1. Causes of Action

I  Australia

In Australia, litigation based on contractual obligations is emerging, particularly concerning the transition to a low-carbon economy, including contracts for carbon crediting and emissions reductions. An illustrative case is Shift2Neutral Pty Ltd v. Fairfax Media Publications Pty Ltd, where the company faced accusations of issuing fraudulent carbon neutrality certificates to customers and investors, leading to a defamation lawsuit. Additionally, the Climate Active trademark program, which certifies businesses who have offset some of their emissions like AGL and Telstra, is under scrutiny by the Australia Institute for potentially misleading or deceptive claims. This highlights the importance for businesses to genuinely adhere to environmental commitments in contractual agreements.

II  Brazil

III  Canada

In Canada, there has been no corporate climate-related litigation with respect to contractual obligations to date. 

IV  China

The surge in carbon trading in China, driven by the country's "dual carbon" goals[5]  and adherence to the Paris Agreement, has led to an increase in climate-related contract disputes. These disputes, which now form a significant portion of China's climate litigation, range from issues concerning the validity and performance of China Certified Emission Reductions (CCER) contracts to carbon emission quota trading. Microcarbon (Guangzhou) Low Carbon Technology LLC v. Guangzhou Carbon Emissions Trading Center LLC (hereinafter referred to as "Microcarbon") reveals the potential risks in carbon trading caused by dispute in emission quota trade. Beijing Tianqing Power International Clean Energy Consulting LLC v. Shunfeng Optoelectronics Investment (China) Co., Ltd involves the performance of an agreement on the development of voluntary greenhouse gas emission reduction. The disputes explore both contractual rights and the intersection of environmental, civil, and commercial law, as exemplified by Shunchang Branch of the Agricultural Bank of China v. Fujian Rongchang Chemical LLC. This landmark case recognised carbon emission quotas as a new type of property right, akin to intangible assets like intellectual property rights, and subject to court enforcement. This legal recognition not only legitimises the carbon trading market but also strengthens the legal framework supporting environmental sustainability, encouraging companies to participate more actively in carbon trading as a means to meet environmental objectives.

[5] See Part 1, G. Contractual Obligation, page 17 of the National Report of China.

V  France

In France, the pending case Notre Affaire à Tous, Les amis de la Terre France, Oxfam France v BNP Paribas concerns the enforceability and performance of obligations arising from its unilateral commitments to environmental sustainability. BNP Paribas has made several commitments to combat climate change by joining various alliances aimed at achieving net-zero emissions: the Net-Zero Banking Alliance in April 2021, the Net-Zero Asset Owner Alliance in September 2021 through BNP Paribas Cardif, and the Net-Zero Asset Managers Initiative in November 2021 with BNP Paribas Asset Management. These commitments, under the French law reform of contract law by Ordinance no. 2016-131 of February 10, 2016, are legally binding. Specifically, Article 1100-1 of the Civil Code establishes that unilateral commitments can lead to obligatory actions. Despite these commitments, BNP Paribas has been accused of not taking the necessary steps toward achieving carbon neutrality by 2050, thus breaching its obligation. As a result, there are calls for the bank to be legally compelled to halt all new financing in fossil fuels and new investments, as per the contractual obligations arising from its unilateral commitments to environmental sustainability. 

VI  Germany

Under the German Civil Code ("Bürgerliches Gesetzbuch" or "BGB"), buyers are entitled to warranty rights including supplementary performance, contract withdrawal, purchase price reduction, and compensation for damages, as stipulated in Sec. 437 BGB, contingent on the existence of a material defect defined by Sec. 434 BGB. This broad definition extends to a product's climate impact, where incorrect public statements on climate protection by the seller, as per Sec. 434 (3) cl. 2 no. 1 BGB, may constitute a material defect, thereby activating these warranty rights. Despite this legal framework, there have been no lawsuits concerning climate claims under Sec. 434 and 437 BGB to date, with incorrect climate-related public statements typically addressed under the Unfair Competition Act (UWG) rather than through contractual obligations. This indicates a theoretical yet untested avenue for enforcing warranty rights based on environmental misrepresentations in Germany.

VII  India

The Supreme Court case, Maharashtra State Electricity Distribution Co. Limited vs. Adani Power Maharashtra Limited, centered on a "Change in Law" clause within a Power Purchase Agreement. Adani Power sought compensation for increased energy production costs due to changes in the [government's] coal supply policy. The Supreme Court ruled in favour of Adani Power, asserting that generating companies are entitled to be compensated to the extent that they are placed in the same economic position they would have been without the change in law. This case demonstrates the potential of using contractual provisions, notably "Change in Law" clauses, in corporate climate litigation. By interpreting these clauses in the context of regulatory changes related to climate change, there is a possibility for arguments that seek compensation or impose penalties on corporations for their environmental impacts or adherence to new environmental laws. 

VIII  Italy

Under Italian law, contractual liability is governed by Article 1218 of the Civil Code, which holds debtors liable for damages if they fail to perform their obligations correctly, unless they can prove the non-performance or delay was due to the impossibility of performance arising from causes beyond their control. Currently, Italian climate litigation has not directly addressed the violation of contractual obligations. The exceptions involve cases related to annulling contracts due to defects of will. A significant issue in the context of environmental protection is "greenwashing", where companies exploit environmental sustainability as a marketing tool (the "green claims") without their products or services genuinely reflecting these claims. This practice is considered illicit, especially when advertisements falsely claim a product is more sustainable than it is, lack scientific evidence, or use vague claims, as illustrated in cases like Eni Diesel+. 

IX  Japan

X  Kenya

In Kenya, there are no recorded climate change cases that invoke contractual obligations as a cause of action. 

XI  Netherlands

In the Netherlands, contractual obligations have not yet been invoked in corporate climate litigation. Nonetheless, in the intersection of contract law and greenwashing, various legal frameworks provide mechanisms for action against deceptive environmental practices. Article 6:74 of the Civil Code (CC) deals with liability for not fulfilling contractual obligations, which can be applied to companies failing to meet their publicised environmental standards. Article 6:228 CC allows for the annulment of contracts based on false representations, targeting companies that make fraudulent environmental claims to obtain contracts. Additionally, Article 6:265 CC enables the termination of contracts in instances of breach, such as not adhering to agreed-upon sustainability criteria. Literature emphasises the responsibility of financial institutions to enforce sustainability conditions in their agreements, including terminating contracts for non-compliance. Moreover, these institutions have a recognised obligation to avoid engaging with entities that do not align with European or international climate goals, like those specified in the Paris Agreement. These legal routes underscore increasing accountability for companies and financial entities to genuinely commit to environmental sustainability and to eschew greenwashing. 

XII  Nigeria

In Nigeria, contractual obligations have not yet served as a legal basis in corporate climate litigation. However, potential for such action exists, exemplified by scenarios where a car dealer negligently or fraudulently advertises their vehicles as the most energy-efficient and climate-friendly in the world to make a significant sale to a customer specifically seeking such features. In these instances, under Nigerian contract law, such misrepresentation entitles the customer to appropriate legal remedies. 

XIII  Norway

In Norway, contractual obligations have yet to serve as a legal basis in corporate climate litigation. However, the Contract Act (AvtaleLoven) outlines the rules for the termination of agreements, without explicitly providing for "green termination clauses" — i.e., clauses that allow for the termination of a contract based on environmental standards or sustainability criteria. Special provisions for consumer contracts are detailed under Chapter 4 of the Act. Specifically, Section 38(b) mandates traders to provide consumers with clear and understandable information before entering into an agreement. This includes the essential characteristics of the good or service. If a contract is breached due to wrong or insufficient information regarding the product's nature, such as its certification as a zero-carbon product, the Contract Act may permit the termination of the contract, despite the absence of explicitly defined "green termination clauses" in the law. 

XIV  Philippines

In the Philippines, the legal system follows the rule that laws are read into contracts (or applied to contracts), which does not violate the constitutional guarantee of non-impairment of contracts. This means that environmental protection provisions and climate change laws are also read into contracts. Additionally, the terms and conditions of Environmental Compliance Certificates (ECCs) and permits of entities whose activities have impacts on environment or climate change are also treated similar to contractual obligations. 

XV  Poland

Currently, there are no lawsuits pending that are based on this provision concerning contractual obligations. Contractual liability in Poland is outlined in Article 471 of the Polish Civil Code, which states that a debtor is required to compensate for damages arising from the failure to perform or improper performance of an obligation. The prerequisites for invoking contractual liability include the act (such as non-performance), the resultant damage, and a causal connection between the act and the damage, with fault being assumed. There is a division within legal scholarship regarding the scope of this provision; some argue it pertains only to material damages, while others contend it also extends to non-material interests. This broader interpretation suggests it could apply in cases involving specific contracts, where non-material damages might occur. 

XVI  United Kingdom

In the UK, contracts can play a significant role in the context of climate change, whether by facilitating climate mitigation goals through arrangements such as forest carbon contracts or by incorporating climate-friendly behaviour clauses in commercial relationships. Examples include challenging property sales or tenancies over inadequate energy performance, embedding carbon reduction pressures in construction projects, or employing 'green termination' clauses for unsustainable activities. Contractual clauses aimed at encouraging climate-friendly behaviour and managing risks include sustainability commitments, net zero requirements, and 'Green Modifications' clauses in construction contracts to increase resilience against climate change. With the advent of mandatory climate disclosure rules, such clauses in supply agreements signifies a shift towards managing corporate climate commitments through contracts. This shift is characterised by the inclusion of 'generic compliance clauses' in supply agreements, which are designed to integrate environmental laws into corporate practices. However, the enforceability of these 'climate' contracting clauses remains to be fully tested in court, potentially shaping future legal landscapes for both supporting and challenging climate-related actions. 

XVII  United States