Automotive industry faces surge in climate litigation

Germany is witnessing a new era of climate change litigation unfold. While in other jurisdictions climate activists have focused their efforts on suing big oil companies, in Germany, the automotive industry has been the central target. In September last year, activists filed a lawsuit against two German car manufacturers for not tightening carbon emission goals. It’s the first time German citizens have sued private companies with the aim of reducing emissions. But what is the legal basis, and how will increasing pressure from climate litigators shape the automotive landscape in years to come?

Car manufacturers key targets of litigation

German car companies face increasing regulatory pressure to decarbonise. In addition, NGOs have begun using the courts to force companies into adopting stricter emission targets. This era of climate litigation in Germany arguably began with the landmark decision of the German Federal Constitutional Court (FCC) in March 2021, which found the German Climate Change Act to be partially unconstitutional for violating the plaintiffs’ fundamental freedom rights in the future.

Another significant push came from the Netherlands, following the Hague District Court’s decision against Royal Dutch Shell in May 2021. The Court ordered Shell to reduce its CO2 emissions by 45% by 2030 compared to 2019 levels. Despite the differences between Dutch and German law, German climate activists from environmental action group Deutsche Umwelthilfe (DUH) announced similar proceedings against German companies shortly after the Milieudefensie decision.

While in other jurisdictions climate activists have focused their efforts on suing big oil companies, in Germany, the automotive industry has been the central target

DUH’s request is for regional courts to order the car manufacturers to globally refrain from selling combustion-engine and hybrid cars beyond 31 October 2030, unless the car manufacturers can prove GHG neutrality for cars sold after this date. Given that the European Commission (EC) recently announced its proposal to phase out the sale of combustion-engine cars by 2035, the DUH activists seem to imply that the EC’s proposal is insufficient to meet the goals of the Paris Agreement.

 Activists’ legal basis

 DUH based its complaints on a combination of tort law and fundamental rights enshrined in the German constitution, arguing that the car companies are legally responsible for inflicting harm. On the one hand, the activists rely on the German Court’s jurisprudence regarding the intertemporal effect of fundamental freedom rights. They argue that combustion-engine cars will consume such significant portions of the global and national CO2 budget available before GHG neutrality must be achieved in 2045, that major emission reduction burdens are shifted onto future periods, resulting in serious future impairments of freedom.

On the other hand, the activists adopt a surprising approach to justify the violation of their own rights. They argue that the car manufacturers’ CO2 emissions violate their future general personality rights, “allgemeine Persönlichkeitsrechte”. General personality rights, which are non-statutory and rooted in fundamental freedom rights, were developed by the FCC and other German courts to protect individuals from attacks to their private life and personality such as stalking, doctored photos or fictitious interviews. These general personality rights also formed the basis for the FCC’s March 2021 decision. The activists contend that their general personality rights are impaired by anticipated restrictions on their future general way of life, caused by the car companies’ actions. Whether the courts agree remains to be seen, especially as they will have to weigh the constitutional rights of the car manufacturers, i.e. the right to property and the freedom of profession, against the activists’ general personality rights.

Another significant legal hurdle for the NGO activists is proving a causal link. They claim that the car manufacturers’ conduct irreversibly consumes large portions of the remaining CO2 budget, which can be traced to them. However, it is untested before German courts whether and which CO2 emissions can be included from a tort law perspective, since large portions of the emissions do not originate from the car manufacturers themselves, but from third party end users of their cars. These third-party end users do not only make their own independent choices about the final use of their cars, but make these choices also largely outside of Germany, since German car manufacturers sell the majority of their cars outside of Germany.

The activists leverage arguments used in the Milieudefensie et al. v. Royal Dutch Shell case, which also corroborated claims with references to the goals of the Paris Agreement and evidence in IPCC reports. The key difference is that the fundamental rights relied upon in Milieudefensie are the right to life and the right to private and family life, as enshrined in the European Convention on Human Rights, while the German claimants rely upon the general personality right in German law. The reference to the Dutch case underlines a trend that arguments in the field of climate change are not limited to the home jurisdiction; it’s a global argument.

 Significance of climate lawsuits

The activists are entering uncharted legal territory with their claims and argument that GHG emissions can violate general personality rights under German law. Indeed, the decisions of the Regional Courts in Munich and Stuttgart will have a significant impact on the future of climate change litigation in Germany.

The activists contend that their general personality rights are impaired by anticipated restrictions on their future general way of life, caused by the car companies’ actions

If successful, these lawsuits could pave the way for further litigation in the automotive industry. But it remains to be seen whether climate protection will be perpetuated by courts or remain in the hands of the legislator. Since the German legislator denied the possibility for individuals to derive rights and claims from the Climate Change Act, it is questionable whether such individual rights can be established “through the back door” by court decisions.

Interestingly, the FCC recently refused to hear the case of 11 constitutional complaints of young climate activists. The plaintiffs essentially argued that certain states, i.e the organisational units below the federal level, were not sufficiently active to protect the plaintiffs’ constitutional rights. The decision implies that it will be difficult for plaintiffs to successfully argue about their protection of fundamental rights at a state level, as responsibility lies at a federal level.

Companies should therefore continue to monitor this complex interface between ever stricter laws in the field of climate change, and ongoing court cases based on novel legal theories.

About the author: Markus Burianski is Partner at White & Case