Anthea Yong and Sally O’Loughlin explore proposed changes to the ASIC Act to remove the requirement for ministerial consent prior to commencing proceedings involving overseas conduct.
What’s happening?
Seven years after changes were made to the Competition and Consumer Act 2010 (Cth) (CCA) to remove impediments to reliance on extraterritorial conduct, the Australian Government is seeking to bring the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) in line.
This reform was recommended by the Harper Review in 2015, which we reported on here.
A refresher on the provisions
The exposure draft of the Treasury Laws Amendment Bill 2024: Minor and technical Amendments (Spring 2024)[1] proposes to repeal provisions that require Ministerial consent where a person seeking damages or other compensatory orders as a result of the contravention of the ASIC Act seeks to rely on evidence on conduct outside Australia.
While the provisions (in section 12AC of the ASIC Act) require the Minister to give consent under subsection (2) or (3) unless the Minister opines that the foreign country specifically authorised the foreign conduct sought to be relied upon in a proceeding and it is not in the national interest to do so, the provisions have acted as a practical barrier to commencing proceedings reliant on conduct overseas.
The comparative provisions of the CCA sections 5(3), 5(4) and 5(5) were repealed to remove the requirement for Ministerial consent on 25 October 2017.
Why was consent required?
The consent requirements were first introduced in 1986 to limit the extraterritorial reach of some laws.[2] The main concern at that time was that foreign laws might specifically authorise certain conduct in that country which contravened the CCA or the ASIC Act.[3]
In 1986, many jurisdictions did not have competition and consumer laws. This created a diplomatic risk if proceedings relating to foreign conduct were commenced in Australia.[4] The relevant provisions of the ASIC Act and the CCA were therefore included to ensure international comity.[5]
The ASIC Act is playing catch-up
A lot has changed since 1986. Competition and consumer laws worldwide have since developed, resulting in a greater uniformity in comparable jurisdictions.[6] Jurisdictions such as the US, Canada, the UK, EU and New Zealand do not have a similar requirement to seek governmental consent before commencing proceedings in respect of contravening conduct occurring overseas.[7]
These proposed amendments to the ASIC Act will be the final step in bringing the extraterritorial application of key Australian legislation in line with similar jurisdictions around the world.
The impact
This repeal of the CCA provisions removed a significant bureaucratic hurdle for private litigants seeking to bring an action for certain overseas breaches of the CCA. It substantially reduced the burden on litigants in terms of the time and cost of obtaining foreign legal advice, the delay in awaiting a decision and the potential for judicial review of the Minister’s decision.[8] Seven years on, the Government hopes to achieve the same result for certain ASIC claims by its proposed amendments.
Consultation has closed. We will keep you updated on the progress of this reform proposal.
[1] Exposure draft bill <https://treasury.gov.au/sites/default/files/2024-09/c2024-582929-ed-bill.pdf>.
[2] Competition Policy Review – Final Report <https://treasury.gov.au/sites/default/files/2019-03/Part4_final-report_online.pdf>.
[3] Guidance on obtaining Ministerial consent to rely on extraterritorial conduct in private proceedings <https://treasury.gov.au/the-department/accountability-reporting/information-publication-scheme/guidance-on-obtaining-ministerial-consent-to-rely-on-extraterritorial-conduct-in-private-proceedings>
[4] Competition Policy Review – Final Report <https://treasury.gov.au/sites/default/files/2019-03/Part4_final-report_online.pdf>.
[5] Guidance on obtaining Ministerial consent to rely on extraterritorial conduct in private proceedings <https://treasury.gov.au/the-department/accountability-reporting/information-publication-scheme/guidance-on-obtaining-ministerial-consent-to-rely-on-extraterritorial-conduct-in-private-proceedings#:~:text=Section%205%20of%20the%20CCA,by%20litigation%20in%20Australian%20courts.>.
[6] Competition Policy Review – Final Report – <https://treasury.gov.au/sites/default/files/2019-03/Part4_final-report_online.pdf>.
[7] Ibid.
[8] David Crino, ‘Harper puts more public and private enforcement of the CCA in play’ (9 December 2015) <https://pulse.kwm.com/in-competition/harper-public-private-enforcement-cca/>.
Runners in a race by Braden Collum / Unsplash /Free licence / Resized