Renegotiation of Australia’s Bilateral Investment Treaties

The International Institute for Sustainable Development (IISD) argues that Australia's older BITs are based on an outdated model that prioritizes investor protection and investor-state dispute settlement (ISDS) over public policy. The submission recommends reimagining these treaties as tools for sustainable development, prioritizing climate mitigation and a just transition. Key proposals include removing ISDS, implementing carve-outs for fossil fuel investments and climate measures, and reforming how damages are calculated to prevent exorbitant awards. IISD suggests that national legal frameworks, rather than international treaties, should be the primary regulators of foreign investment.

• Australia's older-generation bilateral investment treaties (BITs) with Czechia, Egypt, Hungary, Lithuania, Poland, and Romania are based on an outdated model that prioritizes investor protection and investor–state dispute settlement (ISDS) over current public policy goals.
• Future treaty frameworks should prioritize investments that support climate mitigation, adaptation, and a just transition, using Australia’s Green Economy Agreements as a more suitable blueprint than traditional investment protection models.
• Investment treaties should be redesigned to strengthen the host state's capacity for sustainable development, specifically by facilitating productive industrialization, encouraging technology and knowledge transfer, and promoting the creation of decent work.
• The document argues that domestic legal frameworks are the most appropriate level for regulating foreign investment in areas such as the environment, public health, and labour, and that treaties should reinforce these national systems rather than bypassing them via international arbitration.
• To align with the Paris Agreement and avoid 'regulatory chill,' treaties must include carve-outs that exempt all fossil fuel investments and legitimate climate change measures from ISDS and treaty protections.
• The document estimates that the costs associated with ISDS for the global energy transition could reach USD 340 billion.
• If ISDS is retained, the calculation of damages must be reformed to ban speculative valuations (such as the discounted cash flow method), cap awards to actual expenditures, and restrict interest to simple risk-free rates.

APA

International Institute for Sustainable Development (2026). Renegotiation of Australia’s Bilateral Investment Treaties. https://www.iisd.org/system/files/2026-04/submission-renegotiation-australia-bilateral-investment-treaties.pdf

Chicago

International Institute for Sustainable Development. Renegotiation of Australia’s Bilateral Investment Treaties. 2026. https://www.iisd.org/system/files/2026-04/submission-renegotiation-australia-bilateral-investment-treaties.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Renegotiation of Australia’s Bilateral Investment Treaties |date=April 2026 |url=https://www.iisd.org/system/files/2026-04/submission-renegotiation-australia-bilateral-investment-treaties.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2026renegotiation, author = {{International Institute for Sustainable Development}}, title = {{Renegotiation of Australia’s Bilateral Investment Treaties}}, institution = {International Institute for Sustainable Development}, year = {2026}, month = apr, url = {https://www.iisd.org/system/files/2026-04/submission-renegotiation-australia-bilateral-investment-treaties.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }