By — Aasmi Bali

Abstract

Climate litigation has become one of the most acute issues of contemporary legal discussion. With states, corporations, and civil society actors struggling with the burden of climate change mitigation and adaptation, conflicts over environmental damage and regulatory imperatives are proliferating. Conventional litigation is slow and aggressive, which can worsen the urgency of climate action. This paper analyzes how Alternative Dispute Resolution (ADR) can help in solving climate disputes through arbitration, mediation, and negotiation because they offer speed, expertise, and flexibility when dealing with conflicts. With a view to both international trends like the Permanent Court of Arbitration regulations on the environment and a landmark case like Vattenfall v. Germany, and Indian experiences under the National Green Tribunal, the article examines the possibility and constraints of climate ADR. It then ends with the statement that implementing ADR mechanisms in climate governance represents a path forward as far as ecological justice and economic development are concerned.

Introduction

Climate change is no longer far, it defines governance, economics and law. The increasing levels of the sea, and the dramatic weather, and the deterioration of the air quality have caused climate litigation against governments, corporations, and even states by states. However, traditional litigation can hardly cope with big caseloads, technicality and adversarial litigation processes which in most cases aggravate conflicts. In this case, Alternative Dispute Resolution (ADR) (arbitration, mediation, and negotiation) provides a transformational approach. ADR has traditionally been employed in commercial law but is also currently offering timely, creative, and technically informed results, which is particularly important in ecological conflict resolution.

ADR and Climate Disputes: The International Experience

The international community has institutionalised ADR mechanisms on environmental issues. In 2001, the Permanent Court of Arbitration (PCA) supported the Optional Rules of Arbitration of Disputes Relating to the Environment and/or Natural Resources. These rules were to resolve disputes, which required more than the law, but which also required scientific understanding, so that arbitral tribunals could appoint technical specialists in ecology, hydrology, or climate science. One of the first and most famous applications was the Iron Rhine Arbitration (Belgium v. Netherlands, 2005). The tribunal upheld Belgium’s right to transit by rail but stressed it was not absolute and had to be balanced against environmental standards.  By invoking sustainable development, the tribunal showed how arbitration can adapt treaty interpretation to balance economic interests with ecological protection.  Similarly, in the investment arbitration front, there have been climate based controversies.

In Vattenfall v. Germany (ICSID, 2009 and 2012), a Swedish energy company appealed against the environmental laws in Germany, both on a ban of a coal plant, then on the nuclear phase-out in Germany. These instances demonstrate the two-sided character of ADR: it allows investors to challenge rigid rules, but at the same time, the notion makes states implement sustainability into investment law. Therefore, it is possible that ADR either formalizes ecological objectives into legal frameworks or it is a location of corporate resistance. Mediation and negotiation also have some significance in international climate governance.

Established many years earlier than climate litigation, the Indus Waters Treaty (1960) between India and Pakistan remains among the most successful examples of negotiated dispute settlement in the resource-sharing region. The ADR mechanisms incorporated within the treaty have enabled the avoidance of large-scale war even in politically hostile situations, which underscores the importance of mediation as a means of guaranteeing cooperation in ecologically sensitive disputes.

The Indian Context: Towards Green ADR

With the rise in the appearance of climate litigation in India, there has been a corresponding increase in the use of the ADR principles in various forms, the most common one being the National Green Tribunal (NGT). The NGT was formed in 2010 as a special body to adjudicate environmental disputes promptly. Though the NGT is officially a judicial organ, ADR activities are frequently applied to mediate negotiated settlements and design compensation programs in environmentally harmful cases.

The NGT is technically a judicial institution, but its practice sometimes borders on the adjudication and the ADR. It has promoted negotiated settlement in compensation, restoration and community rehabilitation cases, implementing such principles as polluter pays and restorative justice in a manner that draws closer to mediation than strict adjudication. In the meantime, the renewable energy industry in India has cleared new grounds of arbitrations. Power purchase Agreement disputes: power tariff adjustments, arrears, contract termination are habitually submitted to arbitral tribunals. Likewise, arbitration has also been appropriate in carbon credit trading disputes which require physical expertise and international enforcement.

The Indian Judiciary has traditionally been actively involved in protecting the environment, such as in the case of M.C. Mehta v. Union of India (Oleum Gas Leak, 1987), which gave rise to the principle of absolute liability on hazardous industries. However, cases like these also demonstrate the shortcomings of litigation: lengthy cases, patchy applications, and clogged courts. Renewable energy projects and infrastructure projects have been making increased use of arbitration clauses in recent years, as it is understood that power purchase agreement disputes, carbon credit disputes, or regulatory approvals disputes better fit arbitration than any other litigation process.

This is because many climate related conflicts, including industrial contamination and renewable energy dealings are currently settled by way of arbitration or mediation. However, unlike the specialised environmental rules of the PCA, the nation of India has no formal climate ADR framework. Such mechanisms embedded in arbitral institutions and the NGT may make resolving the environmental conflict more predictable, competent and uniform.

The Promise and Perils of Climate ADR

There are a number of benefits of ADR in climate disputes. It is also more economical and quicker and this is essential when it comes to environmental abuses that have to be dealt with immediately. The input of the technical experts to the arbitration and mediation also makes it possible to have decisions made that transcend beyond the law-bounded thinking. Another strength is its versatility, because, although monetary compensation is possible, settlements may incorporate emission reduction, ecosystem restoration, or investment in green projects. Confidentiality can also promote corporate participation.

Nevertheless, these strengths have their weaknesses. Although commercially desirable, secrecy can interfere with the right of the people to know on the issues of environmental significance. Corporation to vulnerable community negotiations may also be one-sided resulting in unfair results. Execution is challenging: arbitral awards can be enforced as per the New York Convention, however, climate commitments like carbon reduction carbon footprints or biodiversity cannot be easily incorporated into a contractual structure. Lastly, one can misuse it, as it happened in the Vattenfall cases, where arbitration was used to test the environmental laws, and possibly undermine climate action.

Global Trends and the Way Forward

There is an increasing trend in the integration of ADR into climate governance worldwide. The Paris Agreement (2015) also implicitly supports cooperative dispute resolution, which motivates parties to settle disputes outside a court. The commercial practice has also been changing: green arbitral clauses are currently being developed and written into contracts by which, in addition to the obligation to arbitrate in case of a dispute, the parties undertake to act in an environmentally-friendly manner. The European Union Green Deal has also contributed towards the introduction of a concept of sustainability into the contexts of dispute resolution, and is indicative of a wider shift towards an international arbitration process that is more environmentally congruent.

These developments are both threats and opportunities to India. The susceptibility of the country to climate change, coupled with its economic growth in a short period of time, makes it a hot spot in climate-based conflict. Integrating ADR systems into India’s environmental governance (specialized arbitral regulations, NGT-mediated mediation commissions, and climate provisions related to infrastructural contracts) can both improve access to justice and provide ecological responsibility.

Conclusion

The conflict of the 21st century is climate change and it requires the law to be quick and adaptable to ecological conditions. Although litigation has influenced the politics of the environment, it is too sluggish and inflexible in complicated climate battles. ADR on the other hand is adaptable, professional, and economical which renders it an essential addition to court operations. However, it needs to be crafted in a manner that includes protection against inclusivity, transparency and fairness otherwise it would tend to favor corporate interests at the expense of ecological justice. In the case of India, the climate ADR should be institutionalized in the government by making sure that the results safeguard the current populations as well as the future generations-greening dispute resolution that will guarantee a green future.

Author’s Bio:

Aasmi Bali is a second-year law student currently pursuing B.Com L.L.B(Hons.) from Jindal Global Law School, Sonipat. Her interests lie in technology law, public policy, and digital rights.

Image Source: https://www.ai-cio.com/news/economic-damage-from-climate-change-could-dent-global-income-by-19-over-25-years/