Issue link: https://digital.shearman.com/i/1425143
3 4 In recent years, there has also been an observable trend of courts within the EU – both at the EU and individual Member State levels – becoming increasingly assertive in adjudicating energy-related matters. These decisions track alongside the EU's expanding legislative impetus, seen in new areas such as the hydrogen regulations discussed above. Several recent decisions have consequences on a global scale, well beyond the EU's borders. Two are particularly noteworthy: 1. MILIEUDEFENSIE AND OTHERS V ROYAL DUTCH SHELL PLC On May 26, 2021, the Hague District Court issued a landmark decision in favour of a collective of Dutch NGOs which ordered Shell to reduce by the end of 2030 its global, group-wide CO2 emissions by 45 percent, relative to 2019 levels. The judgment was significant in several respects, covered in our contemporaneous briefing. In particular: • Shell was found to owe a duty of care to Dutch residents in respect of its CO2 emissions, no matter where those emissions occurred. The Court's decision was not limited to Shell's conduct in the Netherlands, nor even the EU. • In fact, Shell's compliance with the applicable laws and regulations in the Netherlands did not affect this duty of care, which the Court found to exist independently of any individual States' actions to prevent climate change. • Shell not only owed an "obligation of result" to reduce the group's own emissions, but also a "significant best efforts obligation" to reduce CO2 emissions of its suppliers and end- users. By ordering Shell to reduce its emissions, the Dutch Court took the lead on tackling climate change through rights-based reasoning. It also took into account emissions, and required Shell to take action, well beyond the Netherlands' borders. Furthermore, whilst the judgment was rendered under Dutch law, the Court drew heavily from international treaties and guidelines, notably including the European Convention on Human Rights. This sort of reasoning could easily be replicated by other national courts, particularly those within the EU, which has acceded to the Convention. EU courts will likely provide fertile ground for similar claims in the future. Shell is currently appealing the Court's judgment, which is expected to take two to three years. In the meantime, Shell has indicated that it intends to comply with the judgment. In public statements, Shell offered the view that urgent action is needed to reduce carbon emissions, confirming that it would rise to the Court's challenge, but that one Court's decision against a single company is not an effective way to meet that goal. 2. REPUBLIC OF MOLDOVA V KOMSTROY LLC The Energy Charter Treaty ("ECT") is a multilateral investment agreement containing a framework of protections for energy sector investors within and outside the EU. The ECT currently has 57 signatories and contracting parties, made up mainly of EU Member States. It was also signed by the EU and Euratom in December 1994. The ECT is important because it affords foreign investors international law protections over their investments in other contracting States. It also provides a mechanism for the independent and binding adjudication of disputes through arbitration. Over recent years, some of the most significant investment claims have been brought under the ECT, including the $50 billion Yukos award secured by Shearman & Sterling for the majority shareholders in Yukos Oil Company against Russia. However, on September 2, 2021, the Court of Justice of the European Union ("CJEU")'s judgment in Komstroy held that Article 26(2)(c) of the ECT – the provision through which investors can bring claims – is incompatible with EU 05 Increasing Assertiveness of EU Courts in the Energy Sector INSIGHTS