New Zealand Court of Appeal rejects claim seeking to hold large corporates accountable for climate emissions

The claim, brought by Mike Smith, the Climate Change Iwi Group spokesperson, targeted seven New Zealand companies. Each company is either involved in an industry directly releasing greenhouse gases into the atmosphere or supplying products that release greenhouse gases when burned. In striking out the claims of nuisance, negligence and a novel duty of care, the Court held that climate change cannot be appropriately or adequately addressed by common law tort claims pursued through the courts.

The statement of claim raised three causes of action in tort – public nuisance, negligence and breach of an inchoate duty of care. Remedies sought included injunctions requiring each defendant to achieve net-zero emissions from its activities by 2030, and declarations that each of the respondents has unlawfully caused or contributed to the effects of climate change or breached duties said to be owed to Mr Smith.

In March 2020 the High Court^[1] struck out the public nuisance and negligence claims, but not the claim concerning a novel duty of care. The case proceeded to the Court of Appeal in February 2021, and on 21 October 2021, the Court found in favour of the seven respondents. The Court decided that private litigation requiring a small subset of emitters to comply with requirements that are more stringent than those imposed by statute will not be effective in addressing climate change at a national level, let alone globally.^[2] The Court said it would be costly, inefficient and arbitrary in its application and impact.^[3]

In recent times, courts around the world have been asked to test the boundaries between judicial, executive and legislative branches in responding to claims around climate change. Courts in the Netherlands,^[4] France,^[5] Germany,^[6] Belgium^[7] and Australia^[8] found governments and corporates accountable for failing to appropriately address risks associated with carbon emissions, or adequately protecting people from the impacts of climate change. Peppered throughout these decisions are references to international case law and developments recognising that climate change has no boundaries. As the frequency of these cases increases, so too does the body of legal precedent.

The Court of Appeal in Smith took a different approach. It declared that the issue of climate change could not be effectively addressed through tort law. It stated that climate change is “quintessentially a matter that calls for a sophisticated regulatory response at a national level supported by international co-ordination”.^[9] The Court was not persuaded that a new novel duty of care should be created. It said that doing so would challenge the coherence of the law when there are international obligations and New Zealand has a comprehensive legislative framework in place.

Stepping back, we see that there is no clear judicial consensus on how to respond to the challenge that is climate change. Courts will stand as the new frontier to test these issues. Plaintiffs are likely to probe the boundaries between the legislative, executive and judicial branches, and bring cases in jurisdictions seen to be friendlier to climate action. Successful approaches will be copied. With this piecemeal approach, developments will happen at different speeds and have different impacts around the globe. New challenges will emerge as climate change litigation expands to fresh jurisdictions and into new areas of law, and as plaintiffs adopt novel legal strategies informed by developments in climate science and increased public awareness. Corporates, in anticipating these challenges, will be wise to monitor these legal developments to understand the risks to their operations in different jurisdictions.

Footnotes

^{[1]Smith v Fonterra Co-operative Group Ltd [2020] NZHC 419, [2020] 2 NZLR 394.
[2]Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552, at [33].
[3] Ibid.
[4]Milieudefensie et al v Royal Dutch Shell District Court of the Hague, C/09/571932/ha za 19–379, 26 May 2021.
[5] Notre Affaire à Tous v. France, Paris Administrative Court 3 February 2021.
[6]Neubauer et al. v. Germany, Federal Constitutional Court, 29 April 2021.
[7]VZW Klimaatzaak v. Kingdom of Belgium, et al., Brussels Court of First Instance, 17 June 2021.
[8] Sharma by her litigation representative Sister Marie Brigid Arthur v Minister for the Environment [2021] FCA 560.
[9] Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552, at [16].}