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Future Australian trade agreements will not include arbitration provisions
Practical Law Legal Update 4-505-9644 (Approx. 2 pages)
Future Australian trade agreements will not include arbitration provisions
| Published on 05 May 2011 • Australia |
Andrew Robertson (Partner), Piper Alderman
A report on trade policy issued by the Australian Federal government suggests that future Australian trade agreements will not include arbitration provisions.
The report, Gillard Government Trade Policy: Trading our way to more jobs and prosperity, April 2011, deals with many issues of trade policy, but the approach to issues in investor-state arbitration is of particular importance. It provides, at page 14, that:
"In the past, Australian Governments have sought the inclusion of investor-state dispute resolution procedures in trade agreements with developing countries at the behest of Australian businesses. The Gillard Government will discontinue this practice. If Australian businesses are concerned about sovereign risk in Australian trading partner countries, they will need to make their own assessments about whether they want to commit to investing in those countries."
This is a fairly blunt assessment of the risks that Australian investors will now face, without effective recourse, for the commitment provided by contracting states in the investment clauses of trade agreements.
Australia signed the ICSID Convention in 1975 and it entered into force in Australia in 1991. The text of the ICSID Convention forms Schedule 3 to the Australian International Arbitration Act and it has force of law pursuant to section 32 of that Act.
While Australia has previously entered into trade or investment agreements without investor-state dispute resolution procedures, the position confirmed by the government report will now be the rule. This will affect negotiations concerning free trade agreements that Australia is currently pursuing with China, the Gulf Co-operation Council, Indonesia, Japan, Korea, Malaysia, the Pacific Islands Forum and the Trans-Pacific Partnership.