Chinese multinational company Landbridge Group’s legal claim regarding Darwin Port – the first case ever brought against Australia at the international tribunal – is likely to yield a multi-year proceeding, which could serve as a buffer to provide some positive impacts for the Australia-China relationship, analysts said.
The owner of Landbridge, Ye Cheng, filed a case with the World Bank’s International Centre for Settlement of Investor Disputes (ICSID) requesting “arbitration proceedings” over Australia’s plan to take back control of Darwin Port, trade publication Global Arbitration Review said on April 30.
Michael Feller, co-founder and chief strategist at consulting firm Geopolitical Strategy in Melbourne, said the case was likely to stall the ultimate outcomes for several years, which may suit Canberra if it meant a decision on a forced sale did not need to be made for a very long time.
Landbridge Group said in a statement on May 1 that it “has regrettably been unable to achieve a satisfactory outcome through dialogue alone” after efforts to reach a constructive resolution with the Australian government and was now taking “necessary steps” to protect its legal rights.
The first-ever ICSID claim against Australia is the latest development in a diplomatic row over the port, located in the country’s north where both the US and Australia are expanding air bases to host US bombers.
Australian Prime Minister Anthony Albanese said during his election campaign in January that Darwin Port, which was sold in 2015 to Landbridge Group for A$506 million (US$363 million), would go back into “Australian hands”, but China’s ambassador to Australia Xiao Qian said Beijing had “the obligation to take measures” to protect the legitimate rights of overseas Chinese companies.
James Laurenceson, director and professor at the Australia-China Relations Institute with the University of Technology in Sydney, said that Landbridge’s request for arbitration itself “is not a bad one” for the Australia-China relationship.
“This is just another example of where Australia and China, in this case a Chinese company, have a difference of views,” he said. “By engaging a trusted and independent third party, some of the domestic and geopolitical heat can get taken out of the Darwin Port case.”
In its statement, the company added, “Having commenced a formal dispute under the Australia-China Free Trade Agreement, Landbridge expects the Commonwealth to refrain from taking any action adverse to Landbridge’s interests pending the resolution of that dispute, and to, consistent with international rules, afford Landbridge the full opportunity to have its claim heard and determined in the appropriate legal forum.”
Nick Marro, the Economist Intelligence Unit’s lead for global trade, said Australia will need to navigate this “very carefully”, noting the relationship between Australia and China remained fragile after their bilateral ties reached an all-time low during the Covid-19 pandemic.
“The Albanese government is looking to diversify its relationships away from the US, particularly as the Trump administration remains very volatile,” he explained. “The Albanese government’s going to be very wary of entering into a new disagreement with China at the current time, but of course at the end of the day, national security considerations are going to be paramount.”
Describing the return of Darwin Port to Australian hands as “discriminatory” and “inconsistent” with Australia’s obligations under the Australia-China Free Trade Agreement, Landbridge Group said that “multiple Australian government reviews have confirmed there are no national security concerns”.
Laurenceson said a “worse outcome” would have been if the Australian government had “unilaterally cancelled the lease on national security grounds, when the government’s own defence and security agencies have repeatedly said that there were no such concerns.
“Arbitration gives both sides a structured potential off-ramp to manage the dispute.” -- SOUTH CHINA MORNING POST
