US company attempt to sue Australian government lapsed but still cost $44,000

April 24, 2019: The Guardian has reported that US energy company APR has failed in its attempt to use the US-Australia Free Trade Agreement (AUSFTA) to sue the Australian government for compensation because of an adverse court decision. But Senator Rex Patrick has obtained documents that show that since the case was launched in 2017 the Australian government has spent two years and at least $40,000 defending the case.

The failed result is unsurprising because the AUSFTA did not have an Investor-State Dispute Settlement (ISDS) clause. ISDS gives special legal rights to foreign companies to sue governments for millions of dollars if they can argue that a law or court decision harms their investment. Community opposition resulted in the Howard government refusing to include it in the AUSFTA.

APR had claimed that the AUSFTA investment chapter allowed it to use ISDS in the Hong Kong-Australia bilateral Investment treaty under a “most favoured nation clause” which allows investors to argue that ISDS provisions in another agreement could apply.

The US Philip Morris tobacco company also failed in its attempt to use the Hong Kong agreement to sue the Australian government over our plain packaging laws. But the government had to spend almost seven years and $24 million defending that case.

Although both the Philip Morris and APR cases have failed, they show why ISDS clauses and most favoured nation clauses that give more rights to global corporations should not be included in trade and investment agreements. Even if governments win cases, it takes years and millions of taxpayer dollars to defend them.