Lawyers on the front line: Zuzana Caputova, ‘grassroots environmental hero’

Zuzana Caputova, a public interest lawyer who won a decisive victory in the European Court of Justice (ECJ) over a highly controversial waste pit in Slovakia, was recently awarded the European category of the prestigious Goldman Environmental Prize, which honours ‘grassroots environmental heroes’.

Caputova, an advocate who works with a local NGO, Via Iuris, in Slovakia, and who was recently received in the White House for her work, is one of six winners for the 2016 Prize, known as the ‘environmental Nobel’. The prize focuses on individuals who have led positive change in the natural environment through community or citizen participation.

Caputova’s win is in recognition of her successful efforts to close down a landfill site in Pezinok, a small town near Bratislava in Slovakia.

Those efforts, carried out over many years, ranged from public protests and petitions as well as the legal battle which went to the ECJ.

Caputova explains to Global Insight the importance of the Prize in raising awareness in Slovakia, a country that has the fifth worst track record in the EU on corruption according to Transparency International (TI).  It provides the potential for citizens to fight against what she calls ‘entrenched interests’.

‘The Prize received a huge amount of media coverage across Slovakia and it really delivered a very important message that we, the common people, the public, can stand up to economic power – which is linked to political power. There are not that many positive messages that are so optimistic here,’ she says.

The prize focused on the case of Jozef Krizan & Ors v Slovenska inspeckcia zivoteneho prostredia (generally known as ‘the Pezinok landfill case’). A landfill was built in Pezinok, an area of vineyards. The waste site had public health consequences as well as potentially damaging the local wine-making industry.

When another landfill was proposed in 1999, there was huge opposition to what was seen as blatant corruption: local protesters argued that the family of the owner of the company, Ekologicka Skladka,which was behind it, was linked to one of the main political parties, SMER, and its local representatives in the town, and had directly influenced the regional offices to get the landfill approved. Throughout the 2000s, Pezinok’s citizens, with Via Iuris, opposed the second landfill.

The result was an ECJ case, which was not directly about the proposed landfill itself but turned on whether or not the public could access certain information relevant to the community (including the actual location of the proposed site).

The project owners argued the information was confidential. The court found in Pezinok’s favour, declaring that a party could not hide behind ‘the protection of the confidentiality of commercial or industrial information’ as a reason not to disclose information.

Caputova explains the importance of the decision for public participation in other cases in the future: ‘Parties will have access to relevant information from the beginning of the process’.

Lina Pimentel, a partner at Mattos Filho, Veiga Filho, Marrey JR & Quiroga in Sao Paulo, and an officer of the IBA’s Environment, Health and Safety Law Committee, points out that, in most jurisdictions, transparency on data is broadly accepted.

‘The vast majority of companies these days are fully aware of their obligations regarding data,’ she says. ‘Wherever there is this public interest there are important disclosure requirements so it is pretty surprising that this case was actually needed.’

Pimentel is, nevertheless, impressed by the level of public participation in the Pezinok case. ‘It is really important to have this level of public engagement on matters that affect natural resources. These are public assets and the communities need to be involved,’ she comments.

The case decision and the subsequent Prize have been a triumph for Pezinok.

‘We have just learnt in the last couple of weeks that the permissions that had been granted to the owners of the landfill site have been completely cancelled,’ says Caputova, speaking in July. ‘Since our victory in the ECJ in 2013, the grass has begun to grow again on that site.’

Caputova argues that the Prize comes at a crucial time in Slovakia’s history as the country is bogged down in problems of corruption, rule of law failings and a lack of public engagement. ‘We face serious problems of corruption and individuals buying justice,’ she says.

During the opposition to the site in the 2000s, the community faced ‘breaches of law, manipulation and lies, and conflicts of interest’ as well as ultimately ‘dismissal from participation in decision-making, as well as absurd court decisions’.

Ludwig Kramer is a senior lawyer with environmental public interest organisation Client Earth, and a former judge in Germany.

‘It makes no sense not to reveal the location of a landfill,’ he says. ‘This was an administration’s attempt to stop public participation: knowledge is power in these matters.’

Via Iuris is also now focusing its efforts on public participation and rule of law issues. ‘We are supporting citizens to be involved in public affairs and also trying to get rid of systemic failures of public power by campaigning and with in-depth analysis of new laws,’ says Caputova.

There has been some positive change in Slovakia, argues Gabriel Sipos, Director of TI in Slovakia, particularly in improved transparency.

‘Slovakia is the only country in the world to introduce a freedom of information law, which means that all public spending contracts must be put online before they are completed,’ he says. There is also now greater scrutiny of judicial decisions which have recently become available online.

Climate justice: China’s ‘advanced’ new environmental law

A little over a year ago, China’s Minister of Environmental Protection, Chen Jining, publicly declared that the country needed environmental laws with ‘iron teeth’.

These fine words came as the country introduced its new Environmental Protection Law, brought into force on 1 January 2015. Since its introduction, the relevant ministry in China has imposed daily fines in over 400 environmental cases and has ordered operations to be restricted or stopped in over 1,500 cases.

The first case brought by an environmental non-governmental organisation (NGO) under the new law, widely reported in China, resulted in four defendants being ordered to carry out ecological restoration on a site the court found them to have damaged. As Roger Martella, a partner at Sidley Austin’s Washington DC office, and Vice-Chair of the IBA’s Climate Change Justice and Human Rights Task Force, concludes: ‘It’s a step in the right direction. They have really shifted the framework here.’

China’s Environmental Protection Law contains provisions to increase transparency and increase liabilities both for polluters and for government officials that fail to honour certain environmental obligations. It also tackles issues that have been core to the effectiveness of environmental laws internationally: how to make sure laws are implemented and enforced.

According to James Thornton, Chief Executive of UK-based public interest environmental law group, ClientEarth, some of the provisions of the law are ‘better than we have in Europe’. For instance, the law gives ‘standing’ to certain NGOs to bring environmental cases directly against polluters, something that’s not allowed in the UK (they can only be brought directly if a polluter commits a criminal offence or breaches a private law).

At the European Union level, current decisions in the European Court of Justice make it extremely difficult for NGOs to bring cases. There are estimated to be around five hundred environmental NGOs in China which can now access the Chinese courts in this way. As Thornton puts it, referencing President Xi’s battle cry for the environment in the first year of his regime: ‘Chinese citizens are being enlisted into the “war on pollution”.’

The legislation confronts some particularly Chinese issues that, to date, have hindered ‘iron teeth’ responses to environmental degradation (apart from the necessary political will, of course).

For instance, in order to understand the cause and effect of pollution, data is needed on levels of pollution and the environmental impact of projects, existing and proposed.

Also, the public needs to have access to that data – this law introduces that. As Martella explains: ‘Transparency [of data] is key to success in environmental cases. This is information which most of the world now has access to, but not so in China. There is now a reporting obligation to the general public and which can ask for certain information; this is completely new in China.’

Critical to the question of enforcement is an understanding of where, in China, the power to enforce really lies – and it is in the localities. The Ministry of Environmental Protection in Beijing has far less impact than the local environment bureaux spread across China’s many regions.

This is unlike the US, for example, where the central Environmental Protection Agency is much more active – it has about ten times the staff of its Chinese counterpart. It is in the local provinces that crucial decisions in China are made, where influence is felt, and where pressure is exerted.

For this reason, at the same time as introducing the new law, the Chinese authorities have piloted a programme which gives increased powers to local prosecution departments to encourage investigations and public interest claims. According to official statistics, out of 500 investigations under the pilot in its first six months, over 300 related to the environment.

The new law is a response to the parlous state of China’s natural environment which has become an international embarrassment and a domestic menace for its rulers.

PM2.5 ratings, which measure the level of pollution in the air, have become a daily obsession with urban Chinese, particularly in north east China which has many coal-fired power stations. There have been street protests at what has been termed the ‘airpocalypse’, as well as continuous media coverage of water pollution and the health impacts on the next generation.

The question is whether this legislative response is a symbolic shift only: if the law itself is what we might call ‘progressive’, there is scepticism about whether or not it will really challenge behaviours.

Caroline Berube is managing partner at HJM Asia Law & Co and Co-Chair of the IBA’s Asia Pacific Regional Forum. She is upbeat and says: ‘The law has already made a significant impact on daily life. For example, some polluters have been punished or requested to correct their illegal actions.’

But, she warns, much will depend on the impact at the local level where the all too familiar tension between economic development and environmental protection is at its most stark.

She adds: ‘If economic growth slows, will local governments put pressure on the local environment bureau to relax on environmental protection?’

It may be that the Environmental Protection Law is a battle that has been won but that President Xi’s ‘war on pollution’ could still be lost.

Commodity rout continues to take toll on global mining industry

Plummeting commodity prices and China’s waning appetite for natural resources forced many of the world’s mining companies to dramatically rein in spending and sell off loss-making assets in 2015.

As the commodity rout continues, miners will continue to be faced with challenges in 2016, says Florencia Heredia, a founding partner of HOLT Abogados in Buenos Aires and Chair of the IBA’s Mining Law Committee. ‘These are undoubtedly very difficult times for the mining industry,’ she says. ‘This cycle of down prices seems to be much longer than expected and therefore companies are being forced to reduce or get rid of certain operations. However, the assessment of which may or could be unprofitable operations is the real challenge and creativity, efficiency and innovation are to be seen as key elements these days as well.’

Although the junior and mid-cap end of the industry has been struggling in the difficult commodity environment for some time, 2015 was clearly a critical year for large, diversified mining companies.

In 2011, at the peak of the most recent commodities boom, Glencore achieved the biggest stock exchange flotation in the history of the FTSE 100 and had a market capitalisation just shy of $60bn. Yet last September the world’s largest diversified commodities trader announced it was embarking on a $10bn debt reduction programme, along with plans to scrap its dividend, cut spending and sell off unprofitable assets.

And Glencore wasn’t even the worst performer on the FTSE 100 in 2015. That accolade went to fellow mining giant Anglo American, which revealed in December it was suspending its dividend payments alongside launching a restructuring plan which included disposing of more than half of its mines and the loss of 85,000 jobs – equivalent to 63 per cent of its workforce.

The majors aren’t the only companies facing tough decisions though. For mining companies of all shapes and sizes, the time, money and personnel involved means the decision to shut a mine can’t be taken lightly, says Charles Lawton, former general counsel at Rio Tinto and former chair of the IBA’s Section on Energy, Environment, Natural Resources and Infrastructure Law.

‘Mining is one of those industries that has an incredibly long lead time between taking a decision in the boardroom and production at the end of the mining process,’ he says. ‘Of course for the big projects it is immensely expensive as you’re committing billions of US dollars to the expansion of a mine or to build a new mine and miners were falling over themselves to meet Chinese demand, which was extraordinary and there was this concept of the ‘super-cycle’, which now we can see was clearly a misreading of the situation.’

Though the commodity rout has arguably hit the oil industry even harder, with prices slumping to 12-year lows, Pedro Freitas, managing partner at Veirano Advogados in Rio de Janeiro and a senior vice-chair of the IBA’s Mining Law Committee, says the stakes are often higher for mining companies. ‘The mining industry involves usually more infrastructure and impacts more from a stakeholder’s perspective since operations are more complex and therefore have higher costs involving a larger workforce,’ he says.

Lawton agrees the two industries face very different challenges. ‘Mines are much more difficult to switch off than oil fields. Mothballing a mine is difficult in itself because of all the issues of pollution, laying off staff and so on – it’s a completely different industry to oil & gas.’

‘I also think there’s a certain amount of predatory pricing at the moment by OPEC to try and drive out some of the higher cost producers,’ he says. ‘’That is a dynamic that simply doesn’t exist in the minerals industry. I don’t think there’s anyone producing vast quantities of material with a view to driving out the weaker players, but ultimately that probably will happen as you can’t easily turn on and off production so the higher cost producers will probably be forced out, at least temporarily.

‘There will be closures and I suspect the weaker players will fail, but it’s rather like a supertanker, you can’t turn it around very quickly and it’s enormously expensive to do so.’

In terms of legal work though, there is still plenty to keep the sector’s private practice advisers busy, according to Hubert André-Dumont, a partner at McGuireWoods in Brussels and a senior vice-chair of the Mining Law Committee. ‘[It’s] very true that these times are good for M&A and restructuring and typically M&A lawyers are busier in expanding and depressed times,’ he says. ’Notwithstanding this, and in contrast to previous times, there are not as many M&A operations to be seen in the mining industry. Maybe this is due to the fact that operations are run generally in a more efficient manner. Other opportunities for legal work relate to the more complex regulatory frameworks that apply in many host countries.’

As so many mining companies operating in emerging markets have learnt, gaining consent and approvals from local governments can be hard work. Rio Tinto learnt the hard way with its Oyu Tolgoi copper and gold mine in Mongolia. After starting the project in 2006 the company has continued to be at loggerheads with the Mongolian government, which owns a 34% stake in the project. In December 2015 the company secured a US$4.4bn financing package to finally get it off the ground.

Although Lawton retired from Rio long before the financing deal was brokered, he says resource nationalism can add a further layer of complexity when metal prices are low. ‘There’s this constant battle between companies and the host governments where on the one hand when metal prices are higher they say they want equity and dividends and when metal prices are low, like they are now, they want to go back to a royalty type of return.’

Community consent is another area that Heredia believes will be increasingly important in the mining industry in 2016. ‘In my view one of the strongest legal trends in recent years is related to community agreements and work related to engage communities with due consent in mining projects,’ she says. ‘I think this trend will continue as one of the main drivers of a successful project lies with the community support.’

 

UN climate talks: a break from the past

It was a truly historic moment. At 7.28pm local time on 12 December Laurent Fabius, France’s Foreign Minister and President of this year’s UN climate change talks, brought down his gavel as the plenary moved to adopt the Paris Agreement. ‘It’s a small gavel, but I think it can do great things,’ he joked, as ministers from more than 190 countries got to their feet, applauded and cheered.

They had good reason to rejoice: the Paris Agreement is the world’s first climate change agreement obliging action from all counties since the 1992 UN Framework Convention on Climate Change was agreed. It also marks the end of a tumultuous four years of negotiations. The next step is to see it fully enacted, with increased domestic actions from all nations.

‘The Agreement sets a target for countries in pursuit of a worldwide goal,’ says Roger Martella, an attorney at Sidley Austin in Washington, DC and the Climate Change Justice and Human Rights Task Force Liaison Officer for the IBA Environment, Health and Safety Law Committee. But, he adds, the lack of enforceability and the deference to national policies is a huge risk to the Agreement’s implementation.  Despite this, Martella says that in 10 years’ time, ‘we’ll see it adds up to significant greenhouse gas reductions.’

Incredibly, a seemingly minor typo in paragraph 4 of Article 4 held up the final meeting by almost two hours. The word ‘shall’ had been inserted by accident instead of ‘should’ in reference to developed countries’ emission reduction targets. ‘If it was ‘shall’, [the Agreement] would take the form of a treaty,’ which the US would not be able to ratify, explains Lisa DeMarco, a senior partner at DeMarco Allan in Toronto. This is why the Agreement was placed as an annex to the Paris decisions, so that it only requires parties to submit a nationally determined contribution (NDC), not to comply.  ‘It needed to be an annex,’ says DeMarco, ‘so that it didn’t have the appearance of a stand-alone treaty.’

Falling oil prices: the impact is being felt far and wide and testing Russian resilience

In recent years, oil and gas has been at the heart of a slowly recovering global economy. It has driven worldwide projects, fired up high-value M&A and spawned a private equity industry dedicated to the sector. For lawyers and law firms, the oil and gas sector has represented big money. Now prices have plummeted and the impact is likely to be felt widely.

With oil prices some way below the break-even point for many upstream and mid-stream businesses, the market is moving into a stasis. As oil prices hit a low of $46 a barrel in mid-January, Shell announced that it was scrapping its $6.4bn al-Karaana petrochemical project in Qatar. It claimed the project was ‘commercially unfeasible’ thanks to the ‘current economic climate prevailing in the energy industry’. Read more

Lima climate talks: call for action agreed despite old divisions resurfacing

It’s not surprising that the two-week UN climate negotiations in Lima overran by more than 30 hours, given the importance of their outcomes. Decisions made in Lima will frame the future of the international response to climate change for years to come through the agreement that is set to be finalised in Paris in December 2015.

There were two main objectives for the Lima talks. The first was to agree the scope of countries’ so-called ‘Intended Nationally Determined Contributions’ (INDCs), which essentially detail what each nation is planning to do to respond to climate change under the future agreement. The second was to come up with a skeleton negotiating text for the Paris 2015 agreement.

Both of these aims were, to a certain extent, achieved and were adopted in the Lima Call for Climate Action – albeit after much wrangling. ‘I feel that it represents a final bout of playing hardball… before the final D-day,’ says Conor Linehan, a partner at William Fry in Dublin, and Vice-Chair of the IBA Climate Change Justice and Human Rights Task Force.

 

Read more about the outcomes of the UN climate talks in Lima

Lima climate talks: building a new agreement

Representatives from more than 190 countries are meeting in Lima, Peru for two weeks from 1 December to lay down the skeleton text for a new global agreement to fight climate change. The process, as agreed in 2011, is set to culminate in Paris in one year’s time with a new deal – one which will see actions taken to curb emissions from all countries, irrespective of economic status, in a departure from its predecessor, the Kyoto Protocol. Read more

Climate justice: UN special envoy Mary Robinson on the urgent need for action

Formerly President of Ireland and UN High Commissioner for Human Rights, Mary Robinson now focuses on climate justice. In July, she was appointed UN special envoy for climate change. She spoke to the IBA’s Director of Content at the IBA Annual Conference in Tokyo, October 2014.

James Lewis (JL): What do we mean when we talk about climate justice?

Mary Robinson (MR): Climate justice essentially links human rights, development and climate change, and recognises, as does the Human Rights Council, that climate change is having huge negative impacts on human rights. Then we also add in what I would call the opportunity side.

Since we’re undermining the livelihoods of the poorest people, their food security and so on, through climate shocks, through the rainy seasons not coming, through long periods of drought and flash flooding, which is happening all over Africa, and other problems in South Asia, we should prioritise the poorest in access to clean energy.

If they get clean energy, they’ll become productive, they’ll largely bring themselves out of the terrible poverty that we’re making worse.

Read more

BP found grossly negligent over Deepwater

At the start of September the latest chapter in the British Petroleum Deepwater Horizon oil spill tale began to unfold.

BP has been apportioned 67 per cent of the blame for the incident, with Transocean (the rig’s operator) taking on 30 per cent and Halliburton, which had performed work on the rig, the remaining three per cent. Judge Carl J Barbier of the United States District Court for the Eastern District of Louisiana published his finding in the Phase One trial (which relates to the cause of the accident and the allocation of fault – see box) under the Clean Water Act.

More crucial was the Court’s finding on cause. The Court concluded that BP was grossly negligent and engaged in wilful misconduct, which carries with it a maximum penalty of US$4,300 per barrel – opening the door to potentially US$18bn of penalties, on top of the US$43bn the firm has already paid out, or accounted for. However, its findings that Transocean and Halliburton were just negligent – and subject to penalties of US$1,100 per barrel – sets BP apart as being more culpable and has raised concerns over the basis of this conclusion.

Read more

Global environmental degradation: Demand grows to end impunity

A series of potentially landmark European lawsuits are part of a growing trend to hold lawmakers to account for missed greenhouse gas emissions targets, leading environmental lawyers have told IBA Global Insight.

The cases – brought by the Urgenda foundation against the Netherlands, and ClientEarth and the European Commission (EC) against the UK – are said to mark a significant step in the drive to end impunity for inaction on global warming. Read more