We are seeing a possible new trend of post-Treaty settlement litigation. Recently, Te Ohu Kai Moana Trustee Ltd (TOKM) brought a claim in the High Court, arguing that the Crown breached its obligations under a 30-year-old Māori fisheries Treaty settlement, known as the “Sealords deal”. The Court held that the Crown failed to uphold its obligations under the Treaty of Waitangi | Te Tiriti o Waitangi by transferring portions of the quota provided to Māori to other fishing operators without redress.

In this article, we look into the background of the “Sealords deal”, why this case is important to ensure the Crown upholds its Treaty obligations, and its effect on wider law reforms.

Similar litigation may arise as the Government proposes reforming key legislation which may change the legal context in which Treaty settlements were made, such as in relation to the Public Works Act 1981 and the Resource Management Act 1991.

Background to the case

The historical context of the Quota Management System and the “Sealords” deal is crucial to understanding the Court’s findings. Below we set out this context.

The Quota Management System (QMS)

Established in 1986, the QMS manages New Zealand's fisheries sustainably. It introduced individual transferable quota (ITQ), allocated based on catch history, and capped the total allowable catch (TAC). Under the QMS, fishing operators received ITQ, which represented their entitlement to catch a specific volume of fish. ITQ could be bought, sold, leased, and mortgaged.

To implement the QMS, the Crown provided deferred entitlements (s 28N rights) to compensate operators who had to reduce their catch levels. These rights allowed operators to receive new quota allocations free of charge when catch levels increased.

The Settlement of the Māori Fisheries Claim - the “Sealords deal”

The introduction of the QMS had the potential to undermine the Treaty guarantee to Māori of full possession and te tino rangatiratanga of their fisheries. At the time the QMS was introduced, this was recognised in legislation by section 88(2) of the Fisheries Act 1983, which provided that “nothing in that Act shall affect any Māori fishing rights”.

The 1992 Sealords deal resolved disputes between Māori and the Crown regarding commercial fishing rights. It provided Māori with a significant stake in New Zealand's fisheries. The Sealords deal involved a joint venture to purchase Sealord Products Ltd, holding 26% of the total fishing quota. Māori would hold 10% of the total commercial fishing quota.

The Sealords deal was formalised through a Deed of Settlement and the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992. In return for the settlement quota, Māori surrendered their right to seek judicial recognition of customary or Treaty-based commercial fishing rights.

Issue: Crown reallocating quota shares without compensation

The Fisheries Amendment Act 1990 allowed the Crown to reallocate quota to satisfy s 28N rights. When the TAC increases, the first allocations go to s 28N rights holders, leading to a permanent reduction in the proportion of the quota held by Māori and other operators without compensation.

Outcome: High Court found that the Crown breached its obligations under the “Sealords deal”

The Court found that this mechanism transferred the Crown's 28N debt to other quota holders, including Māori, contrary to the Sealords deal's intention. The Court found that both parties to the settlement intended the transfer of quota to be permanent and not subject to reappropriation without compensation. The Court emphasised that reaching Treaty settlements are steps towards reconciliation between the Crown and Māori. However, this requires a commitment to Māori beyond the deed being signed. In reaching the Sealords deal, Māori understood that they would receive the settlement quota, which would not be transferable; and, in return, Māori surrendered their right to seek recognition of their customary or Treaty-based commercial fishing right. The Crown's actions were, therefore, declared a breach of the Sealords Deal and the Treaty of Waitangi.

The Court also emphasised that the Crown's obligation to transfer 10% of existing fishing quota to Māori formed part of the Sealords deal. The Crown's failure to offset losses or provide redress represented an unmet settlement obligation.

Consequently, the Court declared:

• The Crown’s obligation to transfer 10% of existing fishing quota formed part of the Sealords deal.
• Both parties intended the transfer of settlement quota to be permanent and not re-acquired from Māori without compensation.
• It is a breach of the Sealords deal and the Treaty for the Chief Executive to appropriate settlement quota from Māori without providing redress.

New frontier for te Tiriti jurisprudence

The High Court decision highlights the new frontier for te Tiriti jurisprudence, where the Crown must ensure new reforms do not undermine Treaty settlements. With more PSGEs, this decision may lead to new claims where redress under prior settlements is undercut by legislative reform.

The Crown must uphold its commitments to provide adequate redress post-settlement. According to the Auditor-General in a recent report, they are currently not. Many public entities are not fulfilling commitments in settlements. It was found that “public sector arrangements do not adequately support public organisations to meet commitments or fulfil settlements’ overall intent”.

This case and the current environment highlights the current trends of this Government to exclude Treaty clauses, while requiring those exercising powers to act consistently with the obligations arising under existing Treaty settlements. In Hon Bishop’s announcement on the Resource Management Act 1991 reform, he indicated the replacement legislation will uphold existing Treaty settlements, rather than including a Treaty principles clause in the new legislation. However, determining “obligations” under Treaty settlements may not be a simple task in all cases. 

Lessons from this case

For those fulfilling the Crown’s obligations to Māori under Treaty Settlements, this case is a reminder to understand relevant settlements and the Crown’s commitments. This applies to government departments, local authorities, and Crown entities. 

For PSGEs and Māori, this case is a reminder that law reforms might affect Treaty Settlements.

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Special thanks to Sarah Gwynn and Liam Stevens for their assistance in writing this article.