Originally from Investment Arbitration Decisions

ABSTRACT

On 1 January 2005 the Australia-United States Free Trade Agreement came into force, heralding a new chapter in Australian-US trade relations. Unsurprisingly, the investment chapter of this treaty contains some protections with respect to direct and indirect expropriations by a contracting State. However, the treaty lacks an investor-State dispute settlement mechanism, providing instead for a form of State-State dispute resolution. This paper considers the protections contained in the AUSFTA with respect to expropriation and the AUSFTA dispute resolution mechanism – focusing specifically upon the risk to US investors operating in the Australian resources industry. It also considers the domestic Australian protections / remedies available to US investors. Ultimately, it argues that the practical extent of the protections in the AUSFTA with respect to expropriation are dramatically undermined by the difficulty that investors will likely face in enforcing those protections and notes some strategies that can be adopted by investors to help remedy the apparent lack of protection.