R. (on the application of Friends of the Earth) v Secretary of State for International Trade / UK Export Finance (UKEF)

The Court of Appeal considered whether the UK Government acted unlawfully in approving UKEF support for a $1.15 billion liquified natural gas project in Mozambique, in particular whether that decision was consistent with the United Kingdom's obligations under the Paris Agreement. The court held that the Paris Agreement is an unincorporated international treaty and that, while its purposes (including article 2(1)(c) on making finance flows consistent with low‑emission pathways) inform decision‑making, they do not create directly enforceable domestic obligations giving rise to hard‑edged legal requirements.

The court applied the established principle that where a public authority takes into account the UK’s obligations under an unincorporated treaty the domestic courts should examine whether the decision‑maker adopted a tenable view of the treaty obligation rather than substitute the court’s own definitive interpretation. On that standard the court held UKEF’s conclusion — reached on the basis of a detailed climate change report and contemporaneous material — that the financing could be aligned with the Paris Agreement was tenable.

The court also rejected the challenge based on Tameside (duty to make sufficient inquiries). It concluded it was not irrational for UKEF to proceed without a precise quantification of Scope 3 emissions given the acknowledged uncertainties as to how, where and when LNG would be used and the broader questions about displacement of higher‑emitting fuels. The appeal was dismissed.

This was an appeal from the Divisional Court (Stuart‑Smith LJ and Thornton J) against dismissal of an application for judicial review by Friends of the Earth challenging UKEF’s decision to underwrite part of a large financing package for the Mozambique LNG project.

• Nature of the claim / relief sought: Judicial review of the Government’s decision to approve UKEF support for the project; relief sought was quashing of the decision on multiple grounds including illegality for incompatibility with the Paris Agreement, irrationality and failure to make adequate inquiries (Tameside duty).
• Parties and facts: Claimant: Friends of the Earth. Respondents: Secretary of State for International Trade/UKEF and Chancellor of the Exchequer. Interested parties included TotalEnergies and the project finance vehicle. The project was a major LNG development with substantial Scope 3 emissions and significant expected benefits for Mozambique and UK suppliers.
• Procedural posture: The Divisional Court was divided on key issues: both judges applied the tenable‑view approach but disagreed on whether the Paris Agreement created hard‑edged obligations; Thornton J held UKEF had failed the Tameside duty to quantify Scope 3 emissions, Stuart‑Smith LJ rejected that challenge. The Divisional Court dismissed the application and granted permission to appeal to the Court of Appeal.

Issues before the Court of Appeal: (i) Whether the respondents erred in law in concluding the decision aligned with the UK’s obligations under the Paris Agreement; (ii) whether the court should test that conclusion for correctness or merely for tenability; (iii) whether UKEF failed in its duty of inquiry by not quantifying Scope 3 emissions (Tameside).

Court’s reasoning: The court emphasised the constitutional principle of dualism: the Paris Agreement is an unincorporated treaty and does not, of itself, create domestic legal obligations that the courts should enforce as hard‑edged obligations. Where the executive treats such an unincorporated treaty as a factor, judicial review should assess whether the view the executive adopted was tenable rather than require the court to provide a definitive construction in circumstances lacking domestic precedent and beset with scientific and factual uncertainty.

The court analysed the Paris Agreement’s structure and concluded that articles such as 4, 7, 9, 10, 11 and 13 contain the specific obligations which operate to achieve the purposes stated in article 2; article 2 represents purposes (including article 2(1)(c)). On the tenability standard, UKEF’s conclusion that financing could be consistent with the Paris Agreement was tenable given the detailed climate change report (CCR) and the real uncertainties about where LNG would be used and whether it would displace higher‑emitting fuels.

On the Tameside issue, the court held that UKEF was entitled to rely on qualitative assessment and that absence of a precise Scope 3 quantification did not make the decision irrational. The project would proceed with or without UKEF support, and the key question was displacement and net impact rather than the absolute Scope 3 tonnage. The court therefore dismissed the appeal.

Wider context: The court noted that while the Paris Agreement sets clear objectives, its multilateral nature and lack of incorporation into domestic law mean domestic courts should be cautious about providing definitive interpretations where the executive has adopted a tenable view and where scientific and factual uncertainties prevail.

The appeal was dismissed. The Court of Appeal held that the Paris Agreement is an unincorporated treaty and that, where the executive has regard to such a treaty, the court should assess whether the view adopted by the decision‑maker as to consistency with the treaty was tenable. UKEF’s conclusion that financing the project could be aligned with the Paris Agreement was tenable, and it was not irrational (Tameside) to proceed without a precise quantification of Scope 3 emissions.

Appeal from the Divisional Court (King's Bench Division, Stuart‑Smith LJ and Thornton J) which dismissed the claimant’s judicial review application concerning UKEF support for the Mozambique LNG project. Claim No: CO/3206/2020. Permission to appeal to the Court of Appeal was granted by the Divisional Court; the Court of Appeal delivered judgment in [2023] EWCA Civ 14.