Leading Australian law firm Corrs Chambers Westgarth has voiced concerns regarding the potential impact of a proposed east coast gas reservation policy on Australia’s trade reputation, ahead of the upcoming federal election. Opposition leader Peter Dutton’s plan to divert gas from LNG export projects to domestic markets has triggered debate about potential breaches of international investment treaties.
The law firm highlights that government intervention in the gas market, through export restrictions or levies, could violate Australia’s obligations under these treaties, potentially leading to claims for damages from foreign investors. Key issues include fair and equitable treatment, protection of legitimate investor expectations, and the proportionality of policy objectives against their impact on investments.
Corrs emphasizes the necessity of a case-specific assessment to determine treaty breaches, involving a careful evaluation of the policy’s legitimacy and necessity versus the severity of its interference with investments and investor expectations. The firm advises the government to balance domestic market needs with the reasonable expectations of foreign investors and its international commitments.
While it’s currently unclear whether measures like the Gas Security Incentive will provide legal grounds for compensation claims, the government must remain aware of its international investment and trade obligations when considering interventions in the gas market.
