The ICJ's advisory opinion clarifies states' legal obligations to combat climate change, potentially increasing climate-related litigation and regulatory scrutiny for businesses, and providing support for states in certain energy transition related investment treaty arbitrations. Governments may now introduce tighter regulations in order to comply with the ICJ's interpretation of states' obligations under international law, which in turn is likely to impact foreign investments. Businesses could see heightened accountability for environmental impacts, including stricter compliance expectations and potential disputes over fossil fuel activities. The advisory opinion expressly reinforces states' duty to regulate harmful activities, including those of private companies. Companies may need to reassess transition commitments, anticipate regulatory changes, and prepare for intensified scrutiny from governments, activists, and stakeholders, leveraging climate-related opportunities to strengthen defensible positions and create business value.
The International Court of Justice (ICJ) has issued a landmark advisory opinion that potentially marks a turning point in climate change litigation. International treaties such as the Paris Agreement and the Kyoto Protocol started to set the way, but the recent ICJ advisory opinion provides further endorsement of states' legal obligations under international law.
By providing much needed clarity on the legal duties of states in the context of climate change, this advisory opinion could pave the way for states to sue other states over climate change, including for historic emissions of greenhouse gases (GHGs). It is also likely to be instrumental in climate related investment treaty arbitrations. The ICJ found that states have an “obligation to prevent significant damage to the environment” and must “cooperate in good faith” to combat climate change. This decision could well have far-reaching implications for governments, and vulnerable populations. For businesses, should the opinion be implemented, there is an expectation for greater climate-related litigation and regulatory intervention, which could impact foreign and domestic investments alike.
What Happened?
In response to a request led by Vanuatu and supported by over 130 countries, the ICJ was asked to clarify states' legal obligations to protect the climate system. The ICJ concluded that states are legally bound to limit global warming to 1.5°C. This comes amid claims by developing nations that wealthier countries are failing to meet their climate commitments. Developed nations, including the UK, countered that existing agreements like the Paris Agreement are sufficient.
The ICJ's opinion underscores that inaction on climate change could violate international law. Judge Iwasawa Yuji stated that failing to develop ambitious climate plans may breach commitments under the Paris Agreement. Crucially, the ICJ confirmed that broader international law applies, meaning even non-signatories to the Paris Agreement are obligated to protect the environment.
Key Findings
Climate Change as a Human Rights Issue
The ICJ linked climate change to international human rights law, recognising that rising seas, extreme heat, water scarcity, and food insecurity threaten fundamental rights to life, health, housing, food, and water. This aligns with a recent opinion by the Inter-American Court of Human Rights, which emphasised the need to protect the climate system to safeguard human rights and the right to a safe, clean and healthy environment, recognised by the UN in 2021
Attribution Science Validated
The ICJ acknowledged the findings of the Intergovernmental Panel on Climate Change (IPCC) as the best available science and validated the role of attribution science in assessing causation and identifying sources of harm. This could prove pivotal in litigation, as seen in cases like KlimaSeniorinnen Schweiz v Switzerland, where inadequate climate action was deemed a human rights violation. Attribution science may also bolster future claims against major emitters.
State Responsibility
The ICJ stressed that states must regulate harmful activities within their jurisdiction, including those of private companies. This reinforces the Paris Agreement and other international treaties, confirming that states can be held liable for industry actions under their control. The ICJ expressly pointed out that subsidising fossil fuels or approving new oil and gas licences could breach a country's obligations.
Protection for Vulnerable Populations
The ICJ acknowledged the disproportionate impact of climate change on vulnerable countries and populations, affirming their right to protection and redress. Notably, any state—even if not directly affected—can challenge another state's failure to meet climate obligations. This opens the door for claims seeking compensation for climate-related damages, such as destroyed infrastructure or uninhabitable land.
Wider Implications
While the ICJ's advisory opinions are non-binding, they carry significant weight in shaping national and international legal frameworks. Governments have implemented ICJ decisions in the past, such as the UK's return of the Chagos Islands to Mauritius. This opinion is expected to encourage developing nations to pursue compensation claims against high-emitting countries for historic contributions to climate change.
While a surge in state-to-state claims is unlikely, the opinion is likely to fuel domestic climate litigation, with activists relying on the ICJ's findings to hold governments accountable. This could lead to tighter domestic regulations and regulatory intervention and investigations, increasing compliance burdens on businesses and exposing them to greater litigation and disputes risks. The advisory opinion is also likely to be relied upon by states who withdraw from certain types of energy sources in favour of energy transition, and we expect to see reliance by states on this advisory opinion in certain energy related investment treaty arbitrations.
Key Takeaways
The ICJ's opinion represents a significant step forward in global climate accountability. By affirming states' legal obligations to address climate change, it strengthens the foundation for litigation against governments aimed at reducing emissions and implementing change.
With regulation being tested internationally, for example the Omnibus in the EU, there is an expectation that climate-related disputes could once again be leveraged against businesses. This advisory opinion suggests that governments must prepare for heightened scrutiny and the potential for increased regulatory and legal challenges as the global fight against climate change intensifies.
This, in turn, is likely to result in greater regulatory obligations domestically which will be felt by the private sector and to which the private sector will be held to account both by government bodies as well as affected players such as activist shareholders, supply chain partners and the general public. The private sector should be ready to substantiate its claims, and revisit its transition commitments in light of this opinion – strategically embracing climate-related opportunities within local markets can create stronger defensible positions for companies and help realise business value as a result.
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