Markets 
Updated ,first published
The Chinese firm that controls the Port of Darwin has launched an international legal battle against Australia in a dramatic escalation of its fight to maintain a controversial long-term lease of the strategically significant asset.
Both Labor and the Coalition went to last year’s election promising to strip Landbridge Group of its 99-year lease of the port and return it to Australian hands, arguing such a move was necessary to protect Australia’s national security.
That pledge has been thrown into doubt by Landbridge owner Ye Cheng’s decision to lodge a case against Australia with the World Bank Group’s International Centre for Settlement of Investor Disputes, a powerful arbitration body established in the 1960s to resolve disputes between international investors and nation states.
In the case, lodged on April 23, the Chinese billionaire argues that the federal government’s effort to terminate its lease of the port should be blocked because it violates the terms of Australia’s free trade deal with China.
The Port of Darwin was leased to Landbridge in 2015 in a $506 million deal. It sits directly opposite the city’s Larrakeyah Defence Precinct, sparking demands for it to be placed under Australian ownership.
Transport and Infrastructure Minister Catherine King said: “The government is disappointed by this decision and will defend the claim in accordance with established processes.
“The government has been in good faith discussions with Landbridge to reach a mutually acceptable deal to return the Port of Darwin to Australian ownership for several months. We intend to continue these discussions.”
King said the government had been conducting discussions “in a respectful and private manner and do not think it is in either party’s interest to carry the dispute out in the public domain”.
“The government remains committed to returning the Port of Darwin to Australian hands,” King said.
Landbridge said in a statement that the company “considers the Commonwealth’s proposed approach to return the Port of Darwin to Australian hands to be discriminatory and inconsistent with Australia’s obligations” under the China-Australia free trade agreement.
“Landbridge acquired its interest in the port through a fair, open and competitive process in full compliance with all applicable Australian laws and regulatory approvals. Multiple Australian Government reviews have confirmed there are no national security concerns,” the company said.
“Having engaged with the Commonwealth in an effort to reach a constructive resolution, Landbridge has regrettably been unable to achieve a satisfactory outcome through dialogue alone and is now taking the necessary steps to protect its legal rights.”
Landbridge said it expects the government “to refrain from taking any action adverse to Landbridge’s interests pending the resolution of that dispute” and to give the company “the full opportunity to have its claim heard and determined in the appropriate legal forum”.
“Landbridge will continue to operate the Port of Darwin to the highest standards while this matter is resolved and welcomes the opportunity to engage further with the Commonwealth,” the company said.
Investor-state dispute settlement cases typically take around four years to be resolved, but can drag out for longer.
Tobacco giant Philip Morris’ failed attempt to use an investor-state dispute to overturn Australia’s plain packaging laws ran from 2011 to 2015.
Opposition defence spokesman James Paterson said: “The Albanese government must not cave in to these tactics.
“The Port of Darwin must be returned to Australia’s sovereign control – as the Prime Minister promised it would during the election.
“If the operator won’t sell on reasonable commercial terms, the Commonwealth should use the powers available to them under the constitution to force a sale without any further delay.”
Prime Minister Albanese dialled into ABC Darwin radio at short notice during last year’s election campaign to pledge to return the port to Australian hands in a hurried bid to gazump a similar announcement by then opposition leader Peter Dutton.
The Chinese government has opposed Australia’s attempts to take back control of the port, warning it could undermine efforts to stabilise relations between the two nations.
China’s ambassador Xiao Qian said earlier this year that Landbridge had invested significantly in the facility and made it profitable, raising ethical concerns about Australia’s bid to return it to Australian ownership.
Xiao said Beijing would be “watching very closely” because “the Chinese government has an obligation to protect the interests, the legitimate interests of Chinese companies overseas”.
“So if anything happens like the port will be taken back by force or forceful measures, then we have an obligation to take measures to protect the Chinese company’s interest,” he said.
Prime Minister Anthony Albanese said at the time he announced plans to take it back that “we are committed to making sure that that port goes back into Australian hands because that is in our national interest”.
Australian Strategic Policy Institute executive director Justin Bassi said: “The Port of Darwin is not just a port but is national critical infrastructure which should not be under the control of a strategic adversary.”
A 2023 review by the Department of Prime Minister and Cabinet found it was not necessary to change or cancel Landbridge’s lease because safeguards were in place to manage risks to critical infrastructure.
Matthew Knott is the foreign affairs and national security correspondent for The Sydney Morning Herald and The Age.Connect via X, Facebook or email.From our partners
Read the full article here
