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Ireland
On 31 October 2023, the Screening of Third Country Transactions Act 2023 (the “Act”), which establishes a new foreign direct investment ("FDI") screening regime in Ireland, was enacted.
United Kingdom | Publication | February 2023
The English Court of Appeal has unanimously dismissed Friends of the Earth’s judicial review of UK Export Finance’s (UKEF) decision to provide a US$1.15 billion export finance package to a liquefied natural gas (LNG) project in Mozambique. The central issue in the appeal was whether UKEF had made an error of law when it concluded that funding the project was aligned with the UK’s obligations under the Paris Agreement.
In rejecting Friends of the Earth’s arguments, the Court took a narrow view of the standard of review when a domestic court is asked to review the compatibility of a public body’s decision making with an unincorporated international treaty, such as the Paris Agreement. It found that UKEF only had to reach a ‘tenable view’ of whether its decision was aligned with the Paris Agreement and that to discharge its duty of enquiry it need not have quantified the project’s Scope 3 emissions.
In June 2020, UKEF decided to provide US$1.15 billion in financial support to an LNG project in Mozambique, having found this to be within its statutory remit and aligned with the UK’s commitments under the Paris Agreement. This decision was subsequently approved by the UK Government.
In September 2020, Friends of the Earth challenged the decision on the basis that it was not compatible with the UK’s obligations under the Paris Agreement and on the basis that UKEF had not taken sufficient information into account, particularly the projected Scope 3 emissions of the project.
At first instance, a two-judge panel disagreed as to whether UKEF had discharged its duty of enquiry and also the standard to which UKEF had to prove its decision was aligned with the Paris Agreement. Friends of the Earth was granted permission to appeal the High Court judgment, and the case was heard by the Court of Appeal in December 2022.
Further background and detail regarding the arguments in the case can be found in our previous article on the High Court judgment.
Friends of the Earth relied on the following three arguments in its grounds for appeal:
The key points from the Court of Appeal’s judgment are:
This is an important decision for banks and other investors involved in large public-finance backed infrastructure projects. The judgment should provide some comfort to investors that, where a decision made by the UK Government is challenged on the basis of an unincorporated international treaty, such as the Paris Agreement, the English courts will only intervene in very limited circumstances. In any event, its practical relevance may be limited considering changes in government policy since UKEF’s decision. In March 2021, the UK Government said that it would “no longer provide new direct financial or promotional support for the fossil fuel energy sector overseas”. In the same year, at COP26, the UK signed up to an agreement to end new direct public investment in fossil fuels by the end of 2022. More recently, UKEF confirmed that it had not provided any support towards fossil fuel projects overseas for the 2021-22 financial year – a first for the UK’s export credit agency.
On 20 February 2023, Friends of the Earth sought permission from the UK Supreme Court to appeal the decision.
The full judgment can be found here.
With thanks to Charlie Bevis (Trainee) for his assistance in preparing this article.
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