Australian Foreign Investment Requires Right to Sue Foreign Governments

Thursday 9th August 2012

Statement by Peter Anderson, Chief Executive

Australia's largest and most representative business organisation, the Australian Chamber of Commerce and Industry (ACCI), together with leading business groups and some of Australia's foremost legal experts on trade policy, have launched a campaign for trade agreements to include, on a case by case basis, provisions that allow private companies to sue foreign governments for breach of contract or property rights.

The business campaign seeks to restore Australian support for these rights, known as Investor-State dispute settlement (ISDS) provisions. Case-by-case support was withdrawn by the Gillard government in its 2011 policy statement 'Trading our Way to More Jobs and Prosperity'.

The campaign features a joint letter signed last month by sixteen business organisations and legal experts, addressed and sent to the Prime Minister.

In launching the campaign‟s public phase, ACCI Chief Executive said:

"If Australian companies are to fully grasp opportunities of the Asian century and emerging markets of Africa and the Indian Ocean Rim, trade agreements must provide investor certainty for private companies, not just governments. Investors are put off if they don‟t have a secure legal frameworks with enforceable rights by courts or commercial arbitration."

"Especially in developing countries where legal systems are ambiguous or suspect, Australian companies investing off-shore need confidence to take legal action and compel international arbitration against governments which infringe property and contractual rights."

"The recent focus on in-bound foreign investment must not overshadow the prosperity flowing from Australian companies successfully investing in emerging markets."

"ISDS provisions support Australian companies in their investments in foreign countries and provide an efficient mechanism for companies to seek to directly rectify any adverse situations" the joint letter says.

Since 2011, ACCI has tried to persuade the Gillard government to restore a case-by-case approach to ISDS in trade agreements, including Trans Pacific Partnership and Indian Ocean Rim negotiations.

As recently as 13th July in Brisbane, business organisations forming ACCI's General Council resolved to support a public campaign given no-change in the government's approach.

"The government's refusal to consider inclusion of such provisions in current or future regional and bilateral free trade agreements is a flawed approach which reduces security for Australian firms seeking to invest internationally" the joint letter says.

Together with the International Chamber of Commerce, ACCI last week held seminars on international commercial dispute arbitration across five Australian capitals, including judge from the Supreme People‟s Court of China.

"Those arbitration seminars starkly reminded businesspeople that investment is stymied and Australian businesses ripped-off if legal rights are not protected and enforceable on foreign shores."

Aside from ten business groups, the co-signed letter, attached, includes support from the Chartered Institute of Arbitrators, leading barristers (including a former Commonwealth Solicitor General) and legal academics.

Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry 0417 264 862
Bryan Clark, Chief Executive, International Chamber of Commerce Australia 0428 645 232

Technical commentary:
Doug Jones AO RFD, Partner, Clayton Utz, +61 2 9353 4120
Michael Pryles, arbitrator, +613 9286 6632
Dr Gavan Griffiths AO QC, Barrister, +613 9225 7658
Professor Luke Nottage, Professor of Comparative and Transnational Business Law, University of Sydney, +61 2 9351 0210