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1. Introduction

1 THE ROYAL COMMISSION ON GENETIC MODIFICATION (the Royal Commission) was established to report to government on the options available to New Zealand to deal with genetic modification and to advise on appropriate changes to the current legal framework. The Royal Commission report was released on 27 July 2001 and concluded that New Zealand should preserve opportunities by allowing the development of genetic modification whilst minimising and managing risks.[1]

2 One of the issues considered in the Royal Commission report was liability – who is, and who should be, liable for damage caused by genetic modification. The Royal Commission report concluded that the existing liability regime of tort and statute is sufficient and that “the common law ... [is] well able to mould new remedies for novel situations ... From a legal liability perspective we have not been persuaded there is anything so radically different in genetic modification as to require new or special remedies”.[2] Since the release of the Royal Commission report a number of papers have addressed this issue.[3]

3 The Law Commission was requested by the Minister Responsible for the Law Commission to consider and report on issues surrounding liability for loss resulting from the development, supply or use of genetically modified organisms (GMOs).[4] The fundamental issue to be investigated is:

The adequacy of current statute and common law for dealing with issues of liability for loss from genetically modified organisms. If the current law is not considered adequate, what options exist for specific liability regimes and what are their advantages and disadvantages?

4 There are two basic issues. First, are there new challenges presented by GMOs that are not adequately dealt with by the existing liability regime? This paper examines the potential inadequacies of the current regime, discusses possible responses to these inadequacies and assesses the strengths and weaknesses of each of those responses. It also identifies key policy questions in this area.

5 Secondly, if there are gaps in our liability regime, are those gaps specific to GMOs? This raises the question of whether any new regime should be developed specifically for GMOs or whether other potentially hazardous human activities or technologies should be included. Although this issue is discussed, the Law Commission suggests that further investigation should be considered.

6 When assessing possible liability regimes for GMOs, we have assumed that the aims include a regime that would:

• allow appropriate development of GMOs to maximise scientific progress and public benefit consistent with public safety;

• provide incentives for developers to install safety precautions;

• provide compensation for victims (and the environment) for any damage caused by GMOs, even if damage is discovered long after it was caused;

• provide transparent and publicly understood provisions for liability for loss; and

• create a framework that would internalise all costs of the genetic modification industry, or accept that some costs will be socialised (that is, borne by “innocent” individuals).

7 A combination of the options discussed in this paper could go some way to ensuring that compensation will be available for damage caused by GMOs. However, a key problem with liability for damage caused by genetic modification is that it is difficult to assess the level of risk posed or the size of the potential damage. Given these uncertainties, the increasing use of genetic modification in New Zealand may cause damage that cannot be covered under any liability regime. If damage is extreme (either in quantity or because it is not compensable for example, loss of biodiversity) the losses will either lie where they fall (that is, the party suffering the loss has no remedy), or the government will have to cover any shortfall.

8 At the heart of this inquiry are substantial policy choices from which varying legal consequences would flow. Government will have to decide how responsibility for any risks of the new technology is to be apportioned among the industry, individuals and the state. The Law Commission has not been asked to address these policy issues, nor advise upon what course of action should be adopted. Neither has the Law Commission been asked to consider the ethical or economic merits of allowing increased development of genetic modification in New Zealand. Consideration of whether to develop a new liability regime and, if so, its content should not be left solely to lawyers. Although these may appear to be legal issues, there are significant ethical and spiritual aspects, as well as questions of public acceptability. The decision as to who should be responsible for any adverse consequences of genetic modification must be widely debated and clearly agreed.

9 The Law Commission has been greatly assisted by Gareth Kayes, Patricia Sarr and Marcus McMillan with research. We acknowledge their work and express our sincere appreciation of their contributions.