This Article explains the case of ClientEarth v Enea which is one of the landmark cases relating to climate change, decided by the District Court in Poznan, Poland in 2019. Before we delve into the case, it is worth to know the following:-
• Climate Litigation – refers to climate change-related lawsuits. It concerns with any cases which relate to mitigating or adapting to climate change. In Malaysia, we have Environmental Courts which are established within the Magistrates’ Courts and Sessions Courts to handle cases relating to pollution, illegal logging, deforestation, and wildlife poaching [1]. However, cases related to climate change or the environment brought before Malaysian courts [2] are relatively few compared to other countries.
• ESG in Legal – Although Malaysia lacks direct environment-related lawsuits, we can see that Malaysian courts still consider and adopt the broad framework of Environmental, Social and Governance (ESG) when giving their judgments, particularly in cases involving companies. For example, when granting an injunction, the court will assess whether it aligns with ESG considerations, such as, among others, the potential environmental harm caused by a company’s actions or the impact of its decision on communities.
• An example of a Malaysian case which indirectly applies ESG or that it relates to the climate change is the case of Tenaga Nasional Bhd v Jeffry bin Hassan & Ors [2016] MLJU 1376 decided by High Court Judge YA Hassan Abdul Ghani (then JC). When granting the injunction in favour of the Plaintiff to prevent the Defendants from obstructing the Plaintiff’s work on Project Hydroelectric Ulu Jelai which is the construction of a hydro-electric dam on a native land, the Court considered, among others, the nature and impact of the Project [3] to the environment, the public and the country as a whole. The Court found that the Project serves these broader interests which outweighed the individual private rights of the Defendants.
Having said the above, unlike Malaysia, Poland has dealt with cases which directly related to the climate change.
ClientEarth v Enea, also known as “The Ostroleka Case”, was filed by ClientEarth, a non-profit organisation and shareholder of Enea, to challenge the resolution passed by the majority shareholders to construct a coal power plant worth €1.2 billion. Such a resolution was passed after Enea entered into a joint venture agreement with Energa, another Polish energy company to build a power plant in north-eastern Poland.
ClientEarth sought to have the resolution annulled. ClientEarth argued, among others, that the resolution was not in the best interests of the company as it was passed without properly assessing the financial and environmental risks involved. These risks include the global shift towards renewable energy, the rising of carbon prices, and the European Union (EU)’s reforms to limit subsidies for coal power plants to combat climate change. ClientEarth contended that failing to consider these factors exposed financial risks not only to the company but also to its shareholders.
The District Court in Poznan, Poland agreed with ClientEarth and held that the resolution passed by the directors of Enea to construct the coal power plant was null and void.
[1] Circular No 189/2012 Practice Direction No. 3 of 2012.
[2] See Tenaga Nasional Bhd v Jeffry bin Hassan & Ors [2016] MLJU 1376 and Public Prosecutor v Azmi bin Ismail & Din A/L Chilih Temerloh Sessions, Court (2017) unpublished.
[3] Paragraph [37] to [40] of Tenaga Nasional Bhd v Jeffry bin Hassan & Ors [2016] MLJU 1376.
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