Investor-state dispute settlement and infrastructure projects: a potential impediment to good engineering and planning outcomes in Australia?

Abstract

ABSTRACTOver recent years, Investor State Dispute Settlement (ISDS) clauses have been a feature of Australia’s negotiations of Free Trade Agreements (FTAs). ISDS clauses are drafted to provide increased protections for foreign investors of the contracting country parties. Some Australian newspaper journalists, politicians, academics and NGOs continue to promote the view that such provisions will disadvantage Australia. The paper explains the ISDS provisions, enumerates the number of bilateral investment treaties and FTAs to which Australia is party and notes whether they include ISDS provisions. The authors explore whether the ISDS provisions pose a real threat to good engineering and planning outcomes which might impact adversely on infrastructure investments by foreign enterprises. Whilst the initial impression, based on a little known but significant toll road arbitration case from Thailand, is that the potential risk is relatively high. Closer analysis, however, shows that the risk to Australian governments is probably moderately low and can be mitigated further.