Decision makers have significant discretion in climate change issues

In R (on the application of Friends of the Earth Limited) v Secretary of State for International Trade/Export Credits Guarantee Department [2022] EWHC 568 (Admin), the court refused to quash a decision to provide export finance in support of a natural gas project in Mozambique.

Key points

• The nature and scope of the enquiry that a decision-maker is required to undertake depends on the nature of the decision which is to be made. For complex political decisions, the decision-maker should be afforded a wide margin of appreciation.
• Courts should be wary of reaching "hard-edged" interpretations of international treaties. It is sufficient in most cases that the decision-maker's interpretation of the treaty was "tenable".
• Where the language of a treaty is high-level and aspirational, this supports a less strict approach to interpretation.

Background

Friends of the Earth ("FoE") sought judicial review of the decision of the first defendant, the Secretary of State, to provide export finance in support of a natural gas project (the "Project") in Mozambique. The decision was initiated by United Kingdom Export Finance ("UKEF"), in exercise of delegated powers. UKEF aims to ensure that no viable UK export fails for lack of finance and broadly operates like a financial institution in support of UK exports and investments.

FoE sought to quash the decision on two bases. Firstly, FoE contended that the decision was based on an error of law or fact, namely that funding the Project was compatible with the United Kingdom's commitments under the Paris Climate Change Agreement (the "Paris Agreement") and/or assisted Mozambique to achieve its commitments under the Paris Agreement (Ground 1(a)). Secondly, the UKEF's decision was unlawful in that it was reached without regard to relevant considerations in reaching the view that funding the Project aligned with the UK and Mozambique's obligations under the Paris Agreement (Ground 1(b)).

Judgment

The case was heard by two judges sitting as a Divisional Court. Both judges emphasised that they were not concerned with the merits of the decision.

Stuart-Smith LJ gave the leading judgment and recognised the duty emerging from Secretary of State for Education and Science v Metropolitan Borough of Tameside [1976] 3 All ER 665, which requires public bodies to undertake a sufficient inquiry prior to making a decision. However, the question of what should be taken into account and what enquiries should be made is a matter for the decision maker and is highly context specific. The intensity of review and the scope of any margin of appreciation varies depending on whether the decision involves political calculations: R (Spurrier) v Transport Secretary [2019] EWHC 1070 (Admin), [141] ff.

On the facts, he noted that UKEF's decision depended partly on an assessment of climate change effects of a long-term project. This was a complex, policy-laden, and necessarily predictive exercise. It was also relevant that there was no established or internationally recognised methodology for such an exercise. Whether FoE were challenging the rationality of the decision itself or whether the decision should have been made at all (given UKEF's lack of expertise on climate change), UKEF should be afforded a wide margin of appreciation.

Turning to the Paris Agreement, there was no rule that the court should never determine a question of interpretation in relation to unincorporated international treaties. However, in cases involving broad political or aspirational statements of principle, courts should not attempt to reach "hard-edged" interpretations on provisions. Rather they should restrict themselves to applying a test of "tenability". This was not a case where the court were bound to provide a strict interpretation of the treaty. Given the high-level and aspirational language of the Paris Agreement, Stuart-Smith LJ considered that an overly strict interpretative approach would in fact be inappropriate.

The thrust of the claimant's arguments on both Grounds 1(a) and (1b) was that the Defendant failed to have proper regard to the climate impacts of the Project. However, the decision would have no impact on climate change impacts because the development would go ahead in any case. The decision was not "about" emissions. The scope of the Tameside duty is consequently framed by the fact that the decision concerned only whether to provide finance. This involved consideration of multifarious economic, political, and scientific factors. Since a high degree of policy judgment was involved, it was appropriate for the decision-maker to adopt a less rigorously technical approach to climate change analysis than if that had been the only material factor.

On the facts, even though the UKEF did not undertake a full-blown environmental assessment, climate change impacts and considerations of the Paris Agreement were accepted as relevant considerations alongside other factors and they took steps to inform themselves about impacts by sourcing assistance from outside bodies. On the analysis that they had undertaken, it was already clear that emissions resulting from the Project would be significant. UKEF, in the exercise of its judgment, decided to proceed anyway. According to Stuart-Smith LJ, it was therefore difficult to see how more rigorous analysis would have had an impact on the outcome of the decision.

Moreover, regarding ground 1(b), the language of the Paris Agreement was too opaque and high-level to generate hard-edged legal obligations. For example, the claimants contended that the phrase "a pathway towards low greenhouse gas emissions" required states to keep the global increase in temperature below 1.5 degrees Celsius. Given that the world is so far off this target, this was said to be an unrealistic interpretation. Instead the Paris Agreement should be approached as a composite package of aims and aspirations. On that basis the UKEF's interpretation of their obligations under the Paris Agreement was in fact tenable: it was based on the judgement that the Project would foster climate resilience in Mozambique and increase Mozambique's ability to adapt to adverse impacts of climate change.

Dissenting judgment

Thornton J disagreed, concluding that UKEF had filed to discharge its duty of inquiry because there was not a sufficiently detailed review of emissions. This, combined with other flaws in the climate assessment, led her to conclude that there was no rational basis on which to demonstrate that the funding for the Project was consistent with the Paris Agreement. UKEF had concluded that climate risk was a material consideration. However the analysis that was then carried out was incomplete. Whilst she accepted that it would have been a complex predictive exercise, and whilst acknowledging the need to accord considerable respect to UKEF's decision making, Thornton J considered that emissions should and could have been properly calculated. The flaws in the analysis meant that, in her view, ministers did not have a legally adequate understanding of the scale of the emissions impact from the Project.

Comment

The Divisional Court's decision demonstrates that a significant margin of appreciation will be given to public bodies where the decision that they have to undertake is complex and multifaceted, and particularly where it requires the exercise of political judgment. Moreover, this case is a reminder that it may be difficult for claimants to challenge the decisions of public bodies based on compatibility with international law, especially where that law is contained in language that is expressed at a high level of generality. Despite the greater focus on climate change issues recently the courts remain willing to give decision-makers a degree of leeway in these circumstances. However the fact that the two judges disagreed in this situation is interesting and demonstrates that there may be room for greater scrutiny from the courts on climate change issues going forward.