclusion and subsequent agreement could be used as a bar to future litigation?
  5.  Are there any risks associated with raising this issue in terms of discussions negotiations, bilateral meetings or text proposals having regard to the subject matter and processes in other conventions?
  6.  What – in your view – would be the most effective approach to be taken that ensures the new climate agreement does not create a bar to future legal actions associated with loss and damage and breaches of human rights?

Introduction:

Our answers are based on the latest draft text for the loss and damage article (“Option 1”) set out below. “Option 2” in the negotiating text is that no provisions on loss and damage are included.

There is already a body working on loss and damage, the Warsaw International Mechanism for Loss and Damage (“Warsaw Mechanism”), established at COP 19.  The Warsaw Mechanism was established under the “adaptation framework” of the Convention, but is distinct from what is conventionally regarded as “adaptation” strategies for climate change.[1]  Further information, in particular a chronology of loss and damage related work, can be found online.[2]

Option 1

  1. [An international mechanism to address loss and damage is hereby defined under this Agreement/Protocol and shall be bound by the principles and provisions of the Convention, in particular common but differentiated responsibilities and respective capabilities.
  2. The purpose of the mechanism shall be to promote and support the development and implementation of approaches to address loss and damage associated with the adverse effects of climate change, including extreme events and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change.
  3. The international mechanism on loss and damage shall draw upon, further develop and elaborate on the work of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts pursuant to relevant decisions of the COP, including the development of modalities and procedures for the mechanisms operation and support. It can involve, as appropriate, existing bodies and expert groups under the Convention, as well as relevant organizations and expert bodies outside the Convention, and be informed by relevant precedents in international law.
  4. The international mechanism on loss and damage shall be subject to the authority and guidance of the [governing body][CMP][CMA] and supported through the Financial Mechanism of the Convention.
  5. The [governing body][CMP][CMA] shall, at its first session, establish a climate change displacement coordination facility to help coordinate efforts to address the displacement of people as a result of extreme impacts of climate change.
  6. The [governing body][CMP][CMA] shall, at its first session, initiate a process to develop approaches to address irreversible and permanent damage resulting from human-induced climate change, and shall endeavour to complete this process within four years.][3]

 

Advice:

  1. Is the US argument that there is no legal basis in the Convention for a separate article on loss and damage correct?

As discussed below, we believe the argument about the absence of a “legal basis” is not correct as a legal matter.  Nothing prevents incorporation of such an article into the Paris Agreement if the Contracting Parties wish to do so.

We are not aware of any recent statements from the US refuting the legal basis of an article on loss and damage. Our research indicates that the US position on this topic has softened. For example, in September 2015, a group of developed countries – including the United States, Canada, Japan, New Zealand, Norway and Switzerland – made a proposal on loss and damage at the climate talks in Bonn. This suggested that the Warsaw Mechanism would develop guidance for comprehensive risk management, address issues related to climate change displacement and migration, and establish a clearing house for risk transfer, for example through insurance instruments. The concern now seems to be how, practically, to include a provision, rather than whether it should be included.

Earlier resistance by the United States to the inclusion of an article on loss and damage was based, inter alia, on the argument that there is no legal basis for inclusion since the Convention covers only “mitigation” and “adaptation,” rather than compensation for loss and damage.  However, we have found no developed argumentation on the issue and suspect that, at that point, the United States (and other developed countries) were resistant to the idea of a loss and damage mechanism for fear of this resulting in significant financial liabilities.

It is true that a loss and damage mechanism was not specifically envisaged by the Convention, and that this is in contrast to, for example, the financial mechanism provided for in Article 11 of the Convention. However, in our view, the fact that the Convention did not specifically envisage loss and damage provisions is not a bar to their inclusion in later agreements.  There is no legal limitation imposed by the Convention or international law on the scope of further agreements under the Convention.  In several instances, the Convention expressly anticipates further agreements, with no limitation on what those agreements might contain.[4]

Furthermore, the Convention contains language that highlights the importance of addressing loss and damage (emphasis added):

  • Article 4(1)(e) “Cooperate in preparing for adaptation to the impacts of climate change; develop and elaborate appropriate and integrated plans for coastal zone management, water resources and agriculture, and for the protection and rehabilitation of areas, particularly in Africa, affected by drought and desertification, as well as floods”
  • Article 4(8) “In the implementation of the commitments in this Article, the Parties shall give full consideration to what actions are necessary under the Convention, including actions related to funding, insurance and the transfer of technology, to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change and/or the impact of the implementation of response measures…”

Additionally, in the work that has been done on loss and damage so far (culminating in the establishment of the Warsaw Mechanism), reference has been made to the Convention. This suggests an understanding amongst Convention States that loss and damage is very much within the scope of the Convention, which in turn supports the inclusion of specific provisions in an agreement. For instance the COP 19 Report, which dealt with the establishment of the Warsaw Mechanism states the following (the relevant decision within the report is Decision 2/CP.19):

  • Preamble “Also decides that the Warsaw international mechanism shall fulfil the role under the Convention of promoting the implementation of approaches to address loss and damage associated with the adverse effects of climate change”
  • Refers to the “relevant provisions of the Convention”

The Draft Decision prepared in connection with COP 18:

  • Highlighted “the important and fundamental role of the Convention in addressing loss and damage associated with climate change impacts, especially in developing countries that are particularly vulnerable to the adverse effects of climate change, including by promoting leadership, collaboration and cooperation, at the national, regional and international levels and for a broad range of sectors and ecosystems, in order to enable coherent and synergistic approaches to address such loss and damage”
  •  Included an agreed list of items that are within “the role of the Convention in promoting the implementation of approaches to address loss and damage associated with the adverse effects of climate change.”
  1. Would the inclusion of a separate article on loss and damage create liability of parties (for loss and damage from climate change)?

No, the loss and damage provisions in Option 1 do not provide for liability for loss and damage, and are phrased in purely aspirational terms. The draft article seeks to:

“promote and support the development and implementation of approaches to address loss and damage associated with the adverse effects of climate change, including extreme events and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change” (emphasis added)

This language does not entail obligations for States that are specific, and is not the typical language that would give rise to a finding of breach or liability. It is not, for example, couched in terms such as “States shall.

Typically, if it is intended that there should be liability under a treaty, a mechanism will be included to adjudicate disputes under the treaty, to provide a forum for determination of liability. There  are dispute resolution provisions in the negotiating text which mirror those in the Convention, but as Option 1 does not provide for any specific obligations on States, it is difficult to see how an allegation of breach (giving rise to liability) could be levied against a State using the mechanism. [5] In other words, there is no specific obligation imposed on States, and so there can be no breach or liability.

The article may of course pave the way to further negotiations and agreements that are more specific (and possibly do impose binding obligations or even financial liability to compensate for loss and damage), but such agreements do not appear to be envisioned for the time being.

  1. Would an article on loss and damage in the new agreement potentially affect and limit liability for climate change damage under general law?

No, the draft in its current form should not affect liability under other legal norms and it is highly unlikely that even a much more specific liability provision could have such an effect under general public international law or national law.

As we note above, Option 1 is not presently directed toward creating liability and therefore could not affect liability provisions that may exist under other legal norms. Even if loss and damage provisions did create positive and specific obligations (and therefore potentially liability), other aspects would need to be clarified in order to give a more fulsome answer. For example, if there was an obligation for States to pay into a centrally administered fund that would be used to issue compensation for loss and damage, an important further aspect would be who the beneficiaries of that fund were. If payments out of such a fund were to a State then the impact on other modes of liability under general law would be different to that if the beneficiaries were individuals.

General Public International Law

One of the primary sources of public international law is treaties. If a pre-existing treaty provided for climate change liability, a specific article on loss and damage could only affect and limit that liability if certain criteria under the Vienna Convention on the Law of Treaties (“VCLT”) were met. The VCLT provides that a later treaty may prevail over an earlier treaty if the two cover the same subject matter and are incompatible. For the later treaty to prevail, it does not need to expressly state that it supersedes the earlier treaty. It may be sufficient that the two treaties cover the same subject matter and are incompatible.[6]

We are not aware of any treaty that provides for international liability of States for loss or damage arising specifically from climate change.

Domestic Law

The question of whether an international treaty can affect and limit domestic law liability will depend upon the particular national jurisdiction in question. National jurisdictions (States) vary in the manner that they incorporate international treaty law into their domestic laws.

It is common for international law to provide remedies that may go beyond those afforded by national law (e.g. in the area of human rights law) without supplanting any domestic law in the process.  For domestic law liability to be curtailed by a treaty, the treaty would likely need to evince a clear intention to abrogate domestic law remedies or causes of action.  Even then, under many legal systems, a provision to limit otherwise available domestic remedies would first need to be implemented under national law to become effective.

  1. Where the issue of loss and damage is raised in the negotiations but, subsequently not included in the new climate agreement, is there a risk that its non-inclusion and subsequent agreement could be used as a bar to future litigation?

No, we do not consider this a significant risk.  The absence of provision concerning a particular subject matter in an international agreement simply means that the agreement does not address the issue.  We cannot envision any scenario in which the absence of a treaty provision could be interpreted as to preclude claims made on another legal basis.  It is, of course, possible that the non-inclusion of the article on loss and damage could be used by parties to future litigation as a matter of “atmospherics,” or as a fact relevant to the question of the negotiating parties’ policy stance.

The negotiating history of a treaty has only limited legal significance even with respect to applying the specific treaty at issue.  Article 31 of the VCLT sets forth the fundamental rule of treaty interpretation, namely that a treaty “shall be interpreted in good faith in accordance with the ordinary meaning given to the terms of the treaty in their context and in the light of its object and purpose.” Under Article 32, “Supplementary means of interpretation” — including a treaty’s negotiating history — may only be used to “confirm” the meaning suggested by Article 31, or where such meaning is “ambiguous or obscure,” or where it “[l]eads to a result which is manifestly absurd or unreasonable”.

 Were the article on loss and damage not included in the Paris agreement, the agreement would simply be silent on the issue, and therefore there would arise no “ambigui[ty],” “manifestly absurd” result, etc. Accordingly, as a matter of law, the fact that such provision was discussed but not included in the final agreement, should not have any significance as a matter of treaty interpretation principles.  Furthermore, even if the negotiating parties reject Option 1 (which includes the loss and damage provision), it is highly unlikely that they would all agree on the reasons for doing so.  The fact that one party or another makes a particular statement during negotiation is not helpful to establishing a treaty’s meaning unless that statement is clearly accepted by all other parties.

  1. Are there any risks associated with raising this issue in terms of discussions negotiations, bilateral meetings or text proposals having regard to the subject matter and processes in other conventions?

 We do not envision any legal risks, only political ones.  One possible political risk is that raising the issue could result in such a negative reaction by some important parties that it gives those parties a mindset of automatic opposition to similar provisions in other conventions.  However, this possibility appears remote given our understanding of the current state of the negotiations and the “soft” wording of the provision being discussed.

From a purely legal perspective, as noted above, a later treaty may supersede an earlier treaty or convention (and the processes therein) if it covers the same subject matter and is incompatible with the earlier treaty.  However, we are not aware of any incompatibility with any other existing treaty.

We note the following Conventions that contain damage and loss-related provisions for environmental harm, but the provisions are not specifically addressed to the impact of climate change:[7]

  • 1992 International Convention on Civil Liability for Oil Pollution Damage: This convention provides that a State or person suffering from oil damage as a result of a tanker spill may claim against a ship owner directly. Liability is strict but compensation is capped by reference to the ship’s tonnage.
  • International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (this convention has not yet entered into force): As the name suggests, this convention provides compensation for damage to persons and property, costs of clean up and reinstatement measures and economic losses resulting from the maritime transport of hazardous and noxious substances. Again, there would be strict liability associated with any related damages (the ship owner will be liable even without fault, and ship owners must maintain insurance to cover these liabilities). There is also a second tier of compensation that would be paid from the “HNS” (hazardous and noxious substances) fund (to which companies that import hazardous substances in members states of the convention are required to contribute).
  • International framework related to nuclear incidents: comprises three agreements (1960 Paris Convection, the 1963 Vienna Convention and the 1997 Protocol to the Vienna Convention: this insures strict and exclusive liability of the nuclear operator, mandatory insurance for nuclear operators, exclusive jurisdiction (the State in which the damage occurs has jurisdiction over the claim) and a limitation on the operator’s liability in terms of amount and time.

There are also examples of alternative mechanisms; the Caribbean Catastrophe Risk Insurance Facility is one. This is a risk pooling facility for Caribbean governments designed to provide short term liquidity and limit the financial impact on individual governments in the face of catastrophic events. States buy cover and payouts are proportional to the impact of an event on each State’s budget.  Although it is possible that some form of insurance mechanism could be adopted in the climate change context as well, it is too early to speculate about the consequences of any such potential mechanism on other existing mechanisms.

  1. What – in your view – would be the most effective approach to be taken that ensures the new climate agreement does not create a bar to future legal actions associated with loss and damage and breaches of human rights?

We believe the most effective approach would be to include an explicit statement in the agreement that nothing in the agreement diminishes any rights that parties (or others) might otherwise have in other fora with respect to the loss and damage resulting from climate change.  To be clear, we believe that, even without this provision, there should be no limitation of rights under other legal norms, but an explicit provision to that effect would be a simple way to remove any doubts on the issue.  It is not uncommon for international agreements (for example bilateral investment treaties) to include similar clauses.

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[1] The Warsaw Mechanism was foreseen in the Cancun Adaptation Framework, indicating that loss and damage formally falls within the scope of adaptation. Adaptation features in Article 4 of the Convention (which deals with Commitments). Specifically, Article 4(4) provides that “the developed country Parties and other developed Parties included in Annex II shall also assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects.”

[2] A chronology of loss and damage related work is also available at http://unfccc.int/adaptation/workstreams/loss_and_damage/items/7545.php.

[3] Available at http://unfccc.int/resource/docs/2015/adp2/eng/11infnot.pdf.

[4] For example

  • Article 7(2), concerning the Conference of Parties, provides that “The Conference of the Parties, as the supreme body of this Convention, shall keep under regular review the implementation of the Convention and any related legal instruments that the Conference of the Parties may adopt” (emphasis added)
  • Article 17 provides that “The Conference of the Parties may, at any ordinary session, adopt protocols to the Convention”

[5] The dispute resolution mechanism is for “any dispute concerning the interpretation or application of the Convention.” Such dispute can be brought before the International Court of Justice (“ICJ”) in The Hague or adjudicated using “Arbitration in accordance with procedures to be adopted by the Conference of the Parties as soon as practicable, in an annex on arbitration”. For the former, this only applies if a State has made a declaration of consent, the latter has not been done.

[6] An example of treaty drafting to ensure that a prior treaty is not impacted by a later treaty is the repeated clarification that the Convention does not cover gases controlled by the Montreal Protocol.

[7] This is an indicative, rather than exhaustive, list.