Removing Barriers to Climate Change Litigation: The Progressive Erosion of Central Banks’ Immunity

Abstract

This article discusses sovereign immunity rules and the future of climate change litigations in foreign courts against central banks and sovereign wealth funds managed by central banks. It argues that expansions of central banks’ responsibilities and activities in financial markets over the past decades, including that of managing sovereign wealth funds, increase the risk of climate lawsuits against central banks, and in particular, the risk of their assets being exempted from absolute immunity from enforcement measures.

While the doctrine of sovereign immunity has evolved from an absolute to a restrictive approach across a number of jurisdictions, central banks, and in particular, their assets, have continued to enjoy close to absolute protection under international and domestic law. The article discusses whether this may be changing: Taking a Swedish Supreme Court judgment from 2021 as a starting point, it argues that there is no clear rule in international customary law providing absolute immunity for central banks’ assets that are unrelated to its exercise of monetary policy. Far-reaching immunity is not only unreasonable when taking into consideration the original justification for central banks’ immunity but it may also prompt a backlash against the immunity protecting the property related to the core functions of central banks, namely the monetary policy mandates. Equally important, this may weaken states’ commitments to comply with international and domestic environmental obligations.