Clifford Chance

In PSB et al v Brazil (the "Climate Fund Case"), the Court held that the Paris Agreement is a human rights treaty, meaning the Government is constitutionally obliged to combat climate change.

Issues Raised

There has been an upsurge of litigation in Brazil challenging the government's failure to adopt effective measures to combat climate change and deforestation (the rate of deforestation has increased by 76% in 2021 compared to 2018, and almost 190% compared to 2012).

Against this background, four Brazilian political parties commenced proceedings against the Bolsonaro Administration arguing that its failure to disburse payments from the Brazilian Climate Fund was an "unconstitutional omission" from the government's obligation to protect its citizens against damage to the environment and from climate change. The applicants sought an injunction to compel the government to reactivate the Climate Fund.

After considering submissions of the parties and a wide range of experts – including scientists, indigenous people, and business sector representatives – the Brazilian Supreme Court ruled on 1 July 2022 that:

1. Based on (i) the Brazilian constitutional right to a healthy environment, (ii) the principle of the separation of powers, and (iii) Brazil's duty to comply with rights accepted and commitments assumed under international law, the government has a constitutional duty to allocate the Climate Fund to mitigate climate change and prevent the regression of environmental protection.
2. Treaties on environmental law, including the Paris Agreement ("PA"), are a type of human rights treaty and, for that reason, enjoy "supranational" or "supralegal" status. 

There is no legally valid option available for the government to omit to combat climate change. As a result, the Court found that the allocation of resources from the Climate Fund engaged the constitutional duty to protect and restore the environment (and the fundamental rights that are interdependent on them).

The Court cited the commitments made by Brazil over time to reduce greenhouse gas emissions, which it found to be in stark contrast to consistent increases in deforestation within Brazil. Referring to "a collapse in public policies to combat climate change, undoubtedly aggravated by the omission of the current Executive", the Court found that it is the role of the judiciary to act to prevent retrogression in the face of a "persistent failure to address important sources of GHGs - such as deforestation and land use change".

The Climate Fund Case outcome reflects the particular status of the PA in Brazilian law (it has been incorporated into domestic law by decree), and the constitutional status accorded the right to a healthy environment. (See our blog here). Its implications beyond Brazil may be limited by such features.

Within Brazil, the Claimants' success in the Climate Fund Case is likely to bolster efforts to use the courts to challenge governmental action on climate. In addition to other ongoing actions by NGOs, in July 2022 an NGO commenced an action against the investment arm of the Brazilian National Bank for Economic and Social Development, requesting the court to compel the bank to prepare a GHG reduction plan for its investments to align with the PA and the Brazilian National Policy on Climate Change.

Climate change as a human rights issue

There has been a spate of litigation seeking to challenge government policies based on alleged inconsistency with the PA and/or a relevant State's commitment to reduce GHG emissions. See for example, Grantham's/LSE's 2022 Global Trends in Climate Litigation report.

A number of these cases focus on the physical consequences of climate change and their impact on human rights.

The landmark Urgenda case in the Netherlands against the Dutch State notably determined that climate change is a human rights issue and at least four climate change related cases are currently pending before the European Court of Human Rights. The nexus between climate change, business conduct and human rights has also been considered in litigation against Shell in the Netherlands, in which the Court of Appeal will consider Shell's appeal against an order that it reduce emissions by 45% by 2030 (see our briefing).

The Philippines Commission on Human Rights released a report in May 2022 on its inquiry into the role of carbon majors in climate change, concluding that climate change is a human rights issue.

Could the court's Climate Fund Case reasoning be applied in actions against corporates?

We see from the Shell case in the Netherlands that a success against a State (such as in Urgenda) can be used as a stepping stone to assert duties of care on companies including by way of reliance on the UN Guiding Principles on Business and Human Rights. The success of the Climate Fund Case (and any successful action against the State-owned Brazilian development bank) may at the very least lead to further actions in Brazil against corporates and private sector financial institutions.

Does the Climate Fund Case reflect an international trend?

There have been several other recent NGO wins in challenges to government action on climate outside Brazil. For example, on 18 July 2022 the English High Court ruled that the UK Government's Net Zero Strategy (NZS) is unlawful in part, requiring the UK Government to produce a new NZS by March 2023 detailing how a shortfall of 5% in required emissions reductions will be met (see our briefing).

In another recent case, a Czech Municipality Court concluded that the PA is a self-executing instrument as its Nationally Determined Contributions are sufficiently specific, and as a result, certain Czech Ministries must take measures to reach PA commitments.

Conversely, in West Virginia v the EPA (see our briefing) the US Supreme Court limited the authority of the EPA to regulate CO2 emissions in the United States from existing coal- and natural-gas-fired plants carbon emissions.

The contrasting approaches between courts highlight that, within different legal systems, judicial scrutiny of climate policy may be used as a tool both to hinder or require climate action by governments. While it is possible to identify broad trends in the types of argument being deployed in cases across jurisdictions, the outcome of judicial intervention in climate-related cases will differ based on the constitutional and broader legal traditions in each country.