A climate litigation breakthrough: why RWE lost the case it won against a Peruvian farmer

Last week, the German courts dismissed a case brought in 2015 by Peruvian farmer and mountain guide, Saúl Luciano Lliuya, against energy giant, RWE. Saúl Luciano Lliuya was seeking financial contribution from RWE to build flood defences for his town, given the growing risk of flooding linked to the melting of a nearby glacier due to the climate crisis.

Saúl on the Hatun Machay Rock.
(Photo: Alexander Luna / Germanwatch e.V.)

Our Legal Director, David Kay, takes a closer look at why the ruling was no victory at all for RWE – and why big corporate emitters will be nervously awaiting what comes next.

RWE climate case summary: what happened?

Saúl Luciano Lliuya lives in Huaraz, a city in the Andes. Glaciers that are melting due to climate change has put Huaraz and its residents in constant danger of flooding. In 2015, Saúl sued energy giant, RWE, for ~$20,000, representing 0.47% of the approximately $4m flood defence costs to protect Huaraz (being the proportional contribution of RWE to historical greenhouse gas emissions).

Saúl and his legal team used attribution science to claim that RWE is proportionately responsible for the flood risk to his town.

On 28 May,  the Higher Regional Court of Hamm in Germany finally issued a ruling, holding that the level of flood risk to Saúl’s property (deemed to be around 1%) is not sufficient to award the damages sought. However, the court also made the following significant findings:  

• In principle, companies can be held liable for the climate consequences of their actions wherever they occur in the world.

• 0.4% of global emissions (as in RWE’s case) constitutes a significant contribution to climate change which can give rise to liability (whereas individuals cannot be held liable).

• The risks of climate change have been reasonably foreseeable by major emitters from at least 1965 onwards.

In short, the court confirmed that in principle a big private emitter can be financially liable for the consequences of climate change it has contributed to wherever those consequences occur.

Saúl vs RWE: did RWE win?

Yes and no.

The case was widely reported as ‘thrown out’ and ‘rejected’. That is true insofar as RWE does not have to pay $20,000 to Saúl and the risk to his property was deemed too low. So yes, RWE did ‘win’. But this case was about much more than that.

The sum of $20,000 is nothing to RWE, a company which makes billions in revenue. It could have paid that amount and ended the case 10 years ago. But RWE’s lawyers rejected that option, saying at the time that the case was a ‘matter of precedent’. This reveals the true value of the case to RWE: it will have spent many more times $20,000 on legal fees trying to avoid the court establishing a legal precedent of corporate responsibility for climate change.

And it was the argument over this critical legal principle that RWE lost. To my knowledge, this is one of the first times a court has considered a climate change damages claim against a private company as legally possible.

But RWE doesn’t have any direct liability following the climate case?

No. But the significant legal breakthrough in corporate responsibility shows liability can in future be established for big emitters under German law, including for consequences elsewhere in the world.

Large media presence during the press statements in front of the Higher Regional Court of Hamm.

Will we see more climate change court cases like this in future?

Yes. The court has opened the door and laid out the path for a successful claim in the future. 

It won’t just be fossil fuel companies either – there’s already a case filed by four inhabitants of the Indonesian island of Pari against Holcim, the large building materials company, in Switzerland. All large emitters are potentially exposed, not just the big energy majors.

And it won’t just be in Germany. The legal team that brought the RWE climate case say that the legal base for the decision exists in a similar form in 50 states around the world.

Why does this climate case matter to the general public?

Climate risk and damage is already all around us. Mere hours after the court ruling, an entire village was destroyed by a collapsing glacier in Switzerland.

Where I live in Scotland, as I took a ferry across to Arran (a small island off the coast) the ferry announced a warning of high wildfire risk and precautionary measures – something that felt more appropriate to Australia than (famously damp) Scotland. Yet wildfires have caused huge devastation on Arran this year.

And this is just in Europe. Climate vulnerable countries around the world face an even graver existential threat.

At the moment, society as a whole (the general public and taxpayers) bear the brunt of the risk and costs of all of these consequences of climate change, whilst big corporate emitters avoid any responsibility.

Will these legal climate cases change that?

Hopefully. It’s a principle of environmental law that polluters themselves should pay for the costs of their pollution, rather than the general public. But fossil fuel companies have long hidden behind the diffuse, global impacts of their emissions and their relative ‘small’ percentage of global emissions to deny any liability – whilst continuing to pollute with impunity.

These legal cases are critical, using the latest science to break the fossil fuel industry’s liability shield, by drawing the line between the individual company’s emissions and specific climate risk and damage. Making companies pay for the damage caused by their emissions is not only fair, but will help drive companies to a quicker transition to a clean, sustainable future.

So what next for climate litigation cases?

The German court has opened the door, and with 50 states around the world having similar laws, we expect more cases will follow. It is only a matter of time before one succeeds.

The push for corporate accountability owes a lot to the bravery, innovation, and determination of Saúl and his legal team. They may not have got everything they wanted from this case, but corporate accountability lawsuits take a major leap forward and Saúl’s case shines a light for all those on the front lines of climate change that want to hold large polluters accountable.

Interested to know more about climate law? Read all our blogs about climate litigation.