Still open for business: Australia’s Foreign Relations (State and Territory Arrangements) Act 2020 (Cth)
The Federal Parliament has made the Australia’s Foreign Relations (State and Territory Arrangements) Act 2020 (Cth) (Act) to ensure that arrangements between Australian States and Territories and foreign governments are consistent with Australia’s foreign policy.
Under the Act, the Federal Minister for Foreign Affairs (Minister) will have powers to prevent a prospective foreign arrangement from proceeding and to cancel an existing arrangement, where the arrangement is not consistent with Australia’s foreign policy or adversely affects Australia’s foreign relations.
The Federal Parliament is empowered to make legislation such as the Act under section 51 of the Commonwealth Constitution, which provides that the Federal Parliament may make laws on certain matters, including laws with respect to external affairs. While the States and Territories are permitted to make laws on matters covered under section 51 of the Constitution, where there is an inconsistency between a law of the Commonwealth and a law of a State or Territory, the Commonwealth law will prevail and the law of the State or Territory will be invalid, to the extent of the inconsistency, under section 109 of the Commonwealth Constitution.
What does the Act cover?
The Act covers ‘foreign arrangements’, which are arrangements between a State or Territory entity and a foreign entity. The term ‘arrangement’ is defined very broadly to mean a written arrangement, agreement, contract, understanding or undertaking, whether or not it is legally binding, made in Australia or elsewhere and whether entered into before or after the Act commences. It also includes written variations to those arrangements.
The Act also covers ‘subsidiary arrangements’ which are arrangements entered into ‘under the auspices’ of a foreign arrangement. This occurs where the subsidiary arrangement is entered into at the same time, or after, the foreign arrangement, for the purposes of directly or indirectly implementing the foreign arrangement.
‘State/Territory entity’ is also defined broadly and includes a State or Territory, its government, departments or agencies, local governments, universities established by or under a law of a State or Territory and any entities prescribed by the rules to be a State/Territory entity. ‘Foreign entity’ includes a foreign government, its departments and agencies, provinces, states, local councils and other political subdivisions, authorities established for a public purpose, universities without institutional autonomy and any entities prescribed by the rules to be a foreign entity.
The Act distinguishes between two types of foreign arrangements:
- ‘Core’ foreign arrangements - A core foreign arrangement is one between a ‘core State or Territory entity’ and a ‘core foreign entity’. A core State or Territory entity is a State or Territory, its government and its departments and agencies and a core foreign entity is a foreign country, its national government and its departments and agencies.
- ‘Non-core’ foreign arrangements - A non-core foreign arrangement is a foreign arrangement that is not a core foreign arrangement.
Core foreign arrangements are subject to more oversight by the Minister under the Act.
What are the direct impacts of the Act?
The majority of Queensland Government agencies and bodies will be considered core State or Territory entities under the Act.
Core State/Territory entities must notify the Minister of pre-existing foreign arrangements by 10 March 2021. Non-core financial arrangements must be notified by 10 June 2021. A pre-existing foreign arrangement is a foreign arrangement that is in operation on 10 December 2020 or comes into operation during the period from and including 11 December 2020 to and including 9 March 2021.
From and including 10 March 2021, where an arrangement with a core foreign entity is proposed, the State or Territory entity will need to notify and receive the Minister’s approval before commencing negotiations and before entering into the arrangement under Part 2 of the Act.
If an arrangement is caught by the Act, the Minister will have a wide range of powers under Part 4 of the Act, such as:
- prohibiting the State or Territory entity from negotiating or entering into the agreement;
- declaring the arrangement to be invalid, unenforceable or not in operation; and
- varying or terminating any arrangements that are inconsistent with Australia’s foreign policies or would adversely affect Australia’s foreign relations.
Negotiation or entry into core foreign arrangements without the Minister’s approval is prohibited under Part 2 of the Act. The Minister has a 30-day timeframe to provide or refuse approval, after which the Minister will be deemed to have approved under section 28 of the Act.
The Minister has broad powers to ensure compliance, including the ability to obtain an injunction to enforce declarations or to ensure compliance with provisions of the Act, the ability to make rules for the purposes of the Act and the express exclusion of the application of procedural fairness in connection with the Minister’s exercise of a power or performance of a function under the Act.
The Minister must keep a public register of the arrangements available for public inspection on the internet under section 53 of the Act.
The Act has broad implications for States and Territories, local governments and universities. The Act introduces significant new levels of oversight and control.
Steps which agencies may need to implement include:
- undertaking an internal audit of all current and proposed arrangements that will be caught by the Act, including subsidiary arrangements involving private sector entities, and giving the notices to the Minister;
- creating a central register in the agency which holds relevant information relating to the arrangements;
- identifying information that is exempt from being on the public register that the Minister is required to keep under section 53 of the Act, for example, commercially sensitive information, cabinet documents or information subject to legal professional privilege;
- updating relevant internal policies and procedures to ensure compliance with the requirements of the Act, including training relevant personnel and informing counterparties to arrangements of the provisions and effect of the Act;
- incorporating the Minister’s approval as a condition precedent to relevant agreements and developing appropriate mechanisms under existing and proposed arrangements to deal with any declaration from the Minister (such as amending termination clauses within agreements to provide for termination rights in the event of a declaration).
Due to the current geopolitical climate and concern over foreign interference, arrangements with foreign entities have become subject to greater scrutiny. If you have any questions about the Act or would like assistance with training, briefings or compliance, Crown Law can help.
Author: Rosemary O’Shea