Monday, 2nd December 2019
The Netherlands’ plan to ban coal for power generation is in jeopardy after German coal company Uniper threatened legal action against the Dutch state. Environmental lawyers ClientEarth have flagged major issues with the planned case and are urging the Dutch government to stand by its climate commitments.
Uniper reacted to the Netherlands’ July vote to ban burning coal for electricity by announcing it would launch a legal challenge against the Netherlands using the investor-state dispute settlement mechanism (ISDS), over harm it says the policy would do to its investments.
The huge amounts of compensation a foreign investor can claim under ISDS has a demonstrable chilling effect on environmental policies.
Dutch senators will debate the coal power ban tomorrow, December 3. In advance, ClientEarth CEO James Thornton has sent them a letter and a legal analysis urging them not to be influenced by the threats of Uniper or other investors.
ClientEarth trade lawyer Amandine Van Den Berghe said: “As we have found, Uniper’s claim is not legally sound. But it is a worrying illustration of how fossil fuel companies may seek to use ISDS to shift their losses from stranded assets onto states and seek unmerited compensation for poor business decisions.”
Lawyers fear that Uniper’s claims, although unfounded, could undermine the Dutch government’s efforts to tackle climate change, and have similar effects in other European countries.
Van Den Berghe said: “As well as being legally flawed, Uniper’s litigation attempt flies in the face of Dutch efforts to meet climate goals. It shows the detrimental impact ISDS could have on climate policy if states bend to these threats. This must not become a trend for others to follow.
“We call on the Dutch Senate to stand firm on the side of the public interest and adopt without delay this law banning the burning of coal for power generation.”
A final vote on the ban on burning coal for power generation will be held by the Dutch Senate before the end of 2019.
Uniper announced the company would officially launch a legal action against the Netherlands in January 2020.
Notes to editors
ISDS is a controversial mechanism that enables a foreign investor to sidestep national courts and sue a government before a private international tribunal, if the investor considers that a domestic measure negatively affects its investment.
ClientEarth’s lawyers have previously issued warnings over ISDS.