Secret by Brian Toohey

Author:Brian Toohey [Toohey, Brian]
Language: eng
Format: epub
ISBN: 9780522872804
Publisher: Melbourne University Publishing
Published: 0101-01-01T00:00:00+00:00

36

SURRENDERING JUDICIAL SOVEREIGNTY

‘The significance of the ISDS [investor-state dispute settlement] arbitral processes is global. They have general implications for national sovereignty, democratic governance and the rule of law.’

Former High Court chief justice Robert French1

The Hawke Government’s abolition in 1986 of appeals to the British Privy Council was widely praised as an overdue move to ensure that the nation’s highest court was no longer subordinate to a court in another country. Later governments signed trade and investment treaties allowing nonjudicial bodies to overturn High Court decisions by using investor-state dispute settlement (ISDS) clauses in the agreements. Ceding sovereignty to international organisations to promote prosperity, human rights and environmental protection can have clear benefits, as can international laws prohibiting aggression, inhumane weapons, war crimes, and so on. The General Agreement on Tariffs and Trade and the World Trade Organization helped boost prosperity after World War II, but these arrangements have been largely supplanted by bilateral and regional agreements. Mainstream economists argue that these only shift trade from one country to another without increasing global trade.

A former High Court chief justice, Robert French, says, ‘Arbitration tribunals set up under ISDS provisions are not courts. Nor are they required to act like courts … Questions have been raised about their consistency, openness and impartiality.’2 As well as lacking effective appeal processes, French says their decisions have implications for ‘national sovereignty, democratic governance and the rule of law’.3 Even the name of a country where a case is being heard in secret is undisclosed.

These tribunals have a history of imposing hefty penalties on governments pursuing public policy goals in areas such as health, consumer protection and the environment. Unlike foreign corporations, Australian firms can only appeal against these policies in a proper court. Partly for these reasons, John Howard while prime minister resisted intense US pressure to include ISDS clauses in the Australia–United States Free Trade Agreement. Subsequent Coalition governments ignored Howard and included ISDS clauses in several bilateral and regional agreements.

Coalition ministers usually claim they obtain special ‘carve-outs’ to protect particular programs, such as the Pharmaceutical Benefits Scheme. But Greg Wood, a former deputy head of the PM’s Department with extensive trade policy experience, says ISDS clauses constrain the ability of future governments to introduce legislative changes to take account of how ‘issues, circumstances and community attitudes shift’.4

For example, there was no carve-out to protect Labor’s 2011 law requiring plain packaging and health warnings for tobacco. After Philip Morris Asia lost a High Court challenge, it took legal action against the government under an obscure 1993 investment agreement with Hong Kong. The company used the agreement to argue it should be paid vast sums for the ‘expropriation’ of its Australian investments. Former Labor treasurer Wayne Swan argued in a secret ISDS hearing in Singapore that Philip Morris Asia had only taken over the tobacco giant’s Australian operations to create a Hong Kong link to challenge the plain packaging law. The case ended when the tribunal found that the company had contrived its affairs to secure standing under the treaty.

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