PT Garuda, the national airline of Indonesia, will not be able to use the Foreign State Immunities Act to protect itself from ACCC prosecution.
Garuda has been one of many airlines (others include Singapore, Emirates and Cathay Pacific) investigated by the ACCC for price fixing and placing some dodgy surcharges on air freight.
If found guilty, the fines can be more than $10 million, or 3x the value of the benefit obtained by the airline.
Understandably not wanting to pay this fine, when the ACCC commenced proceedings in the Australian courts to prosecute Garuda, the airline claimed protection under the Foreign State Immunities Act.
How? The airline is owned by the Indonesian government, which as a foreign state, is ordinarily immune from the jurisdiction of the Australian courts.
Nice idea, but it forgets one exception in the Act. That foreign states will not be immune from proceedings based on commercial transactions. The High Court decided that the conduct which the ACCC targeted (and wanted to prosecute), related to Garuda's commercial and business dealings.
Garuda will now have to answer the ACCC's allegations before the Court like any other ordinary person with an annual 44 trillion (rupiah) turnover.
The significance?
The influx of investment by state-owned Chinese companies in Australia will likely lead to more and more commercial disputes and the occasional ACCC prosecution. The High Court has now clearly said that, it doesn't matter that the company is owned by the Queen. If the transaction is commercial then it (and the company) can be brought before the Court. The next big question is, so what happens when a fine is imposed and the ACCC tries to seize a Garuda plane to satisfy the debt?
Stay tuned.
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