Climate litigation: Key risks and liabilities for mining companies19 July 2024

So, what is this likely to mean for mining companies?

The Verein KlimaSeniorinnen Schweiz and Others v. Switzerland (“Verein KlimaSeniorinnen”) case comes in the wake of a series of recent climate change related challenges brought against both government authorities and private companies regarding mining activity. These cases have been brought in various jurisdictions based on both domestic legislation and international treaties and frameworks. Such challenges may broadly be grouped as:

(A)  challenges to the constitutionality of legislative provisions relating to the granting of mining concessions that are alleged to violate fundamental rights such as the right to a pollution-free environment; and
(B)  challenges to government decisions, alleging a failure to fully consider climate change impacts when granting mining licences and permits.

Each of these cases also underlines the growing recognition of the intertwined nature of environmental and climate change issues and their effect on the human rights of affected persons.

A.  Challenges to the constitutionality of legislative provisions

In Callejas v. Law No 406 (unconstitutionality of mining concession) (2023), a Panamanian citizen challenged the constitutionality of Article 1 of Law No. 406 that approved a Panamanian government concession contract with a mining company granting exclusive rights to mine gold, copper and other minerals in the Cerro Petaquilla region. This new concession contract had been entered into following a decision in 2017 declaring the previous mining contract (signed in 1997) as unconstitutional and included new provisions relating to safeguarding employment, fostering economic growth and ensuring that the state would benefit from resource exploitation.

The challenge was brought on the grounds that the law approving the new contract violated constitutional provisions related to due process, social welfare and the duty to safeguard public interest. The Panamanian Supreme Court found that, where there was a conflict between fundamental rights protected under the constitution, including the right to a pollution-free environment, these overrode the interests of private investment. In considering the scope of the fundamental rights, the court considered:

• the Panamanian constitution itself, including the duty of the state to guarantee a “healthy and pollution-free” environment “where air, water and food satisfy the requirements for the adequate development of human life” and children’s rights ;
• international commitments made by the Panamanian State, including under the Stockholm Declaration; and
• guidance from international bodies including the Inter-American Commission on climate change (in relation to the requirements on transparency, which should be passed on to contracting entities) and General Comment 26 of the UN Committee on the Rights of the Child (regarding the rights of children to a clean, healthy and sustainable environment).

Similarly, in Decision C-298/16 of June 8, 2016, a group of Colombian citizens challenged the constitutionality of provisions that had allowed for mining activities to be conducted in sensitive ecosystems which they argued played a key role in mitigating climate change and granted the Colombian mining authority an “indefinite” power to designate specific areas for mining exploration. The Constitutional Court followed a previous decision which had already struck out several articles authorising the Colombian government to designate certain projects as being in the national interest (and therefore authorise concessions) and clarified that a law seeking to grant “indefinite” power to administrative authorities to permit mining in a certain area was incompatible with the right to a healthy environment. The decision therefore does not necessarily prohibit the granting of concessions but provides that each proposal would need to be considered on its own merits, including the potential to cause environmental harm.

B.  Challenges to government decisions

In Papua New Guinea, in the case of Saonu and Morobe Provincial Government v Minster for Environment and Conservation and Climate Change and Others (2021), the issuance of an environmental permit for a special mining lease was stayed by the court pending further determination. The decision was taken on the basis that, amongst other procedural reasons, when issuing the permit, ministerial bodies failed to contemplate the climate change goals that had informed the adoption of its Environment Act 2000. The court found that there was a risk of irreparable environmental damage as no information was included in the Environmental Impact Assessment on the levels of CO₂ emissions, the impact of such emissions on the local and global environment, or proposed measures to minimise emissions.

In KEPCO Bylong Australia v Independent Planning Commission and Bylong Valley Protection Alliance (2019), KEPCO appealed a decision of the Independent Planning Commission of New South Wales to reject its application to develop a coal mine due to the potential adverse contribution to climate change that the project would make. The Commission found that KEPCO had not sufficiently planned to manage the mine’s Scope 3 greenhouse gas emissions. This decision was upheld by successive courts on the grounds that KEPCO had not proposed to mitigate its greenhouse gas (“GHG”) emissions and that the mine would have negative effects on the climate.