Is this all a man's whim? Or a legitimate decision?

The elected political leadership of a Torah settlement saw that the coffers were empty.
Need to save on expenses
See, there is a clause that costs money, and that is claims for damages caused by the settlement.
(Well, not really because there is insurance that pays, but rather the cost of the insurance…)
They decided that from now on, the community will not look favorably on a lawsuit against him if he caused harm, and if anyone dares to sue (Torah law or court doesn't matter), the community will publicly shame him.
This is a good solution so that none of the injured parties will sue the settlement, and thus expenses can be saved.
 
I asked:
After all, we all, as individuals, as a society, as an organization (and even as a state), must be careful not to cause harm, and if we do, we must pay or at least appear in court if we are sued.
How can a public body declare that it is not condemned?
It seems to me something violent and bullying.
 
Indeed?
And if this is unfair, is it the role of the local rabbi to stop this injustice?