International Arbitration vis-à-vis Climate Change: Initiatives by Arbitration Sector to Curb Global Warming

Introduction

Climate change and global warming are the two crucial issues that need the instant attention of people. It is being noticed that global warming is increasing with each passing day. It is necessary to keep up with the protection of the environment along with fulfilling our needs. There have been many neglected ways that can prove to be a significant factor in curbing global warming. When arbitration is discussed, it is well known to many of the people that are being chosen for various reasons. Commercial cases, investment treaties, and many other kinds of matters are being decided through arbitration and other alternate dispute resolution mechanism. Till now, commercial and other sectors of arbitration were being chosen for simplified process, speedy decisions, convenience, etc. so cases get resolved as soon as possible.

While we connect climate changes with international arbitration, it is not shocking to know that, like commercial issues, climate change issues are also in priority. There have been various steps taken by the arbitration institutions which are evident to prove that international arbitration is extending its approach to deal with the issue of global warming. Not only the awards passed by the tribunals but, the implementation of various treaties and campaigns are equally important to curb the major environmental issues. The matters of climate change are of public importance and thus attract the interest of arbitrators too. While we notice that arbitration has been gaining importance from last years, will the steps being taken concerning climate change also come out as fruitful decisions? The steps that have been taken till now are not questionable but, for how long will they be effective?

The questions will be raised for ensuring the effectiveness. However, analysis of the strides made by the arbitration sector will give a proper understanding of the same. The Paris Agreement of 2016[1] is not in direct connection to arbitration but, the arbitration proceedings being held along with it will manage the climatic changes. It is necessary to relate the aspects to get better results out of them.

Correlation of Paris Agreement and International Commercial Arbitration

In 2015 United Nations Framework Convention on Climate Change (UNFCCC), the Paris Agreement was adopted for the first time that all nations were committed to ambitious efforts to combat climate change and adapt to its effects. The Paris Agreement aim is to lower the global temperature by 2 degrees celsius above pre-industrial levels i.e., mitigation and to enhance the ability of the nations to deal with the impacts of climate change that is to adapt to climate changes. Paris Agreement also aims to support the developing nations and the nations who are in danger to adopt such changes. The task force of ICC had a broader view foreseeing the climate change-related disputes and tried to include any dispute arising out of or concerning the effect of climate change and its policies. [2]

As per the IPCC Special Report on Global Warming of 1.5 degrees Celsius published in 2018, it stated that climate change is one of the biggest challenges of all time. Therefore, to combat this challenge all they require is rapid and far-reaching transitions in energy, urban infrastructure, land, industrial systems to avoid the worst effects of climate change.[3] So as the new rapid changes to land, infrastructure, and industrial systems that are arising out from the global response to climate change will give a new scope of investment and contracts, accordingly, this will give a rise to contractual legal dispute. Such disputes can be categorised as:[4]

  1. Contracts concerning specific transition, adaptation, or mitigation contracts

Here the contract can be executed between the investor, industry body, funder, State, etc. in conformity with the Paris Agreement commitments. These contractual terms are can be reinforced through appropriate and effective dispute mechanisms. The contacts shall be expressly made with a clause relating to UNFCCC such as Green Climate Fund (GFC), agreements reacted to low emission projects.[5]

  1. Contracts not concerning specific transition, adaptation, or mitigation contracts

As every business activity and contractual relationship is capable of being impacted by energy and other systems transition, mitigation, or adaptation measures and/or the environmental impacts of global warming, those contracts that have no direct impact on climate change or have no specific climate-related purpose may predate the Paris Agreement.

The correlation that has been created with the Paris Convention would help the arbitration institutions to reach their goals too. The goal to reach “greener arbitration” is concerning the goal of the Paris Convention. Therefore, working on both of them would bring out better results from both ends. It would not only facilitate but, also encourage other associations to do the same.

The potential steps by ICC in climate change-related disputes

The Task Force’s mandate is first to explore how ICC Arbitration and alternative dispute resolution (ADR) services are currently used to resolve disputes that potentially engage climate change and related environmental issues. As the Paris Agreement and the Intergovernmental Panel on Climate Change (IPCC) Special Report are relatively recent, disputes arising out of “rapid and far-reaching transitions in energy, land, urban and infrastructure, and industrial systems” are not yet reflected in past and existing ICC cases. Nevertheless, three important aspects of existing ICC cases are instructive:[6]

(i) ICC Arbitration and ADR are frequently adopted in commercial contracts concerning energy, land use, urban and infrastructure, and industry with these sectors representing a large portion of ICC cases;

(ii) climate change-related investment is rapidly increasing and system transition of the scale proposed by IPCC will recalibrate regulatory risk and investment strategy in sectors where ICC Arbitration and ADR are already prevalent; and

(iii) climate change mitigation and adaptation, and systems transition as a whole, may cause environmental impact, and ICC Arbitration and ADR are increasingly being used to resolve environmental claims.

These steps taken by ICC promote the goal of the institution widely. The implementation of the task force is evident that apart from resolving the disputes, arbitration has paved a way to safeguard the environment. The process of curbing global warming is not simplified, yet not complicated. It could be time taking but, with collective efforts in different ways by the arbitration sector will come out to be successful.

CGA: A pathway to greener arbitration

Lucy Greenwood in 2019 founded the Campaign for Greener Arbitrations (CGA) 2019 intending to reduce the carbon footprint on international arbitrations. This campaign is led by a Steering Committee from the arbitration community. This campaign runs on the set of protocols so that the goal of developing practical steps which could be implemented to accomplish the Campaigns Guiding Principles. There are several green protocols suggested and some are as under:[7]

  1. The green protocol for arbitral proceedings

This protocol suggests the measures to conduct arbitral proceedings in a more environmental-friendly manner. This protocol can be initiated by the parties or by the tribunal a well.  Here the parties can do remote proceedings, less use of travel, avoiding printings on paper, etc.

  1. The green protocol for law firms and legal service provides.

This protocol has focused on the firm’s day-to-day operations. Here the firms are required to motivate their employees to work eco-friendlier. The firm shall make  “Green Ambassadors” who shall make new policies on working of firms do that the environment depletion can be reduced. Firms shall also use incentive programmes for the employees so that they can be encouraged to use this protocol.

  1. The green protocol for arbitrators

Here the independent arbitrators are required to seek guidance from this protocol. They are expected to reduce travel, energy, etc. so that the wastage of resources can be reduced. The arbitrators expected to integrate the conduct rules with green protocols.

  1. The green protocol for arbitration institutions.

In the protocol, the institutional representatives are required to guide both internal and external operations of the firm. The institutions shall try to motivate the parties and arbitrators to conduct the proceedings remotely and try to provide such infrastructures as well.

  1. The arbitration hearing venues

The facilitators of conducting arbitral proceedings are required to adopt this protocol. They are encouraged to use technological platforms to promote digital representations of cases and file sharing so that the paper works can be reduced. They shall also use clean energy while conducting such proceedings.

So, this campaign can successfully be achieved by only implementing rules i.e. reduce the hard copy bundles and travel least as possible. The Campaign also plans to expand its research to consider the usage of e-mails and energy consumption, as well as other aspects of an international arbitration practice beyond those analysed in the initial impact assessment.

 Conclusion

The issue of climate change is crucial, and the steps taken by the arbitral institutions are paramount. It has been known so far, the arbitration resolves the issues related to climate change issues but, the self-contribution in making arbitration greener is a new concept. It would take time for the adaption of this mechanism completely in the field but, would have essential contributions towards nature. This will also increase the importance of arbitration globally. As arbitration will be labelled as a mechanism to resolve one more problem. These steps will gain more importance shortly. Also, this will lead to the opening of doors for news initiatives in the field of international arbitration.


*Advocate, High Court of Chhattisgarh.

**Student, Semester VIII, BA LLB(Hons.), Amity Law School, Amity University, Chhattisgarh.

[1]http://www.scconline.com/DocumentLink/Oz50zWNo.

[2]Melissa Denchak, Paris Climate Agreement: Everything you need to know, NRDC, 10-2-2021

[3]The IPCC Special Report, Global Warming of 1.5˚C (October 2018), p. 15.

[4]In-depth Q&A: The IPCC’s Special Report on Climate Change at 1.5°C, Carbon Brief, 8-10-2018

https://www.carbonbrief.org/in-depth-qa-ipccs-special-report-on-climate-change-at-one-point-five-c.

[5] Green Climate Fund Proposal Toolkit (2017), p. 3.

[6]Kirsten Odynski, The Role of ICC Arbitration in Resolving Climate Change Disputes, White and Case, 29-1-2020

   https://www.whitecase.com/publications/alert/role-icc-arbitration-resolving-climate-change-disputes.

[7]Chetna Alagh and Sejal Makkad, Arbitration and climate: Steps taken by arbitration associations to curb global warming, The Daily Guardian, 30-4-2021

https://thedailyguardian.com/arbitration-and-climate-steps-taken-by-arbitration-associations-to-curb-global-warming/.

Join the discussion

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.