Pabai v Commonwealth: climate change, government responsibility and what it means for business

What you need to know

• In a landmark case, the Federal Court has found that the Commonwealth Government does not owe a duty of care to people of the Torres Strait Islands to protect them from the impacts of climate change.
• This decision, along with the Full Federal Court’s earlier judgment in the Sharma case, presents a significant obstacle for future novel climate change duty of care cases in Australia against both governments and companies.
• Despite this outcome, we are likely to see further significant climate change litigation in Australia, including cases based on alleged greenwashing, directors' disclosure duties, administrative law, contract claims, human rights, and other legal grounds.
• Communities seeking redress for alleged climate-related harms from government policy may be more likely to pursue legislative change or public advocacy rather than negligence claims.

The Applicants' case

Pabai v Commonwealth is a significant climate change class action commenced by two Torres Strait Islander leaders on behalf of their communities in March 2022. They argued that the Australian Government should be legally required to take reasonable steps to protect the Torres Strait Islands from the impacts of climate change, such as rising sea levels and coastal erosion. This includes setting and implementing greenhouse gas emissions reduction targets in line with the best available science to prevent harm (primary duty argument), and taking practical measures to help the islands adapt to risks like flooding and erosion (alternative duty argument).

The Applicants highlighted the unique vulnerability of Torres Strait Islanders and the special relationship they have with the Commonwealth, stressing that the government’s actions and inaction had contributed to damage, including harm to their customary culture and way of life. They maintained that it was not enough for the government to set targets that were inconsistent with scientific advice, and that once the government took responsibility for funding protective measures like seawalls, it should have followed through with reasonable action.

The Court’s decision

The Federal Court expressed sympathy for the plight of the Torres Strait Islanders and the need to protect their customs, and considered that the Commonwealth's emission targets of 2015, 2020 and 2021 fell short of the best available science concerning climate change. However, ultimately, Justice Wigney found in favour of the Commonwealth on both the primary and alternative cases.

The Federal Court found that the Commonwealth Government did not owe the specific duty of care alleged by the applicants, as decisions on emissions targets and adaptation measures are matters of core or high government policy, not suitable for determination by the courts under the present common law of negligence in Australia. The standard of care did not require the Commonwealth to set targets solely based on scientific advice, as broader policy, economic, and social considerations are involved.

Furthermore, even if a duty of care existed and was breached, the Applicants could not prove that this breach materially contributed to their loss, given the global nature of climate change. Justice Wigney also found that loss of fulfilment of custom is not currently recognised as a right or interest the loss or harm to which is compensable under the common law of negligence.

In relation to adaptation measures (the alternative case), specifically the construction of sea walls, the Court found that while funding was delayed and ultimately insufficient, this was not due to negligence by the Commonwealth. The delays and cost overruns were attributed more to project administration than to government action.

This decision, along with the Full Federal Court’s earlier judgment in the Sharma case, presents a significant obstacle for future novel climate change duty of care cases in Australia against both governments and companies. However, the question of whether the Commonwealth Government owes a duty of care to protect against climate change impacts has far-reaching implications and may ultimately be considered by the High Court of Australia.

How this decision impacts the Commonwealth

• The Court's decision means the Commonwealth is not required, under the common law of negligence, to take any stronger action to protect the Torres Strait Islands from climate change. This was held to be a matter of high government policy, and not suitable for determination by a court under the common law.
• As such, the Commonwealth retains broad discretion as to climate policy decisions, including the allocation and administration of adaptation funding, and setting emissions reductions targets in line with scientific recommendations. This decision provides a significant shield against similar future claims and lowers the risk of liability in negligence for alleged inadequacies or delays.
• The decision has also narrowed the scope of potential future claims against the Commonwealth for cultural- or identity-based harms arising from climate change.
• There remains a possibility that future legal developments, whether judicial or legislative, could later change this position, and the decision may be tested on appeal. Public bodies should remain alert to evolving legal standards and potential reforms in this area.

How this decision impacts business

• The decision that the Commonwealth Government does not owe a duty of care to protect Torres Strait Islander communities from climate change related harm makes it more difficult to argue that companies owe a similar duty to other communities. The decision was partly based on the Court’s view that setting emissions targets and funding adaptation measures are matters of high government policy and not suitable for judicial intervention. However, in any case, the Court was not persuaded that a duty of care should be recognised on the current state of the law.
• While the decision reduces the scope in the short term for negligence claims based on climate inaction, it does not affect other legal obligations on companies, such as those relating to disclosure of climate risks, directors’ duties to act with care and diligence, or compliance with environmental regulations. Businesses should continue to monitor developments in these areas, as regulatory and community expectations regarding climate responsibility are likely to increase.
• This case also demonstrates community expectations for robust climate action. Businesses are likely to continue to see significant climate change litigation in Australia. Businesses, especially those with operations or supply chains in climate-exposed regions, should ensure transparent climate risk management and meaningful engagement with affected stakeholders.
• To date, several climate change-related class actions have been brought against the Commonwealth. It seems likely only a matter of time before climate change-related class actions are also brought against companies.

Global context and trends

The Pabai case is part of a broader international movement towards using the courts to drive climate action. Recent decisions in Europe, the Americas, and at an international court level have recognised duties of care or human rights obligations relating to climate change. These cases are influencing legal thinking and raising the bar for both governments and businesses worldwide.

Australia is already one of the most active jurisdictions for climate litigation outside the United States. The outcome of Pabai will be closely watched and could shape the future direction of climate risk management and legal accountability in Australia and beyond.

The next major climate change-related decision will be the advisory opinion to be handed down by the International Court of Justice on 23 July 2025, which will clarify the legal obligations of states to protect the climate system and environment from greenhouse gas emissions, and determine the legal consequences for states whose actions or omissions have caused significant harm to the climate.

Conclusion

Pabai is a pivotal case for climate accountability in Australia. Its outcome will have far-reaching implications for government policy, business risk, and the broader landscape of climate litigation.

Governments and companies should monitor legal and social developments closely and consider how evolving legal standards may affect their operations, strategy, and stakeholder relationships. Organisations must then act on such information, including ensuring that their decision-making and public reporting is sufficiently robust to meet a range of applicable legal obligations.

Want to know more?

• Dutch Court of Appeal Overturns Shell Emissions Ruling: Implications for Corporate Climate Responsibility (13 November 2024)
  The Dutch court at first instance required Royal Dutch Shell plc to reduce its emissions and the Court of Appeal overturned the specific reduction target obligation, but maintained that there was a duty to mitigate climate change.
• More greenwashing and other climate-related class actions on the horizon in Australia (23 May 2024)
• ITLOS Advisory Opinion's Impact on Corporate Responsibility (14 March 2024)

Other authors: Jasmine Xu, Lawyer and Laura Le, Graduate.