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
How? The airline is owned by the Indonesian government, which as
a foreign state, is ordinarily immune from the jurisdiction of the
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
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?
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