International collaboration under the Foreign Arrangements Scheme

A new normal

International collaboration under the Foreign Arrangements Scheme

It has been more than 9 months since Australia’s new foreign relations legislation commenced. 

While CRCs are not themselves subject to the new rules, many of their participants and project partners will be, and the longer timeframes required to undertake to due diligence and obtain the required approvals have the potential to hamper international collaboration at a time when Australia and the rest of the world is starting to recover from the COVID-19 pandemic. 

The Foreign Arrangements Scheme
The Australia’s Foreign Relations (State and Territory Arrangements) Act 2020 commenced on 10 December 2020 and introduced a “Foreign Arrangements Scheme” aimed at ensuring that arrangements entered into with certain overseas entities do not adversely affect Australia’s foreign relations and are not inconsistent with Australian foreign policy.   

Foreign arrangements
Central to the Scheme is the concept of ‘foreign arrangement’ – any written arrangement, agreement, contract, understanding, or undertaking between an Australian State/Territory entity (State/Territory governments, local governments, universities) and a foreign entity (foreign governments and agencies, government-affiliated public organisations, universities without ‘institutional autonomy’). 
Importantly for CRCs and other research collaborations, the State/Territory entity and the foreign entity do not need to be the only parties to the arrangement.  Participants Agreements and Project Agreements with overseas partners are therefore potentially impacted.

Notification process
As part of the Scheme, the Minister of Foreign Affairs and Trade must be notified of foreign arrangements at certain stages in the negotiation process depending on whether the arrangement is a ‘core’ foreign arrangement – that is, a foreign arrangement between:

  1. Australian States and Territories, State and Territory governments, departments and agencies (core State/Territory entities); and
  2. foreign countries, their national governments and departments or agencies of those governments (core foreign entities). 

Any foreign arrangement which does not meet the above criteria is considered a ‘non-core’ foreign arrangement and is subject to less onerous notification requirements. 

Type of arrangementNotification requiredSteps taken by Minister
Intended core foreign arrangements

Approval requiredMust notify Minister of a proposal to negotiate or enter into the arrangement Must notify Minister within 14 days of entering into arrangement Minister must approveMust consider proposed negotiation or arrangement and make decision whether to approval.  If no decision made within 30 days, Minister deemed to approveIf arrangement entered into without approval it is deemed invalid and unenforceable and must be terminated 
Intended non-core foreign arrangementsNotification requiredMust notify Minister of proposal to enter into the arrangementMust notify Minister within 14 days of entering into arrangement Minister may prohibitMay make declaration prohibiting negotiation or entering into of arrangementIf arrangement is entered into in contravention of prohibition, may declare arrangement is invalid and unenforceable and must be terminated 
Existing foreign arrangementsNotification requiredMust notify the Minister of core foreign arrangements by 10 March 2021Must notify the Minister of non-core foreign arrangements by 10 June 2021 Minister may declare unenforceableMay declare arrangement invalid and unenforceable and must be terminated

The Register
One of the key features of the Scheme is the establishment of a public register listing all of the arrangements disclosed, the high level details such as party names and subject matter, and the Ministerial decision (if any).  Of a total of 1,348 arrangements listed on the Register at the time of writing:

  • over half (729) have a Chinese government department, agency or university as the relevant “foreign entity” 
  • only two ‘core’ arrangements have been given Ministerial approval, both of which involve the Indonesian government (one relating to human resources development and the other to the promotion of the Indonesian language)
  • all of the four arrangements which have been cancelled by the Minister involved the Victorian government as the Australian party.  Two of these related to China’s Belt and Road initiative, with the other two involving Iranian and Syrian entities. 

Impact on CRCs and their Participants
While CRC entities are not themselves subject to the foreign relations legislation, many of their participants are and this has the potential to impact CRCs. 

For example, Australian State and Territory departments and universities are all “State/Territory entities” under the legislation and may have difficulty engaging with a CRC until they have followed their own internal processes.  Many universities in particular will have detailed compliance frameworks in place which must be followed before the university can sign a Participants Agreement or a Project Agreement involving international partners.

More generally, there may also be a reluctance to be involved in projects with international partners because of the additional administrative burden (and time) required to meet obligations under the new legislation.

There is scope to exempt organisations from the legislation and so it may be that some of the above issues will be addressed in the not too distant future.  In the meantime, CRCs and their participants are faced with a new normal in international research collaboration. 

Jenni Lightowlers                                Julian Ryan
Partner                                                Senior Associate
FAL Lawyers                                       FAL Lawyers

Thanks for FAL Lawyers who are associate members of Cooperative Research Australia