A Peruvian farmer won a small but significant legal victory Monday when a German court said his appeal against energy giant RWE, which he accuses of contributing to climate change that is threatening his Andean home, had merit.

After hearing oral arguments from both sides, the higher regional court in the western city of Hamm said Saul Luciano Lliuya's demand for damages from RWE was "admissible", paving the way for the case to proceed.

Luciano argues that RWE, as one of the world's top emitters of climate-altering carbon dioxide, must share in the cost of protecting his hometown Huaraz from a swollen glacier lake at risk of overflowing from melting snow and ice.

The appeal court's decision not to throw out the case immediately, as a lower court had done in the first instance last December, was hailed as a win by climate change activists.

The court in Hamm has written "legal history", said Klaus Milke, chairman of the pressure group Germanwatch that is advising Luciano.

"It's good news for the many potential plaintiffs worldwide who will be emboldened to take action themselves," he told AFP.

The Hamm court said it would give both sides until November 30 to provide further arguments before deciding on the next steps, but that it was "likely" the case would proceed to hearing evidence.

- David vs Goliath -

After the decision, RWE reiterated its view that the complaint was "not acceptable" and was even "unjustified," arguing that a single company cannot be held liable for specific consequences of climate change.

A lower court in the German city of Essen, where RWE is based, initially found that the lawsuit against RWE was unfounded.

Luciano, who is also a mountain guide, was all smiles as he left the court building. German media have likened his fight against RWE to a "David versus Goliath" battle.

"I would like to return home to the mountains and tell the people that I was able to do something for them," the father-of-two told reporters ahead of Monday's hearing.

Luciano wants RWE to pay 17,000 euros ($20,000) to help pay for flood defences for his community in Peru's northern Ancash region.

The 37-year-old also wants the German company to reimburse him for the 6,384 euros he himself has spent on protective measures.

Luciano bases his claims on a 2013 climate study which found that RWE was responsible for 0.5 percent of global emissions "since the beginning of industrialisation".

He says this makes the firm at least partly responsible for his plight.

- Climate in spotlight -

RWE, Germany's second-largest electricity producer, has long insisted the Peruvian's case has no legal basis.

RWE has in the past said it did not understand why it has been singled out for legal action, stressing the efforts the company had made to become more environmentally friendly.

As well as modernising its coal-fired power plants to reduce CO2 emissions, RWE has invested billions in renewable energy as part of Germany's move away from fossil fuels, it says.

Luciano's lawyer Roda Verheyen said earlier Monday that she believes her client has a winnable case that could set a precedent for so-called "climate justice" cases.

The case comes as climate change is once again in the global spotlight with the UN climate talks taking place in Bonn, a two-hour drive away from the Hamm courthouse.

Thousands of diplomats from around the world have gathered there to negotiate the "rulebook" for the 2015 Paris climate agreement, which goes into effect in 2020.

The pact calls for capping global warming at "well under" two degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, and 1.5 C if possible.

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