Clive Palmer’s empty threat still shows dangers of foreign corporate rights to sue governments

January 23, 2019: Yesterday the ABC reported that Clive Palmer has moved ownership of his company to New Zealand, claimed to be an NZ company, and threatened to use an Australia-New Zealand trade agreement to sue Australian taxpayers for $45 billion because he claims the Western Australian government intends to pass legislation that would disadvantage his company.

The Australian reported correctly today that this is an empty threat because that particular trade deal does not include foreign corporate rights to sue governments.

It is a huge joke that Palmer – whose slogan is ‘Make Australia Great’ - has shifted his corporate base to New Zealand, is threatening to sue Australia, and has got his facts wrong. But there is a serious side to it.

Palmer’s company Mineralogy International Limited (MIL) owns a mining lease but the mine is operated by a Chinese company that wants to expand its operations. MIL has vetoed the expansion of the mine in a dispute over payment of future royalties. The WA government supports expansion of the mine because of claimed potential employment of 3,000 people, and wants to remove the veto.

After Palmer last month transferred the ownership of MIL to an Auckland-based holding company, the MIL chairman threatened the WA Premier that MIL would claim $45 billion in compensation.

But Palmer’s lawyers apparently failed to advise him of the fact that the ANZ trade agreement does not include a mechanism for foreign investors to be able to sue governments for damages, known as Investor-State Dispute Settlement (ISDS), because neither government wanted to include this provision.

The Comprehensive Progressive Trans-Pacific Partnership (TPP-11), which came into force in December, does include this provision but the Australian and New Zealand governments agreed to exempt each other from it.

Both governments clearly see the dangers of giving foreign investors special rights to sue governments over this sort of dispute.

However the TPP-11 does give rights to foreign investors from nine other countries, including Japan, Canada, Mexico and Singapore, all of which have investments in Australia, to bypass national courts and sue the Australian government in an international tribunal if government at any level passes a law or adopts policy which they can claim will harm their investment.

There are now over 900 known cases and many are against health, environment, indigenous rights and other public interest regulation. The Adani coal company could use ISDS in an old India-Australia investment agreement to sue a future Australian government if its licence were cancelled for environmental reasons.

If there is a change of government, Labor has pledged to withdraw from ISDS arrangements in current agreements and to ban it from future agreements. The Palmer fiasco is yet another example of why they should be held to this policy.