The Chinese owner of Darwin Port suing the Australian government shows why ‘free trade’ deals must not include investor rights to sue governments (ISDS). Patricia Ranald on the Landbridge case.
The Chinese owner of the Landbridge company which has a 99 year lease on the Port of Darwin has lodged a claim for compensation in an international tribunal against the Australian government because of its policy to terminate the lease on the grounds of national security.
Landbridge is using Investor-State Dispute Settlement (ISDS) rules in the China-Australia Free Trade Agreement (ChAFTA) which give foreign (but not local) investors the right to sue governments for billions if they can convince an international tribunal that a change in law or policy breaches the terms of the agreement and will reduce their future profits.
All trade agreements have state-to-state dispute settlement to deal with breaches of agreements. These controversial special rights for investors to sue governments are additional rights in some but not all trade agreements.
Coalition sold Port, backed ISDS
The then LNP government agreed to include ISDS in ChAFTA when it was negotiated in 2015, has publicly defended ISDS and did not oppose the sale of the lease by the CLP Northern Territory government. At the time NT Labor it said would have retained control of the port. However the LNP in Opposition backflipped and denounced the lease as a security risk before the 2025 federal election and both parties then pledged to end the lease.
The Albanese government has since been negotiating with the company to end the lease and seek an Australian buyer, but the company has refused.
The original value of the lease was reported as $506 million, but an ISDS case allows the company to claim for future lost profits,
which could amount to billions.
The case could take years and cost additional millions to defend. While Australia could use national security exceptions in the trade agreement as a defence, there is no guarantee that this would be successful, since ISDS tribunals do not have to make consistent decisions and have granted claims against governments which claimed security risks.
Putting corporations above governments
Whatever the merits of the national security argument, the case shows once again that ISDS gives extra legal rights to international companies that already have enormous market power and reduces the right of governments to regulate in response to changing circumstances.
Labor experienced these fundamental flaws in the ISDS system when the Philip Morris tobacco company sued the Rudd government over its tobacco plain packaging law in 2012, provoking widespread community opposition and the development of Labor policy against ISDS.
Labor trying to junk ISDS
The Albanese government has been implementing its policy to exclude ISDS in new trade agreements and to review it in existing agreements, but it is a slow process.
ISDS suffered further disrepute when Australian billionaire Clive Palmer registered his mining company in Singapore and used ISDS in the ASEAN-Australia-New Zealand Free Trade agreement tosue Australia for $420 billion in four separate cases.
Clive Palmer’s first claim was for $300bn
after he lost a High Court appeal against a Western Australian government decision to refuse an iron ore mining license. The last three claims for a total of $120bn are because a Queensland Court refused his coal mining license and a license for a coal-fired power plant for environmental reasons, including increased carbon emissions.
Clive Palmer & co costing a motza
These last three cases are ongoing in 2026 and join a growing global list of fossil fuel companies using ISDS to sue governments for acting to address the climate crisis.
The Port of Darwin claim has landed with exquisite timing as global momentum accelerates against ISDS. Australia and 57 other countries, representing around one third of global GDP, met last week in Santa Marta, Colombia and agreed to map out ways to phase out fossil fuels at the first global diplomatic forum to assess practical steps to do so.
ISDS rules were identified as a barrier to this process.
In the leadup to the conference 346 civil society organisations from 50 countries, and 220 economists and legal experts urged governments to withdraw from ISDS arrangements. The port of Darwin claim should spur the Albanese government to take more coordinated action with other governments to speed up this process.
Chinese Whispers. Broken promises on Port of Darwin buy-back