German court dismisses climate change action against Mercedes-Benz

This week, the Regional Court of Stuttgart dismissed a climate lawsuit against Mercedes-Benz, which aimed at obliging the company not to sell combustion engines as of 2030. The ruling had been eagerly awaited, as it is the first German decision in climate change proceedings against companies after the Constitutional Court’s landmark ruling on the unconstitutionality of the German Climate Change Act. The court's reasoning, as echoed in its press release, is spot-on and in line with previous rulings. However, companies should await further developments: the plaintiffs announced that they will appeal the decision and a number of other climate change cases are pending before other courts.

Background

After climate change lawsuits had initially been largely unsuccessful, Germany’s Federal Constitutional Court ruled in 2021 that the provisions of the German Climate Change Act are incompatible with fundamental rights (read more). Against this background, and inspired by the success of a similar lawsuit against Royal Dutch Shell in the Netherlands (read more), NGOs also started to take companies to German courts. Deutsche Umwelthilfe, an NGO active in environmental protection, and Greenpeace launched or supported lawsuits against three car manufacturers to stop the production of combustion engine cars by 2030 and against an oil and gas manufacturer to refrain from exploring any new oil and gas fields from 2026. In addition, further private lawsuits are pending with German courts, most prominently the action for damages of a Peruvian farmer against RWE that had been dismissed by the court of first instance and is now pending with the court of appeal.

The decision

The three plaintiffs, who are directors of Deutsche Umwelthilfe, sought, inter alia, to prohibit Mercedes-Benz from selling passenger cars with combustion engines after 31 October 2030 if they emit greenhouse gases during their use. In addition, Mercedes-Benz was requested to refrain from selling new passenger cars with combustion engines that emit more than 516 million tonnes of CO2 in total during their use by this date. The plaintiffs believe that they can derive corresponding rights of freedom from the climate decision of the Constitutional Court not only against the state, but also against private companies. In a nutshell, the starting point of the argumentation is the remaining global CO2 budget calculated according to the latest report of the Intergovernmental Panel on Climate Change (IPCC). This global budget is broken down to individual countries and then to the various sectors and the individual companies active in them. Based on the so-calculated CO2 budget for the individual company, the plaintiffs try to set individual reduction targets.

The Regional Court of Stuttgart did not follow this line of argument and dismissed the claim. Two aspects were crucial for the court:

• On the one hand, the court held that the plaintiffs were not able to present and prove a concrete threat of danger at the factual level: the effects of the future sale of vehicles with combustion engines were "completely uncertain" and it is not possible to say whether Mercedes will continue to sell vehicles with combustion engines and, if so, what impact on the plaintiffs’ rights are to be expected.
• On the other hand, the court stated that decisions on specific ways to protect the environment are not to be made by courts. Rather, it is in the hands of the legislature to set quantifiable limits on the basis of the constitutional right to protect the environment, with the courts only applying existing laws in compliance with constitutional requirements. According to the Regional Court, any other decision would violate the constitutional division of tasks between the legislature and the courts.

Moreover, the court deemed a referral to the Court of Justice of the European Union unnecessary. The applicants had requested such a referral in order to clarify the compatibility of (i) Regulation (EU) 2019/631 setting CO2 emission performance standards for new passenger cars and for new light commercial vehicles and (ii) the marketing of greenhouse gas emitting products after 2045 by companies which are responsible for large volumes of emissions with the EU Charter of Fundamental Rights.

Comment

The court’s arguments are very convincing and in line with legal standards for private lawsuits. While climate change is no doubt one of the most crucial issues of our times, it is up to the legislature to decide on the measures that are necessary to protect the environment. The fundamental question how the remaining CO2 budget should be distributed among all stakeholders is by its nature a political and social question. Only the legislature can weigh the conflicting interests, the outcome of which cannot be replaced by the decision of a civil court on a case-by-case basis.

Yet, companies are well-advised to monitor future developments. Appeals against the decision have already been announced and further lawsuits are pending with other courts. The difficult and enormously important underlying legal questions will therefore keep the courts busy for a long time to come, and not just in Germany. Watch this space for updates on climate change litigation in Germany and elsewhere.