Greenwatch: Does a German appeal court decision provide a blueprint for future corporate climate liability cases?
24 June 2025
On 28 May 2025, the Higher Regional Court of Hamm dismissed a long-running climate liability claim against RWE AG. RWE is a German energy company. The claimant was Mr Saúl Lliuya, a Peruvian farmer. Mr Lliuya claimed a contribution to the costs of protecting his property from potential glacial floods, caused by climate change.
The court ultimately dismissed the claim as Mr Lliuya could not sufficiently prove a serious concern of future, imminent harm to his property. But the court concluded that RWE could, in principle, be liable for the impact of its greenhouse gas emissions.
We explore the ruling and consider its implications for climate litigation and corporate responsibility, in Germany, and elsewhere.
Key Takeaways
The ruling may pave the way for future corporate climate liability cases in Germany. It marks a significant development in climate litigation, as the court accepted, at least in principle, that a company could be liable for the impact of its greenhouse gas emissions on a pro rata basis.
The court found that liability for climate-related damages could arise even if emissions are permitted by public law regulations. It suggests that compliance with regulatory standards alone does not protect companies from civil liability, if their actions result in harm to others. This conclusion differs from that of German appeal courts in climate litigation cases brought against major car manufacturers.
A company’s share of global emissions may be considered significant when assessed in relation to other (major) contributors. This may be sufficient for causation in multi-causal liability scenarios, even in cases where the harm occurs at greater geographical distance.
The claim against RWE failed because the claimant failed to prove a serious concern of future, imminent harm to his property. The existence of such serious concern must be supported by credible evidence showing a sufficient probability and temporal proximity. In the present case, however, the risk likeliness in the next 30 years had been estimated by an expert opinion to amount to 1%.
The ruling adds to a growing number of judgments across the world where courts have expanded the scope of corporate liability for climate change, including in respect of parent companies with subsidiaries operating overseas. Companies at higher risk of climate litigation should ensure that mitigants are in place, including effective management of their operations overseas, as well as transition planning and procedures to reduce the risk of greenwashing.
Background
On 24 November 2015, Mr Lliuya, a Peruvian farmer and co-owner of a property in the Ancash region of Peru, filed a claim against RWE AG. He sought (among other things) a contribution to the costs of appropriate protective measures for his property against a potential flood from a glacial lake. RWE AG is the parent company of the RWE Group. Its subsidiaries release large quantities of greenhouse gases. According to Mr Lliuya, RWE's share of all global industrial CO₂ emissions alone amounts to 0.38%.
Mr Lliuya's property is located 25 km southwest of Laguna Palacacocha, a glacial lake in the Andes. The region has been prone to flooding in the past, caused by outbursts from the lake. Mr Lliuya alleged that his property faces imminent harm due to a possible renewed outburst.
Mr Lliuya's case was based on section 1004 of the German Civil Code, which entitles a property owner amongst other things to relief from the court if another person interferes with his or her property.
On 15 December 2016, the Regional Court of Essen dismissed the claim in its first-instance ruling. The Regional Court concluded that there was no causation, as RWE’s greenhouse gas emissions could be hypothetically removed without eliminating the risk of flooding. Furthermore, the Regional Court held that emissions from all contributing companies are indistinguishably mixed, making it impossible to attribute individual harm to specific emitters. The Regional Court also found that the contribution of a single greenhouse gas emitter to global climate change is so minimal that even a major emitter like RWE does not significantly increase the potential consequences of climate change.
The judgment was appealed. The Higher Regional Court of Hamm disagreed with the Regional Court of Essen. The Higher Regional Court of Hamm considered the claim to be in general conclusive and coherent (schlüssig) and therefore proceeded to take evidence. This included an on-site inspection of Mr Lliuya's property and the glacial lake.
Overview of the Ruling of the Higher Regional Court
Why did the Higher Regional Court ultimately dismiss Mr Lliuya's claim?
The court found that that Mr Lliuya could not sufficiently prove a serious concern of a future, imminent harm to his property. Essentially, the court did not think Mr Lliuya's property was at material risk of flooding (a 1% chance over 30 years). But the court did not leave its analysis there. Specifically it found that a company could, in principle, be liable for the impact of its greenhouse gas emissions under German law. In particular:
1. Jurisdiction and applicability of German civil law
The court declared its international jurisdiction on the basis of RWE's registered domicile in Germany. German law was applicable since both parties had relied on German law and had explicitly agreed to its application. This contrasts with the position in many international liability cases, where – in the absence of a party agreement – the starting position is that the applicable law is that of the country in which the damage occurred (Rome II Regulation, Article 4(1)).
2. Court acknowledges causation
The court (differing from the court at first instance) acknowledged a causal link between the CO₂ emissions by RWE's subsidiaries and the alleged imminent damage to Mr Lliuya's property:
Emissions of subsidiaries are attributable to RWE
The court attributed the emissions of RWE AG's subsidiaries to RWE AG itself, given its undisputed position as the parent company that manages and controls the group. This finding echoes the approach taken in other jurisdictions to parent company liability for the activities of subsidiaries. In England, the Supreme Court has been willing to accept the principle of parent company liability for overseas harm caused by subsidiaries (for example, see Lungowe and others v Vedanta Resources plc and another [2019] UKSC 20).
Causation and foreseeability of the consequences
The court held that RWE's emissions contribution could not be disregarded because every increase in temperature, even a small one, contributes to faster glacier melting, which increased the risk to Mr Lliuya's property.
Furthermore, the court argued that, the causal link was not so far outside the realm of experience that the impairment of the property could not reasonably be attributed to RWE. An optimal observer in RWE's role could have foreseen since the mid-1960s that a significant increase in industrial CO₂ emissions would lead to global warming and the consequences alleged by Mr Lliuya.
RWE's contribution is not insignificant
The court did not agree with RWE's view that a sufficient causal link should be denied because RWE's emissions did not contribute significantly to, or cause the alleged danger to, Mr Lliuya's property. According to the court, in multi-causal liability scenarios, a comparative analysis is required. The causation of a party’s contribution to the harmful outcome should therefore not be measured by its absolute percentage alone, but by its proportion relative to other contributors.
By applying these principles, the court found that RWE's share of global industrial CO₂ emissions was significant, especially when compared to the shares of the world’s largest emitters. Mr Lliuya's evidence was that RWE had contributed to 0.38% of industrial emissions and 0.24% of global emissions. Mr Lliuya relied on an influential study by Richard Heede of corporate emissions, which ranked RWE 23rd among the top 81 global CO₂ emitters. The court also considered RWE's contribution to be significant in light of its high absolute figures of CO₂ emissions.
Liability for cumulative, distance and long term damages
The court rejected RWE's argument that liability for cumulative, distant, and long-term climate harm should be addressed only at the political level and not through individual civil law. Referring to the so called "forest damage" (Waldschaden) judgement, the court concluded that the German Federal Court of Justice (Germany's highest civil court) did not generally exclude civil liability for environmental harm, but only denied claims where causation could not be established.
3. Liability despite compliance with public law regulation
Notably, the Higher Regional Court rejected RWE's argument that liability should be excluded because the emissions in question had been compliant with public law regulations and officially permitted by authorities (for example under emissions trading laws). The court stated that, under the relevant legal basis (section 1004 of the German Civil Code), the decisive factor was not the (un)lawfulness of the disruptive act (the permitted release of emissions). Rather it was the consequence of the act (the alleged imminent harm to the claimant's property). Therefore, the authorization of the emissions could only exclude liability if it imposed a duty on the claimant to tolerate the alleged imminent harm to the property. The court rejected the existence of any "duty to tolerate".
This finding reflects that of the Hague Court of Appeal in 2024's Milieudefensie v Shell climate liability case. The Dutch court rejected an argument that an energy company, Shell, could not have liability to reduce emissions if it had complied with existing legislation.
Implications for CO2 emitting companies and conclusion
The case has significant implications for companies with material emissions. In principle, the Higher Regional Court of Hamm acknowledged the possibility of civil liability for emissions which contribute to climate change. For high emitting companies, the ruling generates legal uncertainty since the court found that civil liability may arise even if emissions have complied with environmental regulations.
The Higher Regional Court of Hamm did not permit an appeal to the German Federal Court of Justice. But, the conclusions of the Higher Regional Court of Hamm are unlikely to remain unchallenged. Other Higher Regional Courts, like Munich and Stuttgart, have dismissed claims against major car manufacturers seeking CO₂ reductions. These Higher Regional Courts emphasized that it is the role of the legislature to establish adequate climate protection measures. They also held that companies acting within public law regulations do not unlawfully interfere with rights, so that civil law claims are not justified. However, in these cases the claimants had not asserted a violation of property rights, but rather a violation of their general right of personality – in other words claiming that they had suffered personal harm. The decision by the Higher Regional Court of Hamm may influence future claimants to frame claims in terms of property rights.
In any case, the Higher Regional Court of Hamm will likely be able to reconsider or clarify its reasoning in the foreseeable future. Another appeal, this time by a farmer against a major car manufacturer (file no. I-5 U 34/23) is pending before the court. The farmer also argues that his property is threatened due to greenhouse gas emissions. We will watch that case with interest.
International perspective
The RWE ruling adds to a growing list of recent climate judgments in Europe, and elsewhere. It continues a trend of courts being willing to develop the law to respond to the novel challenge of climate change. In doing so, courts have rejected arguments that companies should not be held responsible for climate change because of challenges in causation, or because these are matters to be addressed by governments, rather than courts.
The RWE case is likely to be viewed in a similar way to the Dutch Court of Appeal judgment in Milieudefensie v Shell, although the legal basis for the claim is different. In each case, the court was willing to advance the law on corporate responsibility, while rejecting the specific relief claimed. Climate change is a global issue, and a feature of climate litigation is reliance by claimants in one jurisdiction on developments in others. The RWE case is therefore likely to feature in future litigation against companies in jurisdictions other than Germany.
Can companies mitigate the risk of claims?
Companies with a history of material emissions are the most obvious targets of similar litigation. Claims against other actors such as financial institutions who have financed emitting activity have also been threatened.
Practical steps that companies may take to mitigate the risk include:
Preparing a credible transition plan setting out how the company intends to play its part in achieving decarbonisation. While this does not eradicate a history of emissions, it may make the company a less prominent target for claimants or activists.
Understanding the operations of subsidiaries overseas and the impact on the environment and climate change.
Ensuring that public statements and marketing materials regarding climate issues are accurate and verifiable. This reduces the risk of greenwashing allegations being brought, either independently of claims arising from historic emissions, or together with these. Climate claims in some jurisdictions have framed liability for climate-related harms in terms of deception and false advertising.
Keeping the evolving law of climate litigation and corporate responsibility under close review. This is a fast moving area. Rulings in one jurisdiction may inform claims in another. Considering climate litigation risk from a global perspective is wise.
Other authors: Sascha Katzenmeier, Associate and Miran Bahra, Associate
