Clive Palmer uses Singapore free trade agreement to revive ISDS claim against Australia
Monday, October 31, 2022: Australian mining magnate and political player Clive Palmer has used his Singapore company, Zeph Investments, to notify the Australian government on October 20, 2022, of its intention to seek compensation over a legal dispute with the WA government about its proposed Balmoral South iron ore project in the Pilbara region of Western Australia.
Palmer had sued the Western Australian government in the High Court over this issue for a claim of A$30 billion, a case that failed in October 2021. This new claim is expected to be even greater. He signalled this gambit back in December 2020, but did not follow through at that time.
The claim will be based on the Investor-State Disputes Settlement (ISDS) provisions of the Singapore-Australia Free Trade Agreement, which allows a Singapore (but not a local) investor to sue Australia if a new law or policy reduces the value of its investment.
Palmer is claiming compensation from the Commonwealth because the WA government passed legislation terminating his legal dispute over the Balmoral South iron ore project, which had been running since 2012.
The original WA dispute was with Minerology, an Australian-based company, but Mineralogy is now owned by Zeph investments, registered in Singapore in 2019. This ownership arrangement enables the absurd claim that Palmer is a Singaporean investor.
This is the same “forum shopping” tactic that was used by the US Philip Morris tobacco company when it shifted assets to Hong Kong and used a Hong-Kong-Australia investment agreement to try to sue the Australian government for billions of dollars over Australia’s plain packaging law in 2011.
It took over 5 years and $12 million of taxpayers’ money in legal costs for the ISDS tribunal to decide that Philip Morris was not a Hong Kong company and thus to dismiss the case.
The new Palmer claim exposes again the unfairness of the ISDS system. The Singapore-Australia FTA ISDS provisions have clauses which are intended to safeguard against forum shopping, but the Australian government will have to argue before a tribunal that the case not proceed, and so will still incur legal costs. The lack of precedents in the ISDS system means there is no guarantee that the tribunal will decide in the government’s favour.
This is yet another example of why ISDS should be excluded from all trade agreements.
Australian Attorney-General Mark Dreyfus said in a statement that the government planned to “vigorously” fight Palmer’s claim. It is Labor policy to remove ISDS provisions from existing FTAs where possible, and this case should spur the government into action.
Zeph Investments has 90 days to lodge the claim after giving notice. So far, the claim is not listed on the United Nations Conference on Trade and Development (UNCTAD) database.