24 - What is an Aarhus Convention Claim? And a new home for the rules

R (ClientEarth) v Financial Conduct Authority [2023] EWHC 3301 (Admin)

This week we are discussing an interesting new case that touches on what is and is not an Aarhus Convention claim. In ClientEarth v FCA, ClientEarth sought permission to judicially review the decision of the FCA to approve the investor prospectus of Ithaca, an oil and gas company.

Please don’t ask me too much about the law in this area– lots of big words like “securities”, “investment”, and “profit” (?) – all very complicated. Basically, all those bits in Succession where my eyes glaze over.

However – as I understand it – in order to register with the FCA and become a listed company, Ithaca needed to produce a prospectus for investors that set out all the relevant investor risks, and the FCA needed to approve it.

I am led to believe that such regulatory decisions are usually a fairly straightforward affair. But, alas, not so in this case. It was a good day for nominative determinism, because the journey to Ithaca’s listing was by no means smooth sailing. ClientEarth judicially reviewed the FCA’s approval: it sought to argue that the FCA had erred in approving the prospectus for various reasons, most of which related to the alleged failure of Ithaca to disclose sufficient information to investors about the climate-related financial risks of investing in a new oil and gas company.

The judicial review was unsuccessful. What matters for the purposes of our humble blog is that ClientEarth also sought to argue that this was a case that benefited from Aarhus costs protection, because it concerned law relating to the environment.

Lang J held at [30]-[47] that Aarhus costs protection did not apply, on the basis that the knotty financial law at the heart of the JR was not national law relating to the environment. Her summary of the reasons why makes for interesting reading.

Essentially, the judge’ s point was that there must be a sufficiently close connection to the environment, which was not in her view demonstrated here. She referred to Austin v Miller Argent (South Wales) Ltd [2014] EWCA Civ 1012, where the Court of Appeal recognised that private nuisance formed part of the UK's environmental law, but held that a complaint in nuisance only fell within Article 9(3) where it has a close link with the particular environmental matters regulated by the Convention and the claim would confer significant environmental benefits. She also referred to an ACCC decision essentially agreeing with the Court of Appeal: the law on private nuisance is part of the law relating to the environment, because it "regularly concerns various components of the environment and aims to protect them", but that did not mean that private nuisance claims as a class fell within Article 9(3) of the Convention.

The judge held that the law relating to prospectuses (prospecti?) was not environmental in subject matter, and that its purpose was not to protect or otherwise regulate the environment. The judge rejected the argument that the laws in question should be considered as relating to the environment simply because required risk disclosures may relate to the environment: “the risks which an issuer must disclose under the Prospectus Regulation are risks which are specific and material to the issuer and/or its securities, and which are therefore relevant to investment decision… The purpose and effect of the [relevant legal provisions] is, however, to ensure that investors are properly informed about risks which are financially material to the issuer and/or its securities. It is not to protect or regulate the environment in any way.”

I would query whether the judge’s decision in this case was correct:

1. Private nuisance certainly often comes with an environment-y flavour. But at its core, it is about protecting private property interests as between landowners. Really, it is the subject matter of an individual nuisance claim that brings it within scope of the Convention. In the present case, we are again considering rules that protect the interests of private parties (investors). So it seems to me there is no reason in principle why the subject matter of an individual claim relating to an investor prospectus – here the environmentally damaging activities of an oil and gas company – cannot bring the relevant financial regulations in scope. Bearing in mind we are not talking about environmental law, but national law relating to the environment.
2. The judge accepted that the Claimant had standing on the basis that “the subject-matter of the claim falls within its area of expertise (the environment) and its mission to ensure that public bodies act in accordance with their legal obligations in relation to the climate crisis.” This seems to me to be a tacit (if not overt) acknowledgment that this was a claim which related to the environment.
3. The scope of the Convention is deliberately wide: and the words “relating to” are very broad indeed.
4. The judge held in the alternative that “even if the claim succeeded, it would not have significant environmental benefits.” It is not clear on what basis the judge reached this view, given the high-profile campaign being carried out by ClientEarth to ensure greener investment decisions, and the (inevitable, it seems to me) knock-on effects if the claim had succeeded.

Overall, this is a difficult decision, but one that we very much need to be alive to when considering novel judicial reviews that do not fit the standard Aarhus mould. In a case concerning a different legal framework, this one seems to me to be eminently distinguishable.

A new home for our favourite cost protection rules

Please note, dear reader, that the Aarhus Convention claim cost capping rules have now packed up, turned off the lights, and moved over to CPR 46 (46.24-28). Fail to update your references at your peril!

Old references to CPR 45.41 will now take a puzzled court to the far less relevant (but perhaps no less important) reminder of the cost consequences of failing to comply with the Pre-Action Protocol for Personal Injury Claims Below the Small Claims Limit in Road Traffic Accidents.

This blog post was written by Alex Shattock.

Authors

– James Maurici KC – James has been in many of the leading cases on Aarhus costs including: R (RSPB) v SSJ [2017] 5 Costs L.O. 691; Case C 530/11 Commission v United Kingdom; Case C-260/11 Edwards v EA; R (Edwards) v EA (No.2) [2011] 1 Costs L.R. 70 and [2013] UKSC 78; and R (Edwards) v EA [2011] 1 W.L.R. 79. He has also appeared a number of times before the UNECE Aarhus Compliance Committee in Geneva, cases include: ACCC/C/2010/45; ACCC/C/2010/53; ACCC/C/2011/60; ACCC/C/2011/61; ACCC/C/2012/77; and ACCC/C/2014/100 and 101. He is currently acting for the UK Government on the Brexit communication to the Compliance Committee – ACCC/C/2017/150. He was one of the contributors to the Aarhus Convention: A Guide for UK Lawyers (2015) and he has written and lectured extensively on the Aarhus Convention.

– Jacqueline Lean – Jacqueline has also been instructed on a number of matters concerning the Aarhus Convention, including appearing (with James Maurici KC) for United Kingdom before the Aarhus Compliance Committee on two communications concerning the Government’s decision to proceed with HS2 (ACCC/C/100 & 101); representing the Secretary of State for Communities and Local Government Secretary of State in R (CPRE Kent) v Secretary of State for Communities and Local Government [2019] EWCA Civ 1230 in which the Court of Appeal considered the approach to summary assessment of costs at permission stage when an Aarhus costs cap applied; and acting for the Secretary of State in R (RSPB) v Secretary of State for Justice [2018] Env LR 13, a challenge to the Government’s amendments to the Aarhus costs protections in the CPR (also with James Maurici KC). She is also a contributing author to Coppel’s ‘Information Rights’ on Environmental Information.

– Nick Grant – Nick joined Chambers in 2019 and has regularly advised on Aarhus related matters. He has represented the UK twice before the Aarhus Convention Compliance Committee, appearing with James Maurici KC in ACCC/C/2017/150 (the Withdrawal Act case) and unled in the admissibility hearing for ACCC/C/2022/194 (the free trade agreements case).

– Alex Shattock – Alex has been involved in a number of environmental claims including Friends of the Earth v SSLUHC (the Cumbria coal mine case: acting for Friends of the Earth in the Planning Inquiry and High Court, with Paul Brown KC and Toby Fisher); Cox and Ors v Oil and Gas Authority [2022] EWHC 75 (Admin) (representing Extinction Rebellion activists in a challenge to the Oil and Gas Authority’s Strategy, with David Wolfe KC and Merrow Golden); R (Hough) v SSHD [2022] EWHC 1635 (acting for the claimant in an environmental and equalities challenge to the controversial use of Napier Barracks as asylum seeker accommodation, with Alex Goodman KC and Charles Bishop). He regularly advises individual and NGO clients on Aarhus costs protection. Alex also has a keen interest in treaty law generally. He has a masters and PhD in public international law and has been involved in various treaty negotiations and treaty ratification processes.