Arbitrating Climate Change in India

-Alpesh Yadav[1]

INTRODUCTION

Even as the global economy has grappled with the effects of pandemic COVID-19, the urgency of addressing climate change has remained unchanged rather has further intensified.

The recent flash flood which occurred on 7th February 2021 in the State of Uttarakhand washed away two hydroelectric projects in the outer Garhwal Himalaya region, impacted several other major hydro projects located downstream, took lives of hundreds of villagers and damaged properties and infrastructure of the region. The sudden flooding is believed to be caused due to glacial lake outbursts releasing water trapped behind the ice causing flood.

The Government proclaimed the calamitous event as a natural disaster. However, if we believe the reports published in international newspapers[2] of the very next day, they quoted that scientists had warned the Government long back that the Himalayas had been warming at a dangerously high rate and the region's ecosystem had become too physically exposed to the dangers of development projects. The scientific committee appointed by Supreme Court in 2014[3], had also advised against building dams in the paraglacial zone, i.e., river valleys in which the floor is higher than 7,000 feet, but such objections were disregarded. Both the hydropower projects that washed away in the flood were constructed in this zone. The Scientific Committee appointed by the Apex Court of India in 2020[4] advised against the construction of 33 feet wide 500 miles of highway in high Himalayans hills of Uttarakhand but such advice was also ignored.

While climate change is on high priority on the global political and business agendas, balancing the infrastructural requirements and environmental risk could always be difficult and there could be several such claims and conflicts. Public and private parties are increasingly subjected to regulations, impacting commercial relationships, and therefore rise in potential for disputes is inevitable.

It is not within the remit of the present article to put forth a detailed analysis or critique on India’s approach towards the impact of climate change. What is attempted herein is only a primer on the important legislations related to the environment and how it could be practical to adopt arbitration to resolve climate-related disputes.

CHANGED CLIMATE

Climate is the pattern of variation in temperature, humidity, atmospheric pressure, wind, precipitation, atmospheric particle count and other meteorological variables in a given region over long periods. The climate of a location is also affected by its latitude, terrain, and altitude as well as nearby water bodies and their currents.

Earth's climate is dynamic and is always changing through a natural cycle. However, the changes that are occurring now are at an alarming speed and human activities contribute maximum to its causes. The excessive carbon dioxide released in the atmosphere acts as a blanket, trapping heat and warming the planet. Change in climate and global warming are amongst the most serious challenges that mankind is facing today.

If we look at the issue from India’s perspective, we are one of the most vulnerable countries to climate change. About half of India's population is dependent upon agriculture or other climate-sensitive sectors. About 12% of India is flood-prone while 16% is drought-prone. India is the third-largest emitter of greenhouse gases in the world after China and the United States.

The underlying causes of environmental degradation in India can be classified as social, economic, and institutional. The social factors include excessive population, poverty, and unchecked urbanization, the economic factors include non-existent or poorly functioning markets for environmental goods and services, unprecedented industrial growth without any measures to check the resultant environmental degradation. The institutional factors are lack of awareness and poor infrastructure making the implementation of environmental law extremely difficult and ineffective.

CLIMATE CHANGE DISPUTES

Climate change is not just another issue, it has several aspects and interconnections with science, technology, economy, trade, diplomacy, and politics and can be the mother of many issues. It is inherently a global concern because of the interconnectedness of our ecosystems and communities, small changes can ripple out throughout the world and eventually affects all living organisms. It is different from other problems faced by humanity, and it compels us to think differently at many levels.

The concept of climate change is broad, and disputes arising in these contexts can be in myriad forms.

DEVELOPMENT OF ENVIRONMENTAL LAW IN INDIA

Environmental legislations existed in India right from the British Regime, however, a well-developed framework came into existence only after the United Nations Conference on the Human Environment in Stockholm in 1972. The outcome of this conference was the constitution of the National Council for Environmental Policy and Planning within the Department of Science and Technology in 1972. This Council later in 1985 evolved into a full-fledged Ministry of Environment and Forests (MoEF), an apex administrative body in the country for regulating and ensuring environmental protection.

Constitutional sanction was given to environmental concerns by incorporating them into the Directive Principles of State Policy and Fundamental Rights and Duties by way of the 42nd Amendment to the Constitution after the Stockholm Conference, 1976. The Directive Principles of State Policy and the Fundamental Duties chapters explicitly enunciate the national commitment to protect and improve the environment.

Substantive laws for the prevention and/or regulation of any activity that may cause climate change that existed/existing in India:

During the British Regime

● Shore Nuisance (Bombay and Kolaba) Act, 1853

● The Indian Penal Code, 1860

● The Indian Easements Act, 1882

● The Fisheries Act, 1897

● The Factories Act, 1897

● The Bengal Smoke Nuisance Act, 1905

● The Bombay Smoke Nuisance Act, 1912

● The Elephant's Preservation Act, 1879

● Wild Birds and Animals Protection Act, 1912.

Post-Independence of India

National Council for Environmental Policy and Planning was set up in 1972 and later evolved into the Ministry of Environment and Forests (MoEF) in 1985.

Policy Statement for Abatement of Pollution and the National Conservation Strategy and Policy Statement on Environment and Development brought out by the MoEF in 1992.

Environmental Action Programme (EAP) formulated in 1993 with the objective of improving environmental services and integrating environmental considerations into development programmes.

● National Environment Policy, 2006.

● Water (Prevention and Control of Pollution) Act, 1974.

● Water (Prevention and Control of Pollution) Cess Act, 1977.

● Air (Prevention and Control of Pollution) Act, 1981.

● Atomic Energy Act of 1982.

● Motor Vehicles Act,1988.

● The Wildlife (Protection) Act, 1972.

● The Forest (Conservation) Act, 1980.

● Environment (Protection) Act, 1986 (EPA).

● The National Environment Appellate Authority Act, 1997.

● Public Liability Insurance Act, 1991 (PLIA).

● National Environment Tribunal Act, 1995.

● Environment Impact Assessment (EIA) Notifications.

The National Action Plan on Climate Change (NAPCC), Prime Minister's Council for Climate Change, laid the framework to address India's development concerns and defined its approach for mitigation and adaptation of climate challenges. The Eight Missions developed for satisfying the principles of the National Action Plan on Climate Change are:

● National Solar Mission (started in 2010).

● National Mission for Enhanced Energy Efficiency (approved in 2009).

● National Mission on Sustainable Habitat (approved in 2011).

● National Water Mission.

● National Mission for Sustaining the Himalayan Ecosystem (approved in 2014).

● National Mission for a Green India (approved in 2014).

● National Mission for Sustainable Agriculture (approved in 2010) and

● National Mission on Strategic Knowledge for Climate Change.

Besides the above legislations, rules and policies, there are several other plans and incentives by the governments for energy conservation and to mitigate the impact of climate change. Each State also has its own Action Plans on climate change.

The Indian Constitution is one of the few in the world that contains specific provisions on the environment. The three constitutional provisions which have a direct bearing on environmental matters are:

● First and foremost, Article 21 states: "No person shall be deprived of his life or personal liberty except according to procedure established by law." The Apex Court has recognized that the several liberties that are implied by Article 21 include the right to a healthy environment.[5]

● Second, Article 48A requires that "the State shall endeavor to protect and improve the environment and to safeguard the forests and wildlife of the country."

● Third, Article 51A establishes that "it shall be the duty of every citizen of India to protect and improve the natural environment including forests, lakes, rivers, and wildlife and to have compassion for living creatures."

The Indian Judiciary has been playing a vital role in implementing environmental principles, ensuring social justice, and protecting human rights. It can be rather said that, while adjudicating the environmental matters, the Supreme Court has actually brought the pattern of "judge-driven implementation" of environmental administration in India.

The Courts have played a crucial role in implementing the environment law and doctrine of Polluter Pays, Precautionary Principle and the most significant Public Trust Doctrine[6].

The National Green Tribunal set up under the National Green Tribunal Act, 2010 is a specialized court to adjudicate and ensure disposal of environmental disputes. The NGT has jurisdiction to deal with violations of environmental law, to provide compensation to victims of pollution, relief for environmental damage and restitution of the environment. The Tribunal is also empowered with appellate jurisdiction against orders passed by regulatory agencies.

SUITABILITY OF ARBITRATION FOR CLIMATE CHANGE DISPUTES

India, today has a plethora of constitutional and legislative provisions on environmental protection. The mainstream judiciary and NGT have played a pivotal role by developing and strengthening the environmental jurisprudence in India. Despite such a robust system in place, there are several glaring concerns that underpin the overall legal mechanism. Improper implementation of policies, callousness in enforcing judicial rulings, lack of expertise and technical know-how amidst the legal fraternity, loopholes in the legislative framework are still areas of concern.

Moreover, the dynamic nature of environmental problems requires quick decision-making, whereas our Constitutional Courts are so overburdened with other pressing cases that it is difficult for them to give sufficient attention to environmental matters.

The NGT is neither administrative tribunals nor constitutional tribunals and does not have the power for judicial review. The jurisdiction of the NGT is limited to only 7 statutes which act as a barrier for taking up environmental matters which do not fall within these statutes. Bench(s) at the NGT are not updated with legal developments in environmental law, as can be evident from the fact that several judgments delivered still talk about strict liability when the rule of absolute liability exists for quite some time. The Bench also lacks diversity and does not include stakeholders from various sectors/places. The existing strength of the tribunal is just six apart from the chairman, whereas the NCT Act mandates the appointment of 20 members (10 judicial and 10 experts) for the 10 benches in five zones with two courts in each zone. The fact is the premier institutions which is required to deal with the environmental issues that cannot be countenance never had full strength.

Even though Central Pollution Control Board (“CPCB”) and State Pollution Control Board (“SPCB”) have quasi-judicial powers, but the issue is that not everyone empowered to file appeals there. Also, the members appointed to the CPCB and SPCBs do not have sufficient knowledge about the environment and most appointments are made based on political interest by MLAs, MPs, and bureaucrats[7].

In an age when India is witnessing a staggering rise in industrialization and development, the country is correspondingly facing environmental issues at a rapid pace. The present legislative structure to resolve environmental disputes is still not sufficiently equipped to meet the needs of the hour. It is therefore necessary to refer the issues to an autonomous multi-specialty body depending on the nature and complexity of the issues to address concern effectively.

Also, due to the strict liability provisions in environmental statutes, parties in commercial arrangements typically allocate environmental risk in their contract. There may be an indemnity or exclusions to an indemnity clause. There may be a release or allocation of liability provision. There may be an “as is” clause. These are amongst the clauses that may generate disputes. Provisions for arbitration in contracts to include the resolution of such disputes could be a good way for effective resolution.

Although some types of environment and climate-related disputes may not lend themselves to arbitration. Nonetheless, disputes with an environmental component that may arise in the context of contractual and commercial disputes can be resolved through commercial arbitration in India.

Arbitration can have a unique role to play in the resolution of disputes that arise from the transition to a greener economy. The specific features of arbitration which make it ideally suited to resolve environment-related disputes include:

a) the ability of the parties to choose arbitrators and experts with appropriate scientific and environment-related expertise,

b) the ability to expedite proceedings and apply interim and conservatory measures particularly in cases involving potentially irreversible damage to the environment,

c) the ability to apply specific governing or applicable law, including relevant environment-related statues,

d) preservation of confidentiality and at the same time taking steps toward increased transparency in accordance with parties’ requirement and taking into consideration public interest involved,

e) arbitral rules are flexible enough that they can be applied to any case.

In a testament to the flexibility of arbitration, the continuity of arbitration proceedings in the global pandemic adapting virtual mode has demonstrated arbitration can be an optimal process to resolve disputes given its key advantages as an effective, customizable, and efficient mechanism. The arbitration community has shown its ability to pivot quickly and adapt seamlessly in changing global circumstances to better suit the reality of disputes in the uncertain landscape.

The ability to customize the process, proceed efficiently and maintain confidentiality, hallmark the advantage and suitability of arbitration for climate change-related disputes.

Customization

Arbitrations allow parties to calibrate the right balance of procedural protections to efficiency. It gives the parties ability to select institutional rules or ad hoc rules that are conducive for resolving their dispute efficiently. They can select arbitrators best suited to resolve their dispute. An arbitrator with relevant experience and familiarity in an industry could expedite the resolution of a dispute significantly. This is especially true for environment-related disputes involving a high degree of technical knowledge.

Efficiency

The arbitration process is generally more efficient than pursuing the dispute in courts, especially considering the backlog of cases the courts have. It also gives parties more flexible and immediate options which may be crucial for resolving climate-related disputes. Further arbitrators can encourage settlement where appropriate and if parties agree to explore such possibilities. The tribunal itself can even conduct mediation, conciliation, or other procedures as appropriate to settle the dispute in such cases.

Confidentiality

Unlike courts, arbitrations are generally private allowing for confidentiality (including sensitive information) which may be important in the context of climate-related disputes.

Furthermore, climate change and environment-related disputes invariably have an international dimension and therefore the inherent flexibility, an option of choosing a neutral forum, neutral venue and internationalism of the arbitral process make commercial arbitration an ideal dispute resolution method for climate-related disputes. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 which is overwhelmingly signed and ratified by the majority of countries allows for seamless award enforcement possibilities worldwide.

The United Nations Framework Convention on Climate Change, Article 14 (2) expressly anticipates arbitration for resolution of interstate disputes arising out of the breach of its provisions “in accordance with procedures to be adopted by the Conference of the Parties as soon as practicable, in an annex on arbitration”. This was reaffirmed in Article 24 of the Paris Agreement on 12th December 2015[8].

Even in the side events at 21st Conference of Parties[9] (COP21) to UNFCCC held in Paris, wherein the historic Paris Agreement was signed, COP22 held in Morocco, 2016 and COP23 held in Germany, 2017, the importance of arbitration for redressal of climate-related disputes were discussed and commended. The International Bar Association Report published in 2014[10] also recognized arbitration may offer a number of advantages to the parties looking to resolve the disputes related to climate change. The IBA Report recommends institutions to develop rules and expertise specific to the resolution of environmental disputes to adapt arbitration for climate change disputes.

Mr. David W. Rivkin, President of the International Bar Association (IBA), in his keynote address at the United Nations Conference on Climate Change (COP 21) held in Paris, December 2015 emphasized the importance of accessible and enforceable dispute resolution mechanism frameworks.

Mr. Rivkin, while emphasizing on benefits of arbitration, stated that international arbitration has been used at least since ancient Greek times to resolve important disputes and to avert major political and diplomatic crises. In so doing, it has helped create the rule of law. International arbitration should similarly play a critical role in developing the legal framework of the post COP21 world.

Mr. Rivkin further said international arbitration is flexible, not only in its procedural rules and tribunal appointment processes but in the different types of parties that may choose to use it and the types of disputes it can be applied to. Arbitration allows parties to provide for the independent, impartial resolution of disputes. By holding parties to their agreements and creating predictability and certainty, arbitral tribunals have promoted international rule of law and international commerce. Mr. Rivkin expresses his thought that affected populations should be able to participate in the arbitral process, provided the terms of the arbitration agreement or the rules used clearly encompass their rights and protections.

Finally, Mr. Rivkin said that the commercial stakeholders in climate change-related issues, such as international monetary lenders, insurers, construction companies, states, and extraction industries, all stand to benefit from the certainty of contract, including in respect of internationally or state or industry imposed climate change or sustainable development objectives and targets.

Mr. Rivkin concluded that there is huge potential to consider how the existing use of international arbitration and ADR mechanisms in resolving climate change-related disputes may be advanced and expanded, both in the context of contractual obligations and treaty mechanisms.

Internationally, arbitration institutions such as ICC, PCA, SCC, HKIAC, LCIA, AAA, etc. are already administering a copious number of cases related to environmental disputes under private commercial and public-private partnership contracts and parties are benefitted in redressing the disputes in a reasonable time.

Resolution of environment-related disputes through arbitration is not something new to India, the prominent amongst such arbitration was for the resolution of the dispute which arose between India and Pakistan over the construction of 330 MW Kishenganga Hydroelectric Project in the then State of J&K. Pakistan took India to arbitration at Permanent Court of Arbitration (“PCA”), a Hague based institution, in 2010. The provision for arbitration paved its path from the Indus Waters Treaty Agreement, a World Bank brokered agreement designating commercial use of the Indus River system. The PCA partially ruled in favour of India by allowing India its right under the Treaty to divert waters from the Kishanganga for power generation in J&K. The PCA, however, maintain that India shall release a minimum flow of nine cubic metres per second into the Kishanganga river (known as Neelam in Pakistan) at all times to maintain environmental flows.

The American Arbitration Association (“AAA”) has expressly listed environmental disputes, which include pollution control, environmental clean-up, chemical regulation, landfills, etc., as one of its areas of expertise.

The International Chambers of Commerce (“ICC”) formed a task force on “Arbitration of Climate Change Related Disputes” to explore how ICC arbitration can be used to tackle climate change-related disputes. The ICC in its Report published in November 2019[11] concluded that it is uniquely positioned to arbitrate climate-related disputes and indicated a willingness to accommodate and administer such disputes.

Interestingly, expenses guidelines of the Stockholm Chamber of Commerce (“SCC”), London Court of International Arbitration (“LCIA”), Korean Commercial Arbitration Board (“KCAB”) and the China International Economic and Trade Arbitration Commission, provide for the reimbursement of costs or expenses reasonably incurred by arbitrators, which include the cost of carbon offsetting their flights to and from case-related proceedings.

CONCLUSION

The need for a green economical architecture has widened the scope for diverse and complex legal relationships amongst private and public stakeholders and also the potential for the use of flexibly adapted dispute resolution mechanisms such as arbitration.

The climate change-related action and regulations have increased dramatically after the Paris Agreement came into force and as a consequence of legislative developments thereafter, environment-related disputes are on increase and so will be the commercial arbitrations on climate disputes.

If our country’s dream to become Global Arbitration Hub is to be achieved, it would be crucial for our system to widen the scope of arbitration and adopt and adapt arbitration for climate change-related disputes, at the international as well as domestic level.

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[1]* Mr. Alpesh holds Engineers Degree from Mumbai University and PGs in Construction Management from NICMAR and Institute of Engineers. He is pursuing Master of Business Law and PGD in Environmental Law from NLSIU. He has over 16 years of experience in Contracts Management and Arbitration. He can be contacted at alpesh.yadav@hotmail.com. [2] Article published in New York Times on 8th February 2021. [3] As advised by Dr Ravi Chopra, Director People’s Science Institute, Uttarakhand. [4] Committee led by Dr Ravi Chopra, Director People’s Science Institute, Uttarakhand. [5] Subhash Kumar v. State of Bihar, A.I.R 1991 SC 420, and Virendra Gaur v. State of Haryana, (1995) 2 SCC 577. [6] Adopted by the Hon'ble Supreme Court of India in M.C. Mehta vs Kamal Nath & Ors. [1997(1) SCC388]. [7] As stated in Bhattacharya Committee Report, 1984, the Menon Committee Report and Supreme Court Judgement in Techi Tagi Tara v. Rejendra Singh Bhandari & Ors., 2017. [8] Art. 14(1) of the UNFCCC / Art. 24 of the Paris Agreement (by incorporation: “The provisions of Article 14 of the Convention on settlement of disputes shall apply mutatis mutandis to this Agreement”). [9] Formal Meeting UNFCCC Parties (Conference of Parties) (COP) held every year to assess progress in dealing with climate change. [10] IBA Climate Change Justice and Human Right Task Force published the report Achieving Justice and Human Rights in an Era of Climate Disruption (IBA Report). [11] This Report was prepared by the Task Force chaired by Mr. Windy Miles and Mr. Patrick Thieffry. The Report was unanimously approved by the ICC’s Commission on Arbitration and ADR in a meeting held on 2nd April 2019 in Paris. The Report is available at www.iccwbo.org and http://library.iccwbo.org/.