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Poland: The Rising Tide of Climate-Change-Related Risks and Disputes

Poland: The Rising Tide of Climate-Change-Related Risks and Disputes

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Climate change-related risks have climbed to the top of the agenda of various stakeholders across the globe: governments, international organizations, NGOs, businesses, and ordinary citizens. The Global Risk Report 2020, presented this year at the World Economic Forum in Davos, demonstrates that climate-related risks – including extreme weather, climate action failure, natural disasters, biodiversity loss, and human-made environmental disasters – are among the top five long-term risks over the next ten years. Most notably, according to survey respondents, the failure of climate change mitigation and adaptation is this year’s number one long-term risk by impact. The report underscores that, in the 2020s, “concerted action is required not only to reduce emissions but also to develop credible adaptation strategies, including climate-proofing infrastructure, closing the insurance protection gap, and scaling up public and private adaptation finance.”

The CO2 reduction targets pledged in the 2015 Paris Agreement (adopted under the UN Framework Convention on Climate Change) look insufficient given that over the last five years the adverse effects of climate change have been more rapid and severe than expected and are continuing to grow exponentially. The Intergovernmental Panel on Climate Change 2018’s “Special Report on Global Warming of 1.5°C” warns that avoiding the worst effects of climate change will “require rapid and far-reaching transitions of energy, land, urban and infrastructure (including transport and buildings) and industrial systems.”

In January 2020, the European Union adopted the European Green Deal – an ambitious package of measures designed to cut greenhouse gas emissions, invest in cutting-edge research and innovation, and preserve Europe’s natural environment. It is estimated that achieving the EU’s goal of climate neutrality by 2050 will require at least EUR 1 trillion of investments. There is a clear tension between calls to create a green society and the urge in less-developed regions, such as CEE, to boost economic growth through investment in carbon-heavy energy and transport infrastructure projects. Poland will be particularly affected by the transition and will need to undergo profound economic and social transformation. Therefore, the Just Transition Mechanism will support those most affected – including Poland if it subscribes to the European Green Deal - through a package of financial and practical support worth at least EUR 100 billion.

A global response to climate change involving new investments will inevitably generate legal disputes. Such disputes may arise out of commercial contracts relating, for example, to carbon emission trading schemes, licensing of climate change technology such as Carbon Capture and Storage, supply of renewable energy, decommissioning of non-renewable power plants, and adaptation of existing buildings and infrastructure, including transportation systems, to a warming climate. Climate-related disputes may also arise as a result of investors’ claims concerning regulatory measures implemented by states and driven by climate change action. Several such claims have already been brought against states which are amending solar energy investment incentives, suspending wind energy offshore development, or phasing out nuclear power. There will also be disputes with local communities impacted by new investments affecting arable land or fisheries.

In 2014, the International Bar Association published a report on “Achieving Justice and Human Rights in an Era of Climate Disruption.” Its key part relates to dispute resolution and recognizes that arbitral institutions offer specialized procedures and dispute settlement methods apt to resolve climate-related disputes, such as review panel proceedings, fact-finding commissions, and mediation or conciliation.

In this vein, in November 2019 the ICC Commission on Arbitration and ADR published a report on Resolving Climate Change Related Disputes through Arbitration and ADR, which identifies several features that may serve the effectiveness of resolving climate-related disputes and provides sample wording which can be introduced to dispute-resolution mechanisms. These features include securing climate-change-related expertise of arbitrators and experts to ensure that decisions reflect sound and up-to-date scientific and technical knowledge; providing procedural tools which take into account the complexity, urgency, and special sensitivities of the climate-change response (such as expedited procedures, time and cost management techniques; emergency, interim, and conservatory measures; and multi-tiered conflict escalation procedures, including mediation, expert determination, and dispute boards); the possibility of integrating climate-change policy or law into the dispute-resolution procedure; the possibility of adopting an increased measure of transparency of arbitration; and providing options for involving third parties in the dispute-resolution procedure. The existing caseload of major arbitral institutions like the ICC, SCC, and PCA already proves that arbitration of climate-related disputes is in use and growing.

By Malgorzata Anna Surdek, Partner, CMS Poland

This Article was originally published in Issue 7.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.


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