Google could use ISDS to sue Australia for millions over regulation for payment of news content
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AFTINET | 8 February 2021

Google could use ISDS to sue Australia for millions over regulation for payment of news content

February 8, 2021: A Senate Inquiry heard last week that Google’s Singapore subsidiary could allow it to use a controversial Investor-State Dispute Settlement (ISDS) provision in the Singapore-Australia Free Trade Agreement to demand millions in compensation over proposed Australian regulation for payment of news content.

ISDS allows foreign investors to bypass national courts and claim compensation for a change in law or policy if they can argue that it harms their investment, even if the change is in the public interest. The disputes are heard by international tribunals made up of practising advocates who are not independent judges and there is no system of precedents or appeals.

All trade agreements have government-to-government dispute processes. ISDS is a separate process giving additional legal rights to international investors that already have huge market power, and it is not included in all the agreements. Community opposition meant that John Howard did not agree to include ISDS in the US-Australia Free Trade Agreement, so the US-based Google cannot sue under that agreement. But Google has substantial investments in Singapore, and ISDS is included in the Singapore-Australia Free Trade Agreement (SAFTA).

The US-based Philip Morris tobacco company used a similar forum-shopping tactic when it shifted some assets to Hong Kong after the plain packaging law was foreshadowed and used a Hong Kong investment agreement to sue the Australian government over our plain packaging law. It took the international tribunal almost five years to decide that Philip Morris was not a Hong Kong company, but Australia still had to pay $12 million in legal costs.

The Australian Financial Review reported that Google had substantial investments in Singapore before the regulation was proposed. This means it may have a stronger case to argue that is a Singapore company and therefore able to use the SAFTA ISDS provisions.

Another possible risk from the SAFTA could arise because its digital trade rules were recently revised to restrict government access to source code and also foreshadowed a restriction on governments requiring access to algorithms. This could impact on access to source code and algorithms which may be required as part of the regulatory framework.

This is another example of how ISDS can give global companies like Google additional legal rights to demand compensation for government regulation in the public interest, and why it should be excluded from all trade agreements. It also highlights the risks of restricting access to source code and algorithms which may be required to regulate giant tech companies.

Fuente: AFTINET