Australia’s Ambivalence Again Around Investor-State Arbitration: Comparisons with Europe and Implications for Asia

In late 2022 Australia’s new Labor government declared that it would no longer agree to investor-State dispute settlement (ISDS) in future international investment agreements (IIAs). Section I reviews its previous anti-ISDS stance (governing with the Greens over 2011 to 2013) inspired by more articulated policy rationales but also the first claim against Australia, over tobacco plain packaging legislation. Then followed the centre-right coalition government’s return to including ISDS on a case-by-case assessment (2014–21) drawing partly on different arguments and evidence. Section II suggests that a new factor behind the latest policy shift comprises a second set of significant ISDS arbitration claims against Australia, from the Singaporean subsidiary of an Australian mining magnate and right-wing political leader. Section III draws parallels with the European Union (EU), whose developed economy member States reacted to inbound ISDS claims by replacing traditional ISDS from 2015 with an ‘investment court’ hybrid process, then influencing multilateral ISDS reform negotiations. Intra-EU ISDS claims are also being precluded by the Court of Justice of the EU, but in the context of European law and institutions providing an alternative pathway for European investors to hold other member States to account. Section IV considers the implications of Australia’s anti-ISDS stance for ongoing and potential IIA (re)negotiations with the EU and Asian States, including the feasibility of moving towards an EU-style investment court approach in Asia-Pacific IIAs. Section V concludes by linking these developments to ongoing debates about reforms to ISDS—locally, regionally and globally—as well as about incomplete investment IIAs.