Arbitration and Climate Change

Arbitration and Climate Change

Arbitration is notably known for its efficiency and flexibility in handling different range of disputes. These disputes could come from the commercial, energy, and any other sector such as foreign investments. While the court is pretty much the supreme decider in cases, there is no doubt that arbitration provides a more flexible nature that makes it a more reliable and efficient dispute resolution mechanism.

However, while arbitration has proven to be extremely efficient in different international disputes, one area that has received considerable attention is climate change disputes. Now unlike other types of disputes handled by Arbitration, Climate change disputes are a very tricky kind of dispute that seems to swing in a different direction and could actually fall in favor of the claimant or that of the defendant.

The reason for this uncertainty is because most breaches of contract resulting from climate change are not directly the fault of the party under obligation (The obliged party could be a company, a host state, or a private individual). Instead, climate change disputes are usually caused by natural changes in weather, natural disasters, and different natural limitations not caused (at least not directly) by man-made influences.

Arbitration and Climate Change

Resolving climate change disputes through arbitration is a growing field that is clearly moving in the right direction. One of the major climate change areas that have the highest dispute concentration is State and Corporate entities’ actions and inactions in contributing to climate change. This means that some of the climate change-related disputes are mostly from claimants who believe that some climate-influenced breaches could have been averted if the other party (states and corporations) had played their part in implementing certain obvious policies.

Arbitration and Climate Change

For companies, climate changes could cause a complex situation of physical, legal, transitional, financial, regulatory, and reputational risk. As it stands, Arbitration and Climate Change dispute resolution have been responsible for more than 1600 different hearings, and the number is even expected to increase in 2021 due to the vast climate issues that arose this year. The United States, China, Japan, and other countries have been hit with a wave of natural disasters, while other countries are serious victims of Global warming.

Climate change disputes have no doubt taken another level from the small beneath-the-radar disagreements to more serious, significant high-end claims that have been battled legally in the National courts and arbitral tribunals. Corporate entities have been dragged into tons of significant disputes such that they had been forced to choose Resolving climate change disputes through arbitration.

Types of Climate Change Disputes

As has been already stated, there are different types of climate change disputes with a variety of factors that influence them. These factors include:

• The action of corporate or commercial entities causing rise to affected firms, groups or individuals with right of actions.

• States inaction on climate change is another major cause of climate change dispute and usually arises from states and investor contracts or Inter-state contracts. Disputes usually arise when the investor or partnering states believe that the host state refused to put up policies and measures to prevent the climate crisis.

• Climate change action – while dispute can arise from the inaction of the state, another cause of dispute could be from the state action. A claimant push for a tribunal resolution if the corporate entity or host state puts in policies and measures that could cause climate change and inadvertently lead to a breach of contract.

• Revocation or dilution of responsive measures taken by states, leading to possible renewable energy treat arbitrations.

• Contract enforcement – another cause of climate change dispute is when a company disregards a contract that includes certain provisions in the event of climate change but for some reason does not follow the agreement when the situation arises.

Arbitration Efforts On Climate Change Disputes

While the courts are actively involved in settling cases related to climate change, arbitration still holds a significant advantage over litigation when it comes to climate change-related disputes. Arbitral tribunals with the right expertise can preside over climate change-related disputes, ensure that the parties involved get a fair hearing, and enforce the award.

An International Chamber of Commerce task force, in November 2019, published a climate-related report titled Resolving Climate Change Dispute Through Arbitration and ADR. The report was dedicated to explaining arbitration’s role in resolving international disputes caused or directly related to climate change. The report outlined four standard ways with which arbitration can be used to resolve Climate change disputes.

Other mechanisms help project arbitration as an effective and efficient climate change dispute resolution method. The Paris Agreement includes clauses that give disputing parties the right to accept arbitration for climate change dispute resolution according to the procedures adopted by the Conference of the Parties of the UNFCCC.


Resolving climate change disputes through arbitration shows the relationship between Arbitration and Climate Change. The fact that it is possible for claimants to actually go to the tribunal to resolve contractual breaches triggered by climate change shows how vast arbitration can be. However, it is essential to note that Climate change disputes are extremely tricky, and it requires an expert professional arbitrator or arbitration team to get the best out of any case.

Getting a top firm is not extremely daunting as several firms have built a reputation on helping clients with Climate change disputes get the best out of their case. One such firm is Rattsakuten, an Arbitration institution with top-class professional arbitrators that have enough experience to carve out the best results for their clients when it comes to climate change disputes. You can reach the firm here for all your inquiries.

About Rattsakuten

Rattsakuten is a leading law firm focused on Commercial Arbitration and Dispute Resolution. Based in Sweden, Rattsakuten handles dispute resolution and Arbitration matters before the SCC (Swedish Chamber of Commerce), ICC, HKIAC, and several other Arbitration tribunals.

Fredrik Jörgensen

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