Investment Treaty Arbitration ‘Down Under’: Policy and Politics in Australia

As part of our joint ARC-funded research project on investment treaty dispute resolution, also involving Shiro Armstrong (ANU) and Leon Trakman (UNSW), Jurgen Kurtz and I have completed a note on Australia’s recent policy and political debate over investor-state arbitration, which ultimately was not provided for in the Australia-Japan FTA signed last year (as explained here).
The complex and ongoing saga in Australia may also impact on pending negotiations for an expanded Trans-Pacific Partnership Agreement and (ASEAN+6) Regional Comprehensive Economic Partnership FTA, each of which involves Japan as well as Australia.
Our paper will be published in early 2015 in the ICSID Review, with a longer version also at Below is an outline.

I. Introduction
II. Opposition to ISDS from the (Political) Left & (Economic) Right
III. The ‘Anti-ISDS Bill’ and KAFTA before the Australian Parliament
IV. Conclusions
Abstract: This paper succinctly summarises Australia’s evolving policy debate over Investor-State Dispute Settlement (ISDS). Part I sketches some regional and global context. Part II briefly revisits the Productivity Commission’s report of 2010, and longer-standing concerns from the political left, which coalesced in the 2011 Gillard Government Trade Policy Statement eschewing ISDS in all future investment treaties or Free Trade Agreements (FTAs).
Part III focuses on the new Abbott Government’s policy since 2014, which reverts to a case-by-case assessment – resulting in ISDS being omitted from Australia’s FTA with Japan, but being included in its bilateral FTAs with Korea (KAFTA) and China. In Parliament, the main opposition Labor Party continues to voice concerns about ISDS, but voted with the Abbott Government on legislation implementing KAFTA, which was then ratified. Labor Party members of a Senate Committee also sided with ruling Coalition members in recommending against enactment of a broader “anti-ISDS Bill”, proposed by a Greens Party Senator to legislatively preclude ISDS provisions in future treaties, albeit primarily on the basis that this would excessively constrain the executive branch’s responsibility to negotiate international agreements.
Part IV suggests that Australia’s major political parties now have an opportunity to develop a shared and sustainable policy stance on this vexed issue, underpinned by the recent parliamentary inquiries and media attention as well as ongoing empirical and theoretical research.

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.