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The U.N. and its signatories have been putting much effort into creating a binding legal framework to fight climate change for over 50 years. Although remarkable progress has been made on the formal side of said framework, which currently revolves mainly around the Paris Agreement, the scientific deadlines to turn those intentions into practice are rapidly approaching without much change in the action side of things. Many reasons for the lack of tangible initiatives against climate change are speculated, but even if a conclusion is reached as to why not enough is being done, probably nothing could still be done, as there currently is no mechanism in place to hold States liable for their non-compliance with climate change obligations. This note is therefore dedicated to analysing the urgency to change that scenario, so the Paris Agreement can finally have a binding dispute resolution mechanism.<\/span><\/p>\n <\/strong><\/p>\n I. Introduction\u2013 The UNFCCC and its Dispute Resolution Mechanism<\/strong>\u00a0<\/strong><\/span><\/p>\n The United Nations (\u201cU.N.\u201d) publicly identified that the climate was changing as a result of human activities for the first time<\/span>in 1972 in Stockholm<\/a>, Sweden. Twenty years later, in 1992, after several studies had confirmed that fact,<\/span>166 States acknowledged it<\/a> by signing the United Nations Framework Convention on Climate Change (\u201cUNFCCC\u201d) in the context of the Earth Summit in Rio de Janeiro, Brazil.\u00a0<\/span><\/span><\/p>\n As its name suggests,<\/span>the UNFCCC<\/a> is a 26 articles treaty which created the framework under which its signatories recognise climate change as an issue caused by the concentrations of greenhouse gases in the atmosphere, should study, discuss, and implement measures to stabilise and reduce those concentrations (UNFCC, Articles 2 to 6).\u00a0<\/span><\/span><\/p>\n It also created a<\/span>convention of the signatory parties<\/a> (\u201cConvention of the Parties\u201d or \u201cCOP\u201d) to be held yearly to discuss and review the implementation of the defined measures, which will have its 28th\u00a0edition in 2023 (UNFCC, Article 7).\u00a0<\/span><\/span><\/p>\n Article 14 of the UNFCCC is dedicated to the settlement of disputes, establishing negotiation as the standard mechanism in item (1) and giving in item (2) the option for the signatories to declare they accept the International Court of Justice and\/or arbitration \u2013 to be later detailed through an annexe, which never happened \u2013 as a compulsory dispute resolution mechanism.\u00a0<\/span><\/p>\n To this date, only<\/span>three countries<\/a> \u2013 Netherlands, Solomon Islands and Tuvalu \u2013 out of the current 199 signatories of the UNFCCC have declared their willingness to adopt any of those two dispute resolution mechanisms as compulsory, which leaves virtually all disputes to be settled solely through negotiation.<\/span><\/span><\/p>\n <\/strong><\/p>\n II. The Paris Agreement: The Legal Framework to Fight Climate Change\u00a0<\/strong>Advances but its Dispute Resolution Mechanism does not<\/strong><\/span><\/p>\n It took 21 COPs for the Parties to reach a<\/span>binding treaty on climate change<\/a><\/span>, during the conference held in Paris in 2015 (\u201cParis Agreement\u201d), with the ultimate goal to limit global warming to a 1.5\u00ba C above pre-industrial levels \u2013 and a secondary goal to limit it to 2\u00ba C, if the first goal is not reached.<\/span>\u00a0<\/span><\/span><\/span><\/p>\n In addition to the establishment of a clear target, the<\/span>Paris Agreement<\/a> also defined that such a target should be achieved through the adoption of \u201cthe best available scientific knowledge\u201d (Miscellaneous 4 of the Paris Agreement), which currently corresponds to the need to<\/span>stabilise greenhouse gas emissions until 2025 and reduce it by 43% until 2030<\/a>.\u00a0<\/span><\/span><\/p>\n To do so, each of the Parties committed to present nationally determined contributions (\u201cNDC\u201d) to stabilise and reduce greenhouse gas emissions every five years {<\/span>Article 4(9) of the Paris Agreement<\/a>}. Three years after that, in the present year of 2023, the first global stocktake will be held to assess where the countries stand and make improvement recommendations where needed {<\/span>Article 14(2) of the Paris Agreement<\/a>}.\u00a0<\/span><\/span><\/p>\n In the following year, an Enhanced Transparency Framework will be put in motion, with countries having the duty to provide biennial update reports on their progress with their determined contributions (<\/span>Article 13 of the Paris Agreement<\/a>).\u00a0<\/span><\/span><\/p>\n In parallel with the Paris Agreement, other progress on climate change has also been made. For instance, at COP 26, the Parties reaffirmed their commitment not to cross<\/span>the 1.5\u00ba C temperature<\/a> increase threshold based on the most recent scientific data on the adverse effects of climate change.\u00a0<\/span><\/span><\/p>\n In the same year, the Parties created the<\/span>International Sustainability Standards Board<\/a> (ISSB) to \u201cdevelop standards that result in a high-quality, comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets\u201d<\/sup>, which basically means that the Parties created a mechanism to objectively set standards of compliance with the climate change efforts for the private sector.\u00a0<\/span><\/span><\/p>\n During COP 27, the Parties announced the creation of a<\/span>Loss and Damage Fund<\/a> to aid countries suffering the most from environmental disasters as a result of climate change.\u00a0<\/span><\/span><\/p>\n Therefore, there has been continuous and remarkable progress in the legal framework to fight climate change since it was first acknowledged as a serious issue in 1972, with most countries in the world adhering to binding commitments.\u00a0<\/span><\/p>\n The same cannot be said, however, about the mechanisms to enforce such binding commitments in case of non-compliance by the Parties. That is because, under Article 24, the Paris Agreement adopted the same (practically non-existent) dispute resolution mechanism of the UNFCCC.\u00a0<\/span><\/p>\n Therefore, aside from the three countries, the only commitment ever made in terms of dispute resolution related to climate change was to negotiate violations of the UNFCCC, and such commitment did not evolve since.<\/span><\/p>\n <\/strong><\/p>\n III. Without a Compulsory\u00a0<\/strong>Dispute Resolution Mechanism, the Climate Change Effort is at High Risk of Falling Short<\/strong>\u00a0<\/span><\/span><\/p>\n Even though climate change is a recognised threat to human existence, with the actions of each country affecting (in different proportions) all others, to this date, there are currently no mechanisms under international law to impose compliance with binding commitments towards it.\u00a0<\/span><\/p>\n This, unfortunately, gives States a large margin to simply disregard such commitments totally or in part.\u00a0<\/span><\/p>\n Despite having affirmed their commitment to limit warming to 1.5\u00ba C more than once in recent years,<\/span>none of the Parties signatories to the Paris Agreement<\/a> is considered by independent scientists to be currently on track to achieve that goal.\u00a0<\/span><\/span><\/p>\n Furthermore, only nine countries could be on track with their share to achieve the goal by implementing moderate adjustments to their current environmental policy. All other countries need substantial adjustments to be on track, have in place policies that would lead to the<\/span>rising of greenhouse gas emissions<\/a> instead of reduction or do not have enough data available.\u00a0<\/span><\/span><\/p>\n A good example of how, under the current legal framework of climate change, countries feel free to act in the opposite direction of their commitments can be extracted from Brazil. The country is<\/span>undeniably relevant for the fight against climate change<\/a>, not only because it is among the top ten emitters of greenhouse gases but also because it has the largest forest in the world (the Amazon Forest),<\/span>the fifth largest territory, the sixth biggest population and the twelfth largest economy<\/a>.\u00a0<\/span><\/span><\/p>\n In 2021, Brazil also presented the latest version of its NDC, committing to reduce its greenhouse gas emissions<\/span>\u201cin 2025 by 37%\u201d and \u201cin 2030 by 50%\u201d<\/a>, both when compared with 2005 levels of emission.\u00a0<\/span><\/span><\/p>\n Despite the international commitments assumed to fight climate change, Brazil\u2019s electric energy system is currently under pressure exactly due to climate change. Nearly 30% of the<\/span>energy produced in Brazil<\/a> is from hydric sources, and climate change has made droughts more<\/span>severe during winter<\/a>, stressing the country`s energy supply.\u00a0<\/span><\/span><\/p>\n Given that, when passing a law authorising the privatisation of the state-owned company Centrais El\u00e9tricas Brasileiras S.A. (Eletrobras), the Brazilian Congress included a provision determining the investment for the construction of natural gas thermal power generation industries<\/span>capable of producing 8GW<\/a> yearly.\u00a0<\/span><\/span><\/p>\n The 8GW production capacity represents an increase in<\/span>comparison to the 6GW<\/a> of the original project. When that original project was approved, Brazil\u2019s National Institute of Energy and Environment estimated it would generate a<\/span>25% increase<\/a> in greenhouse gas emissions for the entire Brazilian electric system, equivalent to a 13.1 MtCO2e per year. With those 2 extra GW, the increase in greenhouse gas emission is now<\/span>estimated in 30%<\/a> or 17,5 MtCO2e.\u00a0<\/span><\/span><\/p>\n That by itself would represent an increase of more<\/span>than 1.6% to Brazil\u2019s 1,057.3 MtCO2e<\/a> emission in 2021. The final number, however, will probably be higher because 4.25GW out of those 8GW will be built in regions that did not have natural gas connections when the law was approved, meaning that the entire infrastructure to make sure the natural gas arrives to those industries will also have to be built \u2013 of course, at the cost of more greenhouse gas emissions and deforestation that could be avoided.\u00a0<\/span><\/span><\/p>\n This massive investment in thermoelectric generation (when the country<\/span>could be investing in renewable energy<\/a> to deal with its increasing droughts) represents, thus, a relevant contradiction to Brazil\u2019s NDC commitment to significantly reduce its greenhouse gas emission.\u00a0<\/span><\/span><\/p>\n If a mechanism was in place to hold countries accountable for disregarding their international commitments towards climate change when conducting their domestic affairs, a dispute against Brazil could be initiated by one of the other signatories of the Paries Agreement claiming to have said contradiction recognized as a violation of the treaty. If that were the case, Brazil could be subjected to a binding decision to refrain from making the investment in thermal power generation or be liable for it.\u00a0<\/span><\/p>\n And Brazil\u2019s case is just one example out of many that could be brought up for nearly every country, as only nine of them are close to being on track with the Paris Agreements goals \u2013 meaning that all others could potentially be subject to disputes for non-compliance with the Paris Agreement.\u00a0<\/span><\/p>\n Without a dispute resolution mechanism in place for the Paris Agreement, however, the international community can only hope for those countries to have domestic laws in place which may prevent violations of the treaty \u2013 using Brazil once again as an example, the adaptation of its domestic law to the Paris Agreement is<\/span>crawling slowly in congress<\/a>.\u00a0<\/span><\/span><\/p>\n That is certainly not enough to ensure the enforcement of the necessary commitments to achieve the goals of such a relevant and urgent matter.<\/span><\/p>\n <\/strong><\/p>\n IV. The Suggested Dispute Resolution Mechanism<\/strong>\u00a0<\/span><\/span><\/p>\n There is an urgent need to fill in the gaps in the implementation targets of the Paris Agreement. Effective non-compliance and dispute resolution mechanisms must be in place to make sure that such targets are carried out.\u00a0<\/span><\/p>\n Although the Paris Agreement made an indication as to which dispute mechanisms it deems adequate by adopting Article 14 of the UNFCCC, these procedures are not fully constituted in its current framework.\u00a0<\/span><\/p>\n At the time the Paris Agreement was signed, there were other options to deal with non-compliance and disputes arising out of the treaty, for instance, the creation of a<\/span>compliance committee as adopted by the Kyoto Protocol<\/a>.\u00a0<\/span><\/span><\/p>\n Therefore, any analysis towards the adequate dispute mechanism for the Paris Agreement must adopt as a premise that a choice was already made when the treaty was signed: the International Court of Justice (\u201cICJ\u201d) and arbitration. Any discussions towards a different mechanism would implicate revoking the indication already made by the signatories and should be treated as secondary, to be discussed only after the mechanisms already elected become binding, given the aforementioned urgency of the matter.\u00a0<\/span><\/p>\n The ICJ, owing to its stature as the world court, is a crucial platform for getting authoritative rulings on a State\u2019s compliance with its international commitments, especially its obligations related to climate change. These include Advisory or contentious proceedings.<\/span><\/p>\n In September 2021, for example, the Republic of Vanuatu announced a plan to ask the International Court of Justice for an advisory opinion to \u201c<\/span>clarify the legal obligations of all countries to prevent and redress the adverse effects of climate change<\/a>.\u201d<\/span><\/span><\/p>\n Although some argue that, given the language used, the Paris Agreement lacks<\/span>substantive obligations<\/a>, it should be expected for the ICJ to conclude that obligations to fight climate change are mandatory and binding by taking into account, for instance, the historical evolution of the subject, its pressing threat towards human existence, the fact that the Paris Agreement was broadly announced as a binding commitment to all of its signatories and the fact that countries have already presented objective commitments towards fighting climate change through its NDCs.<\/span><\/span><\/p>\n Even after the ICJ (hopefully) declares what by now should already be treated as a truism, it will continue to lack jurisdiction over the great majority of prospective claims under the Paris Agreement. Moreover, ICJ\u2019s advisory opinions can only be requested by the U.N. General Assembly, the U.N. Security Council, or, in some circumstances, other U.N. organs and specialised agencies, and they do not obligate States to take any specific action. It is, therefore, of no surprise that<\/span>no dispute regarding non-compliance<\/a> has been brought before the ICJ.<\/span><\/span><\/p>\n However, if the Paris Agreement were to incorporate the ICJ as a binding dispute resolution mechanism, there is no reason why one or more States could not start ICJ proceedings.<\/span><\/p>\n On the contrary, a declaration that a State has violated its international obligations would be a strong international statement from the world court. The responding State is likely to be motivated by the reputational repercussions of such a decision to adjust its climate change policy in accordance with its treaty obligations.<\/span><\/p>\n Proceedings before the ICJ are confrontational in nature and could result in the imposition of enforceable political and economic consequences for states.<\/span><\/p>\n Therefore, it is advisable that the Paris Agreement incorporate provisions for giving greater jurisdiction and authority to the ICJ, given the importance that the ICJ may offer as a prospective forum for resolving inter-State climate change issues. In particular, the new provisions should include a dispute resolution clause that directs conflicts arising under it to the ICJ without the need for States to make separate unilateral statements recognising the compulsory jurisdiction of the ICJ.<\/span><\/p>\n The UNFCCC\u2019s Article 14(2) mandated the parties to reach an arbitration annexe agreement \u201cas soon as practicable.\u201d There is still no arbitration annexe after all these years, however.<\/span><\/p>\n One was created in 1991 (the \u201cDraft Arbitration Annex\u201d), but it was never adopted \u2013 even though it replicated the arbitration annexe that the Vienna Convention for the Protection of the Ozone Layer (\u201cVCPOL\u201d) successfully adopted.<\/span><\/p>\n Although the Vienna Convention reached a remarkable milestone by successfully adopting arbitration as a dispute resolution mechanism, its arbitration agreement is for ad hoc<\/em> procedures, without institutional rules and administration of the procedure, which could also lead to challenges to constitute the arbitral tribunal \u2013 that could be mitigated for instance if<\/span>Uncitral Arbitration Rules<\/a> were to be adopted.<\/span><\/span><\/p>\n For that reason, the election of an institution to deal with climate change arbitrations is advisable, as it would increase the likelihood of the procedure being effective.<\/span><\/p>\n The International Centre for Settlement of Investment Disputes (\u201cICSID\u201d) and the Permanent Court of Arbitration (\u201cPCA\u201d) are two institutions highly accustomed to handling State-related arbitrations and should be natural candidates to be elected as the institution to deal with climate change procedures \u2013 if not permanently, at least until a specific institution is created, given the urgency.<\/span><\/p>\n However, a reform of the current investor-state dispute resolution mechanisms is currently the object of<\/span>study in the U.N.<\/a>, which could make ICSID a questionable choice. For that reason, the PCA, a centenary well-established and respected institution currently<\/span>maintained by 122 countries<\/a> \u2013 including nine of the<\/span>top 10 greenhouse gas emitters<\/a> (the exception being Indonesia) is the most solid choice for inter-State climate change arbitration.<\/span><\/span><\/p>\n Furthermore, arbitration as a dispute resolution mechanism has a number of benefits that make it ideal for claims involving a State\u2019s failure to uphold its international climate change obligations, particularly when that failure persists and all other peaceful options have been exhausted.<\/span><\/p>\n First, arbitrators with the required level of subject-matter expertise and sufficiently distanced from the States involved can be chosen. Second, to help arbitrators with any potentially complicated cross-border scientific, financial, and legal issues, technical specialists can be appointed. Third, arbitration provides a global, impartial forum that takes into account the potential involvement of different nations and the international scope of climate change. Fourth, intra-state arbitration can accommodate pluralistic processes and allow amicus curiae participation, addressing the public interest aspect of climate change. Fifth,<\/span>arbitration is already being used to settle climate change disputes involving states<\/a>.<\/span><\/span><\/p>\n To promote arbitration as an appealing alternative, effective and robust frameworks and procedures need to be put into place to cater to the unique features of inter-State climate change conflicts.<\/span><\/p>\n It could be argued that the absence of an arbitration annexe discourages the parties from pursuing claims. Without a binding arbitration agreement under the Paris Agreement, Parties desiring to resolve a climate change dispute risk becoming bogged down into time-consuming and expensive jurisdictional discussions, never being able to address the substance of the case.<\/span><\/p>\n This potential deadlock might be avoided by the existence of a pre-negotiated and pre-established arbitration agreement, which would also support the use of arbitration to monitor compliance and guarantee the proper execution of climate change obligations.<\/span><\/p>\n Once an Arbitration annexe is put into place, it can incentivise parties to make declarations consenting to arbitration. Sweden, for instance, stated that it would support mandatory arbitration as part of the<\/span>VCPOL<\/a> \n
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