Read the briefing: Corporate courts vs the climate
Fossil fuel companies claiming $18bn against government climate action in secret courts
Circus performers protesting outside law firm

Fossil fuel companies claiming $18bn against government climate action in secret courts

Date: 18 September 2021
Campaigns: Climate, Trade

  • Courts allow big polluters to sue governments into “a state of climate paralysis”, campaigners say
  • Protestors to gather outside firms in London today, home to nearly all of top 30 law firms engaged in corporate courts

Five fossil fuel companies are suing governments for more than $18bn for taking climate action that could harm their profits, new figures reveal, as protestors demand an end to secretive corporate courts.

TC Energy, RWE, Uniper, Rockhopper, and Ascent are suing governments through investor-state dispute settlement (ISDS), a shadowy system of corporate courts that operates outside of a country’s domestic legal system as it is built into trade and investment deals.

Four of the five cases are under the Energy Charter Treaty (ECT), an energy investment agreement that includes ISDS, which the UK and EU are signed up to. TC Energy’s case against the US government is under the North American Free Trade Agreement (NAFTA).

The $18bn (£13bn) demanded by just five companies is almost equivalent to the entire net annual climate funding provided by rich countries to the developing world, which Oxfam assesses as $19-22bn.

Global Justice Now warns that the courts threaten governments’ ability to take climate action and could “make a mockery” of commitments at November’s COP26 summit in Glasgow.

Protestors from Global Justice Now will gather today outside the offices of the companies and their lawyers, where circus performers will unravel blue fabric to symbolise flooding and rising sea levels.

The group projected “Profiting from corporate courts” and “fossil fuel criminal” onto a Uniper power station in Enfield, London, earlier this week, to protest the company’s use of corporate courts against climate action.

British company Rockhopper is suing Italy for $324m over a ban on offshore oil drilling close to the country’s coast, while Ascent Resources, also a UK company, is demanding $118m from Slovenia for requiring an environmental impact assessment on fracking plans

RWE and Uniper are suing the Dutch government for $1.652bn and $1.062bn respectively for deciding to phase out coal.

TC Energy, the company behind the Keystone XL pipeline has filed the largest case, claiming $15bn from the US government for cancelling the project on environmental and social justice grounds.

The UK is a hub for the ISDS system, which is dominated by a relatively small number of specialist law firms who actively promote using corporate courts against governments taking climate action. All but two of the top 30 investment dispute law firms have offices in London.

Gibson Dunn, the law firm acting for Uniper, recently published one of its regular information briefs for its clients flagging that legal reforms in Mexico’s energy sector could constitute grounds for an investment dispute and listing treaties that corporations could use to sue.

Jean Blaylock, trade campaigner at Global Justice Now, said: 

“Fossil fuel companies should be paying to fix the climate crisis they caused, but instead they want a payout. They’re suing governments who take climate action through secretive corporate courts, massively increasing the cost of climate action.

“These courts are built into trade deals and operate outside of and supersede domestic courts and legal systems. That means a country that passes meaningful legislation to phase out fossil fuels could face a multi-billion dollar fine, despite acting entirely legally. It’s utterly undemocratic.

“These cases are only becoming more common as governments commit to climate action. World leaders may finally be waking up to the threat of the climate and ecological crisis, but fossil fuel companies are holding them to ransom, demanding ever-greater pay-outs through corporate courts.”

“Climate finance for low-income countries is already abysmally insufficient. But, thanks to corporate courts, rich countries could end up paying nearly as much to fossil fuel companies as they do to help countries in the global south respond to the climate crisis.

“When world leaders gather in Glasgow, they’ll make lofty promises on climate action, but it will all be for naught if fossil fuel companies can sue governments into a state of climate paralysis. It could make a mockery of pledges at COP26.”