Exide Technologies Limited v Attorney-General HC Wellington CIV-2011-485-1549
[2011] NZHC 1127
•16 September 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2011-485-1549
UNDER the Judicature Amendment Act 1972
BETWEEN EXIDE TECHNOLOGIES LIMITED Plaintiff
ANDTHE ATTORNEY-GENERAL Defendant
Hearing: 5 and 6 September 2011
Counsel: M Chen and S D Barker for Plaintiff
V Casey and C Owen for Defendant
Judgment: 16 September 2011
JUDGMENT OF MILLER J
TABLE OF CONTENTS
Introduction ...........................................................................................................[ 1] A brief narrative....................................................................................................[ 7] The pleadings .........................................................................................................[ 15] What regulatory framework governs MED’s decisions? ..................................[ 26] The Imports and Exports (Restrictions) Act 1988 ...............................................[ 26] The Imports and Exports (Restrictions) Prohibition Order (No 2) 2004............[ 28] The Basel Convention ...........................................................................................[ 39] Status of Conventions in New Zealand Law........................................................[ 39] Background to the Basel Convention ..................................................................[ 41] The terms of the Basel Convention......................................................................[ 43] Subsidiary declarations and guidelines ..............................................................[ 54] The Basel Ban Amendment..................................................................................[ 59] The Waigani Convention ......................................................................................[ 61] MED Policy and Processes ...................................................................................[ 62] The issues ...............................................................................................................[ 68] Can MED prefer waste reduction through recycling to domestic recycling and fewer transboundary movements under the 2004 Order? ................................[ 69]
EXIDE TECHNOLOGIES LIMITED V THE ATTORNEY-GENERAL HC WN CIV-2011-485-1549 16
September 2011
When seeking importing States’ consent did MED rely upon lack of environmentally compliant New Zealand facilities, or overseas demand for recycling, and does it matter? ..............................................................................[ 85] Are ULABs “required” as a raw material for recycling or recovery in the importing States? ..................................................................................................[ 89] What does environmentally sound and efficient disposal in the importing State require of MED? ...................................................................................................[ 91] Does consistency of policy matter too much to MED?.......................................[ 98] Did MED rely on material mistakes of fact about Exide when granting export permits?.................................................................................................................[103] What did MED not take into account when granting export permits? ..........[105] Must MED seek approval of Waigani Convention Parties through whose exclusive economic zones ULABs travel? ..........................................................[107] Does Australia’s change of approach matter?...................................................[118] The first cause of action: substantive challenges...............................................[120]
Illegality and failure to consider object of reducing transboundary
movements ..........................................................................................................[121] Irrelevant consideration of economic efficiency ................................................[122] Unlawful fetter on discretion .............................................................................[123] Material errors of fact about Exide ...................................................................[126] The second cause of action: procedural fairness ..............................................[127] Decision .................................................................................................................[132]
Introduction
[1] New Zealand generates about 16,000 tonnes of used lead-acid batteries (ULABs) each year. Their export to certain countries for recycling is routinely authorised, provided the ULABs can be disposed of there in an environmentally sound and efficient manner. Permits are granted under delegated authority by the Ministry of Economic Development (MED) as New Zealand‟s competent authority under the Basel and Waigani Conventions, which are international conventions restricting inter-State or „transboundary‟ movement of wastes.
[2] MED grants export permits because it believes both that transboundary movements are permissible for recycling under the Conventions and that MED maximises ULAB recoveries in New Zealand by allowing exporters to compete freely with New Zealand‟s last remaining ULAB recycler, Exide Technologies Ltd. Current and pending permits allow the export of more ULABs than New Zealand generates each year.
[3] Exide claims that MED‟s policy contravenes the Conventions, which aim to reduce transboundary waste movements. Indeed, it characterises the policy, not entirely without justification, as one of maximising transboundary movements. If MED is to pursue the objective of reducing transboundary movements at all, Exide maintains, it must take into account, when authorising exports, the need to sustain Exide‟s plant.
[4] Until 2010 Exide relied on imported Australian ULABs, but Australia‟s competent authority now prohibits exports from that country for recycling, citing Australia‟s obligations under the Basel Convention. The viability of Exide‟s plant is said to depend on a change in government policy, for Exide now requires most, and perhaps all, of New Zealand‟s annual ULAB “arisings”, to use the parties‟ terminology, if it is to operate the plant efficiently.
[5] This application for judicial review is a last-ditch attempt to force such a change of policy upon MED, which is unsympathetic. MED characterises Exide‟s pleas as a demand for a domestic monopoly. Should the policy not change, Exide‟s senior witness, John Cowpe, says in his sworn evidence, New Zealand will lose its only recycling facility. At present the plant is eking out its stocks and operating four days per week.
[6] Having regard to Exide‟s position, the proceeding has been brought on at short notice and this judgment has been written in some haste. All of the many points taken by counsel have been considered, but the judgment addresses those that might reasonably be thought dispositive.
A brief narrative
[7] ULABs have been recycled at Exide‟s Petone plant since 1965. The plant also produced batteries, but that ceased in 2006. It is capable of recycling 28,000 tonnes of ULABs per annum. Exide operates under a resource consent granted by the Greater Wellington Regional Council. There is a controversial history of lead- bearing dust emissions from the plant, but the evidence is that since 2006 Exide has invested heavily in compliance, and it says the plant is now very efficient.
Discharges to air are now said to be only 10-15 per cent of those permitted under the resource consent.
[8] As the Attorney-General acknowledges, New Zealand has assumed substantial obligations affecting transboundary waste movements and designed to protect human health and the environment. They arise under the Basel, Waigani, Stockholm and Rotterdam Conventions.1 For present purposes only the first two of these matter.
[9] The Basel Convention entered into force on 5 May 1992, and New Zealand ratified it in 1994. Obligations under that Convention to control transboundary waste movements were initially incorporated into the Customs Export Prohibition Order 1996.2 The Waigani Convention entered into force in 2001, although New Zealand is said to have ratified it in 2000.
[10] Since 2004 obligations under both Conventions have been incorporated in the Import and Exports (Restrictions) Prohibition Order (No 2) 2004, which I will call the 2004 Order. Under the Order decisions about export permits are assigned to the Minister of Commerce. It is common ground that the Minister has delegated his powers, ultimately to officials within MED. For my purposes it suffices to call the decisionmaker „MED‟ without identifying the particular official who granted any given permit.
[11] Permits are granted for a maximum term of one year. Since January 2008
MED has granted 24 permits, 20 for export to the Republic of Korea and four to the Philippines. Five of those permits are current. They together allow export of 17,000 tonnes per annum. MED is also considering two renewals and two new applications,
which would together allow export of an additional 17,800 tonnes.
1 The Conventions are respectively titled: Basel Convention on the Control of Transboundary
Movements of Hazardous Wastes and their Disposal (the Basel Convention) (entered into force 5
May 1992); Stockholm Convention on Persistent Organic Pollutants (the Stockholm Convention) (entered into force 17 May 2004); Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade (the Rotterdam Convention) (entered into force 24 February 2004); Waigani Convention: Convention to Ban the Importation into Forum Island Countries of Hazardous and Radioactive Wastes and to Control the Transboundary Movement and Management of Hazardous Wastes within the South Pacific Regional (the Waigani Convention) (entered into force 21 October 2001).
2 The Order was made under the Customs and Excise Act 1996.
[12] Between 1996 and 2009 Exide imported about 12,000 tonnes per annum of Australian ULABs for recycling. MED approved such imports on the ground that the ULABs could be handled here in an environmentally sound manner. But in 2009
Australia prohibited ULAB exports. They ceased in October 2010. Since then Exide has depended on the New Zealand domestic market. (It also acquires a small quantity from Pacific Island States.)
[13] Since 2005 Exide has tried to persuade MED to change its policy toward ULAB exports. Those efforts took on greater urgency when Australia signalled its intention to ban exports. MED supported Exide in its attempts to retain Australian imports into New Zealand, but it has consistently refused to restrict exports from this country.
[14] From 1 July 2011 the 2004 Order has been administered in the Ministry for the Environment, which is developing its own policy about ULAB exports, and the Environmental Protection Authority has been substituted for MED as the decision- maker.3 Exide insists that it cannot await the new policy. When pressed, Ms Chen pointed to the four current applications, which MED must process under transitional provisions, and evidence that MED is urging the Ministry for the Environment to adopt MED‟s policy. The relief sought, if granted, would leave the Ministry for the Environment with no option but to adopt a materially different policy.
The pleadings
[15] The statement of claim seeks a declaration that decisions to permit ULAB exports since 1 January 2008 were illegal, and an order setting aside current permits under which ULABs have not already been exported. It has now emerged that ULABs have been exported under four of the five current permits. No express application was made for leave to amend the claim, but Ms Chen did urge me to set aside all current permits. She acknowledged that such course would require that the proceeding be adjourned so the permit holders, who have not been sued or served,
might be heard on relief.
3 Import and Export (Restrictions) Amendment Act 2011; Environmental Protection Authority Act
2011.
[16] Several grounds for review are pleaded. First, it is said that the permits already issued are unlawful, and those that are pending would be unlawful, because ULABs can be disposed in an environmentally sound and efficient manner in New Zealand. However, Ms Chen acknowledged in argument that ULAB exports are not prohibited under the 2004 Order whenever there exists a domestic facility capable of recycling them in an environmentally appropriate way. She reframed her argument in terms of relevant and irrelevant considerations, maintaining that MED has failed to consider the primary object of the Basel Convention, that of reducing transboundary waste movements. That object in turn, she contended, requires that MED deploy its discretion to grant export permits having regard to the necessity of sustaining New Zealand‟s only remaining recycling plant. The principal relief sought is now a declaration to the effect that MED must exercise its discretion to grant export permits accordingly.
[17] Second, it is said that when granting the existing permits MED has taken irrelevant considerations into account; they include economic efficiency in the collection and disposal (which includes recycling) of ULABs.
[18] Third, it is said that the decision-makers within MED to whom the Minister of Commerce has delegated his decision-making powers under the 2004 Order have unlawfully fettered their discretion by acting under dictation from the Minister. As the evidence relied upon comprised briefing papers written in June and July 2011, I take it that I am asked to find that the decision-makers would act unlawfully if they were to follow Ministerial directions allegedly given at that time when assessing the four pending applications
[19] Fourth, it is said that Exide has at all material times enjoyed a right to be heard on the grant of each export permit, but was not.
[20] Fifth, it is said that decisions to grant permits were taken in reliance upon material errors of fact about Exide‟s operations in New Zealand; specifically, MED has wrongly assumed that the Petone plant is inefficient.
[21] Ms Chen urged me to make certain findings of fact in connection with these claims. I have done so to the extent I think necessary, but I have borne in mind that some facts are disputed and there was no cross-examination.
[22] The Attorney accepts that decisions to issue export permits are judicially reviewable, but he maintains that the decisions turn on questions of high policy which it is not the Court‟s business to answer.
[23] On the central question of MED‟s policy, the Attorney says that the object of reducing transboundary movements was taken into account. He concedes, however, that the Ministry did not exercise the discretion to grant export permits having regard to the desirability of sustaining Exide‟s plant. Rather, MED‟s policy, and the decisions in each case, have presumed that a) waste exports are permitted where the waste is wanted for recycling in the importing State and the recycling plant there meets minimum environmental standards under the Basel Convention, and b) New Zealand is free to pursue the Convention objective of minimising waste by ensuring that all New Zealand‟s ULABs are recycled, and c) that objective is best met by encouraging a domestic collections market in which offshore buyers can compete freely with Exide, so increasing ULAB recoveries by maximising the price that consumers receive for them.
[24] The Attorney maintains that no material errors of fact about Exide influenced the permit decisions, that MED has not abdicated its discretion, and that Exide has no right to be heard on individual export permits. In any event, Exide has been heard on the question whether MED‟s policy ought to change.
[25] An interim declaration was made at the hearing, to the effect that MED ought not grant any permit pending this judgment. MED took the stance that it could not offer an assurance to that effect, because one applicant is now complaining that delay is causing loss.
What regulatory framework governs MED’s decisions?
The Imports and Exports (Restrictions) Act 1988
[26] In 2003 the Import Control Act 1988 was amended and renamed the Imports and Exports (Restrictions) Act 1988. The purpose of the amending legislation was to enable New Zealand “to give better effect to its international obligations to restrict the exportation of certain goods”.4 The Act provides that the Governor-General, if satisfied that it is necessary to give effect to an international obligation, may by Order in Council prohibit the exportation of goods of a specified class from New Zealand.5 The international obligations of which the legislation speaks are defined to include those assumed under the Basel and Waigani Conventions. A prohibition may be general or limited in various ways or conditional. The Act creates an offence of exporting goods from New Zealand in breach of such an Order in Council.
[27] The 2004 Order was made under the Act, and all of the decisions in issue here were made under the 2004 Order.
The Imports and Exports (Restrictions) Prohibition Order (No 2) 2004
[28] The 2004 Order generally prohibits the shipping of any hazardous waste to a place outside New Zealand.6 ULABs are hazardous wastes as defined, for they contain lead and lead compounds and acidic solutions. The plastic casings are also considered hazardous until they have been cleaned during the recycling process because they are contaminated with the hazardous constituents of the battery.
[29] However, cl 11 permits hazardous waste exports where the Minister has authorised them, and the Minister enjoys a discretion to authorise exports if certain conditions are met. Until 1 July 2011 cl 11 provided so far as relevant:
11 When waste may be exported
4 Imports and Exports (Restrictions) Amendment Act 2003, s 3.
5 Imports and Exports (Restrictions) Act 1988, s 3A.
6 Clause 6.
(1) A hazardous waste or household waste may be exported if the
Minister has consented to the exportation.
(2) Subject to subclause (3) [which deals with Stockholm Convention chemicals], the Minister may consent to the exportation of any hazardous waste or household waste if—
(a) the waste will be exported to a qualifying destination; and
(b) any of the following applies:
(i) New Zealand does not have the technical capacity and the necessary facilities, capacity, or suitable disposal sites to dispose of the waste in an environmentally sound and efficient manner; or
(ii) the waste is required as a raw material for any recycling or recovery industry in the importing State; or
(iii) the exportation of the waste is in accordance with any criteria decided by the Basel Parties; and
(c) the waste can be disposed of or managed in an environmentally sound and efficient manner in the importing State; and
(d) exportation of the waste is otherwise in conformity with New Zealand's obligations under the Basel Convention and, if relevant, the Waigani Convention.
...
(4) In subclause (2), qualifying destination means a Basel Party that—
(a) has not prohibited the importation of the waste; and
(b) has consented in writing to the specific import in question.
[30] Several points may be made at this stage about cl 11. First, it is common ground that the discretion in subcl (1) must be exercised for the purposes of the legislation,7 and that the 2004 Order gives effect, in part, to New Zealand‟s obligations under the Basel and Waigani Conventions, recourse to which may be had when interpreting it. Clause 11 closely follows the language of article 4.9 of the Basel Convention.
[31] Second, the four requirements in subcl (2)(a) - (d) must all be met before the
Minister may authorise hazardous waste exports, but subcl (2)(b) contains three
7 Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 (HL).
alternatives. Of these, only the first two matter; they concern New Zealand‟s capacity to dispose of the waste in an environmentally sound and efficient manner and a requirement, in the alternative, that the waste is required as a raw material for any recycling or recovery industry in the importing State.
[32] Third, “disposed of” in cl 11(2)(c) is not defined in the 2004 Order, but “disposal” in the Basel Convention includes recycling of metals and metal compounds and other inorganic materials.
[33] Fourth, the concept of disposal in “an environmentally sound and efficient manner” is not defined in the Order either, but “environmentally sound management of hazardous wastes” receives a definition in the Basel Convention:
“Environmentally sound management of hazardous wastes or other wastes” means taking all practicable steps to ensure that hazardous wastes or other wastes are managed in a manner which will protect human health and the environment against the adverse effects which may result from such wastes.
[34] The Convention also defines “management” as the collection, transport and disposal of hazardous wastes or other wastes, including after-care of disposal sites. The Convention does not include efficiency in these definitions, but it may be noted that the 2004 Order is concerned with efficiency of disposal in the importing State, not efficiency of collection in New Zealand except, perhaps, so far as the one bears upon the other by ultimately increasing the price paid for ULABs in New Zealand. That said, the Convention does speak of efficiency in a broader sense; one of its objectives is that of reducing transboundary waste movements to the minimum consistent with their environmentally sound and efficient management.
[35] Fifth, cl 11(2)(d) provides that the Minister may consent if exportation of the waste is otherwise in conformity with New Zealand‟s obligations under the Basel Convention and, if relevant, the Waigani Convention. It is common ground that this is an important provision, but for different reasons. Ms Chen contended that it imports other provisions of the Basel Convention which, unlike art 4.9, are not expressly incorporated in the 2004 Order. In particular, it is said to incorporate arts
4.2(b) and (d), which deal respectively with obligations to take appropriate measures to ensure the availability of adequate disposal facilities within New Zealand and to
ensure that transboundary movements of hazardous wastes are reduced to the minimum consistent with their environmentally sound and efficient management. Ms Casey contended that cl 11(2)(d) rather reflects the importance of procedural provisions governing disclosure of waste movements between States and providing for informed consent; these she characterised as the cornerstone of the Basel Convention.
[36] Sixth, it is not in dispute that the two States export to which is in issue here, the Republic of Korea and the Philippines, are qualifying destinations for cl 11(2)(a) in that both are Basel Parties which have not prohibited importation of ULABs and both have consented to the specific imports in issue here. Ms Casey was at pains to emphasise that no question arises of dumping hazardous wastes in a developing country. Rather, both nations maintain ULAB recycling industries to support domestic industries for which lead is a raw material, notably automobile manufacture.
[37] I note in passing that Exide claims the importing State‟s consent to four of the five current permits was vitiated because when seeking consent MED misled the competent authority by claiming that New Zealand cannot dispose of ULABs in an environmentally appropriate manner. I deal with that issue at [85]-[88] below.
[38] I must now outline salient features of the Basel and Waigani conventions and subsidiary agreements entered under them.
The Basel Convention
Status of Conventions in New Zealand Law
[39] I have noted that art 4.9 of the Basel Convention has been incorporated more or less directly into the 2004 Order, but the balance of that Convention, and the Waigani Convention, have not. It is common ground that although the 2004 Order was intended to give effect to New Zealand‟s obligation under the two Conventions, they are not in themselves part of New Zealand law, directly enforceable in this
country‟s courts.8 However, domestic legislation is, where possible, to be interpreted consistently with international obligations.9 Plainly the purpose of the
2004 Order requires that close attention be paid to the two Conventions in this case. I recognise that the 2004 Order may not be the only mechanism employed to give effect to New Zealand‟s international obligations; Ms Casey referred me to other legislation dealing with waste minimisation which I need not detail here.
[40] Ms Chen emphasised that art 26 of the Basel Convention provides that no reservation or exception may be made to the Convention. Her point, as I understood it, was that if the Attorney‟s interpretation is correct the 2004 Order may itself amount to such a reservation or exception. I do not think that can be correct; a reservation or exception would have to be expressed as such, and the Conventions themselves afford Parties considerable leeway in deciding how to give effect to their obligations.
Background to the Basel Convention
[41] The background to the Convention is instructive. It is recorded in an article by the Executive Secretary of the Basel Convention, Katharina Peiry.10 She explains that the Convention was adopted in response to a public outcry following the discovery, in the 1980s, of toxic wastes exported to developing countries, a consequence in part of rising disposal costs in developed countries that had become sensitive to environmental hazards. The Convention was intended to combat that trade. But even at that time most international waste transport happened between industrialised nations, which resisted a ban on transboundary movements. A ban
would preclude transboundary movements even where waste could be better disposed of in the importing State. The resulting Convention was a difficult
compromise, the primary objectives of which she summarises as follows:11
8 New Zealand Airline Pilots Association v Attorney-General [1997] 3 NZLR 269 (CA) at 280.
9 New Zealand Airline Pilots Association at 280; Zaoui v Attorney-General [2005] 1 NZLR 577 (CA) at [34] and (SC) at [44].
10 Katharina Kummer Peiry “Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal” (2010) United Nations Audiovisual Library of International Law < overarching objective of the Basel Convention is to protect human health and the environment against the adverse effects of hazardous wastes.
... The provisions of the Convention center around the following principal aims: (i) the reduction of hazardous waste generation and the promotion of
environmentally sound management of hazardous wastes, wherever the place of disposal; (ii) the restriction of transboundary movements of hazardous wastes except where it is perceived to be in accordance with the principles of
environmentally sound management; and (iii) a regulatory system applying to cases Transboundary movements are permissible.
[42] Ms Peiry explains that the first aim, that of reducing hazardous waste generation and promoting environmentally sound waste management, wherever the place of disposal, is addressed by general provisions requiring States to observe principles of environmentally sound waste management. The second is supported by prohibitions, such as a ban on exports to States not party to the Basel Convention. The regulatory system applying to cases where transboundary movements are permissible she describes as the cornerstone of the Convention as originally adopted. “Based on the concept of prior informed consent, it requires that, before an export may take place, the authorities of the State of export notify the authorities of the prospective States of import and transit, providing them with detailed information on
the intended movement.”12 The movement may proceed if and when all States
concerned have given their written consent. There is also provision for wider co- operation among Parties.
The terms of the Basel Convention
[43] The preamble to the Convention begins by emphasising that the Parties are aware of the risk of damage to human health and the environment caused by hazardous wastes and their transboundary movement. It recites that the Parties are convinced that hazardous wastes should, as far as compatible with environmentally sound and efficient management, be disposed of in the State where they were generated. Transboundary movements should be permitted only when conducted under conditions which do not endanger human health and the environment, and under conditions that conform with the Convention. Enhanced control of transboundary movements will act as an incentive for both environmentally sound management and reduced movements.
[44] The general obligations of the Parties are set out in art 4. They begin with an obligation to prohibit the export of hazardous waste to Parties which have prohibited the import of such wastes, or which have not consented in writing to each specific import. Article 4.2 provides in particular that:
Each party shall take the appropriate measures to:
(a) Ensure that the generation of hazardous wastes and other wastes within it is reduced to a minimum, taking into account social, technological and economic aspects;
(b) Ensure the availability of adequate disposal facilities, for the environmentally sound management of hazardous wastes and other wastes, that shall be located, to the extent possible, within it, whatever the place of their disposal;
...
(d) Ensure that the transboundary movement of hazardous wastes and other wastes is reduced to the minimum consistent with the environmentally sound and efficient management of such wastes, and is conducted in a manner which will protect human health and the environment against the adverse effects which may result from such movement.
[45] I have already mentioned art 4.9, which provides that Parties shall take the appropriate measures to ensure that transboundary waste movements are allowed only if certain requirements are met.
[46] Article 4.10 provides that the obligation to require that wastes are managed in an environmentally sound manner may not under any circumstances be transferred to the States of import or transit. I note that although Ms Chen highlighted this provision, there is no suggestion in the evidence that New Zealand has done so.
[47] Article 6 deals with transboundary movements. It creates a procedure under which the competent authorities of importing and transit States are notified of any proposed transboundary movement. Annex V A prescribes information which must be supplied to them; it includes the reason for the waste export, shipping dates, means of transport, designation and physical description of the waste, the type of packaging envisaged, the estimated quantity, the process by which the waste is generated, method of disposal, and information from the disposer of the waste upon which the exporter has based his assessment that there is no reason to believe the
waste will not be managed in an environmentally sound manner in the importing country.
[48] The State of import, having received such notification, must respond in writing, consenting to the movement with or without conditions, denying permission or requesting additional information. The exporting State may not allow the transboundary movement until it has received written confirmation that the State of import has consented and further has satisfied itself that a contract exists between the exporter and the disposer specifying environmentally sound management of the wastes.
[49] Under art 8, where a transboundary movement which has been authorised cannot be completed in accordance with the terms of the contract, the State of export must ensure that the wastes in question are taken back to that State.
[50] Article 9 provides that Parties must ensure that transboundary movements that do not comply with the Convention are illegal, and exporting States must ensure that illegally transported wastes are returned to it or, if that is not practicable, disposed of in accordance with the Convention.
[51] Article 11 contemplates that regional agreements regarding transboundary movement of hazardous wastes may be entered among Parties or between Parties and non-parties, provided that they do not derogate from the environmentally sound management of hazardous wastes required by the Basel Convention. The Waigani Convention is such a regional agreement.
[52] Other provisions deal with transmission of information regarding transboundary movements and efforts to reduce the quantity of hazardous wastes subject to transboundary movements.
[53] Article 15 establishes a Conference of the Parties which must keep effective implementation of the Convention under review. Various subsidiary declarations and guidelines have been adopted by the Conference of the Parties under this article.
Subsidiary declarations and guidelines
[54] Article 31 of the Vienna Convention on the Law of Treaties (1969) provides that a treaty shall be interpreted “in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.” The context includes the preamble and annexes and any instrument made by one or more Parties in connection with the conclusion of the treaty and accepted by the other Parties as an instrument related to it. There shall also be taken into account, together with the context, any subsequent agreement between the Parties about the interpretation of the treaty or the application of its provisions or any subsequent practice in the application of the treaty which establishes the Parties‟ agreement about its interpretation. Under art 32, recourse may be had to supplementary means of interpretation, including preparatory work and the circumstances of the treaty‟s conclusion, to determine its meaning when the interpretation according to art 31 leaves the meaning ambiguous or obscure or leads to a result which is manifestly absurd or unreasonable. It is not in dispute that, in accordance with these principles, a number of agreements and guidelines may be taken into account when interpreting the Basel Convention.
[55] The Basel Declaration on Environmentally Sound Management was adopted by the Conference of the Parties in 1999. Its relevance here is that it recognised market forces may be harnessed to promote waste minimisation and environmentally sound management.13 It focused on priorities for the succeeding decade. The first was prevention, minimisation, recycling, recovery and disposal of hazardous and other wastes, taking into account social, technological and economic concerns. That
objective included:
Promotion of financial and other economic instruments or concepts, with a view to identifying sustainable and self-sufficient solutions for the minimization and environmentally sound and efficient management of hazardous and other wastes subject to the Basel Convention, bearing in mind that such instruments should be affordable and socially acceptable, as well as economically viable; and the exchange of information on such instruments and their application.
13 United Nations Environment Programme Basel Declarations on Environmentally Sound
Management (10 December 1999) at Preamble [8].
[56] The Declaration also adopted the objective of further reducing transboundary waste movements, taking into account the need for efficient management, the principles of self-sufficiency and proximity and the priority requirements for recovery and recycling.
[57] The OECD Council has issued several decisions about transboundary waste movements. These decisions are multilateral agreements for purposes of the Basel Convention, applicable to OECD countries. (The Republic of Korea is an OECD country, as is New Zealand, but the Philippines is not.) The current decision recognises that well-established markets for recovery of valuable materials from wastes exist within member countries, and it encourages that trade where justified by
the environmentally sound and economically efficient recovery of wastes.14
[58] The Conference of the Parties has adopted technical guidelines for managing specific waste streams. They include the Technical Guidelines for the Environmentally Sound Management of Waste Lead-acid Batteries (2003), which I will call the ULAB Guidelines. The Guidelines emphasise that lead recycling is an optimal solution to the environmentally sound management of ULABs, which are both environmentally toxic when dumped and a valuable source of lead. Recycling processes must deal with acid electrolytes, effluents, slag and heavy organics resulting from lead smelting, dust and sulphur dioxide which are released into the air, and polypropylene battery casings. The best solution for any given country may involve external recycling, although that is described as “the option chosen when recycling environmentally sound [sic] facilities are not available” or a country is geographically so widespread, as in the case of an archipelago, that they cannot
economically be set up.15 The Guidelines assume that those countries that do have
environmentally sound recycling facilities will use them, adopting strategies and policies to provide a legal framework for collection, transportation and recycling. However, the Guidelines acknowledge that the solution that best fits a country‟s
needs requires close analysis, particularly with respect to the cost of lead recycling
14 OECD Decision of the Council concerning the Control of Transboundary Movements of Wastes
Destined for Recovery Operations C(2001)107FINAL (14 June 2001).
15 Technical Guidelines for the Environmentally Sound Management of Waste Lead-Acid Batteries
(Secretariat of the Basel Convention, Chatelaine (Switzerland), 2003) at 42.
activities, “since it is of utmost importance for the recycling process to be
economically attractive.” 16 The ULAB Guidelines conclude:17
Finally, it must be understood that the lead recycling process is deeply embedded in social and economic aspects that dictate several problems as well as several solutions not covered and which could not possibly be covered in this guideline. Therefore, a specific contextual map should be generated, encompassing local politics, economical aspects, social aspects, local and international market aspects, etc., and the lead recycling plant inserted into this context. No solutions or orientations given here should be taken for granted but, instead, analyzed under the lights of this contextual map and its possibilities.
The Basel Ban Amendment
[59] In the article mentioned above, Ms Piery notes that the strong underlying controversies over transboundary waste movements have not subsided. An amendment, known as the Basel Ban Amendment, was adopted by the Conference of the Parties in 1995. It would prohibit exports of all hazardous wastes covered by the Convention, whether intended for final disposal, reuse, or recycling and recovery. Only 70 of the 176 Parties have ratified it, however. Ms Piery observes that while it has become increasingly important to protect vulnerable countries from unwanted hazardous waste imports, other States still wish to permit the importation of wastes that are considered valuable secondary raw materials where they can be managed in an environmentally sound manner. Ms Casey drew my attention to a 1999 OECD workshop paper which dealt specifically with the Philippines. The author noted that imports to that country are not dumping, but rather bridge a domestic supply-demand gap for lead, and opined that the Basel Ban Amendment would severely affect the formal recycling sector, which is both more efficient and more environmentally
sound than the informal sector.18
[60] New Zealand did not support the Basel Ban Amendment and has not ratified it. Contrary to Ms Chen‟s submission, there is nothing in the record before me to
suggest that it is just a matter of time. When reporting on the Imports and Exports
16 At 42.
17 At 56.
18 Ulrich Hoffman “Some General Lessons for the Design of an ESM Framework from an UNCTAD Project on Encouraging Environmentally Sound Recycling of Used Lead-Acid Batteries in the Philippines” (paper presented to OECD Workshop: The Environmentally Sound Management of Recoverable Wastes, Cancún, October 1999).
(Restrictions) Amendment Bill 2003, the Foreign Affairs, Defence and Trade Committee rejected a proposal to incorporate the Basel Ban Amendment, observing that it does not distinguish among countries according to their capacity for environmentally sound and efficient disposal of hazardous wastes:19
New Zealand, along with Japan, the United States of America, Canada, Australia and several industrialising countries, has traditionally opposed the Basel Ban Amendment because it is flawed, is likely to distort the aims of the Basel Convention and duplicates a mechanism already provided n the Basel Convention. It does not distinguish between different countries on the basis of their capacity to undertake environmentally sound and efficient disposal of hazardous wastes. There are excellent recycling and disposal facilities in developing countries. In the absence of imported hazardous waste, developing countries may lack economies of scale necessary to develop their own capacity to dispose of hazardous wastes. The Basel Ban Amendment would also deny developing countries access to economic sources of certain recyclable wastes, increasing their reliance on unsustainable virgin materials. ...
The Waigani Convention
[61] The Waigani Convention involves South Pacific countries, including New Zealand and Australia. It reflects a particular concern that certain South Pacific countries are vulnerable to waste dumping, but otherwise generally follows the language and philosophy of the Basel Convention. For that reason I need not summarise its provisions here. No question arises of exporting ULABs from New Zealand to Waigani Convention Parties other than Australia. (The Philippines and the Republic of Korea are not Waigani Convention Parties.) The significance of the Waigani Convention for my purposes is that ships travelling from New Zealand to the Philippines or the Republic of Korea pass through exclusive economic zones (but not, on the evidence, territorial waters) of Waigani Convention Parties, whose consent to such movements has not been sought. Exide maintains that consent is necessary, saying that because the ships pass through areas under the jurisdiction of Waigani Convention Parties they are in transit for Convention purposes. I deal with
that issue at [107]-[117] below.
19 Import and Exports (Restrictions) Amendment Bill 2003 (217-1) (select committee report) at 3.
MED Policy and Processes
[62] I now summarise the MED policy and processes under which export permits are granted.
[63] MED relies on what is described as an “internal guidance document” when processing applications, but emphasises that it is not an official interpretation of the legal requirements. I accept that it is, on its face, an incomplete statement of MED‟s policy. It does record the process used, beginning with the applications, which must specify the reasons for export and provide sufficient information on which to base an assessment that there is no reason to believe the waste will not be managed in an environmentally sound and efficient manner. Applications must include a notification form containing the declarations and information specified in Annex V A of the Basel Convention. The notification form must be filled out completely and correctly. At a minimum MED requires a full description of the disposal/recovery process, a description of the regulatory framework applying to the processing facility, and evidence that the facility complies with the local regulatory framework in the importing State. MED does not require evidence that disposal is economically efficient in the importing country; if an application is permitted, economic efficiency is assumed.
[64] The internal guidance document emphasises that arts 4(2)(b) and 4(2)(d) of the Basel Convention are particularly relevant. After quoting those provisions, it provides that MED operates under “two critical frameworks”: one supports improved international linkages that allow firms to benefit from trade, knowledge, transfer, investment and technology uptake; the other “promotes good competition policy principles that allow businesses to start and thrive, where consumers get a fair deal, when anti-competitive behaviour is restricted and firms compete for business in well functioning markets under clear and transparent rules”. It goes on to state that “[t]he current policy is a permissive regime of allowing transboundary movements of hazardous waste, as required by the Basel Convention, on both environmental soundness and economic efficiency considerations. This means consideration of these Article 4 obligations has been carried out in the context of an overarching framework and does not need to be addressed on a case by case basis.”
[65] The internal guidance document next records that once an application has been reviewed a copy is sent to the competent authority in the importing country “using a standard cover letter”. Once a response is received MED again reviews the application to determine finally whether to consent. If it does consent, conditions are normally placed on the export, dealing with the provision of information about movement and location of the goods, insurance, labelling, packaging, handling, storage, transport and processing, and liability for the goods if they cannot be used for the purpose for which they were exported. All hazardous waste movements must be accompanied by a movement document.
[66] Exide has been asking MED since 2005 to curtail ULAB exports to sustain domestic processing. Following Australia‟s decision to prohibit exports, MED has recognised a real possibility that the Exide plant will close with the loss of 48 jobs unless the policy changes. MED usefully summarised the policy when briefing the Minister of Commerce on the risk of closure. In a briefing paper dated 24 June
2011, MED explained that under the Basel and Waigani Conventions New Zealand must generally reduce transboundary movements of hazardous wastes to a minimum, but that obligation is qualified, in that New Zealand‟s policy should be both environmentally sound and economically efficient. MED has accordingly taken the approach that the obligation to reduce transboundary movements should not be interpreted as a prohibition on exports where domestic capacity exists, because economic efficiency requires that the market operate freely to determine the price of resources and give collectors the option of external recycling where that is economically more attractive. In other words, MED holds that by encouraging a free collections market it maximises ULAB recoveries in New Zealand, ultimately ensuring that more are recycled. MED acknowledges, however, that the economic viability of domestic recyclers is a relevant consideration when determining export policy.
[67] In a second briefing paper dated 15 July 2011, MED sought guidance about the approach that it should use for the four current applications for export permits. (I note in passing that it is this document that Exide relies upon for the proposition that MED has allowed the Minister to dictate the exercise of its discretion under cl 11.) The briefing paper repeated that the current framework is a permissive regime of
allowing transboundary movements on both environmental soundness and economic efficiency grounds, allowing the market to operate freely and determine the price at which Exide can obtain the supplies it needs from the New Zealand market. The Minister might change policy by preventing the export of ULABs, but MED emphasised that that would reduce economic efficiency since Exide would no longer face international competition. It might be necessary to regulate the sector, given that a change of policy would create a monopoly. The paper noted that Australia has taken a different stance, but that is explicable because its domestic collections market is competitive. The Minister responded by endorsing MED‟s recommendation that the policy not be changed in the meantime.
The issues
[68] It is now possible to list the issues under the first cause of action:
a) Whether MED ignored arts 4.2(b) and (d) of the Basel Convention, which require that New Zealand establish domestic recycling facilities and minimise transboundary movements;
b)Whether MED introduced an irrelevant consideration by focusing on the economic efficiency of ULAB collection, rather than the environmental efficiency of the disposal process;
c) Whether four of the five current permits were authorised on the wholly incorrect basis that New Zealand lacks the necessary facilities to dispose ULABs in an environmentally sound and efficient manner, and, if so, whether the permits are vitiated;
d)Whether the waste was required as a raw material in the importing State; Exide contends that “required” connotes something more than “wanted” having regard to the objects of the Basel Convention;
e) While Exide accepts that ULABs can be disposed of in a manner that meets minimum environmental standards of environmental soundness
and efficiency in both the Philippines and the Republic of Korea, there is an issue whether MED failed to satisfy itself of that, in relation to each of the recycling plants involved, when granting the current permits;
f) Whether MED elevated consistency of policy to an important consideration in its own right and deferred to the Minister on the decision whether to adhere to the policy when considering the four pending applications;
g) Whether permit decisions were vitiated by important mistakes of fact
about Exide‟s plant;
h) Whether MED overlooked a relevant consideration, the distance that
ULABs travel en route to the Republic of Korea and the Philippines;
i)Whether the current permits are vitiated by MED‟s failure to seek the consent of Waigani Convention Parties whose exclusive economic zones ULABs pass through en route to the importing States; and
j) What significance, if any, ought to be attached to Australia‟s change
of approach.
Can MED prefer waste reduction through recycling to domestic recycling and fewer transboundary movements under the 2004 Order?
[69] I will deal with the first and second issues together because MED‟s pursuit of economic efficiency is said to explain why it overlooked the Basel Convention objectives of establishing domestic recycling and reducing transboundary movements. Exide‟s case on this central issue came down to the proposition that the reduction of transboundary movements is so central to the Basel Convention that MED cannot, by adopting a strategy which effectively maximises them, have had the object of the Convention in mind. I do not agree.
[70] To begin with, I accept Ms Casey‟s submission that MED did consider the objective of reducing transboundary movements when formulating and reviewing its policy. That is apparent from the record, in which MED acknowledged that such is among the objectives of the Basel Convention. I have already referred to the internal guidance document and the briefing paper of 15 July 2011. Having considered those objectives, MED thought it more important to foster the market for ULABs in New Zealand, so promoting their recovery and eventual recycling.
[71] Further, the 2004 Order contains no prohibition on export whenever New Zealand is capable of recycling ULABs domestically in an environmentally appropriate manner. On the contrary, cl 11 plainly authorises export when waste is to be exported to a qualifying destination where it can be disposed of or managed in an environmentally sound and efficient manner, and the waste is required as a raw material for recycling or recovery in the importing State, and export otherwise conforms with New Zealand‟s obligations under the Basel Convention. In other words, export is authorised for recycling purposes where the waste can be disposed of in an environmentally appropriate manner, notwithstanding that the Convention generally seeks to reduce transboundary movements. It is for these reasons that, as noted earlier, Ms Chen ultimately conceded that ULAB exports are permitted under the 2004 Order notwithstanding that they can be processed appropriately in New Zealand.
[72] Next, the Convention itself admits MED‟s approach. First, it also pursues reduced generation of hazardous wastes. Since lead-acid batteries become waste once they have been used, waste generation is reduced by maximising ULAB recoveries. It can be assumed that all ULABs recovered will also be recycled. Second, the Convention does not prohibit transboundary waste movements. Rather, transboundary movements are to be reduced under art 4.2(d) to the minimum consistent with their environmentally sound and efficient management. Third, the Convention does not compel Parties to develop or maintain domestic facilities; it merely requires that they take appropriate measures to ensure the availability of adequate disposal facilities that shall be located, to the extent possible, within them. Consistent with that, the OECD decision recognises that environmentally sound and economically efficient recovery of wastes may justify their transboundary
movements, and that domestic policy ought not create unnecessary obstacles to such trade where wastes are destined for recovery operations.
[73] Lastly, the ULAB Guidelines recognise that each State has a discretion to decide what is appropriate in its particular setting. In New Zealand‟s case, the context must include the difficulty that there is presently only one domestic recycling facility, meaning that competition cannot be relied upon to maximise ULAB recycling should exports be prohibited.
[74] None of this is to vindicate MED‟s policy, or to deny that Exide offers cogent criticisms of it. For example, even the ULAB Guidelines emphasise reduced transboundary movements and encourage domestic recycling; see [58] above. There is something to be said for Ms Chen‟s submission that MED has been selective in its use of the Convention and the ULAB Guidelines. After all, the amending legislation of 2003 stated that its purpose was to give better effect to New Zealand‟s obligations
“to restrict the exportation” of certain wastes.20
[75] Nor can it be correct, as Ms Casey maintained in her written submissions, that there is no difference between maintaining existing recycling plants and building new ones; the Basel Convention assumes that each Party begins with an existing level of transboundary movements which it then ought to reduce. That being so, the loss of existing recycling capacity ought to give MED cause for concern.
[76] MED instead insists that export permits do not reduce the stocks available to Exide, which is free to compete for as many of New Zealand‟s ULABs as it wants. MED has asserted, and still does, that if Exide cannot compete it must lack efficiency. But in refusing for that reason to countenance altering its policy MED simply assumes that Exide faces no structural impediments to competition. On the record, there is at least one. First, Exide can no longer compete for ULABs in Australia. Second, Exide has consistently maintained that it must meet far higher environmental standards than does the Philippines plant which has received all of New Zealand ULAB exports to that country. (There is no evidence to suggest that
Korean standards are any lower than those in New Zealand.) On the evidence before
20 Imports and Exports (Restrictions) Amendment Act 2003, s 3.
me, MED does not appear to have investigated that claim and does not know precisely what environmental standards apply in the importing States.
[77] When this question was posed in argument Ms Casey submitted that environmental standards are encompassed by ISO9001 or 14001 accreditation, referring to international management quality standards which are met by both Exide and the Philippines plant. But the evidence does not show that those standards impose identical environmental requirements. There is no evidence that ISO accreditation extends to, say, identical limits upon atmospheric levels of lead at the boundary of a recycling plant. In her evidence, Robyn Washbourne, a senior analyst with MED, merely suggests that while ISO 14001 does concern environmental standards, it provides a framework for holistic assessment and emphasises continuous improvement. It also appears from her evidence that MED looks to compliance with local standards and recognises that environmentally sound management is a country-specific concept. The documents that MED obtains from importers may include copies of waste disposal, waste water discharge and air discharge licences, but there is no evidence that MED compares the standards under which such permits are issued with those applicable in New Zealand. MED‟s evidence does not directly confront that of Exide‟s witnesses, who plausibly say that their plant must meet substantially higher specific standards. Since 2006 Exide has spent $3.5 m to that end. I reject Ms Casey‟s invitation to discount Exide‟s evidence by characterising the Exide witnesses (Mr Cowpe and James Manson) as inexpert; they possess much experience and knowledge in this field.
[78] As I explained to counsel at the hearing, I need not make findings of fact about comparative standards in the Philippines and I do not propose to do so. I simply observe that it appears from the evidence that MED has not investigated the issue, although its policy rests in part on assumptions about it.
[79] Ms Chen also criticised MED‟s characterisation of Exide‟s pleas as a request for a domestic monopoly, arguing that Exide just wants MED to “comply with the law”. Ms Casey was unable, when I asked her to show me the evidence, to point to any such explicit plea. In a letter of 9 March 2005 Exide advised that it did not object to exports being allowed “to ensure market forces remain in place”, although
it argued that 3,000 tonnes was too much. Ms Chen accepted in argument that MED might choose to grant permits for part of New Zealand‟s annual arisings, so giving Exide both a degree of protection and an incentive to compete for the rest.
[80] However, Exide‟s previous acknowledgement that MED might license exports was offered in 2005, when it still imported Australian ULABs. And Ms Chen initially argued before me that MED cannot lawfully authorise ULAB exports when there exists a domestic facility capable of handling them, while Mr Cowpe suggested in evidence that the Petone plant requires about 16,000 tonnes of ULABs per annum to operate economically. If accepted, those contentions would result in Exide becoming a monopsony buyer (assuming, as the parties appear to have done, that barriers to entry are such that no one else will enter the New Zealand recycling market). In the circumstances, MED‟s characterisation of Exide‟s recent position, while pejorative, was not wrong in substance.
[81] That said, I accept Ms Chen‟s submission that MED appears to have made no attempt to ascertain what minimum volume the plant might require, and hence whether sufficient ULABs would remain accessible to other exporters to make it worth their while going through the time-consuming and no doubt costly permit process. The minimum sustainable volume must depend in part on characteristics of the plant and in part on the market price. MED asserts that, Exide having seen off its rivals through this litigation, any resulting reduction in the price of ULABs would materially affect recoveries. That is not self-evidently correct. Apart from Exide‟s acknowledgment that some export permits might be granted to keep the market competitive, there is no evidence that consumers routinely receive money for ULABs. They may be handed in at intermediaries, such as landfills or battery retailers, who sell them to recyclers such as Exide. I am told that Exide only deals with intermediaries. The market is not the only available instrument for enhancing recoveries; I am given to understand that ULAB dumping is already unlawful in New Zealand. ULABs may have characteristics other than economic value that encourage recycling; it is noteworthy that, according to Mr Manson, the worldwide recycling rate for ULABs is an estimated 95 per cent.
[82] I record that in this part of the case generally, Ms Casey pointed to the late shift in Exide‟s position, submitting that further evidence might have been called had MED appreciated that the issue was not illegality but relevance. In my opinion Exide‟s claim has always put the justification for MED‟s policy in issue. Ms Washbourne recognised that by pointing out that a policy change would raise policy questions of the kind that I have just discussed, among others. She speculated that Exide must be able to compete if it can match the market price, as it claims to be doing at present. But to say that is merely to raise questions about the market which MED evidently has made no attempt to answer. I do accept that such an inquiry might well require that Exide disclose commercially sensitive information, such as the price that it receives from its Australian sister company for recycled lead, which it seems reluctant to do. As Ms Washbourne says, the policy analysis would also put MED to significant effort, although there may be something to be said for Ms Chen‟s submission that MED protests too much about the difficulties inherent in the task. The short point for present purposes is that MED has not attempted to gauge Exide‟s minimum scale or the impact of protection on ULAB recoveries; it has simply assumed that Exide ought to be able to compete on equal terms for all New Zealand‟s arisings.
[83] Nor is it a complete answer to Exide‟s complaint that MED might be willing instead to provide support under industry and regional development programmes. As Ms Casey repeatedly emphasised, MED has invited Exide to put up a business case to that end. But the Basel Convention envisages that States will control exports in the interests of promoting domestic recycling and reducing transboundary movements, as Australia has done.
[84] But while I acknowledge the apparent force in Exide‟s criticisms, I accept Ms Casey‟s submission that they raise questions of policy which it is not for the Court to answer in judicial review. For the reasons given above, I am satisfied that MED‟s construction of the 2004 Order is available. It follows that the policy that MED has followed to date, and proposes to follow when dealing with the current applications, is not unlawful. Nor has Exide shown that MED failed to take the objects of the Basel Convention into account when formulating and reviewing the policy.
When seeking importing States’ consent did MED rely upon lack of environmentally compliant New Zealand facilities, or overseas demand for recycling, and does it matter?
[85] There is a factual dispute about which of the grounds in cl 11(2)(b) of the
2004 Order MED invoked. Exide contends that the consent of the competent authority in the importing country, the Philippines or the Republic of Korea as the case may be, was sought in four of the five cases on the ground that New Zealand cannot dispose of ULABs in an environmentally sound and efficient manner. It is not in dispute that Exide‟s facility is in fact capable of disposing of ULABs in such manner; MED has authorised the import of ULABs from Australia to New Zealand on that very footing.
[86] Ms Casey did not deny that in four of the five cases MED invoked cl 11(2)(b)(i) in its covering letter to the competent authority in the importing State. For example, in a letter of 19 November 2010 to the Han River Basin Environmental Office in the Republic of Korea, MED wrote, as New Zealand‟s competent authority for the Basel Convention, enclosing the notification form and supporting documentation for a proposed shipment of ULABs. The letter advised that the transboundary movement was proposed under art 4.9(a) of the Basel Convention, namely that New Zealand lacks the technical capacity and necessary facilities to dispose of the ULABs in an environmentally sound and efficient manner. Immediately beneath that advice the letter requested the consent of the Korean authority.
[87] However, the evidence of Ms Washbourne is that in each case MED actually authorised the transboundary movement on the ground that the waste was required for recycling in the importing State. Consistent with that, as Ms Casey pointed out, the covering letter also specified that the proposed shipment was intended for recovery operation R4 (reclamation of metals) in a specified facility. R4 is a code used for disposals/recovery operations. The notification document enclosed with the letter is the document required under the Basel Convention (confusingly, in this example it was actually an OECD variant employed by the Republic of Korea). It specified that the reason for export was “recycling/goods required as raw material for
importer”. On the evidence before me I am not persuaded either that MED actually relied upon the absence of facilities in New Zealand or that the competent authority in the importing State was misled.
[88] It follows that Exide‟s challenge to the decisions as having been made on a wrong factual premise must fail. It also follows that I need not address Ms Chen‟s argument that the error vitiated MED‟s decisions to grant the export permits, but I respond to it briefly. It is common ground that informed consent among Parties is fundamental to the Basel Convention and New Zealand‟s obligations in that regard are mandatory. However, I accept Ms Casey‟s submission that, even had the competent authority overseas been misled, MED‟s error would not allow Exide to impeach an export permit in this proceeding. The error might afford the importing State reason to withdraw its consent, so triggering New Zealand‟s obligation to take the ULABs back under the Basel Convention. But no consent has yet been withdrawn and there is no reason to believe that any will be, since the importing States concerned want the ULABs for recycling.
Are ULABs “required” as a raw material for recycling or recovery in the importing States?
[89] MED interprets the phrase “required as a raw material for any recycling or recovery industry” as meaning that ULABs are wanted for a recovery or recycling process in the importing country. Ms Chen argued that “required” in cl 11(2)(b)(ii) must mean more than that, pointing to dictionary definitions which connote necessity for a particular purpose. Although she did not develop the argument, I took her to mean that the applicant for an export permit must demonstrate that the importing State must import ULABs.
[90] However, the question posed by the 2004 Order is whether the ULABs are “required as a raw material for any recycling or recovery industry in the importing State”. The existence of such industry having been established, ULABs are plainly needed as a raw material for it. It is not in dispute that the Republic of Korea and the Philippines depend on foreign ULABs for lead, particularly for their automotive
industries. That being so, ULABs are “required” in those States for purposes of cl 11.
What does environmentally sound and efficient disposal in the importing State require of MED?
[91] Ms Chen ultimately did not dispute that MED turned its attention to whether ULABs could be recycled in an environmentally sound and efficient manner at the destination plants in the importing States. Nor did she suggest MED must insist upon those plants complying with standards no less stringent than New Zealand‟s. On the contrary, it was common ground that it suffices if the ULABs can be disposed of in a manner that meets minimum requirements of the Basel Convention.
[92] Exide does contend, however, that MED failed adequately to inform itself about the environmental standards to which the importing plants were subject before authorising ULAB exports.21 Exide‟s argument focused on the standards applied when granting the five existing export permits, with reference being made to previous permits as more general evidence of MED‟s practices. Ms Chen focused on deficiencies, as Exide sees it, in MED‟s verification of environmental standards applicable to the destination plants. By way of illustration, she took me through examples showing that permits were granted when, from the records disclosed by
MED under the Official Information Act 1982, discharge permits or quality management systems certificates (usually issued under the ISO9001 or 14001 standards) were out of date. She contended that the records are also incomplete, in that they fail both to illustrate what regulatory standards apply in the importing States and to confirm that the destination plants meet those standards on a continuing basis.
[93] Ms Casey‟s response began with the proposition that Exide has failed to show that the destination plants do not meet local environmental standards. That seems to me quite irrelevant; the 2004 Order requires that the waste can be disposed of or managed in an environmentally sound and efficient manner in the importing
State, and it is for MED to satisfy itself of that before granting an export permit.
21 Auckland City Council v Minister of Transport [1990] 1 NZLR 264 (HC) and (CA) at 324.
Exide need not prove the contrary. The question for judicial review purposes is whether MED adequately informed itself before exercising its discretion.
[94] However, I accept Ms Casey‟s submission that, on the evidence, MED does not maintain separate files for each permit and it relies upon broader knowledge of foreign regulatory regimes, so it is not appropriate to assume that documents disclosed under the Official Information Act about each specific permit are a complete record of the information relied on. Further, MED is normally entitled to assume that regulatory authorities will enforce existing local standards.
[95] Next and fundamentally, there is no requirement that plants in importing States meet specific international standards. The Basel Convention defines environmentally sound management, as noted at [33] above. The standard is broad and flexible. It admits not only international standards such as ISO14001, but also non-specific and lesser standards, so long as “all practicable steps” are taken to protect human health and the environment. The standard would seem to admit local considerations of a practical nature, as Ms Washbourne contends. Further, cl 11(2)(c) inquires whether the waste “can be” disposed of appropriately, not whether it will be, which would seem to preclude any continuing obligation upon MED to monitor compliance with environmental standards during the currency of a permit.
[96] In the circumstances, Exide cannot show that MED has failed adequately to inform itself before granting export permits. As noted, the evidence is that MED has taken steps to check applicable standards in relation to each permit.
[97] I record that Ms Casey argued this issue is almost entirely moot in any event. It is true, as she submits, that the prayer for relief concerning the five current permits is confined to those under which no ULABs have yet been exported, and only one permit falls into that category. The plant concerned has current ISO9001 and ISO14001 certification. However, I have allowed Exide to pursue its challenge to all current permits, recognising that no injustice is done to MED by that course and that the permit holders can be heard if necessary. The issue also matters to the pending applications.
Does consistency of policy matter too much to MED?
[98] Ms Chen submitted that it is apparent from the briefing papers to the Minister ([65]-[67] above) that MED, and the Minister on its advice, regard consistency of approach as an important consideration in its own right, meaning that MED is unwilling to revisit its policy.
[99] I begin by noting that this issue is of narrow scope. There is no evidence that MED has previously refused to revisit its policy for this reason, so the issue does not affect the five current permits. It is confined to the four pending applications.
[100] I accept Ms Casey‟s submission that while the briefing paper of 15 July 2011 spoke of consistency, it did so in circumstances where the policy framework is now being considered by the Minister for the Environment, who has assumed responsibility for the 2004 Order. MED proposed that rather than review its policy for the last four pending applications, it should apply the policy in the interests of consistency and certainty for industry participants. All that MED has done, then, is to decide that it will pursue the same policy when dealing, at the same time, with a small group of pending applications all of which raise the same general issue.
[101] Further, the very consideration that is said to justify a change of policy at this juncture, namely the likely and impending closure of Exide‟s plant, was taken into account when reaching that decision, as were the reasons for and against the policy, such as maintaining a domestic recycling facility, on the one hand, and maintaining a competitive market for ULABs in New Zealand, on the other.
[102] So far as the individual features of each pending application are concerned, there is no evidence that MED has foreclosed its discretion as a result of its approach to the Minister. Each will need to comply with the provisions of the 2004 Order.
Did MED rely on material mistakes of fact about Exide when granting export permits?
[103] Exide contends that MED‟s decisions to approve ULAB exports in the past are illegal in that they were based on material errors of fact, namely that New Zealand lacks adequate facilities to dispose of ULABs because Exide‟s plant is not environmentally sound or efficient. Counsel points to the evidence of Marina Matthews, an associate at Chen Palmer, solicitors for the plaintiff. On 17
May 2011 she attended a meeting with MED officials, including Ms Washbourne. At that meeting, Ms Matthews explains, Ms Chen stated that the Exide plant was both environmentally sound and efficient, but Ms Washbourne responded that Exide is not considered efficient because it wants a subsidy and is not prepared to pay the world price for ULABs.
[104] It is true that MED asserts that Exide should be able to compete by paying the world price for ULABs, and further insists that Exide really seeks protection from competition. Further, I have accepted that, on the evidence before me, MED appears to have adopted that stance without having analysed comparative environmental standards applying in New Zealand and in the countries to which ULABs are exported. However, it does not follow that export permits have been granted on the assumption that Exide‟s plant is inefficient. As I have explained, MED has taken the view that under cl 11 it is enough that the recycling facility in the importing State complies with the Basel Convention. MED has not relied on relative efficiency. Consistent with that approach, MED has previously approved the import of ULABs from Australia on the basis that Exide‟s plant is capable of processing them in an environmentally sound and efficient manner.
What did MED not take into account when granting export permits?
[105] It is not in dispute, as I have earlier recorded, that both when granting the existing export permits and when adopting and reviewing its proposed approach to the current applications, MED has not thought it important to maintain a viable domestic recycling facility. If it had, MED must take into account other considerations that it admittedly has not examined at all, such as the minimum
throughput needed for viability of the Exide plant and whether Exide can be expected to compete on price for ULABs having regard to relative environmental standards in New Zealand and the importing countries.
[106] It is common ground that under MED‟s approach no attention is paid to the distances that exported ULABs travel. So, for example, MED attaches no priority to applications according to whether the destination country is, say, Australia rather than the Republic of Korea. Ms Chen argued that the Basel Convention is “all about distance”. Ms Casey took the point that this issue was not pleaded. In any event, I am unable to accept Ms Chen‟s submission. It is true that only one document in the record analyses distances travelled by ULABs and there is no evidence to suggest that MED has preferred one destination over another on that ground. But Ms Chen could not point me to any provision of the Convention which focuses on distance, as opposed to the number and scale of transboundary movements. That is not to say that distance is an irrelevant consideration, since shipping undoubtedly has its own hazards and environmental costs, but it cannot be said that MED erred by not treating it as a consideration that must be analysed independently of transboundary movements.
Must MED seek approval of Waigani Convention Parties through whose exclusive economic zones ULABs travel?
[107] Ms Chen argued that MED must secure authorisation from competent authorities in Waigani Convention States whose exclusive economic zones ULAB- carrying ships pass through en route to the Philippines or the Republic of Korea; that is so, she contended, because the ships are deemed to be in transit for Convention purposes. MED does not think ULABs are in transit unless they enter port in another State, such as Singapore, en route to the importing State. Accordingly, Ms Chen contended, cl 11(2)(d) of the 2004 Order has not been complied with, and the export permits have been granted unlawfully.
[108] The area covered by the Waigani Convention is defined, a little clumsily, to include exclusive economic zones established in accordance with international law of the Convention Parties. Transboundary movements are movements of hazardous
waste to or through “an area under the jurisdiction” of another Party. An area under a Party‟s jurisdiction is “any land, marine area or airspace within which a Party exercises administrative and regulatory responsibility in accordance with international law in regard to the protection of human health or the environment.”
[109] The Convention provides in art 4.4(b) that New Zealand must take appropriate measures to ensure that, within the area under its jurisdiction, all transboundary movements of hazardous wastes are carried out in accordance with the Convention. The obligations include that of obtaining the consent of competent authorities in Transit Parties. A Transit Party is any Party, other than the exporting or importing Party, “through which” a movement of hazardous wastes is planned or takes place.
[110] It may be that exclusive economic zones are within a Party‟s jurisdiction and that ULABs relevantly “pass through” Parties whose exclusive economic zones they cross. The evidence is incomplete, but I am prepared to assume that ULABs do “pass through”, since the area covered by the Convention is defined in a way that suggests the Parties agreed that exclusive economic zones were relevantly within their jurisdiction. However, art 2.4 of the Convention records an exception for the right of innocent passage:
Nothing in this Convention shall affect in any way the sovereignty of States over their territorial sea, the sovereign rights and jurisdiction that States have in their exclusive economic zones and continental shelves, and the exercise by vessels and aircraft of all States of navigational rights and freedoms, as provided for in international law and as reflected in the 1982 United Nations Convention on the Law of the Sea and other relevant international instruments.
[111] In short, the Convention expressly preserves the right of innocent passage under the 1982 United Nations Convention on the Law of the Sea. The latter Convention in turn establishes a limited exception to the right of innocent passage, for ships carrying inherently noxious substances. Article 23 provides that:
Foreign nuclear-powered ships and ships carrying nuclear or other inherently dangerous or noxious substances shall, when exercising the right of innocent passage through the territorial sea, carry documents and observe special precautionary measures established for such ships by international agreements.
[112] Ms Chen invoked this exception, arguing that for purposes of art 23 the Waigani Convention is an international agreement which establishes precautionary measures for ships carrying ULABs, so all of the Convention‟s requirements apply. The argument confronts difficulties which I find collectively insurmountable.
[113] To begin with, the Convention is expressly subject to navigational rights and freedoms provided for in international law and reflected in the Convention on the Law of the Sea. Accordingly, innocent passage through exclusive economic zones is restricted only to the extent that international law and the Convention on the Law of the Sea so provide.
[114] Next, my attention has not been drawn to anything that restricts the right of innocent passage through exclusive economic zones, as opposed to territorial waters, of Waigani Convention Parties. Ms Chen invoked customary international law, but without providing any supporting evidence or authority that such restrictions have been extended beyond the territorial sea. Evidence of custom is necessary to establish that a practice has entered the rules of international law.22
[115] Next, there is nothing to establish that ULABs are noxious substances for purposes of art 23 of the Convention on the Law of the Sea. Plainly they are hazardous wastes under the Waigani Convention, but art 23 speaks of nuclear or other inherently dangerous or noxious substances, not wastes. It is not self-evident that lead-acid batteries require special precautions for purposes of international shipping generally. By way of illustration, I am told from the bar that new and used cars are routinely shipped with batteries but without special precautions being taken to protect the environment from the lead and electrolytes that they contain.
[116] Next, art 23 says nothing about protocols for seeking anyone‟s consent before ships carrying noxious substances exercise the right of innocent passage. It merely requires that they carry documents and observe any precautions established for such
ships by international agreements.
22 M N Shaw International Law (6th ed, Cambridge University Press, Cambridge, 2008) at 84; Fisheries Jurisdiction (United Kingdom of Great Britain and Northern Ireland v Iceland) (Merits) [1974] ICJ rep 3 at 50.
[117] Finally, the evidence indicates that ships carrying ULABs must carry documents and observe precautionary measures under the Basel and Waigani Conventions. In short, there is no evidence that ULABs, if they are noxious substances, are shipped in a manner that contravenes art 23.
Does Australia’s change of approach matter?
[118] The difficulty presently facing Exide results substantially from Australia‟s decision, in pursuit of its own obligations under the Basel Convention, to ban ULAB exports. Given that decision and the close economic relationship between Australia and New Zealand, I inquired of counsel what significance the Australian approach has for my purposes. Ms Chen accepted that it strictly has no legal significance; it is merely what she characterised as an exemplary approach to the Convention. It is not suggested that MED failed to consider the Australian decision.
[119] Ms Casey sought to distinguish the Australian approach, emphasising that Australia permitted ULAB exports until satisfied that its domestic collections market was competitive. Further, the relevant Australian regulations differ by favouring domestic facilities over export.23 In 2003 a legal challenge was mounted to the export, by Exide‟s Australian sister company, of ULABs to New Zealand. At that time the plaintiff in that proceeding was the only Australian company with the capacity to fully recycle ULABs. The Administrative Appeals Tribunal dismissed the claim, finding among other things that if it were granted the plaintiff would gain
a recycling monopoly. In 2009, by contrast, Australia had two established operators and a third entering the market, and that was taken into account in decisions to ban exports to New Zealand and elsewhere.24 I accept these submissions.
The first cause of action: substantive challenges
[120] I can now deal briefly with the specific allegations in the statement of claim.
23 Hazardous Waste (Regulation of Exports and Imports) (OECD Decision) Regulations 1996, reg
16.
24 I am told that the decision in New Zealand‟s case was a Ministerial decision made on 6 October
2009. See also Dodd and Dodd Group Pty Ltd v Minister for Sustainability, Environment, Water, Population and Communities [2010] AATA 957.
Illegality and failure to consider object of reducing transboundary movements
[121] For the reasons given at [69]-[84] above, I am satisfied that MED‟s policy is available under the 2004 Order and the Basel Convention, notwithstanding that the policy makes no attempt to reduce transboundary movements by encouraging domestic recycling of ULABs. Nor did MED fail to take the object of the Convention into account when exercising the discretion to grant export permits. It was open to MED to prefer the objective of increasing domestic ULAB recoveries, and hence their eventual recycling, notwithstanding that its policy encourages transboundary movements and may even result, should Exide‟s plant close, in transboundary movements increasing substantially. Further, I accept that the decision was a matter of “high policy”, to use a term adopted by the Court of Appeal in Attorney-General v Unitec Institute of Technology, in which the Court should be
slow to intervene.25
Irrelevant consideration of economic efficiency
[122] For the reasons given at [70]-[73] above, I am satisfied that MED did not take an irrelevant consideration into account by relying upon economic efficiency when formulating and reviewing its policy.
Unlawful fetter on discretion
[123] I accept Ms Casey‟s submission that MED need not revisit its policy every time it considers an application for an export licence. It may follow a previously formulated policy provided it remains open to anything new that Exide has to say.26
[124] The challenge under this head, as I have noted earlier, focuses upon the four current applications. Exide contends that MED has elevated consistency to a criterion in itself and further abdicated its discretion to the Minister. In my opinion nothing turns on this aspect of the case once it is accepted, as I have found at [101]
above, that the central question, whether the policy ought to be changed to preserve
25 Attorney-General v Unitec Institute of Technology [2007] 1 NZLR 750 (CA) at [51].
26 R v Secretary of State for the Environment ex parte Brent LBC [1982] 1 QB 593 at 640-642.
domestic recycling and minimise transboundary movements, was addressed in the briefing papers, and MED‟s recommendation accepted.
[125] That leaves the question whether, in seeking and adopting ministerial guidance on that question, MED intends to fetter its discretion improperly when considering the individual permit applications. For the reasons given at [100]-[102] above, I am not persuaded that it intends to do so.
Material errors of fact about Exide
[126] For the reasons given at [104] above, this claim fails on the facts.
The second cause of action: procedural fairness
[127] Exide asserts a right to be heard on individual export permits because its interests are closely, indeed uniquely affected by MED‟s decisions to grant them. MED knows that Exide must process most of New Zealand‟s ULABs if its plant is to remain viable, but MED has routinely granted permits collectively authorising the annual export of more ULABs than New Zealand generates. Ms Chen argued that the 2004 Order recognises Exide‟s interests in that it gives effect to the Basel Convention, which obliges New Zealand to maintain adequate domestic disposal facilities. For the proposition that Exide must be heard before MED grants individual permits, Ms Chen cited Fowler and Roderique Ltd v Attorney-General, in which the Court of Appeal held that where the exercise of a power is “likely to affect the interests of an individual in a way that is significantly different from the way in which it is likely to affect the interests of the public generally”, the decision-maker will “normally” be expected to consider the interests of the individual before exercising the power.27
[128] The authorities cited for this proposition, like Fowler and Roderique itself, frequently deal with decisions which have the effect of depriving someone of an
existing permit which they might otherwise expect to have renewed. This is not such
27 Fowler and Roderique Ltd v Attorney-General [1987] 2 NZLR 56 (CA) at 74.
a case. However, I am prepared to assume that having regard to its unique interest in the matter, Exide was entitled to be heard on MED‟s policy of encouraging the domestic collections market at the expense of domestic recycling.
[129] Exide was heard on MED‟s policy, albeit at its own insistence. Permits have a life of one year at most. Since 2005 Exide has invited MED to revisit its policy, and they have been in substantive dialogue since some time before Australia decided to prohibit ULAB exports. Exide has been heard both on its views of New Zealand‟s obligations under the Basel Convention and on its own economic viability. Its claims were weighed against the merits of the policy.
[130] The requirements of natural justice vary with the circumstances. In this setting, I do not accept that Exide must also be heard on every export permit, since all raise the same general issue and beyond that Exide has no special interest that the law ought to recognise in the details or processing of any given application.
[131] It follows that the decisions to grant the existing five export permits, and the decision to apply the same policy to the current applications, cannot be impeached for procedural unfairness.
Decision
[132] The application for judicial review is dismissed. The interim declaration is discharged.
[133] The defendant is entitled to costs on a 2B basis with provision for two counsel. Counsel may file memoranda if costs cannot be agreed.
Miller J
Solicitors:
Chen Palmer, Public Law Specialists, Wellington for Plaintiff
Crown Law, Wellington for Defendant
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