How Dispute Resolution is Shaping Human Rights Expectations of Companies: Judicial Reference to UNGPs, OECD Guidelines

After two days spent hearing from experts in fields from private practice to politics and academia, the final session of the BHRLA conference exemplified the theme of “navigating change” underpinning the event.

The panel drew together Elisabeth de Nadal (Partner, Cuatrecasas), Clément Dupoirier (Partner, Herbert Smith Freehills), Dr Ekaterina Aristova (Research Fellow, Bonavero Institute of Human Rights at the University of Oxford), Andrew Denny (Partner, A&O Shearman) and Freerk Vermeulen (Partner, NautaDutilh) for a discussion about the development of soft law business and human rights (“BHR”) principles into hard law obligations.

BHR exists at the developing intersection between “soft law” responsibilities and “hard law” obligations. As discussions on the future of sustainability reporting and due diligence obligations reopen between the European institutions with the Omnibus I package, this timely conversation explored how courts have referenced the UN Guiding Principles on Business and Human Rights (“UNGPs”) and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (“OECD Guidelines”) to interpret corporate legal duties, and the effect this has on soft law instruments in turn. The panel also looked at the effect of UNGPs- and OECD Guidelines-inspired human rights and environmental legislation on the conduct of BHR-related litigation.

With an enormous amount to cover, in this blog we explore three jurisdictions which demonstrate the breadth of ways that soft law and hard law interact in judicial decisions, before looking beyond Europe to some of the trends in corporate climate litigation.

The Netherlands

The case of Milieudefensie v. Shell will now go to the Dutch Supreme Court after the claimants appealed in this landmark climate change litigation case. The case is illustrative of a climate change litigation strategy that seeks to build on soft law BHR principles in order to inform and create hard law obligations.

In a decision handed down by the Court of Appeal on 12 November 2024, Shell was successful in overturning the District Court of the Hague’s first instance ruling, which had ordered Shell to reduce its Scope 1, 2 and 3 emissions by net 45% relative to 2019 by the end of 2030. This order was based on the District Court’s finding of an unwritten standard of care under Article 6:162(2) of the Dutch Civil Code, requiring Shell to reduce emissions by the specified amount in order to avoid committing a “tortious act”.

This finding built on the 2019 Supreme Court decision in Urgenda, which upheld the District Court’s ruling that the Dutch State must ensure that Dutch emissions were 25% below 1990 levels by 2020.

While limited to the non-binding section of the judgment, the Court of Appeal in Milieudefensie observed that Dutch law imposed a general duty of care on Shell to reduce its emissions, and that the standard of care imposed on companies is informed by the UNGPs and OECD Guidelines. It departed from the District Court’s conclusion that the exact percentage of any emission reduction obligations could be established by the Court. The Court of Appeal also found that the requested order would not be effective in reducing emissions into the atmosphere. The CSDDD, CSRD, EU-ETS and EU-ETS-2 were also considered by the Court of Appeal in concluding that the EU legislative framework on climate change does not preclude the existence of obligations in tort with respect to climate change, but may affect what a company is required to do to fulfil that obligation.

The Court of Appeal referred to previous case law (including Urgenda and the case of Verein Klimaseniorinnen Schweiz v. Switzerland) in concluding that “protection against dangerous climate change is considered a fundamental right, not only in the Netherlands but also elsewhere in the world.” Though primarily an obligation held by States, the Court concluded that the “indirect horizontal effect of fundamental rights”, derived from (in this case) Articles 2 and 8 of the European Convention on Human Rights (“ECHR”), could allow the Dutch courts to consider such rights when interpreting the unwritten standard of care required of companies in their relationship with private citizens. The UNGPs and OECD Guidelines, amongst other soft law measures, were considered positively in reaching this conclusion.

The United Kingdom

In the UK, claimants have sought to bring claims in the UK courts in relation to human rights and environmental issues in connection with a UK company’s activities in other jurisdictions or those of its subsidiaries or suppliers. To establish jurisdiction in the UK, they have relied on the presumption that a UK company can generally be sued in the UK courts, even in relation to harms suffered elsewhere. To establish liability in the absence of dedicated due diligence legislation, they have sought to invoke common law principles to assert a corporate duty of care in relation to BHR-related issues. This may lead to perverse incentives for UK parent companies to maintain a more arm’s length relationships with overseas subsidiaries and suppliers, and no (or less detailed) group-wide human rights and environmental policies. This would ultimately be counterproductive for parent companies, given the potential litigation and reputational risks that might arise in turn from taking such an approach.

In 2019, in the case of Lungowe v. Vedanta the claimants were successful in establishing that a parent company may, in certain circumstances, be held liable in negligence for the operations of its subsidiary, (in that case the pollution of local waterways by the subsidiary occurred in Zambia, while Vedanta is a UK incorporated company). A duty of care to the claimants was found to be at least arguable on the basis of group-wide environmental and sustainability policies and procedures, which emphasised that the parent had oversight over its subsidiaries in relation to these issues. The claimants were also able to rely on the fact that, pre-Brexit, the UK courts were required to accept jurisdiction over the claim against the parent company as it was domiciled in the UK. The UK Supreme Court concluded that the claim against the subsidiary should also proceed in the UK on the basis that the claimants could not get “substantial justice” in Zambia.

Claimants are now seeking to stretch the arguments in relation to a parent company’s duty of care in relation to its subsidiary so that they cover a supplier, in order to enable them to bring claims in relation to human rights and environmental issues in the supply chain. In Kumar Limbu v. Dyson the claimants allege that Dyson is liable in tort for alleged forced labour violations in its supplier’s factory in Malaysia, relying on Dyson’s promulgation and implementation of mandatory policies and standards regarding the living and working conditions of workers in the Dyson group’s supply chain. In overturning a judgment that the English courts should not take jurisdiction, the Court of Appeal held that the presumption that a UK company such as Dyson could be sued in the UK was not displaced, noting that the promulgation of the policies took place in England and that the alleged failures to oversee the proper implementation of those policies were said to be failures of management located in England.

However, in contrast to the ruling under Dutch law in Milieudefensie v. Shell, it is likely to be far more difficult to stretch the English common law still further and establish that a duty of care is owed to the world at large in relation to a company’s impact on the climate. This is largely because the common law is generally resistant to the idea of an indeterminate duty being owed to an determinate class. Accordingly, claimants have been looking for other ways to try and bring tactical litigation against companies in the English courts in relation to their climate impact.

In 2023, ClientEarth and others (as shareholders) brought a derivative action against the directors of Shell, alleging they were in breach of their duties to the company in failing to ensure it had a proper climate transition plan in place. The Court refused permission for the claim to proceed, on the grounds that the claim sought to impose “absolute duties” on directors which cut across their duty to balance the range of competing considerations – including but not limited to the response to climate change – involved in running a company of Shell’s size and complexity. The Court went on observe that it was not for the courts to supervise management decisions or to grant relief that would require constant supervision. The Court of Appeal rejected ClientEarth’s application for permission to appeal, on the grounds that the appeal would have no real prospect of success and there was no other compelling reason for the Court to hear the appeal.

However, there are still likely to be further climate litigation cases in the UK, as claimants seek to find novel ways to get around the limitations of the common law. And the rise in other sorts of BHR claims is likely to continue also, given the precedents in cases like Vedanta.

France

In France, three recent developments have served to increase the potential liability of businesses for alleged actual or potential adverse human rights and environmental impacts.

First, the adoption, in 2017, of the French Loi de Vigilance created human rights and environmental due diligence obligations for large companies domiciled in France. Case law, slowly developing in relation to the Loi de Vigilance, might offer insights into how the CSDDD is ultimately implemented, in whatever form it takes following the Omnibus negotiations. The Loi de Vigilancerequires in-scope companies to establish and implement an effective vigilance plan. The vigilance plan must “include the reasonable vigilance measures to allow for risk identification and for the prevention of severe violations of human rights and fundamental freedoms, serious bodily injury or environmental damage or health risks resulting directly or indirectly from the operations of the company and of the companies it controls […] as well as from the operations of the subcontractors or suppliers with whom it maintains an established commercial relationship, when such operations derive from this relationship.” Companies can be sued in tort for damages as a result of losses that could have been avoided had the obligations of the Loi de Vigilance been fulfilled. Companies can also be subject to injunctive measures, allowing the Paris Civil Court to order companies to comply with their duties.

In December 2023 the Paris Civil Court partially upheld the trade union Sud PTT’s claim against La Poste, alleging, amongst other things, the use of undeclared or illegal workers by the company’s subcontractors, which would not be adequately dealt with by La Poste’s vigilance plan. The Court clearly stated that the vigilance plan was a risk-based exercise, ultimately putting the risk assessment at the heart of all processes in connection with the duty of vigilance. The Court considered that La Poste’s vigilance plan was overly general, and its risk assessment did not precisely identify top priority risks. The Court made clear however that it may opine on whether a company is compliant with the legislation, but it cannot decide how the company makes itself compliant.

Secondly, the 2016 amendments to the French Civil Code introduced new provisions (Articles 1246 to 1252) allowing claims for pure ecological damage (i.e. damage suffered by Nature as opposed to damage suffered by individuals) through civil liability (tort). Known as “the Case of the Century”, in 2021 the Paris Administrative Court held that the French State defaulted on its undertakings to fight climate change, and therefore NGOs were entitled to rely on the new provisions of the Civil Code to seek compensation in kind (i.e. adequate adjustments of the State’s measures to combat climate change). The court stated that, in the framework of the new provisions, remedial initiatives to counter ecological damage must be prioritised, and damages would only be allocated if the remedial measures were deemed insufficient.

Finally, in an 18 June 2024 decision of the Paris Court of Appeal, in a case against TotalEnergies, the Court clarified at the admissibility stage that, subject to the relevant conditions being fulfilled, claimants could theoretically bring a claim under both the Loi de Vigilance and Article 1252.

These case studies in the Netherlands, UK and France serve to show that the dispute resolution landscape remains very fragmented in approach. With the prospect of significant amendments to the EU’s sustainability due diligence legislation, and in the absence of legislation in the UK, the role of national courts in interpreting the human rights obligations of companies remains significant. These developments in jurisprudence will continue to affect the formation and interpretation of due diligence legislation by contributing to the normative interpretation of citizens’ human rights in their relationship with companies.

Global trends in corporate climate litigation

The developments that we have seen in the Netherlands, UK and France are part of a fragmented landscape of corporate climate litigation, which follow different strategies. From climate deception cases to greenwashing claims and fiduciary duty lawsuits, litigation is rapidly evolving as a means to hold fossil fuel companies, financial institutions and corporate directors accountable for their response to climate change.

One highly visible category of cases is climate deception litigation in the US, seeking to hold fossil fuel companies accountable for misleading the public about the impact of their products on climate change. At least thirty lawsuits have been filed by states and municipalities against major oil and gas companies, arguing that they deceived the public about the climate damage they knew their products would cause - a strategy reminiscent of past tobacco litigation. The US courts have not yet ruled on the merits of these claims, and the legal battles have focused on whether the cases should be heard in state or federal courts. So far, claimants have been successful in keeping them in state courts, which are generally seen as more favourable to their arguments. However, the future of these cases remains uncertain, especially given the political shifts in climate policy and the growing anti-ESG movement in the US.

The expansion of corporate climate litigation is not confined to the US. As of 5 March 2025, the Sabin Center’s Global Database recorded 231 climate-related cases outside the US. These cases span national courts, complaints to state non-judicial authorities and challenges before quasi-judicial bodies such as the OECD National Contact Points. Corporate climate litigation is now being pursued in at least thirty jurisdictions, demonstrating its growing global reach. Many cases do not focus solely on climate change but integrate it into broader legal arguments. For instance, deforestation cases in Latin America often combine claims related to environmental pollution, indigenous rights and the climate crisis.

Legal actions centred on the “duty of climate care” are gaining traction. Inspired by the Milieudefensie v. Shell case, claimants are attempting to replicate the argument in other jurisdictions, seeking to compel corporations to reduce their contribution to climate change by way of injunctive relief. So far, a series of cases against BMW, Volkswagen and Mercedes-Benz in Germany has been unsuccessful, as courts ruled that there was no foreseeable violation of the claimants’ individual rights, and any concrete measures that might be necessary to be taken by the car manufacturers must be decided by the legislator. Nevertheless, similar cases are progressing elsewhere. In Italy, oil company Eni and its shareholders face a lawsuit for their contribution to global warming, while in Japan, the “Youth Climate Case Japan for Tomorrow” challenges major electric power companies. Additionally, climate litigation is increasingly targeting financial institutions. In the Netherlands, Milieudefensie has launched a climate case against ING Bank, while in France, BNP Paribas faces two lawsuits under the French Vigilance Law. In Australia, banks and pension funds are also being challenged for inadequate climate risk disclosure.

A growing number of lawsuits seek monetary damages from corporations for their role in climate change. Three high-profile cases in Europe stand out: (i) a Peruvian farmer suing RWE, Germany’s largest electricity producer; (ii) Indonesian islanders suing Swiss cement giant Holcim; and (iii) a Belgian farmer suing Total in Belgium. Claimants in these cases generally argue that corporate greenhouse gas emissions contribute to extreme weather events, such as floods, and seek financial compensation for climate adaptation costs. Scientific data plays a crucial role, with claimants working alongside civil society organisations, scientists and anthropologists to support their claims. The most advanced case, the German lawsuit, has already reached the evidence stage, and the long-awaiting hearing will take place at the Higher Regional Court of Hamm on 17 and 19 March 2025.

Greenwashing - the practice of misleading consumers about a company’s environmental impact - is another growing focus of corporate climate litigation. Two major types of greenwashing cases have emerged globally. One category challenges ambitious corporate net-zero targets. In 2021, the Australasian Centre for Corporate Responsibility sued Santos, arguing that its claims of providing “clean” natural gas and achieving net-zero emissions by 2040 were deceptive. This was the first lawsuit in the world to challenge the credibility of a corporate net-zero plan. A similar lawsuit was filed in 2022 against Total in Europe. The second category of greenwashing claims targets misleading advertising. Companies frequently market products as “green”, “eco-friendly” or “climate neutral” while relying on carbon offset schemes without providing full transparency. Courts have generally ruled that carbon offsets alone do not justify such claims. Airlines, in particular, have faced lawsuits for misleading sustainability claims, and regulatory authorities are stepping in. In the UK, the Competition and Markets Authority has previously announced investigations involving ASOS, Boohoo and ASDA for potentially deceptive green claims.

Multiple lessons can be learnt from these various dynamics and developments. Corporate climate litigation is gaining momentum, largely driven by civil society organisations and legal precedents set by past cases. As the landscape evolves, the diversity of disputes continues to expand. Legal victories, as well as the sheer number of ongoing cases, indicate that climate litigation is becoming a permanent fixture in the litigation landscape. Courts around the world are increasingly engaging with climate-related legal arguments, integrating them into their analysis of corporate responsibility and environmental impact. However, successful litigation strategies vary significantly by jurisdiction. While some cases can serve as blueprints for others, differences in legal frameworks make it difficult to transplant legal arguments from one country to another. This complexity means that climate litigation will continue to evolve uniquely across different countries. Several factors drive this growing trend, including advancements in climate science, the rise of ESG reporting data, shifting business culture and mounting public pressure. As these elements converge, corporate climate litigation remains one of the most dynamic and impactful areas to watch.

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