Unjust Enrichment: A Disputes Mechanism To Rebalance Climate Change-Linked Gains?

• Published date: 03 October 2022
• Subject Matter: Corporate/Commercial Law, Environment, Corporate and Company Law, Directors and Officers, Environmental Law, Climate Change
• Law Firm: Brown Rudnick LLP
• Author: Mr Razzaq Ahmed and Imogen Winfield

The increasing focus on environmentally sustainable business and climate change has thrown a spotlight on conduct and profits in industries seen as direct and indirect contributors to the global problem of climate change.

Climate-related litigation has traditionally targeted governments, including through the use of judicial review to challenge decisions (and potential violations of the Climate Change Act, international standards and human rights law). Mass tort litigation and nuisance claims against fossil fuel companies have also featured in other jurisdictions. These types of actions typically seek loss-based relief (e.g. compensation) or declaratory relief to prevent loss events arising. At present, English law remedies for climate change victims remain largely untested. Claims in tort are likely to encounter substantive problems relating to causation and are procedurally complex (and therefore time and cost intensive). Human rights related claims are still experimental and the link between climate change and human rights is underdeveloped to say the least. Whether or not English courts are asked to adopt the same approach as the Dutch court in Netherlands v. Urgenda Foundation also remains to be seen (imposing a duty of care on the government to protect individuals' human rights from the effects of climate change).

We also see claims emerging against corporates in England and Wales and the potential claims landscape against directors and companies for breach of statutory duties (under the Companies Act and Financial Services and Markets Act), negligence and misrepresentation has been widely acknowledged. We consider another approach and potential role for climate-related litigation: when a person or organisation is enriched at the expense of another in circumstances that the law sees as unjust. The branches of restitution and unjust enrichment are relatively young as a matter of English law. While the case law is long-standing, the subject was only authoritatively dealt with by the House of Lords in 1991 in Lipkin Gorman v Karpnale Ltd. It is also one of the few areas of English law that has formally received (in 2012) a "restatement" - a powerfully persuasive, but non-legislative, statement of the law with the input of the judiciary.¹ Unjust enrichment reflects a "corrective justice" theory of law: that citizens have a right to restoration in equity when a party has deliberately externalised to them the costs of a climate-related activity, while asymmetrically internalising the benefits (usually in the form of profits).²

Unjust enrichment in English law

Unjust enrichment requires that:

1. A defendant was enriched or received a benefit (which could include goods, services or cost savings);
2. The enrichment occurred at the claimant's expense (where a sufficient causal connection exists between the...