New Zealand Legislation: Bills
Bills are proposed Acts
This Bill amends the Antarctica (Environmental Protection) Act 1994 by inserting a new Part 5A. The Bill implements many of New Zealand’s obligations under Annex VI to the Protocol on Environmental Protection to the Antarctic Treaty on Liability Arising from Environmental Emergencies (the Liability Annex). The Liability Annex deals with liability for environmental emergencies occurring in Antarctica. It was adopted in 2005 by the 28th Antarctic Treaty Consultative Meeting but has not yet entered into force.
The Bill requires operators (those organising or conducting Antarctic activities) to take prompt, effective response action when environmental emergencies arise from their activities. New Zealand operators must notify the Ministry of Foreign Affairs and Trade if they cause or discover an environmental emergency. If an operator fails to take prompt, effective response action, a Party to the Liability Annex (an Annex Party) may do so, and the defaulting operator must reimburse the Annex Party’s costs.
Where no Annex Party takes response action to an environmental emergency caused by a New Zealand operator, the High Court may order the operator to pay an amount representing the costs that would have been incurred had prompt and effective response action been taken. This amount will be paid into an Environmental Protection Fund administered by the Antarctic Treaty Secretariat.
The Bill also sets out the situations in which an operator is exempt from liability, and imposes a financial limit on liability (expressed in International Monetary Fund special drawing rights, equivalent to a minimum of US$1.5 million for environmental emergencies involving a ship, and US$4.5 million for other environmental emergencies). Liability is strict, and attaches to both State and non-State operators. The Bill removes the requirement for the Attorney-General to consent to civil proceedings against operators, since the Bill aims to facilitate such actions and requiring the Attorney-General's approval could be seen as a barrier.
The Liability Annex does not define “State operator”. Instead, each Annex Party must decide which of its operators are State operators. New Zealand will accept another Annex Party's decision, because State operators are not exempt from liability. Each Annex Party will be responsible for the actions of its State operators under international law. For this reason, the Bill does not cover the State operators of other Annex Parties, which will instead be covered by the relevant Annex Party's domestic legislation.
The Liability Annex will enter into force once it has been approved by all 28 Antarctic Treaty Consultative Parties, including New Zealand. Enactment of this Bill will enable New Zealand to approve the Liability Annex. The Bill will be brought into force by Order in Council once the Liability Annex itself enters into force.
Clause 1 is the Title clause.
Clause 2 provides that the Act comes into force on a date to be appointed by Order in Council. The Order in Council will be made when it is known when the Liability Annex will enter into force, which will be when it has been approved by all the Antarctic Treaty Consultative Parties. The Act should come into force on the same day that the Liability Annex enters into force.
Clause 3 provides that the Act amends the Antarctica (Environmental Protection) Act 1994 (the principal Act).
Clause 4 amends section 6. That section provides that the consent of the Attorney-General is required before any proceedings under the principal Act are instituted against certain people. The amendment excludes civil proceedings commenced under new sections 37E and 37F from the scope of this requirement, meaning that proceedings under those sections can be brought without the Attorney-General's consent.
Clause 5(1) inserts new Part 5A, comprising new sections 37A to 37I.
New section 37A sets out the purpose of new Part 5A, which is to implement New Zealand's obligations under the Liability Annex.
New section 37B defines terms used in this Part. Key definitions are environmental emergency, New Zealand operator, and prompt and effective response action. The definitions closely reflect the definitions and terminology used in the Liability Annex.
New section 37C requires New Zealand operators whose activities give rise to an environmental emergency to notify the Ministry of Foreign Affairs and Trade (the Ministry). It is an offence not to do so.
New section 37D requires New Zealand operators whose activities give rise to an environmental emergency to take prompt and effective response action. It is an offence not to do so.
New section 37E provides that if a New Zealand operator or a New Zealand resident operator whose activities give rise to an environmental emergency fails to take prompt and effective response action, then the operator is liable to pay the costs incurred by any Annex Party that does take response action. An application for an order requiring a non-State operator to pay the costs must be made to the High Court. The application may be made only by the Minister, if the Ministry took the action, or by another Annex Party that took the action. Article 7(4) to (6) deals with what happens when the operator is a State operator. An operator is liable whether or not it knew of the environmental emergency.
New section 37F provides for the situation where no Annex Party has taken response action following an environmental emergency caused by a New Zealand operator or a New Zealand resident operator. In that situation, the operator whose activities gave rise to the environmental emergency is liable to pay the costs of the response action that should have been taken. An application for an order requiring a non-State operator to pay the costs of the response action that should have been taken may be made to the High Court. The application may be made only by the Minister, or by a person authorised by an Annex Party to apply on its behalf. Money paid following an order under this section is paid into the Environmental Protection Fund. Article 7(4) to (6) deals with what happens when the operator is a State operator.
New section 37G sets out some limits on the civil liability imposed by new sections 37E and 37F. This relieves operators from liability for environmental emergencies caused by acts necessary to protect human life or safety, exceptional natural disasters, acts of terrorism, or acts of belligerency against the operator.
New section 37H imposes limits on the amount of liability under new sections 37E and 37F. These are determined by reference to the Liability Annex. Regulations made under section 55(2) may update the text of the Annex to reflect agreed changes to these limits.
New section 37I provides that if an environmental emergency arises from the activities of 2 or more operators, liability is joint and several.
Clause 5(2) adds the text of the Liability Annex, set out in the Schedule, to the Protocol on Environmental Protection to the Antarctic Treaty, which is set out in Schedule 2 of the principal Act.
Annex VI to the Protocol on Environmental Protection to the Antarctic Treaty on Liability Arising from Environmental Emergencies (the Liability Annex) was adopted by the 28th Antarctic Treaty Consultative Meeting (ATCM) in June 2005. New Zealand and other Antarctic Treaty countries are now seeking to approve the Liability Annex so that it can enter into force.
The Liability Annex establishes a regime of liability for damage to the Antarctic environment arising from activities conducted there by Parties to the Antarctic Treaty and its Protocol on Environmental Protection. Operators (those organising Antarctic activities) must take preventative measures to reduce the likelihood of accidents harming the Antarctic environment; establish contingency plans to deal with harmful incidents; and take prompt, effective response action when environmental emergencies arise from their activities. If an operator fails to take prompt and effective response action to protect the environment, others may endeavour to do so, and the defaulting operator must reimburse their costs.
The Liability Annex also establishes legal mechanisms for the recovery of these costs; sets out certain exemptions from liability; requires Antarctic operators to have insurance; and imposes a financial limit on liability (expressed in International Monetary Fund special drawing rights, equivalent to a minimum of US$1.5 million for environmental emergencies involving a ship, and US$4.5 million for other environmental emergencies). Liability is strict (it does not require proof that the environmental emergency arose from an operator’s fault or negligence) and applies to both government and private operators. Legislation will be needed to implement most aspects of the Liability Annex.
The Antarctic Treaty entered into force for New Zealand on 23 June 1961. The Protocol on Environmental Protection to the Antarctic Treaty (the Environmental Protocol) entered into force for New Zealand on 14 January 1998. The Liability Annex was adopted by the ATCM held in Stockholm in June 2005.
The Liability Annex has not yet entered into force. It is proposed that New Zealand approve the Liability Annex in advance of the 50th anniversary of the signing of the Antarctic Treaty in 2009.
The adoption of the Liability Annex fulfils a longstanding obligation on Antarctic Treaty countries, including New Zealand, to conclude an annex to the Environmental Protocol setting out legal liability for damage to the Antarctic environment. This obligation is contained in article 16 of the Environmental Protocol. The Liability Annex is an important element of the Antarctic environmental protection regime.
The Liability Annex will enter into force once it has been approved by all Antarctic Treaty Consultative Parties, including New Zealand (Environmental Protocol, article 9(2) and Antarctic Treaty, article IX). New Zealand plays an active role in the Antarctic Treaty System and strongly supports its objectives.
Approving the Liability Annex is an opportunity to highlight and promote, both domestically and internationally, New Zealand’s support for a strong environmental protection regime for Antarctica. In addition, because of the leading role New Zealand played in chairing the negotiations, New Zealand will be expected to be one of the first countries to formally approve the Liability Annex. To date, only Sweden, Peru, Poland, and Spain have approved the Liability Annex. Twenty of the remaining 24 Antarctic Treaty Consultative Parties have indicated that they have started their internal review processes for approving the Liability Annex. As well as New Zealand, these countries include Australia, Brazil, China, France, Germany, the United Kingdom, and the United States of America.
It is proposed that New Zealand adopt the legislation necessary to approve the Liability Annex, but not bring this legislation into force until the Liability Annex itself enters into force following its approval by all the Antarctic Treaty Consultative Parties. This process is expected to take several years.
The Liability Annex is an important element in the effective implementation of the Antarctic environmental protection regime, of which New Zealand is a strong supporter.
The advantages to New Zealand of approval of the Liability Annex (which, together with approval by the other Antarctic Treaty Consultative Parties, will enable its subsequent entry into force) are—
the Liability Annex meets New Zealand’s objective of securing as broad a liability regime as possible; and
while there was no agreement to include liability for irreparable damage to the environment in the Liability Annex, a commitment was secured to future negotiations of a further regime to cover situations of irreparable damage; and
requiring operators to take preventative measures and establish contingency plans will reduce the likelihood of accidents harming the Antarctic environment (for which New Zealand would have search and rescue responsibility if such accidents occurred in the Ross Sea region of Antarctica); and
being one of the first countries to approve the Liability Annex is an opportunity to highlight and promote, both domestically and internationally, New Zealand’s support for a strong environmental protection regime for Antarctica.
The status quo is for liability for environmental emergencies in Antarctica to be governed by the general provisions of article 15 of the Environmental Protocol and the international legal principles governing state responsibility. Neither of these sources provides sufficient certainty for operators, whether private or State, as to their potential liability. To create clear, enforceable legal obligations, the Liability Annex is required.
There are no significant disadvantages to New Zealand approving the Liability Annex. The only costs incurred as a result of approving the Liability Annex relate to insurance requirements, and are analysed in the costs and effects section below.
Given New Zealand’s leading role as chair of the Liability Annex negotiations and a significant player in Antarctic affairs, a decision not to approve the Liability Annex would harm New Zealand’s international reputation.
On balance, officials consider that it is in New Zealand’s interest to approve the Liability Annex, as the costs are minor whereas the benefits to the Antarctic environment and to New Zealand’s reputation are significant and long term.
New Zealand’s legal obligations under the Liability Annex, once it entered into force, would include—
requiring New Zealand operators to take preventative measures to reduce the likelihood of accidents harming the Antarctic environment, and to establish contingency plans to deal with harmful incidents (Liability Annex, articles 3 and 4); and
requiring New Zealand operators to take prompt response action when environmental emergencies arise from their activities (Liability Annex, article 5(1)); and where they do not do so, establishing their liability to pay the costs of the response action that they should have taken (Liability Annex, article 6); and
establishing a notification procedure for an operator who discovers an environmental emergency, so that the Government can consider whether to take response action itself; and promoting the use of notification procedures and cooperative response procedures by New Zealand operators who cause environmental emergencies (Liability Annex, articles 4 and 5); and
establishing legal mechanisms for the recovery of response action costs (Liability Annex, article 7) and the situations in which liability is exempted (Liability Annex, article 8); and
setting the financial limits on the compensation for which an operator may be liable (Liability Annex, article 9) and requiring operators to carry insurance up to these limits.
These are the same legal obligations that other parties to the Liability Annex would have upon the entry into force of the Liability Annex.
The Environmental Protocol does not allow States to make reservations, either to the Environmental Protocol or to its annexes, which form an integral part of the Environmental Protocol (Environmental Protocol, articles 9(1) and 24).
The Environmental Protocol’s existing dispute resolution procedures, set out in articles 18 to 20, will also apply to the Liability Annex (Environmental Protocol, article 9). If a dispute arises concerning the Liability Annex’s interpretation or application, the parties to the dispute are to consult among themselves as soon as possible with a view to resolving the dispute by negotiation, inquiry, mediation, conciliation, arbitration, judicial settlement or other agreed peaceful means (Environmental Protocol, article 18). Parties can choose to resolve disputes relating to an annex using either or both of the International Court of Justice and the Arbitral Tribunal (details of which are contained in the Schedule to the Environmental Protocol). By default, Parties are deemed to have accepted the competence of the Arbitral Tribunal (Environmental Protocol, article 19(3)). If parties to a dispute have not accepted the same means, or have both accepted both means, then the dispute shall be submitted to the Arbitral Tribunal, unless the parties agree otherwise (Environmental Protocol, article 19(5) and (6)).
Legislation will be required to implement most of New Zealand’s obligations under the Liability Annex, including—
requiring New Zealand operators to take prompt and effective response action when environmental emergencies arise from their activities (Liability Annex, article 5(1)); and where they do not do so, establishing their liability to pay the costs of the response action that they should have taken (Liability Annex, article 6); and
establishing a notification procedure for an operator who discovers an environmental emergency, so that the Government can consider whether to take response action itself; and promoting the use of notification procedures and cooperative response procedures by New Zealand operators who cause environmental emergencies (Liability Annex, articles 4 and 5); and
establishing legal mechanisms for the recovery of response action costs (Liability Annex, article 7) and the situations in which liability is exempted (Liability Annex, article 8); and
setting the financial limits on the compensation for which an operator may be liable (Liability Annex, article 9).
This legislation will take the form of an amendment to the existing Antarctica (Environmental Protection) Act 1994 (the 1994 Act). The amending Bill is expected to contain approximately 5 clauses of medium complexity. Regulations will be needed to bring the amending legislation into force, following the entry into force of the Liability Annex.
Some Liability Annex obligations will not require legislative amendments, as they can instead be implemented through existing administrative procedures. These obligations will be attached as conditions (Ministerial directions) to environmental impact assessments conducted under the 1994 Act. Section 10(1)(b) of the 1994 Act provides that the Minister may “direct any person carrying out ... any activity”
in Antarctica to “abide by such conditions as the Minister considers appropriate in order to avoid or minimise the effects of the activity on the Antarctic environment”
.
The obligations proposed to be implemented as conditions in this way are operators’ obligations to take preventative measures and establish contingency plans (Liability Annex, articles 3 and 4) and to carry insurance or a financial guarantee to cover their liability (Liability Annex, article 11). This is an appropriate mechanism for implementing these obligations, since reducing the risk of environmental emergencies occurring in Antarctica is one of the Liability Annex’s primary aims. The New Zealand procedures for non-governmental visitors to Antarctica (available on the Ministry of Foreign Affairs and Trade’s Internet site) will be updated to ensure non-State operators are aware of the requirement to provide this information along with their environmental impact assessment.
Approving the Liability Annex, and therefore ultimately allowing it to enter into force, will have long-term benefits for the Antarctic environment. In particular, requiring operators to take preventative measures and establish contingency plans will reduce the likelihood of accidents harming the Antarctic environment. Imposing legal liability to clean up or pay the costs of response action where damage does occur will act as an incentive for operators to minimise damage to the environment.
The Liability Annex is not expected to have any impact on the economy.
There will be ongoing compliance costs for New Zealand operators in the Antarctic, both governmental and non-governmental, as a result of implementing the Liability Annex obligations outlined above. However, these are expected to be minimal as operators already have insurance in place.
Alongside the current environmental impact assessment required for proposed Antarctic activities, private operators will need to demonstrate they have—
undertaken reasonable preventive measures designed to reduce the risk of environmental emergencies and their potential adverse impact; and
established contingency plans, in co-operation with other operators, for responses to incidents with potential adverse impacts on the Antarctic environment; and
maintained adequate insurance or other financial security, such as a bank guarantee, to cover liability for response action taken by a party to the Environmental Protocol where the operator fails to take prompt and effective response action. Such insurance must cover liability up to the financial limits of liability set out in article 9(1) and (2) of the Liability Annex (expressed in International Monetary Fund special drawing rights, equivalent to a minimum of US$1.5 million for environmental emergencies involving a ship, and US$4.5 million for other environmental emergencies). These limits were judged to reflect an appropriate balance between the need to set limits sufficiently high to offer a deterrent, and the need to keep financial risks within reasonable limits.
State (government) operators must also meet the same requirements as private operators, outlined above. However the Liability Annex allows parties to elect to self-insure rather than carry insurance for State operators. Since Antarctica New Zealand’s activities are primarily land-based, the maximum level of exposure for which it may be liable in respect of any one incident is 3 million SDRs (currently equivalent to approximately US $4.5 million). Antarctica New Zealand currently carries public liability insurance sufficient to cover this exposure. As a result, there is no need to take up the self-insurance option in respect of Antarctica New Zealand.
The New Zealand Defence Force (NZDF) operates C-130 Hercules and P3K Orion aircraft in the Antarctic. Accordingly, its maximum level of exposure in respect of any one incident would also be US $4.5 million. In the case of an environmental emergency arising from a ship (should NZDF operate vessels in the Antarctic Treaty area in the future), the limit on liability is set at US $1.5 million for a ship of 2 000 gross tonnes, increasing by a sliding scale with each additional tonne. NZDF currently carries aviation and marine protection and indemnity insurance sufficient to cover this exposure. As a result, there is no need to take up the self-insurance option in respect of NZDF.
New Zealand government agencies such as the Ministry of Fisheries and the National Institute of Water and Atmospheric Research also undertake scientific research voyages from time to time in the Antarctic Treaty area (south of 60°S). Such voyages will also be covered by the Liability Annex once it enters into force. As these voyages are ship-based, the relevant limit on liability for an environmental emergency arising from their activities would start at US $1.5 million for a ship of 2 000 gross tonnes, increasing by a sliding scale with each additional tonne. Such voyages have previously carried public liability insurance sufficient to cover this exposure, and would be required to do so following the Liability Annex’s entry into force. As a result, there is no need to take up the government self-insurance option provided in the Annex in respect of State operators conducting Antarctic research voyages.
Government agencies represented on the Officials’ Antarctic Committee (the Treasury; Antarctica New Zealand; the Ministries of Defence, Environment, Fisheries, Research, Science and Technology, Tourism, and Transport; the Departments of Conservation and of the Prime Minister and Cabinet; New Zealand Defence Force; Land Information New Zealand; and Maritime New Zealand) and the Ministry of Justice have been consulted on and support the proposed treaty action. The Ministry of Economic Development, the Parliamentary Counsel Office, and the National Institute of Water and Atmospheric Research were also informed.
Representatives of the International Association of Antarctica Tour Operators (IAATO), the Antarctic tourism industry body, and of Antarctic environmental NGOs were involved in the Liability Annex negotiations. Interested parties will also have the opportunity to comment on the Liability Annex’s domestic implementation during the Parliamentary treaty examination process and the select committee process.
The Liability Annex creates liability for the costs of response action (such as containing an oil spill), but does not create liability for irreparable damage to the environment itself. This reflects adamant resistance from a number of countries during the negotiation of the Liability Annex. However, in a compromise, the ATCM decided when adopting the Liability Annex to defer the issue of irreparable damage to future negotiations.
The ATCM adopted Decision 1 (2005), which provides that, within 5 years, the ATCM will take a decision on the establishment of a time frame for the resumption of negotiations “to elaborate future rules and procedures as may be necessary”
relating to liability for irreparable damage.
The Liability Annex may be amended or modified by a Measure adopted in accordance with article IX(1) of the Antarctic Treaty (Liability Annex, article 13). Article 13(2) of the Liability Annex provides for an expedited amendment procedure, with amending Measures that do not specify otherwise deemed to be accepted 1 year after their adoption, unless a party requests otherwise. All Measures require consensus to be adopted.
New Zealand would consider any amendments or modifications to the Liability Annex on a case by case basis, and any decision to accept an amendment or modification would be subject to the usual domestic approvals and procedures.
There is no withdrawal or denunciation provision in the Liability Annex itself. The Antarctic Treaty and the Environmental Protocol contain limited provisions dealing with withdrawal. In the case of the Environmental Protocol, this is not possible until at least 50 years after its entry into force (January 2048). In addition, it is possible to withdraw from either treaty at any time by consent of all parties to the treaty (Vienna Convention on the Law of Treaties, article 54).
Any decision by New Zealand to withdraw from the Antarctic Treaty or the Environmental Protocol would be subject to the usual domestic approvals and procedures.
The Ministry of Foreign Affairs and Trade has determined that this national interest analysis is adequate.
