What it costs to close the door on climate lawsuits

When a community floods or landslides are triggered by a cyclone, or a coastline erodes, who should pay for the damage? Those affected? Taxpayers? Councils? Or those whose activities contributed to the risk?

This year the Government passed a law that prevents people, companies, and government entities from being sued in tort for harm caused by greenhouse gas emissions and their contribution to climate change, with the Climate Change Response (Tort Liability) Amendment Act 2026.

If people can no longer seek redress through the legal system for climate-related harm, what mechanisms do we have to ensure governments, businesses and landowners exercise an appropriate duty of care? Will a complaint to the European Commission in September 2026 alleging the New Zealand Government has breached its climate commitments shift accountability elsewhere?

The Government’s Amendment Act was triggered by the 2024 Supreme Court decision in Smith v Fonterra, which allowed climate advocate Mike Smith’s climate tort claims against major emitters to proceed to trial. The Government saw the litigation as opening the door to significant climate-related liability, and that climate policy should be determined through democratic processes rather than litigation. Yet what mechanism remains when democratic processes fail to prevent harm or provide compensation?

One of the crucial benefits of liability is that it creates incentives for care and precaution. We are now experiencing extreme climate events – where does the duty of care rest and what actions can those affected take? When, for instance, councils allow urban development in a floodplain, not accounting for risks of land subsidence, increased contamination of waterways, and so on?

You could argue that citizens can take action against councils through the ballot box, but by then the damage is done and those affected not compensated. The economic consequences of uncompensated damage can be significant.

But establishing causation is difficult, as is securing sufficient compensation to fully cover costs. The sinking of the oil tanker Erika in 1999 illustrates just how difficult this can be. The poorly maintained single hull oil tanker broke in two, spilling about 20,000 tonnes of oil into the Atlantic, blackening the French coastline and killing thousands of sea birds.

It was a seemingly straightforward case of marine oil pollution, but complex corporate structures hampered efforts to establish who should pay and how much they should be liable for. It took almost 10 years and a long-running legal battle for the French court to award €190 million in damages, recognising environmental damage alongside economic harm.

Liability is not the only mechanism that can influence behaviour of course; pressure can come from other sources, including regulation, insurance, investor expectations, and international agreements. If New Zealand courts are no longer available to test whether climate-related harms should attract compensation, scrutiny may increasingly come from outside New Zealand’s legal system.

This was evidenced by the civil complaint lodged by the Dutch environment justice organisation Both Ends to the European Commission (the European Union’s executive body) alleging that the Government breached its climate commitments under the EU-NZ Free Trade Agreement.

It’s the first complaint for climate regression lodged under any EU trade agreement. In effect this takes the issue beyond New Zealand law into the rules governing international trade with potentially serious economic impacts.

The EU is New Zealand’s fourth largest trading partner, with the export of goods – meat, dairy, fish, fruit – worth about NZ$6 billion a year. Agriculture is not in the European Union Emissions Trading System so its border adjustment mechanism could not be applied to our exports. However, expectations by our trading partners on sustainability and policy related to climate change have the potential to increase the pressure on the New Zealand government to meet its Paris commitments. This is a blow to our international reputation and will have economic consequences. Could the action of Both Ends put the government’s feet to the fire?

There are now more frequent extreme climate events – where does the duty of care rest and what actions can affected parties take? Now that Government has removed the possibility of legal action on damages associated with climate change, will it remove the possibility of liability in other climate-related events?

Climate tort claims sought to use the courts to encourage precaution and provide compensation when harm occurred. It uses the threat of legal liability. Removing one of the few available avenues of redress was easy. What mechanism will the government use to replace civil liability that ensures precaution, accountability, and compensation for harm?

We might be obliged to come up with something; the Both Ends complaint relies on a different form of accountability, the possibility that failure to meet climate commitments could damage New Zealand’s international standing and trading relationships. If you remove one accountability mechanism, another will emerge, because societies still need ways to assign responsibility when harm occurs.