Due Diligence Regarding Fossil Fuel Activities in the ICJ’s Advisory Opinion – Indian Blog of International Law

Abhijeet Shrivastava

Introduction

The International Court of Justice’s (‘ICJ’) advisory opinion on the Obligations of State in respect of Climate Change (‘Opinion’) included the following noteworthy finding: 

…Failure of a State to take appropriate action to protect the climate system from GHG emissions — including through fossil fuel production, fossil fuel consumption, the granting of fossil fuel exploration licences or the provision of fossil fuel subsidies — may constitute an internationally wrongful act which is attributable to that State… (para 427) [emphasis added]

In the same Opinion, the ICJ took note of the conclusion of the Intergovernmental Panel on Climate Change (‘IPCC’) that ‘the largest source of CO² is combustion of fossil fuels’ (para 81). It would then seem strange, on one hand, that the phrase ‘fossil fuels’ or any close synonym found no mention in the Paris Agreement. On the other hand, the United Nations Framework Convention on Climate Change (‘UNFCCC’) did superficially address the topic of ‘fossil fuels’, but only to emphasise the ‘special difficulties’ of developing country States Parties in transitioning to alternatives to fossil fuels [see Articles 4(8)(h) and 4(10), and the fourth last preambulatory paragraph to the UNFCC]. The bleak reality is that regulating the production and consumption of fossil fuels is an issue as divisive as it is crucial for meaningful climate action. Yet, nearly 20 States have shown support towards an ongoing effort to mobilise negotiations for a Fossil Fuels Non-Proliferation Treaty, although as of now, this process is only a proposal. 

Probably, it is because of this complexity that Judge Cleveland asked participants about their views on the ‘specific obligations under international law of States within whose jurisdiction fossil fuels are produced to ensure protection of the climate system’, including ‘with respect to subsidies’, eliciting nuanced responses. 

The present piece interrogates the implications of the findings on fossil fuel activities, both within the Opinion and the individual opinions of judges. After this, the piece highlights a series of ambiguities about what this finding may imply in practice, by surveying the responses of States to the question posed by Judge Cleveland. Although the Opinion marks a progressive step towards challenging the primary cause of climate change, it leaves much unanswered. 

Role of Due Diligence

To say that fossil fuel consumption, production, licensing, or subsidies ‘may’ constitute an internationally wrongful act has one immediate implication—these activities are not inherently internationally wrongful acts. As the ICJ clarified in the very same paragraph, fossil fuel activities could breach

…conventional and customary obligations identified under question (a) pertaining to the protection of the climate system from significant harm resulting from anthropogenic emissions of such gases. (para 427) [emphasis added]

Thus, a fossil fuel activity could give rise to breaches of either or both treaty and customary law obligations. The language of this paragraph, however, shows a close link with the ‘duty to prevent significant harm to the environment’, which the ICJ characterised as an obligation to exercise due diligence (paras 134-135). This is affirmed by the fact that the very next paragraph refers to the possibility of attributing a State’s omission to prevent the activities of private actors as a possible ‘failure to exercise regulatory due diligence’ (para 428). In other words, fossil fuels may be produced or consumed within the jurisdiction of a State, with the prospect of causing ‘significant harm’ to the ‘climate system’, thus triggering the obligation to act with due diligence in preventing or mitigating their effects. 

Under due diligence, the risk of harm in the context of the climate system results in a ‘stringent’ standard of conduct (para 246), yet the conduct expected of different States will vary in line with the principle of ‘common but differentiated responsibilities and respective capabilities’ (para 247). Varying factors include State capacity, ‘the level of scientific knowledge’ and ‘the risk of harm and the urgency involved’ (para 254). Ultimately, whether and to what extent activities regarding fossil fuel consumption, production, and subsidies are prohibited under this standard calls for a case-specific assessment of what amounts to duly diligent conduct in each instance, as per the unanimous Opinion. However,as my analysis below shows, important questions persist. 

Individual Opinions

Judges Bhandari and Cleveland stated clearly that any fossil fuel activities will implicate the procedural obligation to conduct an environmental impact assessment (paras 12, 15). They further highlighted the Global Stocktake decision reached under COP 28 in support of phasing out and transitioning from fossil fuels (para 20). Given this, the Nationally Determined Contributions (‘NDCs’) of States, which should be progressively ambitious over time, must include fossil fuel phase-out and transition goals (paras 21-22). Although sympathetic to the CBDR-RC principle in interpreting due diligence as a standard of conduct, they warned, quoting the Bahamas, that CBDR-RC ‘is not a get-out-of-jail card’ for developing countries (para 27). Thus, NDCs are open to objective scrutiny.

Judge Yusuf regretted that the ICJ did not further clarify the legal consequences (i.e., reparations) of internationally wrongful acts arising from fossil fuel activities (para 40). Judge Bhandari clearly highlighted cessation as a probable consequence (para 5). The absence of clarity on the question of reparations was indeed a missed opportunity for the ICJ, not just in this context, but more generally.. 

Lastly Judge Cleveland emphasised the need to interpret international investment law ‘in light of States’ obligations in respect of climate change’ (para 23). This was because of the threat of ‘regulatory chill’ against developing countries, arising from powerful investors challenging their policies through investor-State dispute settlement. It was already apparent, then, that implementing the ICJ’s findings on fossil fuel activities may not be without potential international legal obstacles. 

State Perspectives

In responding to Judge Cleveland, some States had argued that the UNFCCC and the Paris Agreement exclusively regulated climate change obligations; the absence of any specific obligations on fossil fuels meant fossil fuel activities were unfettered (e.g., Canada, China, Saudi Arabia). For some, the Global Stocktake decision on fossil fuel activities was interpretive means for obligations under the Paris Agreement, meaning that the treaty included obligations to phase out and transition from fossil fuels (e.g., Japan, Panama, the Philippines). For yet others, even if there were such obligations, the standard of conduct expected of States reflected in their subjectively formulated NDCs (e.g., the United Kingdom). 

While the ICJ did not reference the Global Stocktake decision, by contrast from Judges Bhandari and Cleveland, paragraph 427 of the Opinion makes clear not just that fossil fuel activities may breach treaty law (including the Paris Agreement), but also customary law, including the duty to exercise due diligence in preventing significant harm. In this sense, the explicit clarification from Judges Cleveland and Bhandari that due diligence extends to including appropriate goals within NDCs is welcome. It would have been preferable for the ICJ to have said so unanimously, settling any doubts about including rigorous fossil fuel transition and phase-out goals in NDCs. The fact that paragraph 427 explicitly referred only to the duty to exercise due diligence in preventing significant harm may be explained by the strong support to this duty applying against fossil fuel activities (e.g., African Union, Belize, Colombia, Egypt, Seychelles, Tuvalu, Kiribati). 

Where the Opinion fell short, however, was in operationalising this norm, leaving key issues unacknowledged, let alone answered. Although we now know that due diligence is the litmus test for the permissibility of fossil fuel consumption, production, licensing, or subsidies within a given State’s jurisdiction, participating States disagreed on the threshold for permissible activities. 

For instance, in line with the formulation under the Global Stocktake decision and some soft law, certain States insisted on terminology like ‘unabated’, ‘unmitigated’, or ‘excessive’ in qualifying impermissible fossil fuel consumption or production (e.g., Albania, Colombia, Côte d’Ivoire), or terms like ‘inefficient’ use of subsidies (e.g., Bangladesh, Chile, European Union), while other replies did not include such terms. It may also be questioned what the ICJ meant by ‘consumption’ or ‘production’—for instance, it was debatable whether these include Scope 3 activities as defined under the Paris Agreement, i.e., fossil fuels produced under one State’s jurisdiction but consumed under another State’s jurisdiction in the transnational supply chain (e.g., Cook Islands, Russia, Samoa, Seychelles). Perhaps the understandable inability of the ICJ to resolve such controversial queries with precision was precisely why it left the issues open-ended, whilst providing due diligence as a baseline standard of conduct.

Lastly, it is important to recall Judge Cleveland’s observation about the difficulty in cohering States’ obligations surrounding fossil fuel activities along with apparently competing obligations in international economic law. Not just conflicts, there may also be synergies. It is pertinent to note, as highlighted by some States (e.g., Cook Islands, Saint Lucia) that there are efforts in international trade law, including under the World Trade Organisation and other networks, to prohibit fossil fuel subsidies. l In this area, the impetus for restricting subsidies  may be primarily about preventing trade distortions rather than protecting the climatic system. There is room for further reflection on how, as a matter of systemic integration, these co-existing norms as we now know them, could operationalise. Evidently, while the ICJ has made an important contribution through paragraph 427, it marks only the beginning of a larger conversation. 

Conclusion

Clearly, although the ICJ’s Opinion is a welcome step in asserting with authority the possibility of fossil fuel consumption, production, licensing, or subsidies amounting to internationally wrongful acts, a lot more thinking remains on exactly when this may happen. In closing, the ICJ expressed the ‘hope that its conclusions will allow the law to inform and guide social and political action to address the ongoing climate crisis’ [para 456]. With this elementary, but necessary clarification on due diligence and fossil fuel activities, the time is ripe for the proponents of the Fossil Fuels Non-Proliferation Treaty to mobilise support, and address the specific ambiguities highlighted over the course of negotiations. 

(Abhijeet Shrivastava is a public international lawyer, who finished his LLM from Cambridge University, and his BA, LLB (Hons) from OP Jindal Global University.)