Chapter 9 Liability and dispute resolution
This chapter considers whether the introduction of genetically modified (GM) canola might present any unique legal risk. It examines the role of existing common law remedies for dealing with disputes that might arise in the production, trade and use of genetically modified (GM) canola.
9.1 Is there unique legal risk associated with introducing genetically modified canola?
Participants in the grain supply chain in Australia who grow or handle GM canola might be legally liable for any losses that result from the adventitious presence of GM canola in non-GM canola crops or products, or from the contamination of other crops or products with GM canola. Losses might be caused at any point in the supply chain. Regarding this issue of potential legal liability, the Panel considers that the key question is whether GM canola presents any unique legal risk compared with the introduction of any other new crop varieties.
The production of commercial crops has always carried the risk of the actions of one party imposing costs on another for which the affected party is not compensated. The failure of one farmer to control weeds, for example, may impose costs on a neighbour. An example pertinent to this Review may be pollen flow from one canola crop (GM or otherwise) that may damage a neighbouring canola crop. Ellickson (1991) found that problems of this nature are generally resolved through farmer-to-farmer negotiation and agreement on adhering to sound agricultural practices, and that they rarely require court intervention. The Australian Government has chosen not to implement a strict liability regime for GM crops because the risks could be resolved through recourse to existing statute and common law, as is the case for other instances whereby the activities of a farmer affect a neighbour.
The Panel notes the use of legal remedies by farmers or participants in the grain supply chain has been rare in countries that have adopted GM crops, including Australia following the introduction of GM cotton here in 1996 (Dalton et al. 2003). Nevertheless, several submissions attributed unique liability risk to this new crop production system (Dorothy Pottage, sub. 14; Biological Farmers of Australia, sub. 114; Rupa Selecki, sub. 223; GeneEthics, sub. 234), requiring the Panel to examine the issue of GM liability.
Given that advising on appropriate legal regulatory schemes is outside the Panel's terms of reference and expertise, the Panel sought advice from the Victorian Government Solicitor and reviewed several relevant papers covering the issue of legal liability in relation to GM crops (ACIL Tasman 2005; Dalton et al. 2003; Kershen 2002; Lunney and Burrell 2006). Specifically, it sought to identify the causes of action that may be brought in relation to the unintended presence of GM organisms, at a number of points along the supply chain. After reviewing these materials and considering the Victorian Government Solicitor's advice, the Panel considers that introducing GM canola poses no unique legal risks.
9.2 Common law actions
The Panel's considered view is that trespass, nuisance and negligence are the common law causes of action most likely to be brought against a GM farmer for losses associated with the unintended presence of GMOs:
- Trespass to land occurs where there is a direct physical interference with another party's exclusive possession of land. If a GM farmer transports seed on a truck, for example, then a spillage of that seed may amount to trespass if it is intentional, reckless or negligent, in circumstances where the seed contaminates another person's land.
- The cultivation of GM canola may constitute a nuisance to a neighbouring farm if the unintended presence of GM canola materially damages a neighbouring crop or unreasonably interferes with the neighbour's use or enjoyment of their property.
- A GM canola farmer may be held liable for negligence if an established duty of care between the farmer and another party is breached and damage which was reasonably foreseeable is sustained by that other party.
ACIL Tasman (2005) explained the potential use of these common law torts following the introduction of GM canola, including examples of their application throughout the grain supply chain. The liability risk under any of these actions can be assessed only on a case-by-case basis. To minimise the risks, however, ACIL Tasman (2005) advised that GM farmers should be careful to comply with any relevant licence conditions imposed by the Office of the Gene Technology Regulator (OGTR) and any directions of the GM seed supplier included under the technology user agreement (TUA), as well as relevant industry best practice standards and guidelines. The framework under Single Vision Grains Australia will help resolve these issues.
9.3 Breach of contract
The Panel considers that liability may additionally arise under a claim of breach of contract. Commercial contracts are the key governing legal instruments facilitating trade along the grain supply chain. They are used to specify the actions and responsibilities of parties at points in the supply chain. For purchases of seed covered by intellectual property rights, TUAs between a farmer and a technology provider (either a technology developer or a seed company) outline the conditions under which the seed can be used, including licensing conditions imposed by the OGTR and the method for royalty payments on intellectual property rights. Biological Farmers of Australia highlighted farmer liability concerns with such commercial arrangements, suggesting a TUA:
… binds the farmer to Monsanto's oversight for multiple years, and includes a variety of other conditions that have effectively defined what rights a farmer does and does not have in planting, harvesting, and selling genetically engineered seed … No farmer is safe from the long reach of Monsanto. (sub.114, pp.16–17)
Obligations under intellectual property rights covering a seed variety (and the consequences of infringement) are not particular to GM canola varieties. As discussed in chapter 7, the ability to recover investment in plant breeding improvements is vital for ensuring new technologies developed by the private sector are accessible to Australian farmers.
Put simply, farmers should not knowingly cultivate GM crops (or any other modern crop variety covered by intellectual property rights) without first signing the required seed contract, and they should then adhere to its conditions. As stated by the Victorian Farmers Federation (VFF), farmers make seed purchasing decisions on a seasonal basis, weighing up the preferred production system for their property and the most appropriate seed varieties in the marketplace, accounting for any contractual obligations (sub. 115). The VFF advocated a farmer's right to choose (or reject) from the range of new available technologies (and any associated contractual obligations) approved by the OGTR.
Further along the supply chain, the Australian Grain Harvesters Association (sub. 7) noted significant uncertainty relating to meeting contractual warranties for hygiene of harvesting equipment. The Association stated that 'the introduction of GM canola into Australia's grain industry will … ignite the very real predicament of legal liability for our members' (sub.7, p. 1). It sought special legal liability exemption for any spread or contamination of grain crops associated with harvesting equipment moving from farm to farm and held that it 'must have absolute certainty and confidence that we will not be sued or discriminated against for any spread or contamination of grains or property, when and if GM canola is introduced' (sub.7, p. 2).
ACIL Tasman's (2005) overview of the legal liability risks associated with GM crops suggested that if transporters and contract harvesters act to avoid breaching contractual thresholds for low level presence of GM material or, alternatively, follow industry best practice to avoid spillage of GM material, the legal risk may be minimised. All other participants along the grain supply chain consider that the cultivation, handling and marketing of GM grain under standard contract conditions are achievable, now that thresholds for low level presence of GM canola are in place. Further, the National Agricultural Commodities Marketing Association's arbitration system provides participants in the grain supply chain with an industry based arbitration service to resolve disputes and avoid litigation, reduce friction among members and other industry participants, prevent misunderstandings and adjust unsatisfactory contractual conditions.
The organics sector presents a particular legal risk: any detection of GM material in organic crops has the potential to result in economic loss through lost market opportunities or price premiums if organic 'status' is affected (Milawa Mustards, sub. 24; Original Foods, sub. 47; Ceres Natural Foods, sub. 116). The National Standard for Organic and Biodynamic Produce does not accept any threshold for low level presence of GM material at this time.
If organic status is lost, rendering the organic producer in breach of a vendor declaration, then the organic producer may seek recompense through dispute resolution or legal means. Chris Kelly (sub. 6) mentioned the European Union's recent decision to harmonise the low level (unintended) presence thresholds (0.9 per cent) with the production and labelling of all produce along the supply chain. He suggested this approach has merit and might be explored for addressing the trade risks posed to the Victorian organics market. Claims of economic loss would need to be assessed for individual merit, accounting for the evidence for loss, as well as proof of breach of contract, trespass, nuisance or negligence (all of which involve evidential difficulties). While the Panel acknowledges that outcomes of possible causes for action are highly uncertain at this time, there is little evidence that problems posed are 'beyond the scope of informal resolution or the common law' (ACIL Tasman 2005, p. 18). Although not tested in the courts, inquiry and experience suggest the introduction of GM canola would not present a unique legal liability risk compared with that of introducing any other modern crop variety.
Despite uncertainty about outcomes from potential causes for legal action, the Panel considers there is little evidence that the introduction of genetically modified canola would pose any unique risks to which existing legal mechanisms could not respond.