Since the adoption of the Paris Agreement in 2016 and its entry into force, businesses have struggled to adjust to the increasing regulation of emissions. International arbitration and alternative dispute resolution ("ADR") are increasingly becoming the choice for businesses in effectively resolving climate change-related disputes.
In April 2017, the International Chamber of Commerce Commission on Arbitration and ADR created the ICC Task Force on Arbitration of Environmental and Climate Change Related Disputes, whose draft report is in the final stages of approval.
Among its findings are that in commercial contracts concerning the sectors most severely impacted by the transition to sustainable energy, ICC arbitration and ADR were frequently adopted as the dispute resolution mechanism. For instance, in the fields of energy, urban and infrastructure, global and regional land use, and industry, arbitration is increasingly being chosen as the favored means of resolving such disputes. The ICC is also a well-established entity in resolving environmental disputes resulting from climate change.
The Task Force predicts that climate change-related disputes will increase exponentially in coming years and suggests that the ICC is best positioned to deal with such disputes, given its active role in negotiating on issues of climate change on behalf of businesses and industry. It also has procedures in place to allow for unique solutions to address climate change-related issues, including:
- Recourse to arbitrators and experts with appropriate scientific and climate change-related expertise;
- Case management techniques allowing for expedited procedures and urgent measures designed to facilitate the prompt resolution of disputes;
- The ability to apply specific governing or applicable law, including relevant climate change legal instruments;
- The preservation of confidentiality as the hallmark of arbitration while taking steps toward increased transparency in accordance with party autonomy; and
- Ability to join additional parties, bring multiple claims on the basis of multiple contracts, and permit amicus curiae submissions with party agreement.
ICC arbitration is therefore a natural choice for businesses attempting to adapt to increasing climate change regulation and to bring their practices in line with new standards. Businesses may consider introducing an ICC arbitration clause into their existing and new commercial contracts to stay one step ahead of a potential climate change dispute.
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