Australia's Rejection of Investor-State Arbitration: Causation, Omission and Implication

Abstract

This article analyzes the Australian Government's announcement that it will no longer include investor–State dispute resolution provisions in future bilateral and regional trade agreements. The Australian policy shift is distinctly at odds with the recalibration strategies employed by other developed States. Philosophically, it is more in line with the hard exit from the investment law regime practiced so far by a limited number of Latin American States. Given Australia's long history as a committed supporter of international law, the Australian policy shift is likely to prove influential to a broad range of countries. With that prospect in mind, this article examines the policy change in three stages. First, it identifies and details the causal nexus between a combined set of domestic and international events and the Australian policy change. Second, it examines the direct causal factor — comprising the 2010 recommendations by the Australian Productivity Commission — in detail. Specifically, this part of the article focuses on the framing and methodology adopted by the Commission in its evaluation of the utility of investment disciplines. It uncovers problematic assumptions and omissions which, it is suggested, necessarily weaken the Commission's substantive findings. Finally, the article examines the implications of the Australian policy shift across a chronology by tracing likely short, medium and long-term consequences.

Keywords: international investment law, dispute settlement, investor state arbitration, Australia

JEL Classification: K33