The outcome has been called a “landmark lost,” 3  and rightly so. Similarly to the District Court’s decision, the Court of Appeals considered the legal category of hazardous negligence, but never went so far as to find Shell under the unwritten standard of care (6:162, Dutch Civil Code) to protect human rights by decreasing its emissions.4 It was advanced that the loss could have been averted with wiser legal strategies on the part of Milieudefensie et al., notably by hinging on (i) Shell’s planned investments in new oil and gas fields and (ii) obligations in relation to Scope 3 (downstream) emissions, apart from emissions reduction obligations.5

Are we sure that the outcome would have been different? On the first point, the court itself acknowledged that Milieudefensie had argued Shell’s negligence in making new hydrocarbon investments, and that this argument was based on the unwritten standard of care, rather than on the specific emissions reduction claim (para 7.57). On the second point, the court could have analyzed the obligations limbing Scope 3 emissions apart from the specific emissions reduction request. Milieudefensie would still have had an interest in the matter as its first claim was not based on specific emissions reductions, but rather on hazardous negligence.

It looks like a blame game. It can just be unwillingness to proceed with concrete legal findings. On appeals, the three-panel court made powerful concessions on the role of businesses to bear their fair shares of climate action (e.g., para 7.53). But eventually quashed the whole judgment. It consistently fashioned the 48-page decision with a seeming Corporate Social Responsibility (CSR) approach, with concessions of very little import: namely by considering the key role of businesses to protect the climate system and human rights yet shying away from any specific finding and cogent obligations. Testament to this is the court’s glossing over of a fundamental prerequisite for any finding: a basic analysis of the appellant’s organizational chart, which the court of first instance had painstakingly carried out by considering the corporate policy-setting role of Royal Dutch Shell vis-à-vis the Shell Group.

On the one hand, the appeals’ court made concessions, in theory. It deepened the legal mechanisms by which international law obligations can have effects on private actors, what the court referred as the indirect horizontal effect of human rights (para 7.18). Basically, “the values embodied in fundamental rights are of such great importance to society as a whole that such rights can also be invoked, at least to some extent, by citizens in their relationship with a private company” (para 7.18). It concluded that “companies like Shell, which contribute significantly to the climate problem and have it within their power to contribute to combating it, have an obligation to limit CO² emissions in order to counter dangerous climate change, even if this obligation is not explicitly laid down in (public law) regulations of the countries in which the company operates,” going as far as to state that “[c]ompanies like Shell thus have their own responsibility in achieving the targets of the Paris Agreement” (para 7.27).

On the other hand, such remarks had very little teeth.  The court’s concession that “companies like Shell” have climate responsibility has only persuasive value because the whole judgment of first instance was quashed. The argument is not only toothless, but also mistaken. In the indirect horizontal effects of human rights law, it is states that are liable for the conduct of businesses whenever regulation has proved insufficient, including extraterritorially. The court may have wanted to hint at the direct horizonal effects of human rights law on businesses, namely the enforceability of rights by private parties, not just public authorities, against businesses, as part of the theory of the privatization of rights, or Drittwirkung (i.e., third-party effect).7

Paying lip service to climate science, without attempting to operationalize it, is also part of CSR strategies. The appeals court maintained that the claim of Milieudefensie et al. for Shell to reduce emissions by 45% was not “admissible” (para 7.57). The court of first instance had derived the percentage reduction by operationalizing at the corporate level the goals of the Paris Agreement (Article 2) of keeping the global temperature increase limit to well below 2°C above pre-industrial levels, aiming at 1.5°C above pre-industrial levels, as deriving from the IPCC reports and constituting the best available findings in climate science, supported by widespread international consensus.8 The appeals court was confused by experts’ different emissions reduction projections concerning hydrocarbons, which in principle should not undermine a court’s epistemic responsibility to consider the projections’ different assumptions and to make a choice in the general consensus that hydrocarbons emissions must be cut.9

The troublesome understanding of climate science in the decision goes beyond this. Among several possible contentions, what is particularly troublesome is the market substitution argument (para 7.106). The three-judge panel held that a reduction obligation imposed on a specific company would be compensated by “the (already produced) fossil fuels [..] via another intermediary” (para 7.106). This argument is often made by polluters: courts shall not impose obligations on climate change matters because any GHG-restrictive measure will be nullified by market substitution. And yet, it was proven wrong by several courts, including in the Netherlands, the US, Norway and Australia. Literature has shown that the market substitution argument is based upon a mistaken set of assumptions. It is grounded in the assumptions that (i) the fossil fuel market is entirely demand-driven, (ii) fossil fuels will continue to be relevant in the international energy mix in the foreseeable future, and (iii) global policy does not thus far rule out market substitution.10 However, the shortage of fossil fuels obviously changes both supply and demand curves: demand for fossil fuels will thus not be the same, irrespective of whether a fossil fuel project is approved and perfect substitution is “at worst, entirely impossible.”11 Moreover, international energy mix outlooks and global policy have largely changed over the years and cannot be “assumed” to vouch for any fossil fuel project.12 As elaborated by the Hon. Justice Brian J. Preston, Chief Judge of the land and Environment Court of New South Wales in Gloucester, “the environmental impact 13 does not become acceptable because a hypothetical and uncertain alternative development might also cause the same unacceptable environmental impact.” And to prove such hypothetical and uncertain alternative development is certainly not a burden of proof to be borne by Milieudefensie et al., as the Hague Court of Appeals seemingly stated yesterday (para 7.106).

Law is made of a fragile tissue.14 It was woven into a more innovative, yet paradoxically more fragile, tissue yesterday as climate scientists will need to fight more for their science to strengthen legal rules. However fragile, the tissue of legal rules is endowed with a homeostatic quality. As for the homeostasis of living systems, it necessitates a dynamic state of equilibrium,15 which only the Supreme Court of the Netherlands may be able to bring at this point.

Dr. Esmeralda Colombo

Policy and Public Funding Manager - Smartenergy Italy Srl

Marie Skłodowska-Curie Actions Storage Leader - European Institute on Economics and the Environment (EIEE)

[1] B. Latour, Facing Gaia. Eight lectures on the New Climatic Regime (tr. by C. Porter, Polity 2017), p. 31.

[2] Corporate policy was mandated to cover Scope 1, Scope 2, and Scope 3 emissions, with the modulation of RDS’s obligation regarding the emissions attributable to the Shell Group (Scope 1 and Scope 2 emissions) as an obligation of results. Scope 3 emissions had to be reduced, instead, as a best-efforts obligation concerning the business relations of the Shell Group, including end-users. Milieudefensie et al v Royal Dutch Shell plc, ECLI:NL:RBDHA:2021:5337 (District Court of The Hague, 26 May 2021), paras 4.4.23, 4.4.24 and 4.4.39.

[3]   A. Nollkaemper, Lessons of a Landmark Lost: The Judgment of the Hague Court of Appeal in Shell v Milieudefensie, VerfBlog, 2024/11/12, https://verfassungsblog.de/shell-milieudefensie-climate-litigation/.

[4] In first instance, the hazardous negligence open standard became a door-opener for the application of international, EU, ECHR, and transnational law (e.g., the UNGPs and the OECD Guidelines for Multinational Enterprises) in light of climate science and international consensus.

[5] Nollkaemper (n 3).

[6] L. Lane, “The Horizontal Effect of International Human Rights Law in Practice” (2018) 5 EJCL 5, pp. 15–16 and 26ff.

[7] A. Clapham, Human Rights Obligations of Non-State Actors (OUP 2006), p. 521. On Drittwirkung, see G. Teubner, “Costituzionalismo della società transnazionale” (2013) 4 AIC 1, pp. 2–3 and 7 BVerfGE 198 (1958) (Lüth), where the German Federal Constitutional Court established Drittwirkung.

[8] Milieudefensie et al v Royal Dutch Shell plc (n 2), para 4.4.27.

[9] L. Fisher, “Environmental Law, Scholarship, and Epistemic Responsibility” (2021) 33 JEL 521, https://doi.org/10.1093/jel/eqab034.

[10] J. Bell-James and B. Collins, “If We Don’t Mine Coal, Someone Else Will: Debunking the Market Substitution Assumption in Queensland Climate Change Litigation” (2020) 37 EPLJ 167, p. 174.

[11] WildEarth Guardians v US Bureau of Land Management, 870 F.3d 1222 (10th Cir. 2017), at 1228.

[12] Bell-James and Collins (n 10), pp. 176 and 178.

[13] Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7, para 545.

[14] B. Latour, La fabrique du droit : une ethnographie du Conseil d’État (Editions La Découverte 2002), p. 258.

[15] Ibid.