Clive Palmer uses another trade agreement to sue Australia, again, for $A69 billion over refusal of Waratah coal mine permit

14 November, 2023: Billionaire Clive Palmer has given notice to the Australian government that his Singapore-based company Zeph investments is using the Investor-State Dispute Settlement (ISDS) process in the Singapore-Australia Free Trade Agreement to claim an additional A$69 billion in compensation because the Queensland Land Court refused permits for its Waratah coal mining project in North Queensland. The permits were refused for environmental reasons, including their contribution to increased carbon emissions.

Palmer has previously used ISDS in a different agreement, the ASEAN-Australia-New Zealand Free Trade Agreement for two other claims against the government. The first is a claim for almost A$300 billion over the Western Australian Government decision about an iron ore mining licence which he had appealed to the High Court and lost. The second claim is for A$43 billion over the refusal of the environmental permit for the same Waratah coal mine in North Queensland.

What kind of system allows Palmer to claim to be a Singaporean investor and sue the Australian government for a total of AU$409 billion under two different trade agreements?

ISDS is a process included only in some trade agreements which allows foreign investors to sue governments for compensation if they can argue that a law or policy decision harms their future profits, even if the decision is made for environmental or other public interest reasons. Having registered Seph investments in Singapore, Palmer can lodge claims under trade agreements between Australia and Singapore.

ISDS claims are heard by international tribunals, which, in contrast with national legal systems are staffed by part-time arbitrators who are not independent judges, but can continue to be practising advocates, and there are no precedents or appeals. Even if governments win cases, defending them takes years and tens of millions in legal fees.

This is farcical enough, but the ISDS system is so full of loopholes compared with national legal systems that it does not prevent companies from making multiple claims over the same decision under different trade agreements. Palmer’s strategy is clearly to maximise costs to the government.

Palmer’s second and third cases add to increasing numbers of cases from fossil fuel companies suing governments because of decisions to reduce carbon emissions. A 2022 study published in the prestigious Science journal found that ISDS cases threaten the global green energy transition, noting that the Intergovernmental Panel on Climate Change (IPCC) had recently acknowledged that ISDS cases could lead to states refraining from, or delaying, measures to phase out fossil fuels.

Following its experience of being sued by the Philip Morris tobacco company over its 2012 plain packaging law, the Labor government has a policy against including ISDS in new agreements and to review it in existing agreements. Palmer’s third case makes the removal of ISDS in existing agreements even more urgent.