Thinking Two Steps Ahead : Do Export Restrictions on Australian Gas Amount to Indirect Expropriation?

The Australian Domestic Gas Security Mechanism (‘ADGSM’) provides the Australian Government with an expedient regulatory tool over gas exporters. Australia is the largest exporter of Liquified Natural Gas (‘LNG’) in the world but has suffered from very high domestic gas prices. If the Australian Government determines a year to be a gas shortfall year and imposes export restrictions under the ADGSM, it runs the risk of a challenge by LNG exporters under the Investor-State Dispute Settlement System (‘ISDS’) for indirect expropriation. The article argues that Australian policymakers must prepare for such a challenge through anticipation of two possible courses of action. First: a challenge by investors in the WTO according to a state-espousal strategy. Second: ISDS proceedings where WTO interpretation of ‘general or local short supply’ is transplanted into ISDS proceedings. The article discusses both strategies and concludes that Australian policymakers must design export restrictions under the ADGSM that account for both possible approaches