AFTINET tells DFAT review to drop corporate rights to sue governments from Bilateral Investment Treaties

September 30, 2020: AFTINET's submission to the Review of Bilateral investment Treaties (BITs) is here.

It  contains the latest evidence on foreign investor rights to sue government, known as  ISDS, including the notorious Philip Morris tobacco company use of a Hong Kong BIT to claim billions in compensation for Australia's tobacco plain packaging legislation. The ISDS tribunal took nearly 5 years to decide that Philip Morris was not a Hong Kong company, and Australia recovered only half of the $24 million in legal costs.

Global mining companies are using Australian subsidiaries in similar forum-shopping exercises. 

In 2019 an Australian subsidiary of a Canadian mining company was awarded US$5 billion from the government of Pakistan over a dispute about a mining license, based on dubious claims for future lost profits. Pakistan was experiencing an economic crisis and had just received an IMF emergency loan for the same amount. It is a scandal that the ISDS award could wipe out the benefits of the IMF loan.

The same Canadian mining company has used another Australian subsidiary to launch a case against a decision not to renew a license for a mine in Papua New Guinea after a documented record of environmental damage and human rights abuses.

Huge awards against developing countries and the use of Australian BITs in forum shopping contradict Australia’s commitments to human rights, undermine its aid and development programs, and harm Australia’s reputation and relationships with developing countries.

Clive Palmer’s is threatening to use a recently-established Singapore subsidiary company to launch an ISDS claim against the Commonwealth over legislation passed by the WA government. If the case proceeds, it is absurd that the Australian government will have to spend time and money arguing that Clive Palmer’s company is not a Singaporean company.

Global corporations are also preparing cases against government actions to save lives during the COVID-19 pandemic.

AFTINET's submission argues that Australia should revise its BITs to encourage investment facilitation but exclude ISDS provisions, and should instead be enforced through state-to-state dispute processes.

The submissions will be published on the DFAT website and recommendations will be made to the Minister for decision, but the detail of the ministerial decision may not be made public.

DFAT will then start negotiations based on the ministerial decision with the different bilateral partners before the end of the year.

Any proposals to amend or cancel BITs should go before the Joint Standing Committee on Treaties for review.