ADI Limited & Ors and Commissioner for Equal Opportunity & Ors - [2005] WASAT 259

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: HUMAN RIGHTS

ACT: EQUAL OPPORTUNITY ACT 1984 (WA)

CITATION: ADI LIMITED & ORS and COMMISSIONER FOR EQUAL OPPORTUNITY & ORS [2005] WASAT 259

MEMBER: JUDGE J ECKERT (DEPUTY PRESIDENT)
MS J TOOHEY (SENIOR MEMBER)
BRIG A WARNER (SENIOR SESSIONAL MEMBER)

HEARD: 6 AND 7 APRIL 2005

DELIVERED : 28 SEPTEMBER 2005

FILE NO/S: ET 31 of 2004

BETWEEN: ADI LIMITED
ADI MUNITIONS PTY LTD
ADI ADVANCED SYSTEMS PTY LTD
THALES UNDERWATER SYSTEMS PTY LTD
THALES TRAINING AND SIMULATION PTY LTD
Applicant
AND
COMMISSIONER FOR EQUAL OPPORTUNITY
TRADES AND LABOUR COUNCIL OF WESTERN AUSTRALIA
WESTERN AUSTRALIANS FOR RACIAL EQUALITY
ETHNIC COMMUNITIES COUNCIL WA INC
Respondent

Catchwords:

Exemption application Public interest Nature of discretion Scope and purpose Test for exercise of discretion in exemption application Decisions of other bodies and other States Nationality National origin Place of birth

Legislation:

AntiDiscrimination Act 1977 (NSW), s 8, s 51

AntiDiscrimination Regulations 2004 (NSW), s 5
Equal Opportunity Act 1984 (WA), s 3, s 4, s 36, s 37, s 38, s 39, s 66L(3), s 66M(5), s 66N(3), s 66ZM, s 66ZN, s 66ZP, s 66ZQ, s 135
Equal Opportunity Bill 1984, cl 135
Equal Opportunity Regulations 1986 (WA), reg 24
Interpretation Act 1984 (WA), s 18, s 19, s 51
New South Wales Regulations 2004, s 5
Privacy Act 1998 (Cth)
Racial Discrimination Act 1975 (Cth), s 9, s 15, s 17
State Administrative Tribunal (Conferral of Jurisdiction) Amendment and Repeal Act 2004 (WA)
The Commonwealth of Australia Constitution Act 1990, s 109
United States Export Administration Regulations
United States International Traffic in Arms Regulations, reg127.12

Workplace Relations Act 1996 (Cth)

Result:

Application for exemption granted

Category: A

Representation:

Counsel:

Applicant:     Mr A Power
First Respondent           :     Mr J Rosales-Castaneda
Second Respondent      :     Mr M Ritter SC
Third Respondent          :     Mr M Ritter SC
Fourth Respondent        :     Mr M Ritter SC

Solicitors:

Applicant:     Allens Arthur Robinson
First Respondent           :     Equal Opportunity Commission
Second Respondent      :     Ms C Ozich
Third Respondent          :     Ms E Carbone
Fourth Respondent        :     Ms E Carbone

Case(s) referred to in decision(s):

ADI Limited & Ors and Equal Opportunity Commission & Ors [2005] WASAT 49
ADI Limited & Ors and Equal Opportunity Commission & Ors [2005] WASAT 49
ADI Limited (Exemption)[2004] VCAT 1963
Boeing Australia Holdings Pty Ltd & Ors [2003] QADT 21
Boeing Australia Holdings Pty Ltd & Ors [2003] VCAT A362
City of Brunswick EOC 92‑450
Commonwealth of Australia v Stamatov [1999] FCA 105
Jupiter Holdings Pty Ltd and Commissioner for Equal Opportunity [2005] WASAT 202
Le v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 875
Macabenta v Minister of State for Immigration and Multicultural Affairs (1998) 90 FCR 202
Minister for Education and Commissioner for Equal Opportunity & Ors (1987) EOC 92‑198
Minister for Education and Commissioner for Equal Opportunity & Ors (1993) EOC 92‑517
Minister for Foreign Affairs and Trade v Magno (1992) 37 FCR 298
National Australia Bank [1989] EOC 92‑248
Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997
Plaintiff S 157/2002 v Commonwealth [2003] 211 CLR 476
Re Golden Casket Exemption Application [2002] QADT 16
Re RMIT [2000] VCAT 409
Re Stefan Tietz Application for Exemption, unreported decision of the Equal Opportunity Tribunal (G Donaldson, Deputy President; R King, Member; Professor C Mulvey, Deputy Member); No 22 of 2000; 10 November 2000
Stevens & Ors v Fernwood Fitness Centres Pty Ltd (1996) EOC 92‑782

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal’s decision

This decision concerned an application by ADI Limited and various related companies, major defence contractors, to be exempted from the operation of s 37 and s 39 of the Equal Opportunity Act 1984 (WA), so that ADI and its related companies could fulfil their obligations under defence contracts that they have with the Australian Government without breaching the Act. Those contracts required the applicants to access American technology, which they could do only if they complied with American regulations prohibiting "nationals" of some countries from accessing that technology. The applicants could be in breach of the Equal Opportunity Act1984 when they comply with their contractual obligations; in particular their conduct could constitute racial discrimination.
The Tribunal granted the exemption. Traditionally, the authorities provide that for an exemption application to be granted, the applicant must show that the exemption would be within the scope and purpose of the Act and that it would further the objects of the Act. The application could not be motivated primarily by economic interests – it had to be motivated by other sound reasons consistent with the objects of the Act. In line with a growing tendency in Western Australia and the other States to consider the public interest in deciding an application for exemption, the Tribunal in this matter looked to the public interest as the framework against which the objects of the Act were tested. On this basis, although there would be some commercial advantage or benefit to ADI in granting the exemption, the Tribunal found that the public interest in ADI fulfilling its defence contract obligations to the Australian Government in accordance with the requirements of the Australian Government, out‑weighed any possible commercial benefit or advantage it would receive and it outweighed the need to expressly further the objects of the Act.
The terms of the exemption limit its application to conduct necessary to enable ADI and its related companies to undertake defence projects where they are required to access American controlled technology and where the otherwise unlawful conduct is a last resort and unavoidable. The exemption is for a term of 5 years from 28 September 2005.

The application

On 16 July 2004 ADI Limited and various related companies (in thse reasons, collectively referred to as "ADI") applied to the former Equal Opportunity Tribunal for an exemption from the operation of s 37, s 38 and s 39 of the Equal Opportunity Act 1984 (EO Act). That application was amended by ADI and accepted by this Tribunal at a directions hearing on 31 March 2005. ADI now seeks an exemption pursuant to s 135 of the EO Act from the operation of s 37 and s 39 of the Act which make it unlawful to discriminate against applicants for employment, employees and contract workers on the grounds of race as defined by s 4 of the EO Act.
It is helpful to set out the entire application:
"The Applicant Companies …hereby apply for exemption from the following provisions of the Equal Opportunity Act 1984:
sections 37, 38 and 39, insofar as those sections relate to the 'race' (as that attribute is defined in section 4 of the Act) of employees, job applicants, and contract workers of the Applicant Companies, and to persons who apply for employment with the Applicant Companies.
The class of activities for which the exemption is sought is discrimination against employees, job applicants and contract workers, where such discrimination is required in order for the Applicant Companies to undertake certain defence projects in compliance with the laws of the United States of America (the Controlled Projects …), and in particular:
(a)demanding from prospective employees and existing employees details of their place of birth and citizenship insofar as these matters affect the person's status as a 'national' under the laws of the United States of America applying to the Controlled Projects (Nationality), for the purpose of determining who is permitted to work on the Controlled Projects;
(b)identifying the Nationality of employees by markings (e.g., badges) and by the publication of lists, or any other means to distinguish which employees are able to access technology, material and other information that is subject to restriction under certain laws of the United States of America (the Controlled Material);
(c)restricting the provision of the Controlled Material to certain employees, based on their Nationality;
(d)rejecting applications from prospective employees for positions related to Controlled Projects, based on their Nationality;
(e)transferring employees from Controlled Projects on the basis of a change in their Nationality;
(f)providing to companies that provide Controlled Material to the Applicant Companies details of the Nationality of those of the Applicant Companies' employees who will access the Controlled Material, in order to satisfy those companies' obligations in respect to the disclosure of Controlled Material; and
(g)providing to companies that use Controlled Material at their facilities details of the Nationality of the Companies' employees who will attend those facilities in order to satisfy those companies' obligations in respect to access to Controlled Material."
On 19 August 2004 pursuant to an order of the former Equal Opportunity Tribunal, ADI published a notice in The West Australian newspaper setting out the details of the exemption it is seeking. In response to that notice, the second, third and fourth respondents became parties to the application.
The Commissioner for Equal Opportunity is a party to these proceedings pursuant to reg 24 of the Equal Opportunity Regulations 1986 (WA).
On 1 January 2005 the functions of the former Equal Opportunity Tribunal were assumed by the State Administrative Tribunal by virtue of the State Administrative Tribunal (Conferral of Jurisdiction) Amendment and Repeal Act 2004 (WA). Consequently, these proceedings are now before this Tribunal for determination.

Evidence before the Tribunal

ADI provided a substantial amount of evidence to the Tribunal in support of its application. That evidence was primarily given by way of three affidavits of Mr Andrew Ian McKibbin, the Commercial Manager of ADI. Mr McKibbin's affidavits also had attached to them a substantial number of annexures including the United States International Traffic in Arms Regulations (ITARs) and United States Export Administration Regulations (EARs) and extensive technological information. Mr McKibbin gave oral evidence at a hearing on 6 and 7 April 2005 and was subject to cross‑examination by both Mr Ritter SC and Mr Rosales‑Castaneda.
ADI also provided to the Tribunal four ring binder folders of information, including the documents that it had discovered, to the parties, which included extensive correspondence with US sponsors, the Commonwealth of Australia, the Australian Defence organisation and various others. The documents also included examples of Technical Assistance Agreements (TAAs) and Manufacturing Licences (sometimes Licensing) Agreements (MLAs) together with amendments to them.
The objecting parties filed affidavits from Ms S Mayman, Secretary of the Trades and Labour Council of Western Australia (also known as Unions WA), Mr M Newhouse, Chairperson of Western Australians for Racial Equality and Ms Y Henderson, the Commissioner for Equal Opportunity (the Commissioner).
The Tribunal also had before it a bundle of authorities, written submissions from ADI and from Mr Ritter and Mr Rosales‑Castaneda and further submissions from ADI in reply. Each counsel also gave detailed and comprehensive oral opening and closing submissions to the Tribunal.
A representative of the Commonwealth, the Australian Government Solicitor based in Perth, Mr Macliver, was present throughout directions hearings leading up to the hearing and through most of the hearing. Although not a party, the Commonwealth at times made submissions regarding various aspects of the proceedings, including confidentiality of some of the material before the Tribunal.
On 31 March 2005 the Tribunal heard an application from ADI to hold the hearing of this matter in private. The Tribunal declined that application but did make a suppression order with respect to some parts of Mr McKibbin's written and oral evidence. See ADI Limited & Ors and Equal Opportunity Commission & Ors [2005] WASAT 49.
The facts set out in these reasons for decision are gleaned from those affidavits and other documents together with that oral evidence, and are accepted by the Tribunal as being a proper and accurate representation of ADI's position.

The applicants

The applicants (ADI Limited, ADI Munitions Pty Ltd, ADI Advanced Systems Pty Ltd, Thales Underwater Systems Pty Ltd and Thales Training and Simulation Pty Ltd) manufacture and provide a broad spectrum of technologies, services and systems, both in the defence and commercial sectors but primarily in the defence sector. They have numerous contracts with the Australian government through the Department of Defence and indirectly through other companies in Australia and the United States of America.
In 1989, the accumulated assets of the Department of Defence Production were corporatised into Australian Defence Industries Pty Ltd. That name was changed in January 1996 to "ADI". In 1999, the Department of Defence approved the sale of that company to Transfield Holdings Ltd and Thomson‑CSF (now Thales).
Thales SA (France) is one of the world's largest systems and electronics groups with its headquarters in France. It operates in Australia as Thales Underwater Systems Pty Ltd and Thales Training and Simulation Pty Ltd. Thales Underwater Systems has 360 employees and is involved in projects related to sonar technology, especially for submarines and surface ships. Thales Simulation and Training employs 173 people and produces simulators for military and civilian aircraft, sea vessels and armoured vehicles. In HMAS Stirling, in Western Australia, Thales Training and Simulation Pty Ltd has a Collins class submarine simulator for use by the Royal Australian Navy.
Each of the applicant companies is incorporated in Australia. ADI Group Holdings Pty Ltd is the parent company of ADI Limited. ADI Group Holdings Pty Ltd is a 50:50 joint venture between Thales SA (France) and Transfield Holdings Ltd. ADI has two active subsidiaries: ADI Advanced Systems Pty Ltd and ADI Munitions Pty Ltd.
ADI Munitions Pty Ltd holds land and facilities at Benalla (Victoria). The cash flow from this operation forms security for the lenders to the joint venture between Thales SA (France) and Transfield Holdings Pty Ltd. As such, ADI is one of Australia's largest defence, engineering and systems contractors, by reference to employee numbers, revenue and the number of contracts ADI has with the Australian government (Second McKibbin affidavit: 25/11/04 [10]). ADI conducts business throughout Australia and around the world and teams with leading international companies.
ADI has five operating divisions (Second McKibbin affidavit: 25/11/04 [11] and [12):
(1)electronic and aerospace ‑ responsible for development and maintenance work on command, control and communication systems for the Australian Defence Force (ADF) as well as undertaking intelligence, surveillance, reconnaissance and electronic warfare related work. At the time of application, this division employed 396 people;
(2)naval – a critical naval engineering capability supporting the Royal Australian Navy, including the current upgrade of the six guided missile frigates (FFG). The frigates' combat systems are being enhanced to counter regional threats and to ensure supportability. It also operates the repair and maintenance division at Garden Island on Sydney Harbour. At the time of application, it employed 630 people of which 28 were located in Western Australia;
(3)land ‑ ordnance ‑ responsible for the design, development and manufacture of munitions, explosives, propellants, chemicals for commercial application and gun powder used in sporting applications. It also stores and distributes explosive ordnance throughout Australia for the ADF. At the time of application it employed 1026 people and had operations in New South Wales and Victoria;
(4)land ‑ engineering and vehicles ‑ designs and manufactures military and specialist vehicles, marine equipment and guns and provides support and maintenance of equipment once it is in service. It is based in Victoria and at time of application had 299 employees; and
(5)services and security ‑ adapts defence technologies of ADI for application in civil markets.
Current business of ADI in Western Australia is as follows (Second McKibbin affidavit: 25/11/04 [42] and T55 – T74, however note [45] of the Second McKibbin affidavit is subject to the suppression order made on 31 March 2005):
(1)information, systems, software and services in Nedlands – this is known as ADI 1S3 and employs 118 people of which 25 are dual nationals and 13 of those 25 have access to US controlled material. This division is working on the FFG upgrade which is valued at approximately $37 000 000. It is also working on the Air 87 Reconnaissance helicopter and the value of that project is estimated at $28 000 000;
(2)refit planning on logistical support services at HMAS Stirling where the Royal Australian Navy is upgrading four of its six FFGs. There are 16 employees working in this area at this base, one of whom is a dual national who has access to US controlled material. The explosive ordnance division also operates at HMAS Stirling. ADI employs 14 people at this business unit. Approximately 15 ‑ 30% of the overall work has ITAR content, for US controlled material (Second McKibbin affidavit: 25/11/04 [42(c)]). ADI estimates that this project has contributed $3 000 000 to the Western Australian economy due to support of local suppliers;
(3)naval ‑ marine in service support – this unit provides support for Australian and overseas defence forces including support to the United States navy vessels requiring maintenance when in Western Australia. Periodic inspections of the weapon systems of the FFGs and ANZAC vessels are done here. There are four employees involved; and
(4)ANZAC ISS Rockingham – this unit provides support to the Royal Australian Navy in respect of its Western Australian based ANZAC class vessels. There are seven people involved in this unit.
ADI employs a total of 159 people in Western Australia, 26 of whom are dual nationals and 14 of those have access to US controlled material. These statistics, and those referred to above in (1) – (4), were provided by ADI to the Tribunal and were current as at 13 April 2005.
ADI anticipates there will be a number of major projects likely to be undertaken in Western Australia in the near future. ADI provided evidence with respect to these projects but those details are subject to the suppression order made on 31 March 2005. The Tribunal accepts ADI's evidence on future projects and accepts it is likely that (if this exemption is granted) ADI will continue to conduct major operations in Western Australia. The Tribunal also accepts it is likely that if this exemption is not granted ADI could look to other places to conduct major operations (T92).
Through a decision of the Australian government, a large number of Australia's armaments are based on the use of US technology, ITAR technology or US controlled technology (together "US controlled technology"). ADI says it needs to have access to that technology in order to fulfil its contractual obligations to the ADF and the Tribunal accepts that is the case. That choice of US controlled technology and the choice of armaments for Australia's armed forces based on US controlled technology is made by the Australian government. The Tribunal accepts that ADI does not have any direct control over those decisions.

ITARs and EARs

To obtain access to US controlled technology necessary for ADI to be able to perform its obligations under defence related contracts with the Australian government, ADI enters into agreements or obtains licences (TAAs or MLAs) under US law which make that technology available to it.
That access to US technology is regulated by various US laws; the relevant ones here are the EARs and the ITARs. Those US regulations prohibit persons who are dual nationals, or third country foreign nationals of some countries, from having access to the US controlled technology. Those US regulations also require that US defence related technology cannot be provided to a company outside of the US unless the provider of the technology is a US incorporated company and the company to which the technology is to be provided enters into an agreement with that US incorporated company, known as a US sponsor. The agreements must oblige the foreign company to comply with relevant US regulations.
Therefore to obtain access to the US technology, ADI must enter into and comply with agreements known as TAAs and MLAs. ADI is currently party to 49 of these agreements and they affect projects which generate annual sales in excess of $400 000 000 or 57% of ADI's annual turnover (First McKibbin affidavit: 7/7/04 [9]).
The other party to each of the TAAs and MLAs is a US sponsor which provides the US controlled material or US sourced technology to ADI. These sponsors include major US defence companies and companies with international operations such as Lockhead Martin Corporation, Baron, Rolls Royce (USA) and Hughes Missile Systems.
Under the TAAs and MLAs, the US sponsors seek and are obliged to pass on their US law obligations to ADI by way of contractual obligations. The contracts made between the US sponsor and ADI are subject to the ITARs which are regulated by the US Department of State. The interpretation and regulation of compliance with the provisions of the ITARs is therefore controlled by the US Department of State. Without assuming the obligation to comply with ITAR, ADI would not be allowed access to the US controlled technology, which it says is fundamental to its fulfilment of its defence contract obligations to the ADF. ADI is therefore party to agreements which oblige it to ensure that US defence related technology is not accessed by dual nationals or third country foreign nationals of certain countries. These terms require ADI to discriminate on the ground of nationality in the area of employment. This conduct potentially infringes s 37 and s 39 of the EO Act.

Need for exemption

The Tribunal finds that, to be able to do the work required of it under its contracts with the ADF, ADI needs access to the US controlled technology which it obtains through agreements with US sponsors which are regulated by US regulations, specifically EARs and ITARs. The agreements that ADI has with the US sponsors and that are relevant to this application are TAAs and MLAs.
Under the ITARs (and the TAAs and MLAs), ADI must not allow people who are dual nationals and some people who are third country foreign nationals to access the US controlled technology; nor can ADI transfer any data or defence services or equipment to those people.
Mr McKibbin gave evidence and we accept that the issue of potential breach of the EO Act has arisen only in recent years. Prior to August 2002, ADI proceeded on the understanding that Australian citizens, whether or not they held another passport and were therefore dual nationals, were entitled and eligible to access US controlled technology. In August 2002, one of the US sponsors pointed out to ADI that dual national employees were not entitled to access US controlled technology without the agreement of the United States authorities regardless of whether or not one of their nationalities was Australian (T16 ‑ T21 and First McKibbin affidavit: 7/7/04 [12] – [50]).
Subsequent to that, and as a consequence of it, ADI voluntarily disclosed its potential breach to the US regulatory authorities, through the channel of the relevant US sponsor company. Ultimately, on 5 March 2004, the US government closed its file on that breach and since then ADI has applied what it believes to be the appropriate interpretation of the ITARs. Consequently, ADI believes it is in breach or could potentially be in breach of s 37 and s 39 of the EO Act, in that it needs to discriminate on the basis of race when it employs people, if it is to comply with the US government's interpretation of the ITARs.
ADI is a project‑based company – this means that it moves its employees from project to project depending on their relevant skills or background and also depending on their ability and qualification to access US controlled technology. ADI also employs or seeks to employ people with specific qualifications and experience to work on particular projects.
Nationals of some specified countries are absolutely barred from accessing US controlled material. However, there is a discretion in the US Department of State to allow nationals of some countries to be included, depending on the nature of the technology and the nationality (or dual nationality) of the person involved. As ADI is a project‑based company, employees and prospective employees need to disclose their nationality for each project. Obtaining approval for a particular nationality or a particular person to work on a project involving US controlled material does not necessarily mean that approval will be given for that nationality or that person on the next project.
Therefore, August 2002 was a turning point. It was the first time that ADI became aware of the US State Department interpretation of ITARs with respect to the meaning of dual nationality. ADI negotiated with the US sponsor regarding voluntary disclosure of the breach. The US definition of national then became clear to ADI and it was necessary to change its approach to nationality. During this process of negotiating the voluntary disclosure with the US sponsor, ADI had no direct contact with the US Department of State. Everything was done through the US sponsor company. It took several years to resolve, during which ADI was not permitted to amend other TLAs and MLAs (T21 and First McKibbin affidavit: 7/7/04 [45]). And it provides the background as to why this application is before us.

Amending TAAs and MLAs

ADI can seek to amend a TAA or MLA so that it can allocate who it perceives to be the best people with appropriate skills and capabilities for a particular task, to a particular project. There are two steps to this process.
First, ADI, through its US sponsor, can seek to amend the TAA or MLA to add dual nationals or third country nationals from particular specified countries. This is entirely in the discretion of the US government and according to Mr McKibbin's evidence, ADI has no role to play in the decision. Mr McKibbin gave evidence (T24) about the process:
"It usually depends on the sensitivity of the technology for which the US‑controlled material is being provided. It probably depends on the nationalities; it depends on the number of nationalities, I would believe. Having not had direct communication with the US State Department on that, I understand from what our US sponsors tell us, that that is the case."
Further, Mr McKibbin informed the Tribunal that no reason is given by the US government for refusal or acceptance of a country in a TAA or MLA amendment. It is totally in the hands of the US government and beyond any control or influence by ADI.
If ADI is unsuccessful in amending a TAA or MLA by adding another country to it for the purpose of allowing access by dual nationals or third country foreign nationals the alternative is to send, a very detailed curriculum vitae of the individual for whom ADI is seeking acceptance to the US sponsor company, who passes it on to the relevant US authorities. That detail includes the place of birth of the person, where that person has lived (as in which countries), where the person has worked (countries) and their marital status. Mr McKibbin gave evidence (T25) as follows:
"The information we have provided, we have been advised, will be similar to the information that would have to be provided for an Australian security clearance. So we would be looking at a number of issues: place of birth; places where they have lived; countries where they have lived; travel; education; where they've worked; in what countries they've worked; what jobs they've held; what companies they've worked for or what governments they've worked for – that sort of information. They may require copies of passports. That's the sort of information that we would have to provide, and then another amendment would be put through to the US State Department naming that individual, enclosing with the letter that information; and then the US State Department as we understand it would consider that."
In response to a question from counsel, Mr McKibbin confirmed that marital status is also relevant. Mr McKibbin was quite clear in his evidence that ADI has little knowledge of what is actually considered and what is vitally relevant when the US State Department makes its decision. Ultimately, in fact, the absolute discretion as to whether access will or will not be granted, lies with the US President (First McKibbin affidavit: 7/7/04 [46]). However, Mr McKibbin was of the view that the sensitivity of the technology with respect to the particular project was very important and in particular the sensitivity that the US government attaches to it (T26).
There was evidence that each stage of amendment (either adding a country or a particular individual) took three to nine months for processing by the US State Department (T24 ‑ T27). The amendment to a TAA or MLA becomes effective when the last party, usually the US sponsor company, signs it and sends it back to the US State Department. ADI provided to the Tribunal a number of amended TAAs and MLAs which showed the path to approval. Therefore, if ADI is required to go through both amendment processes, it can take up to 18 months.
Mr McKibbin gave evidence that while an application for amendment to the TAA or MLA was being processed by the US government, the relevant person would be re‑deployed in another area where they did not have to access US controlled technology. Therefore, the application for amendment process did not or has not to date, held up progress of a project; it has merely meant that the person that ADI might perceive to be the best qualified to work on it is not available to ADI for that project at that time (T27).
Mr McKibbin gave evidence, though unsubstantiated by any real data, that it is a matter of inevitable fact that there will be a growing number of situations where dual nationals and third country foreign nationals will be required to work on ADI projects. Mr McKibbin stated that there are inadequate numbers of Australians appropriately and adequately qualified to work in these areas and that inevitably amendments to TAAs and MLAs will be required to facilitate ADI meeting its contractual obligations (T93 ‑ T97). The Tribunal accepts this evidence as representing a likely scenario.
There was evidence that the current process for any employee who will be accessing or likely to access US controlled technology is that ADI asks them to disclose their nationality regardless of whether they are a prospective employee or existing employee (T48). Currently, employees' security and identity tags are colour‑coded depending on their level of access to US controlled material (T49).
Mr McKibbin gave evidence that the Canadian government has in place an exemption from these requirements. He informed the Tribunal that there has been a similar arrangement developed for Australia but that it has been languishing in the US Congress since 2003 (T61) and that it is unlikely to proceed. The ITAR exemption held by Canada covers only 20‑40% of work done under TAAs and does not cover any work done under a MLA. It would therefore be of limited use for ADI if it were granted, and ADI does not believe it would resolve what it perceives to be the fundamental dilemma that brings it before this Tribunal (T79).

Potential breach of the ITARs and EARs

ADI provided evidence to the Tribunal that the following consequences could flow directly from a breach of the ITARs or EARs. (First McKibbin affidavit: 7/7/04 [15] and [16] and Second McKibbin affidavit: 25/11/04 [35] – [41]). ADI was at pains to emphasise to the Tribunal that these were not trivial consequences, so remote as to be best ignored; rather these were real and potentially serious consequences (T73 ‑ T74). They included:
(1)financial and criminal penalties: for example, the following extract from the transcript of Mr McKibbin's evidence is informative (T93):
"ECKERT J: Are you aware of any circumstances where the US Department of State has imposed corporate or individual penalties with respect to the international traffic in arms regulations? ---
Yes. I am. On US companies there have been large fines. There was one in relation to Boeing, I believe, on AWACS because material was transferred to the Australian subsidiary in Brisbane without US clearance.
Any outside the Australian complex? --- Yes. There have been several US companies fined in relation to exports to China. There have been several very high profile, and there have been large fines. I think one was 50 million.
ECKERT J: 50 million. Penalties other than fines?--- There have been restrictions on further exports of technology until the company got its situation in line – its act together.
BRIG. WARNER: Finally, from me, if such an event occurred and ADI's sponsor company, or an ADI sponsor company in the United States incurred a penalty, does that penalty or the cost of it automatically or contractually flow to ADI?--- In some of our contracts with sub‑contractors the US companies insist – and they do have some market might – that if something arises out of things like the ITARs and they are fined as a result of a breach by us under a TAA, we would have to indemnify them for those fines."
ADI therefore could become liable for fines and penalties incurred by US sponsors; or the effect of a penalty on a US sponsor could flow on to ADI;
(2)US sponsors may be prevented from allowing ADI access to US controlled technology for up to three years;
(3)civil fines and penalties may be imposed (up to US$500 000 for each violation);
(4)individual criminal penalties may be imposed of up to $US1 000 000 or 10 years jail (or both);
(5)a prohibition by the US government from participating directly or indirectly in the provision of defence services where access to US controlled technology is required, which would have serious implications for ADI's business and the retention of its skills base;
(6)Australia's defence capability could be adversely affected if the prohibition were enacted;
(7)if ADI cannot fulfil its defence related contracts with the ADF and that high value defence work is done offshore, there would be a consequent effect on the Australian economy and the West Australian economy;
(8)ADI would be at risk of losing future contracts and not winning new contracts if it is found to have breached the ITARs;
(9)if the prohibition were enacted at least 40% of ADI's work force would be re‑deployed and if this were not possible they would be made redundant (including 58 employees in WA alone) and this would have a flow on effect with the loss of ancillary staff employed in connection with the ITAR projects and contracts reliant on US controlled technology such as sub‑contractors, management and administration staff; and
(10)the percentage of employees affected could increase as facilities used for projects reliant on US controlled technology became unviable and had to be closed.
The objecting parties argued that although these consequences existed, they were unlikely to be implemented and that ADI need not fear such draconian consequences.
ADI provided evidence that it had implemented the following practices in an attempt to minimise the conflict between ITARs and EARs on the one hand and the EO Act on the other, (Second McKibbin affidavit: 25/11/04 [46] – [55]) including:
(1)a training and education programme for staff engaged on projects where US controlled technology is used;
(2)implementation of the 'technology control plan' whereby technology control officers ensure that access to US controlled technology is provided to authorised personnel only and not re‑exported;
(3)location specific controls, which provide for segregated work areas where work involving the use of US controlled technology takes place;
(4)a security committee reviews ADI's compliance with ITAR on a quarterly basis. It also reviews internal security audits of compliance with obligations under the "Protective Security Manual" of the Commonwealth of Australia and considers and ensures the implementation of any matters arising from audits conducted by the defence security authority by promulgating new or amended security policies and directions; and
(5)seeking approval through amendment to the most significant TAAs to permit dual nationals and third party foreign nationals to be able to work on the associated projects.
Further, in light of the exemption granted to ADI by the Victorian Civil and Administrative Tribunal (VCAT) (see ADI Limited (Exemption)[2004] VCAT 1963 – 5 July 2004), and as a consequence of the conditions imposed by that exemption, ADI has taken, is taking, or proposes in the near future to take, (Applicants' Submissions [12]) the following steps:
(1)where an employee is moved from a project using US controlled technology to some other work, the technology control officer will explain to that person why he or she is being transferred;
(2)before rejecting an application to join ADI's workforce or work on a project involving US controlled technology, where the application is to be rejected and, in the absence of the ITARs the application would be accepted, ADI will consider other reasonable and practical alternatives to rejection including, whether or not the person could be re‑deployed with ADI as well as the feasibility of applying for and obtaining the relevant US regulatory approvals;
(3)reliance on the Victorian exemption, but only to the extent necessary to enable compliance with the obligations described in the US law relating to defence projects and their corresponding contractual obligations;
(4)colour‑coding on security passes to reflect an employee's level of access to the technology (incorporating "need to know", Australian security clearance level and ITAR authorisation) but not the person's nationality nor will a pass indicate the reason for that employee's level of access to technology;
(5)restricting the security pass information, lists of employees and their security clearance levels, including ITAR authorisations, to technology control officers, managers and human resources officers on a "need to know" basis; and
(6)amending each ADI company's employment policies to make it clear that a limited exemption has been granted in Victoria and that the purpose of requests for information regarding nationality are being made only for compliance with the US regulations.
These changes introduced by ADI as a consequence of being granted the Victorian exemption will have a flow on effect on ADI's operations in Western Australia.

The EO Act

The relevant provisions of the EO Act are set out below. Although ADI originally applied for exemption from the operation of s 38 of the EO Act, it did not pursue that as it was not relevant.
"3. Objects
The objects of this Act are –
(a)to eliminate, so far as is possible, discrimination against persons on the ground of sex, marital status or pregnancy, family responsibility or family status, sexual orientation, race, religious or political conviction, impairment, age or, in certain cases, gender history in the areas of work, accommodation, education, the provision of goods, facilities and services and the activities of clubs;
(b)to eliminate, so far as is possible, sexual harassment and racial harassment in the workplace and in educational institutions and sexual harassment and racial harassment related to accommodation;"
"135. Tribunal may grant exemptions
(1)The Tribunal may, on application by a person, by order, grant to the person an exemption from the operation of a specified provision of Part II, IIAA, IIA, IIB, III, IV, IVA or IVB.
(2)The Tribunal may, on application by a person to whom an exemption from a provision of Part II, IIAA, IIA, IIB, III, IV, IVA or IVB has been granted under subsection (1), by order, grant to the person a further exemption from the operation of that provision.
(3)The Tribunal shall cause notice of an application for an exemption, a further exemption or the variation of an exemption or further exemption to be given by newspaper advertisement or otherwise, in such form and manner as the Tribunal may direct.
[(4)repealed]
(5)Section 113 applies to an application under this section in the same way as that section applies to an inquiry.
(6)An exemption or further exemption —
(a)may be granted subject to such terms and conditions as are specified in the order;
(b)may be varied either on the application of the person to whom the exemption is granted or at the instance of the Tribunal;
(c)may be expressed to apply only in such circumstances, or in relation to such activities, as are specified in the order; and
(d)shall be granted for a period specified in the order not exceeding 5 years."
Extract from s 4 ‑ Interpretation
"4 'race' includes colour, descent, ethnic or national origin or nationality and the fact that a race may comprise 2 or more distinct races does not prevent it being a race for the purposes of this Act."
"36. Racial discrimination
(1)For the purposes of this Act, a person (in this subsection referred to as the “discriminator”) discriminates against another person (in this subsection referred to as the “aggrieved person”) on the ground of race if, on the ground of —
(a)the race of the aggrieved person;
(b)a characteristic that appertains generally to persons of the race of the aggrieved person; or
(c)a characteristic that is generally imputed to persons of the race of the aggrieved person,
the discriminator —
(d)treats the aggrieved person less favourably than in the same circumstances, or in circumstances that are not materially different, the discriminator treats or would treat a person of a different race; or
(e)segregates the aggrieved person from persons of a different race.
(1a)For the purposes of this Act, a person (in this subsection referred to as the “discriminator”) discriminates against another person (in this subsection referred to as the “aggrieved person”) on the ground of race if, on the ground of —
(a)the race of;
(b)a characteristic that appertains generally to persons of the same race as; or
(c)a characteristic that is generally imputed to persons of the same race as,
any relative or associate of the aggrieved person, the
discriminator —
(d)treats the aggrieved person less favourably than in the same circumstances, or in circumstances that are not materially different, the discriminator treats or would treat persons; or
(e)segregates the aggrieved person from persons,
who are not of that race.
(2)For the purposes of this Act, a person (in this subsection referred to as the “discriminator”) discriminates against another person (in this subsection referred to as the “aggrieved person”) on the ground of race if the discriminator requires the aggrieved person to comply with a requirement or condition —
(a)with which a substantially higher proportion of persons not of the same race as the aggrieved person comply or are able to comply;
(b)which is not reasonable having regard to the circumstances of the case; and
(c)with which the aggrieved person does not or is not able to comply."
"37. Discrimination against applicants and employees
(1)It is unlawful for an employer to discriminate against a person on the ground of the race of that person —
(a)in the arrangements made for the purpose of determining who should be offered employment;
(b)in determining who should be offered employment; or
(c)in the terms or conditions on which employment is offered.
(2)It is unlawful for an employer to discriminate against an employee on the ground of the race of the employee —
(a)in the terms or conditions of employment that the employer affords the employee;
(b)by denying the employee access, or limiting the employee’s access, to opportunities for promotion, transfer or training, or to any other benefits associated with employment;
(c)by dismissing the employee; or
(d)by subjecting the employee to any other detriment.
(3)Nothing in subsection (1) renders it unlawful for an employer to discriminate against a person, on the ground of the race of the person, in connection with employment to perform domestic duties within a private household in which the employer resides.
"39. Discrimination against contract workers
It is unlawful for a principal to discriminate against a contract worker on the ground of the contract worker’s race —
(a)in the terms or conditions on which the principal allows the contract worker to work;
(b)by not allowing the contract worker access, or limiting the contract worker’s access, to any benefit associated with the work in respect of which the contract with the employer is made;
(c)by denying the contract worker access, or limiting the contract worker’s access, to any benefit associated with the work in respect of which the contract with the employer is made; or
(d)by subjecting the contract worker to any other detriment."

ADI's submissions

ADI contends that it needs the exemption so that it can comply with its contractual obligations to the Australian government (the ADF in particular). ADI says it is concerned that it is in breach of the EO Act and will potentially be in breach in the future because of the requirements to comply with the US regulations with respect to US controlled technology subject to the ITARs. ADI says that its purpose in seeking the exemption is so that it can comply with its contractual obligations.
Mr Power on behalf of ADI, advised that ADI was "on the horns of a dilemma" in that it could not comply with both its obligations to its US sponsors and under the EO Act. He submitted that the only solution for ADI was therefore to seek an exemption, however he conceded, an exemption in limited terms to be granted only to the extent necessary for ADI to fulfil its obligations under the ITARs and EARs.
The effect of an exemption is to make lawful what would otherwise be unlawful as being prohibited by the EO Act. The EO Act gives no guidance as to the facts or circumstances to be taken into account by the Tribunal in the exercise of its power of exemption under s 135. Mr Power argues that accordingly, the Tribunal has an unfettered discretion in deciding whether or not to grant the exemption, however he concedes that in the exercise of that discretion the Tribunal must have recourse to the scope and purpose of the EO Act.
The inclusion of the exemption provision in the EO Act suggested, according to ADI, that Parliament envisaged certain situations and circumstances where discrimination could be appropriate or necessary. Mr Power relied on an extract from the Parliamentary Debates (Hansard), and in particular the second reading speech and related debates on the EO Act. Mr Rosales‑Castaneda and Mr Ritter also relied on an extract from Hansard to emphasise their views that the discretion is fettered. That extract from Hansard is discussed below at [98]. The nature of the Tribunal's discretion is pivotal as to whether or not this exemption should be granted.
ADI quoted Stevens & Ors v Fernwood Fitness Centres Pty Ltd (1996) EOC 92‑782 where the Victorian Equal Opportunity Tribunal discussed the principles to be applied when considering exemption applications. Counsel for the objecting parties also relied on Stevens & Ors v Fernwood Fitness Centres Pty Ltd (supra). Essentially, that case sets out the principles on which exemption applications can be determined. It provides that the Tribunal, when considering exemption applications, should have regard to:
(1)there being a possible discrimination or breach of the EO Act. It is not necessary to prove an actual breach of the EO Act but there must be sound potential for a breach to be found. ADI argued that in this case the need to comply with the ITARs and to seek from employees and prospective employees details of their birth and their nationality is a potential breach of s 37 and s 39 of the EO Act; and
(2)if there is potential for a breach of the EO Act:
(a)whether the conduct sought to be exempted falls broadly within the spirit of one of the express exception provisions in the EO Act, although not within the letter of one of those provisions;
(b)whether the conduct sought to be exempted fits within the scheme of the objectives of the EO Act; and
(c)what interests might be pointed to in the application that would justify the granting of the exemption.
We have indicated our agreement that the conduct required of ADI potentially breaches s 37 and s 39 of the EO Act. ADI concedes that there is no express exception in the Act which relates to the position of ADI and that it cannot invoke the spirit of any of the express exceptions (Applicants' Submissions [20]).
Whilst ADI did not directly concede that to grant an exemption in this matter would not be consistent with the objectives of the Act, it submitted that the objectives of the Act must be balanced against the interests which are relied on to justify the exemption. ADI submitted that those interests outweighed concerns as to the objectives of the Act and it relied in its submission on the statement by VCAT when granting its exemption in Victoria (ADI Limited (Exemption) [2004] VCAT 1963 (supra) at [48]):
"The potential loss of the US related defence projects regulated by the ITARs, both current and future, from the ADI companies and from Australia would significantly prejudice the national interest in the sense of its defence related capability, would adversely impact on Australia's employment and would impact on the tertiary education sector in the funding of research projects."
ADI was at pains to emphasise that it sought an exemption only to allow compliance with the US regulations and not to provide ADI with a wide discretion to merely disregard the EO Act. The exemption, ADI claims, would be intended as a last resort to avoid an intractable conflict between the requirements of the US regulations and the EO Act so that, although the exemption would not further the objects of the Act, the effect that it has on the objects of the Act, namely racial discrimination, is "strictly limited" (Applicants' Submissions, [22]).
In its submissions in reply, ADI refuted the submissions on this issue set out by the objecting parties. ADI argued that the discretion to grant the exemption should be construed broadly so as to permit the Tribunal to have regard to public interest considerations of the kind that underpin this application. ADI argued that any alternative construction would be inconsistent with the legislative scheme designed to allow the Tribunal maximum flexibility. ADI argued that this was reflected not only in the Parliamentary debates surrounding the introduction of the EO Act, but in the exercise of the exemption discretion by other tribunals in Australia and the growing tendency in those tribunals towards consideration of the public interest.
ADI contended that the exemption it seeks means that it would be required to prove as "a matter of objective fact" that the conduct against which a complaint could be made was necessary for compliance with ITARs and EARs and that only that type of conduct would be permissible within the terms of the exemption (Applicants' Submissions in Reply [3]).
ADI stated that it would continue to seek amendment to TAAs and MLAs as a first step, prior to reliance on the exemption, if granted (T43 and T94).
Whilst ADI acknowledged that the grant of an exemption would benefit it commercially this did not, in its view, detract from the strength of the public interest argument concerning national security and national and state economies.
ADI argued that it could not be safely inferred that any or all subsequent breaches of ITARs would be unpunished merely because the voluntary disclosure in August 2002 was ultimately accepted by the US government. That disclosure was made in accordance with reg 127.12 of the ITARs and ADI is of the view that the mitigating factors present were sufficient to warrant no further action being taken – primarily that ADI had proceeded in the past on a misconception of the meaning of "nationality" in the American context.
The objecting parties suggested that ADI would be better to seek agreement between the Australian and American governments rather than seeking an exemption. ADI argued that it is not its role to broker those kinds of negotiations and that it would be in fact virtually impossible for it to do so. It was ADI's view that the proper path for it to take should be to seek relief under domestic law, which it has done with this application for exemption.
ADI was also of the view that the actions or inactions of other defence industry companies regarding whether or not to seek an exemption provide no useful basis for any inference, and on that basis are irrelevant.
Mr Power emphasised to the Tribunal that the rightness or wrongness of the regime imposed by the US government under the ITARs and the EARs and therefore ultimately through the US sponsor companies, was not a matter on which ADI or the Tribunal should take a view. It is not for ADI to say whether the US approach is right or wrong; rather, it is a fact that these things apply to ADI regardless of the merit attaching to them. ADI, he contended, does not have any real choice in the matter. The use of US technology, which it was conceded is the best available, is a decision made by the Australian government. The means of getting that technology is controlled by the US government. ADI is caught in the middle.
Mr Power also put forward arguments with respect to nationality as opposed to national origin and those arguments are discussed below at [136] – [150] in the context of whether, despite the grant of an exemption, ADI's conduct would nonetheless amount to a breach of the Racial Discrimination Act 1975 (Cth).
Ultimately ADI contended that it was seeking the exemption primarily because it was trying to be a "good corporate citizen" (T92). It is of the view that even if an exemption is not required "at this minute" for its business operations in Western Australia, it needs to have the exemption available for the future when it would be required, because ADI did not want to continue operating on the basis of being in breach of the EO Act. Mr McKibbin (at T44) stated in response to a question in cross examination from Mr Rosales‑Castaneda:
"ADI believes it is a very good employer. It's bringing this application because it believes it's in a very difficult situation, in a cleft stick. It's doing it because, in the scenario I’ve just raised, we understand we are in breach of the Western Australian Equal Opportunity Act. We don't like that; we don’t want to be; we're not in the position of breaching Acts, but we have a difficult situation, trying to comply with the US requirements so that we can employ people in this State, so that we can provide opportunities for other people on projects coming up – defence projects, big defence projects – yet in practice we could be in breach of the Equal Opportunity Act. I don't like that, personally."

Objecting parties' submissions

Mr Rosales‑Castaneda for the Commissioner and Mr Ritter SC for the Trades and Labour Council of Western Australia, Western Australians for Racial Equality and Ethnic Communities Council WA Inc (together referred to as "the objecting parties") provided comprehensive written and oral submissions to the Tribunal. Their submissions were supportive of each other, however, each had a different emphasis on different aspects which it is unnecessary to delineate for the purpose of these reasons. Briefly, a fundamental submission put to the Tribunal was that any exemption must further the objects of the EO Act and the discretion exercised by the Tribunal must be exercised within the scope, objects and purpose of the EO Act and not outside of that. On that basis, it was argued that the Tribunal either had no jurisdiction to entertain the application or could not grant it. In this sense, the objecting parties argued that an application which did not further the objects of the EO Act was so flawed that it is invalid and, if that first hurdle could not be met, the application could not be further considered.
Counsel argued that this application for exemption is wholly unrelated to the objectives or the scheme of the EO Act and the granting of it would result in a commercial advantage to ADI and it would therefore be inappropriate for the Tribunal to grant it. There had to be sound "social, economic or other reasons, consistent with the purpose of the Act, for the exercise of the discretion in favour of an exemption" – Re Golden Casket Exemption Application [2002] QADT 16. They argued that the primary purpose of ADI's application was to secure an economic advantage for ADI and that this strongly militated against the granting of the exemption sought (T109).
Mr Ritter and Mr Rosales‑Castaneda submitted that the applications and exemptions which had been granted in other States and, in particular, in Victoria were of very limited, if any, significance or application to the present application. In particular, they pointed out that the Victorian application was unopposed and it did not involve consideration of submissions in opposition to the application, such as are being made to this Tribunal. Further, the Victorian decision did not fully consider whether ADI could comply with their agreements with the US sponsors without obtaining the exemptions sought (T123).
Mr Rosales‑Castaneda was of the view that VCAT had misinterpreted the scope of "public interest" and its relevance and weight in applications of this kind. He also submitted that VCAT and the Queensland tribunal had gone beyond the objects of their anti‑discrimination Acts and that all decisions relying on a broad interpretation of 'public interest' are wrong and "beyond the objects of" and "contrary to the spirit of their respective Acts" (Commissioner's Submissions [12(e)]). Mr Rosales‑Castaneda contended that this Tribunal is "circumscribed to the objects of the EO Act" when considering "public interest" and that economic considerations are not relevant (Commissioner's Submissions [12(f)]). He continued with the proposition that the conditions imposed by VCAT on ADI are difficult to monitor and, in any event, ineffective in minimising the potential discriminatory effect that an exemption has or may have on prospective or existing employees and subcontractors.
Mr Rosales‑Castaneda also submitted that any decision by the New South Wales Attorney General should be given little weight because the Anti‑Discrimination Regulations 2004 (NSW) set out considerations not mentioned in the Equal Opportunity Regulations 1986.
There was argument that pursuant to s 109 of the Commonwealth Constitution the Tribunal should not grant this exemption, because if ADI did the things permitted by the exemption it would nonetheless be in breach of the Racial Discrimination Act 1975; and that therefore to grant the exemption would offend the supremacy of that Commonwealth Act under the Commonwealth Constitution. Further, it was argued that it is futile to grant an exemption where the conduct sought to be exempt is clearly prohibited by another law. The original application made by ADI to the Tribunal could well have constituted a breach of the Racial Discrimination Act 1975 because it requested an exemption to permit ADI to demand from prospective and existing employees details of their "national origin". National origin is relevant for breaches of s 9 and s 15 of the Racial Discrimination Act 1975. However, demanding details of one's "nationality" is not a breach of the Racial Discrimination Act 1975.
ADI amended its application for exemption, in consultation with Mr Macliver, the Australian Government Solicitor based in Perth, so that any reference to "national origin" was removed and replaced with the concept of "nationality". ADI took the view, supported by Mr Macliver, that this overcame any problems at a Commonwealth level, arising under the Racial Discrimination Act 1975. However, the application still included the requirement to demand from prospective employees and existing employees details of their place of birth. Mr Ritter, in particular, argued that the retention of details of place of birth was tantamount to requiring details of national origin and that further, because it is the US government that would interpret this information that was being demanded from prospective and current employees, there was scope for it to apply it as an issue of national identity rather than nationality. Therefore, according to Mr Ritter, there was a current breach of the Racial Discrimination Act1975 by the retention of place of birth or alternatively it was tantamount to a breach because of the interpretation that would or could be placed on the information by the US government.
Mr Ritter relied on Macabenta v Minister of State for Immigration and Multicultural Affairs (1998) 90 FCR 202 where the Federal Court held that there was a distinction between "national origin" and "nationality" and that conduct relating to the former could constitute a breach of the Racial Discrimination Act 1975 but reliance on nationality was not a breach of either s 9 or s 15 of that Act. Mr Rosales‑Castaneda extended this interpretation to say that there could also be a possible breach of s 17 of that Act whereby a potential claimant could arguably hold the US government liable because it had caused ADI to breach the Racial Discrimination Act 1975. The intention to discriminate not solely on the basis of nationality was indicated, according to Mr Ritter, because of the retention in the application of details of place of birth and citizenship in so far as it affected the person's status as a national under the laws of the United States of America. Further, Macabenta v Minister of State for Immigration and Multicultural Affairs (supra) was authority for the view that place of birth is an aspect of a person's national origin rather than their nationality. Therefore, on the basis that "place of birth" is an aspect of "national origin" and not "nationality", counsel for the objecting parties argued that the grant of an exemption would result in conduct by ADI which is in breach of the Racial Discrimination Act 1975 which does not include provision for an exemption of the kind sought by ADI.
Mr Ritter also argued that the granting of an exemption would lead to conduct which infringed international conventions, specifically the International Covenant on Civil and Political Rights and the International Convention on the Elimination of all Forms of Racial Discrimination, both of which are signed by the Australian government. The latter Convention is incorporated in the Racial Discrimination Act 1975 through the Schedule to that Act. Although Mr Ritter conceded that the existence of international obligations under international conventions does not give rise to a substantive obligation which conditions the exercise of statutory powers by a State body such as this Tribunal (unless incorporated by State Parliament into domestic legislation), he was of the view that the provisions of an international treaty to which Australia is a party is a relevant consideration in the exercise of statutory discretion by the Tribunal – Minister for Foreign Affairs and Trade v Magno (1992) 37 FCR 298 at 304.
Mr Ritter cautioned the Tribunal to be very careful about considering an exemption where "the reason for seeking the exemption is, in effect, the requirements of a foreign power, such as in this instance, the United States of America." (Submissions on behalf of various opposing parties [29]).
Mr Ritter was also sceptical that an exemption would achieve the stated purpose of the application. According to Mr Ritter, the stated purpose is to enable ADI to lawfully comply with the US regulations, which require ADI to discriminate on the basis of both nationality and national origin (T77). Mr Ritter was doubtful that the exemption would ensure compliance by ADI with the US regulations if it is sought solely on the basis of nationality, as he is of the view that the ITARs nonetheless require discriminatory conduct by ADI based on national origin. He drew this conclusion from cl 10.2 of the ITAR Guidelines for preparing agreements. Clause 10.2 provides:
"The US Government does not need each third country foreign national employed by a foreign signatory identified in the agreement. Approval of these individuals is contingent on their country of origin."
Mr Ritter also contended that ADI's claims as to the consequences of not granting the exemption were not substantiated and there was no evidence to prove, or insufficient evidence to support, the assertions made by ADI in this regard. In particular, Mr Ritter was critical that there was no direct evidence from the Commonwealth of Australia to support the claims by Mr McKibbin.

We are of the view that the granting of the exemption is the only way to properly control these consequences, to ensure continued economic security and defence capacity at current levels.
Mr Macliver, for the Commonwealth, requested that if the Tribunal was mindful to grant the exemption, on terms other than as requested by ADI, it be produced in draft form for comment by the Commonwealth and the parties to the application (T102). However, in light of the orders made below, we have concluded that it is unnecessary to provide the order in draft.

Orders

(1)Each of the applicants is granted an exemption from s 37 and s 39 of the Equal Opportunity Act 1984 insofar as those sections relate to "nationality", being a component of the definition of "race" (in s 4 of the Act) of employees, job applicants and contract workers, on the conditions set out in Orders 2 to 8 below.
(2)The exemption granted in Order 1 applies to conduct by an applicant company only where:
(a)the conduct is necessary to enable the applicant company to undertake defence projects in compliance with the laws of the United States of America (Controlled Projects); and
(b)the applicant company has taken all steps as are reasonably available (including steps which might be taken under the terms of the agreements relating to the Controlled Projects) to avoid the necessity of engaging in the conduct.

(3)Where an employee or contract worker is moved from a Controlled Project to any other work within ADI or any of its related companies, the Technology Control Officer of the relevant applicant company must explain to that person why he or she is being transferred.
(4)Where an applicant company uses a system of security passes to reflect the level of access to technology by employees and contract workers, the passes may be colour coded but not in such a way as to make identifiable the nationality of the person or the reason for the person's level of access.
(5)All information relating to security passes, security clearance levels and authorisations under the laws of the United States of America shall be restricted to the relevant Technology Control Officers, managers and Human Resources Officers of the relevant applicant company on a "need to know" basis.
(6)Each of the applicant companies' employment policies shall be amended as soon as reasonably possible so as to refer to the terms of this exemption including all conditions attached to it and to make it clear that the purpose of a request for information regarding nationality is made only for compliance with US regulations.
(7)This exemption is for a term of 5 years from 28 September 2005.
(8)ADI shall pay the costs of publishing the notice of the exemption in the Government Gazette.

I certify that this and the preceding [164] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE J ECKERT, DEPUTY PRESIDENT