Adani’s threat to sue should not deter decisions to protect the environment says legal expert

May 9, 2019: UNSW legal researcher Dr Jonathan Bonnitcha has confirmed AFTINET’s concerns that the Adani mining company could use the Investor-State Dispute (ISDS) process in the India-Australia Bilateral Investment Treaty to claim compensation of billions of dollars from the Australian government if its mining licence is cancelled for environmental reasons.

The treaty between Australia and India was terminated in March 2017 but a grandfather clause means it could still apply to investments made before that date.

Dr Bonnitcha explains that investment treaties were originally justified to prevent uncompensated seizure of foreign investors’ assets but are now mostly invoked in complex regulatory disputes. He says that any regulatory action in relation to the Carmichael mine wouldn’t involve seizure of Adani’s assets. Investment treaties should not have any application to this sort of regulatory dispute

Dr Bonnitcha argues that Adani’s claim would have little chance of success, but the large amounts at stake can make some governments back down in response to investors’ threats of litigation. He says that the appropriate way of dealing with these concerns is to clarify or terminate existing investment treaties, not to relax environmental controls.