High Court to pass judgment on registration of communication activities under the Foreign Influence Transparency Act - Terrorism, Homeland Security & Defence

The Foreign Influence Transparency Act 2018 (Cth) (FITS Act) is a central part of the Australian Government's laws against foreign interference.

In LibertyWorks Inc v Commonwealth of Australia, the High Court of Australia will decide whether a requirement under the FITS Act, to register prior to undertaking 'communication activities' in Australia for the purpose of political or government influence on behalf of a foreign principal, impermissibly burdens the implied freedom of political communication and is therefore invalid.

In other proceedings, LibertyWorks is seeking to overturn the Commonwealth Government's ban on travel, implemented under the emergency powers of the Biosecurity Act 2015 (Cth).

The facts

In August 2019, LibertyWorks held a political event called the Conservative Political Action Conference (CPAC) Australia. The conference mirrored an influential conference, also called CPAC, which is held by the American Conservative Union (ACU). Organisers of the American CPAC supported and attended CPAC Australia.

On 22 October 2019 the Attorney-General's Department sent the first notice issued under the FITS Act to LibertyWorks. The notice sought copies of invitations, letters and other correspondence relating to CPAC and the ACU. LibertyWorks refused to provide these documents. On 20 December 2019, the Secretary of the Department wrote to LibertyWorks stating that no further action would be taken in relation to the notice but emphasising that the Secretary's view remained 'that LibertyWorks may have registration obligations in relation to the ACU and CPAC'.

On 7 February 2020, LibertyWorks filed an action in the original jurisdiction of the High Court. LibertyWorks argued that the FITS Act was invalid, in whole or in part, on the ground that it infringes the implied freedom of political communication.

The scheme

The FITS Act was passed on 28 June 2018, and established the Foreign Influence Transparency Scheme (Scheme), which 'identifies the forms and sources of foreign influence exerted in Australia'.¹ Under the Scheme, individuals and entities that undertake 'registrable activities' are required to register. Registrable activities include parliamentary lobbying on behalf of foreign governments and activities in Australia for the purpose of political or governmental influence, including general political lobbying, communications activity and disbursement activity.² A public register displays some of the information online.

The FITS Act provides that 'communication activities' give rise to registration obligations if they are undertaken in Australia, for the purpose of political or government influence, and on behalf of a foreign principal. ³ LibertyWorks argued that this requirement (Provision) impermissibly burdens the implied freedom of political communication.

The implied freedom

The implied freedom can restrict a government's exercise of power. However, the implied freedom is not absolute and laws that impinge on the freedom may be valid. Both LibertyWorks and the Commonwealth accepted that the FITS Act impinged on the implied freedom.

Effective burden

LibertyWorks argued that the Provision burdens the implied freedom by deterring members of the public from speaking on political matters, such as at CPAC Australia. For example, the requirement to register brings with it record-keeping obligations. Keane J indicated during the hearing that that he found the deterrent effect of registration realistic for private individuals but unlikely in the current matter given that both LibertyWorks and the ACU's raison d'etre was political advocacy and they were funded for that purpose. ⁴

The Commonwealth argued that the burden was only 'modest' and that its effect was not restricting speech but rather imposing a requirement to register. ⁵ The Commonwealth noted that this requirement was similar to requirements found in other legislative regimes, including Acts that regulate foreign ownership and lobbying.

The parties agreed that, despite impinging on the freedom, the Provision would be valid if:

its purpose is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government; and
it is reasonably appropriate and adapted to advance that purpose.

In answering the latter question, the Court may employ a structured proportionality analysis that assesses whether the Provision is:

'suitable', in the sense that it has a rational connection to the purpose of the FITS Act;
'necessary', in the sense that there is no obvious, compelling and reasonably practical alternative means of achieving the same purpose with less burden on the implied freedom; and
'adequate in its balance', which requires 'a judgment ... as to the balance between the importance of the purpose served by the law and the extent of the restriction it imposes on the implied freedom'. ⁶

The FITS Act's purpose

It was uncontroversial that the primary purpose of the FITS Act was to improve transparency around foreign involvement in public debate in Australia. LibertyWorks argued that the purpose of the Provision is not compatible with the constitutionally prescribed system in the sense that it adversely impinges upon the functioning of the system of representative and responsible government. That submission is unlikely to be accepted.

The Commonwealth added that the FITS Act also had a prophylactic purpose in discouraging foreign influence (in addition to revealing it). ⁷

Proportionality analysis

Suitable

LibertyWorks argued that the Provision was not rationally connected to the transparency purpose of the Act as the relationship between LibertyWorks and the ACU was already conducted in a fully transparent manner. For example, there was public promotion of CPAC Australia and the relationship ACU had to CPAC Australia on social media. That meant that the Provision was of no utility because it did not create any further transparency.

The Commonwealth considered the Plaintiff's submissions to be downplaying the extent of the relationship between LibertyWorks and the ACU.

Necessary

LibertyWorks argued that an alternative provision that meets these requirements would be to require that 'any communication on behalf of a foreign principal must be made transparent by means of the source being disclosed at the time of communication'. ⁸ For example, a speaker at CPAC Australia could disclose a connection to the ACU at the beginning of their speech.

Accordingly, LibertyWorks said, 'the registration regime is surplus to requirements in the achievement of the FITS Act's transparency purpose'. ⁹ That would mean the law went 'too far' and was invalid.

The Commonwealth argued that there was no obvious and compelling alternative that would result in less of a burden on the implied freedom. The Commonwealth noted that registration created transparency for all Australians whereas LibertyWorks' proposal only created transparency for those who attended CPAC Australia.¹⁰

Adequate in its balance

Drawing on the arguments run in relation to the first two limbs of the proportionality test, LibertyWorks argued that the transparency purpose of the FITS Act 'is not served by the detriment on the freedom which accompany the over-reaching restrictions the FITS Act'. ¹¹

In response, the Commonwealth argued that the FITS Act was adequate in its balance, because the purpose it seeks to achieve is not 'manifestly outweighed by its adverse effect on the implied freedom'.¹²

The Commonwealth submitted that the transparency purpose is of significant importance, and the burden on the implied freedom is modest.

What to watch for

The weight the Court places on LibertyWorks' proposed alternative, a requirement to disclose at the time of the speaking, will play an important role in the Court's decision. In argument, the Commonwealth made a strong submission that LibertyWorks' proposal 'completely fails to reveal to the government and to the Australian public more generally that foreign principals are seeking, acting, communicating for the substantial purpose of affecting Australian political decisions'. ¹³

Given the importance of retaining Australia's political independence, this argument may be decisive.

Gageler and Gordon J have both previously raised objections to the use of structured proportionality. LibertyWorks v Commonwealth is an important opportunity for the two new Justices, Steward and Gleeson, to explain their position on the use of structured proportionality as a method of analysis.

Footnotes

¹ Explanatory Memorandum, Foreign Influence Transparency Bill 2017 (Cth), 6.

²Foreign Influence Transparency Act 2018 (Cth) ss 20–21.21.

³ Ibid, s 21(1), Item 3.

⁴LibertyWorks Inc v Commonwealth of Australia [2021] HCATrans 35 (2 March 2021), 34.

⁵ Commonwealth of Australia, 'Respondent's submissions', submission in LibertyWorks Inc v Commonwealth, S10/2020, 21 October 2020, 10.

⁶Clubb v Edwards; Preston v Avery (2019) 267 CLR 171, [6] (Kiefel CJ, Bell and Keane JJ), [266] (Nettle J)

⁷ LibertyWorks Inc v Commonwealth of Australia [2021] HCATrans 35 (2 March 2021), 52, 80.

⁸ LibertyWorks Inc, 'Plaintiff's submissions', submission in LibertyWorks Inc v Commonwealth, S10/2020, 22 September 2020, 17–18.

⁹ Ibid 18.

¹⁰ LibertyWorks Inc v Commonwealth of Australia [2021] HCATrans 35 (2 March 2021), 52, 88.

¹¹ LibertyWorks Inc, 'Plaintiff's submissions', submission in LibertyWorks Inc v Commonwealth, S10/2020, 22 September 2020, 19.

¹² Comcare v Banerji (2019) 267 CLR 373, [38].

¹³ LibertyWorks Inc v Commonwealth of Australia [2021] HCATrans 35 (2 March 2021), 88.

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