The “Anti-ISDS Bill” before the Australian Parliament

This posting is based mainly on a Note that critically reviews The Trade and Foreign Investment (Protecting the Public Interest) Bill 2014, drawing on my written Submission and subsequent Senate Hearings. The fully footnoted version will appear in the next issue of the CIArb’s “Australian ADR Reporter” or successor Journal. Readers may also be interested in my subsequent posting to the Kluwer Arbitration Blog, followed by the Senate Committee Report (27 August 2014) which agreed that the anti-ISDS Bill should not be enacted. Significant extracts from that Report will also be added and analysed in my draft paper at, with an introduction incorporating a version of the Note below.
This work is part of an Australian Research Council Discovery Project (DP140102526) funded over 2014-2016 jointly with Dr Shiro Armstrong and Professors Jurgen Kurtz and Leon Trakman, which was acknowledged in the Senate Bill hearings and final Report. The topic of ISDS will also be discussed at the Law Council of Australia’s 2014 International Trade Law Symposium, 18-19 September, Canberra, and will be the focus of an ABC National Radio broadcast on 14 and 16 September (with transcripts here).

On 6 August 2014, the Senate’s Foreign Affairs, Defence and Trade Legislation Committee held public hearings on The Trade and Foreign Investment (Protecting the Public Interest) Bill 2014, introduced on 3 March by Senator Peter Whish-Wilson of the Australian Greens Party. His private Member’s Bill seeks to prevent the Australian government from entering into any future treaties containing provisions on investor-state dispute settlement (ISDS). These are designed to provide an additional option for foreign investors to directly enforce substantive commitments made by host states, such as non-discrimination and compensation for expropriation. Australia now has ISDS provisions with 29 economies, derived from:
• all 21 bilateral investment treaties (BITs) presently in force, signed since 1988 [albeit arguably very limited for many];
• four out of eight bilateral free trade agreements (FTAs), signed since 1982; and
• Australia’s sole regional FTA, signed in 2009 with ASEAN member states (thus adding ISDS protections between Australia and four more states – Brunei, Cambodia, Malaysia and Myanmar).
The Gillard Government negotiated the omission of ISDS in the investment chapters in FTAs with New Zealand (signed in 2011) and Malaysia (2012). By contrast, the Abbott Government has reverted to the inclusion of ISDS on a case-by-case assessment. It agreed to ISDS in the FTA with Korea (signed on 8 April 2014), but seemingly was not pressed as hard to include the procedure in the FTA subsequently agreed with Japan (signed on 8 July 2014). Even if Senator Whish-Wilson’s present private member Bill passes the Senate, which seems almost impossible given that both Coalition and (opposition) Labor Party members of the Committee recommended against enactment in the Report of 27 August, it will have no chance of passing the lower House of Representatives unless the Abbott Government abandons its current policy. But this discussion in the Australian Parliament may anyway impact on the FTA with Korea, which was tabled on 13 April 2014 and must be approved by the Joint Standing Committee on Treaties.
Accordingly, the recent Committee hearings on the Bill have broader national and international significance. The video-recordings (and soon the transcripts for Hansard) can be accessed via the Parliament’s website. I was invited to give evidence based on my written Submission dated 2 April 2014, opposing the Bill and previously abridged on this Blog, and the video-recording is already available online [from around 2.08-3.10hrs here]. The Committee heard from 9 witnesses on 6 August 2014, based on 141 Submissions – including many short ones from private individuals. The internet was also mobilised by supporters of the Bill:

The committee has received over 11,000 emails from individuals using an online tool asking people to express their opposition to investor state dispute settlements under trade agreements to the committee. Due to the large number of emails received, it is not possible for the committee to accept them as submissions and publish them on the committee’s website. The committee, however, has agreed to accept the emails as correspondence.

Readers of this Note are further encouraged to view the Senator’s Second Reading Speech, along with a critical Submission by Dr Sam Luttrell and Dr Romesh Weeramantry (experts in international arbitration who also opposed the Bill). The Chief Justice of Australia has weighed in recently on this topic as well, referring to the Bill and my Submission. Even if this Bill does not pass, ISDS will remain an important issue in Australia’s pending FTA negotiations, especially for major regional treaties such as the TPPA and RCEP.

Author: Luke Nottage

Prof Luke Nottage (BCA, LLB, PhD VUW, LLM LLD Kyoto) is founding co-director of the Australian Network for Japanese Law (ANJeL), Associate Director (Japan) of the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS), and Professor of Comparative and Transnational Business Law at Sydney Law School. He specialises in international dispute resolution, foreign investment law, contract and consumer (product safety) law.