UKEF Court Decision

This week, something extraordinary happened in the United Kingdom (UK) High Court. Two judges were totally split on deciding whether the UK government’s financing of Mozambique gas is illegal. This is huge news for several reasons, but mainly because it is the first time that a UK High Court judge has found government fossil fuel funding totally unlawful and not aligned with the Paris Agreement, to which the UK government is a signatory.

In December 2021, JA! partners, Friends of the Earth England, Wales and Northern Ireland (FoE EWNI) were in court, with JA!’s support, for the judicial review of the UK Export Finance’s (UKEF) agreement to provide $1.15 billion to the Mozambique Liquid Natural Gas (LNG) project in Cabo Delgado, led by Total from France.

The split decision means the judicial review has not yet succeeded, and we are awaiting a court order determining the final result. To learn more about the case you can read here and you can read JA! Director Anabela Lemos talk about why it is so important, here.

One judge, Justice Thornton, agreed with FoE EWNI that UKEF acted illegally and had ‘no rational basis’ to conclude that financing the project was consistent with the Paris Agreement. The second judge, Justice Stuart-Smith clearly disagreed with the case, and thought that the financing was totally lawful. He agreed with UKEF’s position that it can finance the project on their basis that the terms of the Paris Agreement are ‘ambiguous’ and at times ‘unworkable’.

But Justice Smith’s decision is entirely inconsistent with the UK government’s public-facing endorsement of the internationally-binding treaty. It is also inconsistent with current government policy on overseas finance.

However, it is not over – we are treating this outcome as a win – with a caveat – seeing as the findings of Justice Thornton were highly significant, and we believe, grounds for an appeal.

This is why JA! And FoE EWNI believes that Justice Thornton’s conclusions are significant:

  • This case was a critical opportunity to test what compliance with the Paris Agreement looks like. That a High Court judge has deemed UKEF’s actions unlawful means that there may be a basis to call other government decisions into question along similar lines
  • Justice Thornton’s ruling is internationally significant, because it is considered the first time a judge has said that all flows of finance, to be consistent with the Paris Agreement, must be shown to be in line with the temperature goal to be consistent with the treaty
  • There are potential international implications, particularly for other export credit agencies that have relied on the plausibility of the same climate assessments to justify their own investments in the Mozambique LNG project

She concluded that UKEF didn’t consider all the emissions from the project and that because of this and other mistakes, they had no rational basis to conclude the decision to support the project was in line with the Paris Agreement to limit global temperature rise to 1.5 degrees. She also found that the information presented to the Ministers making the financing decision was not sufficient for them to adequately understand the climate impacts of the project and their scale.

Research by Friends of the Earth and the New Economics Foundation shows that the Mozambique LNG project will produce between 3.3 and 4.5 billion tonnes of CO2 equivalent over its lifecycle of 37 years, more than the combined annual greenhouse gas emissions of all 27 EU countries.

On top of all of this, the Mozambique gas industry has been central to conflict, human rights abuses and has caused the displacement of hundreds of thousands of Mozambicans. People in Cabo Delgado have lost their lands and livelihoods as a result of its development. Our country is one of the most vulnerable to climate impacts that continue to be exacerbated created by projects like Mozambique LNG and the fossil fuel industry.

JA! Director Anabela Lemos says:

“The fact that a high court judge totally agreed with us that the UK government’s financing of Mozambique gas is illegal is important. This is something that has never happened before in UK courts, and is showing the fossil fuel industry and its financiers that climate justice activists from Mozambique and around the world are right. JA! and our partners will continue to fight this project, and any other fossil fuel project that devastates the climate and people.”

Our friends at FoE EWNI say:

“Friends of the Earth maintains its view that a claim should succeed where any High Court Justice identifies unlawful conduct, but the court has not yet confirmed whether it has or hasn’t ruled in the group’s favour. A majority view was not reached by both judges, because the second judge, Justice Smith’s conclusions starkly contrasted those of his counterpart. This means that overall consensus has not been reached by the whole court. In the event that Friends of the Earth’s claim is considered unsuccessful, an appeal is considered inevitable to reach a definitive outcome.”

Now that overall consensus has not been reached by the whole court, FoE EWNI will inevitably appeal to reach a definitive outcome, and cancel the UKEF financing for good.

This case has shown that civil society is not going to let UKEF and other fossil fuel financiers get away with their actions. They have thought they could do this for ages, but people and movements from across the world are fighting back, including through legal action against companies and governments who continue fuelling the climate crisis and human rights violations.

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