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A new pro-corporate tier to Australia's government and judiciary

By Thomas Faunce - posted Thursday, 5 November 2015

The newly signed Trans-Pacific Partnership (TPP) includes a chapter that marks a turning point in the diminution of democratic sovereignty in Australia. Why is this?

A main reason is that the TPP for the first time allows powerful US corporations to sue federal and possibly state Australian governments before a panel of investment arbitrators whenever such corporations feel their investments in this country have been impeded by our democratically enacted laws and policies.

'Investments' under the TPP is very broadly defined and can include intellectual property.


We've been assured that social services, creative arts and decisions of Foreign Investment Review Board cannot be challenged, that non-discriminatory regulatory actions on health and the environment cannot be challenged by this mechanism as indirect appropriations except in 'rare' circumstances (not defined), that hearings will be open to the public and Australia can issue interpretations that must be followed (but without appeal if they are not).

There are no reciprocal TPP rights of our government to sue those corporations if, for example, they pollute or degrade our environment. There is no right of appeal, no obligation on those investment arbitrators to follow any body of precedent, let alone the norms on international law.

Such investment arbitrators have never found against a US corporation. Damages awards must be paid, otherwise trade sanctions apply and credit ratings are downgraded.

Why has our government agreed to this? The system of Investor State Dispute Settlement (ISDS) arose when investors needed protection from nationalisation in developing nations that lacked a strong rule of law. In the 1990s the US expanded ISDS rights for its corporations to Mexico and Canada, then unsuccessfully tried to make them global in a single treaty. That failed.

Australian PM John Howard kept ISDS out of the AUSFTA.

Now, the introduction of ISDS at the behest of US corporations into Australia raises stark policy issues for our societal virtues. How can, for example, Australia maintain justice, equity and environmental sustainability as dominant policy concerns if we allow powerful, cashed-up corporations to have the final say on what legislation we can pass?


What can be done?

Doing nothing in effect means we have acquiesced in a new wave of corporate colonisation. This will have major negative impacts on quality of life throughout our society.

If Australia's High Court follows the US Supreme Court's position enunciated last year, we may be required to apply the rulings of investment arbitrators without reexamining the merits.

This raises further profound questions about erosion of the Constitutional constraints on judicial power in Australia. The TPP's ISDS rights also will allow corporate lobbyists to push for wages and conditions to be eroded as they impede corporate investments.

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About the Author

Thomas Faunce is Assoc. Professor at the College of Law and Medical School ANU.

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All articles by Thomas Faunce

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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