Germany's Federal Court of Justice draws the line on corporate climate change liability

Germany's Federal Court of Justice (Bundesgerichtshof – BGH) dismissed two high-profile climate lawsuits brought against BMW and Mercedes-Benz. The plaintiffs, directors of a prominent environmental NGO, had inter alia sought to prohibit the car manufacturers from selling passenger cars with combustion engines after 2030. The BGH's twin rulings are the first decisions by Germany's highest civil court on climate change claims against private companies. They provide welcome legal certainty: setting company-specific CO₂ limits is the responsibility of lawmakers, not the courts, and companies that comply with existing emissions regulations cannot be required by civil courts to go further. Yet, the rulings do not fully close the door on all climate litigation. Differently structured claims – including those recently filed by Pakistani farmers against RWE and Heidelberg Materials – raise nuanced legal issues, and NGOs will likely continue using strategic litigation to advance their agenda.

Background – the Constitutional Court paving the way

Climate change litigation has been one of the defining legal trends of the past decade. A landmark ruling by Germany's Federal Constitutional Court in 2021 holding that provisions of the German Climate Change Act were incompatible with fundamental rights insofar as they failed to provide a sufficient roadmap for emissions reductions beyond 2030 (read more) opened the door to a wave of corporate climate lawsuits. Inspired also by a Dutch court's ruling against Royal Dutch Shell (read more), NGOs filed civil lawsuits against major German companies seeking to translate the Constitutional Court's state-directed obligations into duties owed by private enterprises. 

Deutsche Umwelthilfe (DUH) and Greenpeace, in particular, supported actions against several major German car manufacturers, seeking to force them to stop selling combustion engine vehicles by 2030. The cases against two of those manufacturers – one proceeding from Munich, the other from Stuttgart – worked their way through the German courts. Both were dismissed at first instance and on appeal (read more on one of the Regional Court decisions). Now, the BGH dismissed both final appeals, bringing a definitive close to these particular proceedings.

What the car manufacturer cases were about

The three plaintiffs – senior DUH officials launching the actions in their own name – sought primarily preventive injunctions aimed at stopping the defendants from placing combustion engine vehicles on the market after 31 October 2030. In addition, they sought to cap cumulative CO₂ emissions from cars sold by each manufacturer from 1 January 2022 onwards. Various alternative claims were also pursued, including requests for the manufacturers to prepare climate transition plans.

Their legal argument was creative and ambitious. The plaintiffs argued that the defendants could only consume a certain CO₂ budget if the climate targets set out in the Paris Agreement were still to be met. By exceeding the CO₂ budget attributable to the company and thus consuming too large a share of the remaining national residual budget, future political scope for action would be restricted, and at a later point in time radical legislative measures would become necessary to reduce greenhouse gas emissions. In short, with every combustion engine car sold, the plaintiffs argued, the necessity of taking drastic climate protection measures in the future would increase – and those future measures would threaten to interfere with the plaintiffs' personal lives and thus their general personality rights protected under the German constitution.

What the BGH decided and why

The BGH held that the defendants' business conduct does not infringe the plaintiffs' general personality rights, neither directly nor through so-called “anticipatory interference” ("eingriffsähnliche Vorwirkung"). According to the court, this would require a binding CO₂ budget to be allocated to the defendants. Only if such a binding emissions budget exists and has been exhausted by the defendants, legislation restricting freedom and a breach of the plaintiffs' general personality right could be considered. The BGH ruled, however, that an emissions budget can only be inferred from the Paris Agreement and the Federal Climate Change Act in general terms and for Germany as a whole, but not for particular actors or individual sectors such as transport. This, the BGH emphasised, sets the present cases fundamentally apart from the Constitutional Court's decision, which concerned the national legislator's obligation to manage a recognisable national carbon budget.

Turning to the question of responsibility, the BGH concluded that even if restrictive climate laws were enacted in the future, the resulting burden on the plaintiffs' rights could not be laid at the defendants' door. The court pointed to the EU Passenger Car Emissions Regulation, which establishes a detailed, climate-goal-oriented regime governing precisely the activity at issue – the placing of vehicles on the market. As long as the defendants operate within the boundaries of this framework and meet all applicable legal requirements, no additional civil-law duty of care arises. More broadly, the BGH stressed that the task of weighing climate protection against the full spectrum of competing societal, economic and political interests belongs to the democratic legislator, not to the judiciary. Distributing the emissions reduction burden among different actors involves policy choices of such complexity that the legislature must retain wide discretion. Courts, the BGH held, should not attempt to extract specific temperature limits or emission caps from the general environmental protection mandate enshrined in the German constitution.

The plaintiffs' alternative claims were likewise unsuccessful. Several were found to be insufficiently specific to be enforceable, and the claim for a mandatory climate transition plan was rejected for lack of a legal basis. The BGH also declined to refer questions to the Court of Justice of the European Union, finding the answers to be obvious (acte clair).

The broader picture: Lliuya and beyond

The BGH rulings should be read alongside the recent judgment of the Higher Regional Court of Hamm in Lliuya v RWE, which dismissed a Peruvian farmer's claim for contribution to flood protection costs against the energy company (read more). While the Hamm court rejected the claim on the facts, it controversially held that large emitters can in principle be held liable for climate-related property damage anywhere in the world under civil law, provided a materiality threshold for emissions is met. The BGH did not have the opportunity to review that decision, which became final due to the low value in dispute, and the Hamm case was built on a different legal basis.

The DUH claims invoked the general personality right and sought injunctive relief to prevent future conduct, while the Lliuya claim was an action for damages based on property law arising from past emissions. The BGH's reasoning does not necessarily apply to such claims when a plaintiff can demonstrate concrete, imminent harm caused by a defendant's historical emissions. Comparable cases are thus not automatically rendered moot by the BGH's rulings.

Comment: a welcome ruling, but not the last word

The BGH's landmark decisions mark a key turning point for climate change litigation in Germany. They rightly confirm that civil lawsuits are not the proper vehicle for deciding inherently political questions such as the allocation of a CO₂ budget among sectors and companies. The fundamental question of how the remaining emissions space should be distributed requires democratic deliberation and legislative action – it cannot be resolved through case-by-case adjudication in bilateral disputes between private parties. By anchoring its reasoning in the Constitutional Court's own framework and demonstrating that the conditions for anticipatory interference are not met at the level of individual companies, the BGH has provided much-needed legal certainty for the business community.

At the same time, the rulings have limits. The BGH expressly left open whether the general personality right's scope extends to climate concerns and whether the constitutional concept of anticipatory interference could, in principle, be transposed to civil law – questions that may resurface if the legislature were to allocate binding emissions budgets to individual sectors or companies. Moreover, the court's emphasis on the comprehensive nature of the EU Passenger Car Emissions Regulation as a shield against civil liability raises the question of what happens in sectors where no such specific regulatory framework exists.

NGOs and other pressure groups will thus likely continue to use climate change litigation as a strategic tool to advance their climate agenda, particularly at a time when political attention has shifted to other pressing issues. DUH has lost before the highest civil court in Germany, but experience shows that activists and their legal advisers will seek to learn from this ruling and develop new arguments, and a number of cases with nuanced legal issues are already pending. 

The rulings are thus a major milestone for companies that operate within the law, but they do not justify complacency. For companies, the key takeaways are as follows:

• Compliance with existing emissions regulations remains the most important line of defence. The BGH made clear that where a comprehensive regulatory framework governs a company's climate-relevant activities, courts should not impose additional obligations by way of civil liability.

• Furthermore, robust recordkeeping and transparent emissions reporting are not only good practice for regulatory compliance and reputational purposes, but also provide the strongest foundation for defending against future claims.

• Moreover, companies should continue to monitor developments in climate litigation – both in Germany and internationally. The legal theories underpinning climate claims are evolving, and what fails on one legal basis may succeed on another or in another jurisdiction. Companies in sectors particularly affected by climate-related litigation may also chose to prepare specifically for activism and potential legal actions so they are not caught off guard.

• Finally, this form of climate change litigation is only one dimension of a broader trend towards ESG-related litigation. Companies increasingly face claims in areas such as greenwashing and supply chain due diligence, which will each be subject to new rules shortly (read more here and here).