Climate litigation & insurance issues The Future of Mass Tort Claims

1. Climate litigation & insurance issuesThe Future of Mass Tort Claims British Institute of International and Comparative Law London, 6 February 2009 Prof. Dr. Ina Ebert, Munich Re

2. Climate litigation • ● Litigation related to property damage • ● Litigation related to new technologies in connection with the consequences of climate change • ● Litigation based on (man-made) climate change as such or on the violation of regulation related to climate change

3. Climate Change Litigation • ● Potential plaintiffs • ◦ US-states/-cities, NGOs, Industry suffering from global warming (e.g. fishing, forestry, skiing), Inuit, victims of NatCats (Katrina) • ● Potential Claims • ◦ can be based on statutes or Common law • ◦ Statutes: e.g. Clean Air Act (CAA), National Environmental Policy Act (NEPA), Endangered Species Act (ESA), Kyoto Protocol • ◦ Common law: normally public nuisance, conspiracy (other options: private nuisance, unjust enrichment, negligence) • ◦ claims for damages because of greenhouse gas emissions, enabling greenhouse gas emissions or failure to avoid liability, warn or disclose information or claims aiming at injunctive relief • ● Potential defendants • ◦ Oil, utility, coal companies, car manufacturers, chemical industry, meat industry and financial institutions financing these branches of industry

4. Climate Change litigation: Legal issues • ● Political question, not to be decided by courts? (jurisdiction up to now) • ● Who is allowed to sue? US-Supreme Court: e.g. US-states • ● Causation: Who exactly causes exactly what damage to exactly whom? • ● Liability denied because defendants were „doing nothing more than lawfully engaging in their respective spheres of commerce“? • ● Preemption: Does federal regulation prevent liability? • ● Assessing the damage (positive side-affects, contributory negligence) • ● Liability related to climate change but not for emissions as such

5. Cases of Climate Litigation so far • ◦ Connecticut v. American Electric Power: 8 states, City of New York etc. demand order to reduce carbon dioxide emissions (emissions as public nuisance, injunctive relief). Verdict 2005 Federal Court New York: Dismissed (political question that has to be answered by legislation), appeal pending • ◦ Friends of the Earth v. Mosbacher: NGOs and 3 cities sue financial institu-tions for contributing to global warming by financing overseas facilities that burn fossil fuels and for violation of NEPA (failure to complete Environmental Impact Statement). Decision March 2007 Court for the Northern District of California: Defendants´ motion for summary judgement denied (case not considered completely hopeless) • ◦ California v. General Motors: Claims for billions of $ as damages against 6 car manufacturers because their cars make up for 20 % of human-generated carbon dioxide emissions in the US (public nuisance). Verdict Sept. 2007 Federal Court California: Dismissed (political question not to be decided by courts, defendants cannot be blaimed “for doing nothing more than lawfully engaging in their respective spheres of commerce”)

6. Cases of Climate Litigation so far • ◦ Massachusetts v. EPA: 12 states, several cities and NGOs sued EPA for not regulating carbon dioxide emissions from motor vehicles under the CAA (EPA: CAA does not give EPA authority to do so, even if it did, it would be ineffective and not appropriate), • Verdict April 2007 US-Supreme Court: EPA has authority to regulate green-house gases under CAA (greenhouse gases are pollution), states are allowed to sue EPA (special status for state sovereigns), EPA should re-evaluate reasons for action/inaction • ◦ Comer v. Murphy Oil: Katrina-victims claim damages for personal injury, loss of property and business interruption (based on public/private nuisance, unjust enrichment, conspiracy etc.), Verdict April 2007 Federal Court Mississippi: Dismissed (non-justiciable political question that has to be addressed by legislation/executive branches of government) • ◦ NGOs on behalf of Inuit village Kivalina (Alaska) v. 5 oil companies, 14 electric utilities and coal company (e.g. BP, Chevron, Peabody, Exxon Mobil, American Electric Power): Claims for up to 400m.$ for relocating village which is about to “fall into the sea” because of global warming, claims are based on public nuisance and conspiracy (filed February 2008)

7. Coverage issues • ● Lines of business affected: D&O, PI, in cases of property/ bodily injury (not just pure economic loss) also general liability/product liability • ● Occurance (coverage only for emissions caused by an accident, not for regular, intentional emissions?) • ● range of Pollution Exclusion (US-Supreme Court: greenhouse gas = pollution) • ● Defence costs

8. Consequences • ● “direct liabity” for CO2 emissions as such: • ◦ Unlikely, but higher defense costs for likely defendants • ● “indirect liability” (= liability related to climate change): • ◦ likely to increase in importance: • ▫ Stricter regulation leading to stricter liability/standards of care • ▫ Growing public awareness due to intensive media coverage • ▫ Growing consensus about man-made global warming • ◦ examples: failure to warn/report/inform, conspiracy, wrong reaction to emergency situations, improper claims handling, failure to (sufficiently) consider consequences of climate change (e.g. construction industry)

9. Consequences • ● Losses directly caused by emissions should not be carried by the insu-rance industry. Who should pay for the costs of climate change is a political question. It should be decided by politics (legislation), not by civil courts/ liability law. • ● Losses indirectly related to climate change are a standard topic for liability insurance (e.g. PI, D&O). Therefore insurance coverage is generally available. However, it might be necessary to examine certain risk groups more closely (and adjust pricing).

10. Thank you very much for your attention!