J-CORP PTY LTD and LEADBITTER

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: HUMAN RIGHTS

ACT: EQUAL OPPORTUNITY ACT 1984 (WA)

CITATION: RAYTHEON AUSTRALIA PTY LTD and COMMISSIONER FOR EQUAL OPPORTUNITY [2008] WASAT 266

MEMBER: JUDGE J ECKERT (DEPUTY PRESIDENT)
MR A WARNER (SENIOR SESSIONAL MEMBER)
MR M ANDERSON (SENIOR SESSIONAL MEMBER)

HEARD: 19 NOVEMBER 2008

DELIVERED : 19 NOVEMBER 2008 – written reasons for extempore decision

FILE NO/S: EOA 28 of 2008

BETWEEN: RAYTHEON AUSTRALIA PTY LTD
Applicant
AND
COMMISSIONER FOR EQUAL OPPORTUNITY
Respondent

Catchwords:

Exemption application - Exceptions under EO Act - National origin - Race discrimination - Dual nationality - Third country nationals - Citizenship - American defence requirements - International traffic in export administration regulations (USA) - Arms regulations (USA) - ITAR - Access to American technology by foreign nationals

Legislation:

Arms Export Control Act (US)
Equal Opportunity Act 1984 (WA), Pt II, Pt IIA, Pt III, Pt IV, Pt IVA, Pt IVB, s 3, s 4, s 37, s 37(1), s 37(2), s 39, s 49, s 50, s 68, s 68(1), s 135, s 135(1), s 135(6), s 137
Equal Opportunity Regulations 1986(WA), reg 24
International Traffic in Arms Regulations, Pt 120.16, Pt 120.17, Pt 121, s 123, s 124, s 124.8(5), s 125, s 126.7
Racial Discrimination Act 1975 (Cth)
State Administrative Tribunal Act 2004 (WA), s 39(1)(e)

Result:

Exemption granted for five years with conditions

Category: B

Representation:

Counsel:

Applicant: Mr Kirk and Ms Priestly
Respondent: Mr J Rosales-Castanada

Solicitors:

Applicant: Allens Arthur Robinson
Respondent: Commissioner for Equal Opportunity

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

ACT Human Rights Commission v Raytheon Australia Pty Limited and Ors [2009] ACTSC 55
ADI Limited (Exemption) [2004] VCAT 1963
ADI Limited and Ors and Commissioner for Equal Opportunity and Ors [2005] WASAT 259
BAE Systems Australia Ltd (Anti-Discrimination) [2008] VCAT 1799
BAE Systems Australia Ltd [2008] SAEOT 1
Boeing Australia Holdings Pty Ltd (Anti-Discrimination Exemption) [2007] VCAT 532
Commissioner for Equal Opportunity v ADI Limited [2007] WASCA 261
Exemption application re
Boeing Australia Holdings Pty Ltd and related entities [2003] QADT 21
Exemption Application re
Raytheon Australia Pty Limited and Ors [2008] QADT
Exemption Order re ADI, 28 June 2005, New South Wales Government Gazette, 1 July 2005, 3495
Exemption Order re Boeing Australia Holdings Pty Ltd, 8 February 2005, New South Wales Government Gazette, 11 February 2005, 391
Exemption Order re Raytheon Australia Pty Ltd and Ors, 15 October 2008
Raytheon Australia Pty Ltd and Ors [2008] SAEOT 3
Raytheon Australia Pty Ltd and Ors and ACT Human Rights Commission [2008] ACTAAT 19
Raytheon Australia Pty Ltd and Ors Exemption Application (Anti-Discrimination) [2007] VCAT 2230

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

In these proceedings the Tribunal made an order s 135(1) of the Equal Opportunity Act 1984 (WA) granting Raytheon Australia Pty Ltd an exemption from the operation of s 37, s 39 and s 49 of the Equal Opportunity Act 1984 (WA). Those sections deal with discrimination on the ground of race. The exemption will allow Raytheon Australia Pty Ltd, where necessary, to discriminate against its employees and contract workers and potential employees and contract workers on the ground of their race.
Raytheon Australia Pty Ltd designs, manufactures, implements and maintains defence systems. It has contracts with the Commonwealth of Australia, through the Department of Defence, and with other companies in Australia and the United States of America. Ultimately, the defence related goods produced by Raytheon Australia Pty Ltd are provided to the Australian Defence Forces.
In order to fulfil its contractual obligations, Raytheon Australia Pty Ltd accesses defence articles, technical data and defence services owned by the US government, collectively referred to as ITAR Controlled Material. That Material is subject to the International Traffic in Arms Regulations, which controls the import and export of defence articles and defence services from and to the USA. Those regulations restrict the transfer of ITAR Controlled Material outside of the USA and to persons other than 'US persons'. Because of the nature of Raytheon Australia Pty Ltd's contractual obligations, a number of its employees may need to access ITAR Controlled Material at various times. Those employees who are not citizens or not lawful permanent residents of the USA are 'foreign persons' for the purposes of the Regulations. However, the contracts that Raytheon Australia Pty Ltd has entered into, allow 'Australian nationals' (who are Australian citizens by birth or naturalisation) to also have access to ITAR Controlled Materials. Access may also be permitted for some people who are 'dual nationals'.
The purpose of the exemption from the operation of the Equal Opportunity Act 1984 (WA) was to allow Raytheon Australia Pty Ltd to obtain from its employees and contract workers and potential employees and contract workers, information concerning their nationality so that Raytheon Australia Pty Ltd is able to identify who will be permitted to access ITAR Controlled Material. Raytheon Australia Pty Ltd may also need to discriminate against its employees and contract workers on the ground of their race in deciding what work they can do if access to ITAR Controlled Material is required.
The Tribunal noted that Raytheon Australia Pty Ltd had been granted an exemption from the operation of equal opportunity legislation in Victoria, Queensland, New South Wales, South Australia and the Australian Capital Territory.
The Tribunal found that Raytheon Australia Pty Ltd required an exemption from the operation of the relevant sections of the Equal Opportunity Act 1984 (WA), so that it could comply with the Act whilst also meeting its contractual obligations including compliance with the International Traffic in Arms Regulations. Without an exemption, there was a potentially adverse effect on Raytheon Australia Pty Ltd's workforce in Western Australia ultimately leading to a negative impact on the Western Australian economy.
Accordingly, the Tribunal granted Raytheon Australia Pty Ltd an exemption from the operation of s 37, s 39 and s 49 of the Equal Opportunity Act 1984 (WA) for a term of five years, expiring on 18 November 2013, and subject to a number of conditions.

Background

This matter was heard on 19 November 2008. At the conclusion of the hearing we made orders dealing with the application, and indicated that we would publish our reasons at a later date. We now do so. The orders we made are set out at the conclusion of these reasons.
We apologise for the lengthy delay in providing these written reasons for decision. We note that s 136(1) of the Equal Opportunity Act 1984 (WA) (EO Act) requires the Tribunal to publish its written reasons for decision within one month after it makes that decision. Clearly, we have not complied with that requirement, however, we are satisfied that our failure to do so does not affect the validity of our decision or our reasons for it. On that basis, we apologise for any inconvenience that our delay might have caused.
Raytheon Australia Pty Ltd (Raytheon) applied under s 135(1) of the EO Act for an exemption for five years from the operation of s 37, s 39, s 49 and s 68 of the EO Act. Section 37, s 39 and s 49 deal with discrimination on the grounds of race. 'Race' is defined in s 4 of the EO Act to include, amongst other things, national origin or nationality. The exemption is sought in so far as s 37, s 39, s 49 and s 68 of the EO Act prohibit discrimination on the grounds of race, including nationality, of employees and contract workers for Raytheon, and persons who apply for employment or contract work with Raytheon, where in the course of their employment or work those persons will require access to certain material which was described in the hearing as ITAR Controlled Material.
The ITAR Controlled Material referred to in this case comprises defence articles, technical data and defence services which it is necessary for Raytheon to obtain from companies and government agencies in the United States of America, in order to perform its obligations under contracts it has entered into with the Commonwealth of Australia, through the Department of Defence, and other companies in Australia and the United States of America (the Contracts). The ITAR Controlled Material is subject to the International Traffic in Arms Regulations (ITAR), made pursuant to the Arms Export Control Act (US) which authorises the Department of State for the United States of America to control the export and import of defence articles and defence services. The ITAR restricts the transfer of ITAR Controlled Material outside the United States of America and to individuals and bodies other than 'US persons' (as defined in the ITAR). We explain the basis for Raytheon's application, and the factual findings we make in relation to it, in further detail below.
Pursuant to reg 24 of the Equal Opportunity Regulations 1986 (WA), the Commissioner for Equal Opportunity is a party to the application. The Commissioner opposed Raytheon's application for an exemption on the ground that an exemption was not necessary. The Commissioner also submitted that if an exemption were granted, it should be for a limited period, it should be granted in terms which would permit compliance with it to be monitored, and its terms should provide that the exemption would cease to apply if as a result of a change of circumstances an exemption were no longer necessary.
Our reasons for decision address the following matters:
1)the factual basis for Raytheon's application;
2)the Tribunal's power to grant an exemption and considerations relevant to the Tribunal's exercise of discretion;
3)whether the grant of an exemption is necessary;
4)our reasons for concluding that an exemption should be granted; and
5)the terms of the exemption order.

Factual basis for Raytheon's application

Raytheon filed a statement of facts and contentions and relied on affidavits sworn by Mr Paul Haseman, the Director of Legal Affairs for Raytheon and Senior Counsel for Raytheon International Incorporated, and by Mr Warren Latham, the General Manager - Naval Systems for Raytheon. The Commissioner did not accept or admit the facts relied on by Raytheon in its statement of facts and contentions, but did not seek to cross examine Mr Haseman or Mr Latham. The Commissioner's submissions were ultimately confined to the conclusions we should draw from the evidence, and we address those submissions below. The evidence relied on by Raytheon in support of its application was therefore unchallenged and except where we have expressly indicated any reservation about it, we accept that evidence.
Raytheon is a wholly owned subsidiary of the Raytheon Company, which is incorporated in the United States of America. Raytheon's business is the provision of the design, manufacture, implementation and maintenance of defence systems. Raytheon has facilities across Australia, including in Western Australia. In 2007, its sales were in excess of $500 million, and at the time of the hearing it employed an engineering and technical workforce of over 1,300 people in Australia.
Because of the nature of the defence systems which it provides, it is necessary for Raytheon to have access to technology and information relating to US defence systems in order to perform its obligations under the Contracts. That technology and information falls within the United States Munitions List in Pt 121 of the ITAR. Mr Latham provided examples to illustrate why and for what purposes Raytheon's employees require access to the ITAR Controlled Material. Depending on the nature of the project on which employees are working, some employees may need to access ITAR Controlled Material on a daily basis, while others may need to access it only in connection with specific tasks.
Raytheon obtains the ITAR Controlled Material from either US government agencies or from US companies, including the Raytheon Company. Those agencies and companies are subject to the ITAR.
Under the ITAR, the export from the United States of America of ITAR Controlled Materials is prohibited, unless it is approved in accordance with the ITAR. 'Export' is defined in [120.17] of the ITAR to include disclosing or transferring technical data to a 'foreign person', whether in the United States or abroad. 'Foreign person' is defined in [120.16] of the ITAR to mean any natural person who is not a lawful permanent resident of the US, and also includes any foreign corporation, or any other entity that is not incorporated or organized to do business in the United States of America. Raytheon, and those of its employees and contract workers who are not citizens or lawful permanent residents of the United States of America, are therefore 'foreign persons' for the purposes of the ITAR.
Various approvals can be obtained under s 123, s 124 and s 125 of the ITAR to export the ITAR Controlled Materials to foreign persons. These include licenses issued by the Director of the Office of Defence Trade Controls, and Technical Assistance Agreements and Manufacturing License Agreements between a United States company or entity and the foreign person. These agreements must be approved by government agencies in the United States before they constitute an approval for the purposes of the ITAR. Raytheon is currently a party to a number of these agreements (the Agreements). A prerequisite for the approval of these agreements under the ITAR is that a foreign person who receives the ITAR Controlled Material must be subjected, by the agreement, to the same obligations as apply (by statute) to the US company or entity which exports that Material to the foreign person. As a result of the Agreements, Raytheon must therefore comply with all applicable US legislation relating to the Agreements, including the ITAR.
In addition, [124.8(5)] of the ITAR requires that the Agreements contain the following term relating to persons who may have access to the ITAR Controlled Materials:
The technical data or defence service exported from the United States in furtherance of this agreement and any defense [sic] article which may be produced or manufactured from such technical data or defense service may not be transferred to a person in a third country or to a national of a third country except as specifically authorized in this agreement unless the prior written approval of the Department of State has been obtained.
Mr Haseman indicated that the effect of this term was that Raytheon cannot transfer ITAR Controlled Material to any person who is not a citizen or permanent resident of the United States of America or an 'Australian national'. For the purposes of the ITAR, the United States Government considers 'Australian nationals' to be Australian citizens by birth or by naturalisation. Mr Haseman's evidence is that a 'national of a third country' is understood to include Australian permanent residents, people with visas permitting their temporary residence in Australia, and people who hold dual nationality, as a citizen of Australia and of another country (other than the United States of America). The transfer of the ITAR Controlled Material to persons holding dual nationality may be approved if the Agreement lists the country of origin of all third country foreign nationals who may be employed by Raytheon. However a person with dual nationality for Australia and a country proscribed under the ITAR will not be authorised to access ITAR Controlled Material.
Mr Haseman also indicated that it is possible to obtain approval from the Managing Director of Defense Trade Controls in the US Bureau of PoliticalMilitary Affairs (DDTC) for the transfer of ITAR Controlled Material to individuals who are not Australian nationals. However, Mr Haseman's evidence was that this approval is not automatic or even standard practice, is contingent on the country of origin of the individuals concerned, and may depend on the sensitivity of the ITAR Controlled Material which is involved.
In order to comply with the obligations under the ITAR to which it is subject by virtue of the Agreements, Raytheon needs to obtain from its employees and contract workers information concerning their nationality to allow Raytheon to identify who is authorised to access the ITAR Controlled Materials, to include reference to the countries of origin of its dual nationality employees in the Agreements, and to permit Raytheon to seek approval for access by those of its staff who are not Australian nationals. Raytheon is concerned that if it were to require the provision of that information it may be in breach of the EO Act. Further, Raytheon may need to discriminate against current or prospective employees or contract workers on the grounds of their dual nationality, or status as a national of a country other than Australia or the United States of America, for example in relation to the work that they do if access to ITAR Controlled Materials is required for that work. Raytheon therefore submits that the grant of an exemption under s 135 would permit it to comply with the EO Act, and its obligations under the Agreements, including compliance with the ITAR.
Raytheon has obtained an exemption from the application of equal opportunity legislation in Victoria: Raytheon Australia Pty Ltd and Ors Exemption Application (Anti-Discrimination) [2007] VCAT 2230; Queensland, Exemption Application re: Raytheon Australia Pty Limited and Ors [2008] QADT; New South Wales, Exemption Order re Raytheon Australia Pty Ltd and Ors, 15 October 2008; South Australia, Raytheon Australia Pty Ltd and Ors [2008] SAEOT 3 and the Australian Capital Territory, Raytheon Australia Pty Ltd and Ors and ACT Human Rights Commission [2008] ACTAAT 19 and ACT Human Rights Commission v Raytheon Australia Pty Limited and Ors [2009] ACTSC 55.
Exemptions based on the need to comply with the ITAR have also been granted to other companies in Victoria: ADI Limited (Exemption) [2004] VCAT 1963; Boeing Australia Holdings Pty Ltd (Anti-Discrimination Exemption) [2007] VCAT 532; BAE Systems Australia Ltd (AntiDiscrimination) [2008] VCAT 1799; Queensland, Exemption application re: Boeing Australia Holdings Pty Ltd and related entities [2003] QADT 21; New South Wales, Exemption Order re Boeing Australia Holdings Pty Ltd, 8 February 2005, New South Wales Government Gazette, 11 February 2005, 391 and Exemption Order re ADI, 28 June 2005, New South Wales Government Gazette, 1 July 2005, 3495; South Australia, BAE Systems Australia Ltd [2008] SAEOT 1 and in Western Australia, ADI Limited and Ors and Commissioner for Equal Opportunity and Ors [2005] WASAT 259 and Commissioner for Equal Opportunity v ADI Limited [2007] WASCA 261 (ADI).

The Tribunal's power to grant an exemption and considerations relevant to the Tribunal's exercise of discretion

Section 135(1) of the EO Act permits the Tribunal to grant a person an exemption from the operation of a specified provision of Pt II, Pt IIA, Pt III, Pt IV, Pt IVA or Pt IVB of the EO Act. The Tribunal may grant an exemption subject to terms and conditions, or in relation to particular circumstances or activities, and for a period not exceeding five years: s 135(6) of the EO Act. The effect of the grant of an exemption is that it will not be unlawful under the relevant provisions of Pt II, Pt IIA, Pt III, Pt IV, IVA or Pt IVB of the EO Act for a person who has been granted an exemption, or a person in the employment of, or under the direction or control of a person who has been granted an exemption, to do an act in accordance with the provisions of the exemption order: s 137 of the EO Act.

The exemption sought by Raytheon is from the operation of s 37, s 39, s 49 and s 68 of the EO Act. There are two limbs to the prohibition on discrimination in s 37. First, s 37(1) prohibits discrimination by an employer against a person on the ground of the race of that person in relation to the arrangements to determine who should be employed, the decision as to who should be employed, and the terms and conditions on which employment is offered. Secondly, s 37(2) prohibits discrimination by an employer against an employee on the grounds of the employee's race in the terms or conditions of employment, by denying opportunities for promotion, transfer and training and other benefits of employment, by dismissing the employee or by subjecting the employee to any other detriment. Section 39 contains a similar prohibition in relation to contract workers.
Section 49 applies to the circumstances covered by s 37 and s 39, and prohibits a person from requesting or requiring another person to provide information that persons of a different race, in the same or not materially different circumstances, would not be requested or required to provide.
Although Raytheon sought an exemption from the operation of s 68 of the EO Act, an exemption from that provision cannot be granted. Section 135 does not permit an exemption to be granted from the provisions of Pt V of the EO Act, in which s 68 is found. In any event, in the present circumstances, there is no need for an exemption from the operation of s68 of the EO Act. Section 68(1) makes it unlawful to publish or display, or cause to be published or displayed, an advertisement or notice that indicates an intention to do an act that is unlawful under the EO Act. The grant of an exemption to Raytheon from the operation of s 37, s 39 and s 48 will mean that an act which would otherwise be subject to those provisions will no longer be unlawful, with the result that advertising an intention to do that act will no longer fall within the scope of s 68 of the EO Act. On that basis we have varied our orders made on 19 November 2008, as a reference to s 68 was inadvertently included in those orders.
It is apparent from the terms of s 135 of the EO Act that it confers a wide discretion on the Tribunal to grant an exemption from the provisions of the EO Act to which it refers. That discretion is, however, constrained by the objects, scope and purpose of the EO Act read as a whole: ADI at [43] [47]; (Martin CJ; Wheeler JA and Pullin JA agreeing). The range of specific and general exceptions in the EO Act confirms that the legislative object behind the EO Act is not to prohibit all discriminatory conduct, or all conduct of a particular kind because it is discriminatory on a particular ground. Instead, Parliament recognised that in a number of circumstances, which are identified by reference to a particular ground of discrimination, and more generally some discriminatory conduct, can be justified and should not be prohibited. The wide power to grant an exemption under s 135 of the EO Act was designed to cover the possibility that the exceptions in the EO Act might not cover all conduct which, though discriminatory, is nevertheless justifiable: ADI at [56] [59] (Martin CJ, Wheeler JA and Pullin JA agreeing).
The range of exceptions in the EO Act demonstrates that a wide variety of considerations, extraneous to the anti-discriminatory objects of the EO Act and the objects set out in s 3 of the EO Act, were relied on by Parliament as the basis for justifying what would otherwise be discriminatory conduct: ADIat [69] (Martin CJ, Wheeler JA and Pullin JA agreeing). Accordingly, in ADI Martin CJ held at [72]:
In summary, in my opinion when exercising the discretion conferred upon it by s 135 of the EO Act, it is consistent with the objects, scope and purpose of the Act, for the Tribunal to take into account any considerations which it considers would justify the commission of conduct which would otherwise be unlawful under the Act. So, provided there is a rational basis for the discriminatory conduct, it will fall to the Tribunal to determine whether the interests to be served by permitting that conduct outweigh the detriment which flows from discriminatory conduct. Often the interests properly considered by the Tribunal in that context will be public interests but they need not be so. As can be seen, for example, from s 50 of the Act, private interests … have been recognised by the legislature as providing a sufficient justification for the permission of conduct which would otherwise be unlawful.

Is the grant of an exemption necessary in this case?

The Commissioner contended that the grant of an exemption is not necessary in this case because all existing employees of Raytheon are currently eligible to access ITAR Controlled Material. Raytheon accepted that that was the case. In his affidavit, Mr Latham explained that in the past, personal information relevant to ITAR compliance had been obtained voluntarily from employees. As a result, at the date of the hearing, every Raytheon employee in Western Australia who requires access to ITAR Controlled Material was eligible to do so, and no existing employee in Western Australia would be adversely affected by the grant of the exemption sought by Raytheon. However, that is not the end of the matter because the Commissioner's submission does not take into the fact that additional employees or workers may be engaged in the future.
The Commissioner contended that if additional employees or contracts workers were required to do work in Western Australia that required them to have access to ITAR Controlled Material, this could be achieved by nondiscriminatory means. The Commissioner submitted that it would be possible for Raytheon to meet this need by transferring staff who are approved to access ITAR Controlled Material to Western Australia. However, we accept that this would not be possible, for two reasons. First, the extent of the approval given for an employee to access ITAR Controlled Material depends on the nature and sensitivity of the project on which that employee is working. It cannot, therefore, be assumed that because an employee has approval to access ITAR Controlled Material for one project that that approval would extend to accessing ITAR Controlled Material required for another project. Secondly, staff would need to be willing to work in Western Australia, and could not be compelled to do so.
We also note that although it would be possible for Raytheon to seek DDTC approval for its employees who are not Australian citizens, or who hold dual nationality with a third country, to have access to ITAR Controlled Material, the evidence established that this was not a viable option for several reasons. First, Mr Haseman pointed out that the submission of the necessary documentation to the DDTC would still necessitate that Raytheon obtain personal information from its current and prospective employees and workers in relation to their nationality and national origin. In addition, in order to obtain approval, Raytheon would also need to require its employees and workers with dual nationality or third country nationality to enter into non-disclosure agreements in relation to the ITAR Controlled Material.
Secondly, Mr Haseman's evidence was that the processing by the DDTC of amendments to the Agreements would take approximately three to nine months (during which period Raytheon could not permit the individuals concerned to access the ITAR Controlled Material), and approval would need to be sought on an ongoing basis for each new employee or contract worker who was not an Australian national. Mr Haseman gave an example of a recent application made to the DDTC by Raytheon in respect of two of its employees. He stated that it had taken eight months to secure that approval.
Counsel for Raytheon drew to our attention a policy letter issued by the US Department of State on 10 October 2006 in which it announced that employees of Raytheon who work on projects where the end user is the Australian Department of Defence will not require separate export approval for the additional country or countries of their citizenship or nationality provided that the employee holds a security clearance from the Australian Department of Defence, is not a national of a country proscribed under the ITAR and has a valid need to know the ITAR Controlled Material, unless otherwise specifically restricted by the DDTC. However, Mr Haseman's evidence was that the assistance provided by this policy was limited as the DDTC reserved the right to refuse to adhere to the policy, and that it was almost certain that the DDTC would refuse an application related to a national of a country proscribed under the ITAR even if that individual was an Australian citizen and held a security clearance. Further, counsel for Raytheon submitted that in order to rely on the policy, Raytheon would still need to obtain information from its employees and contract workers about their nationality, in order to decide whether or not they were covered by the policy.
Counsel for Raytheon also drew our attention to the fact that in September 2007 Australia and the United States entered a treaty concerning Defence Trade Cooperation. We were informed that the purpose of the treaty was to create a comprehensive framework for the twoway trade in defence information. However, counsel advised us that the treaty has not yet been ratified by the United States Senate, and therefore is not yet operative. The Commissioner submitted the effect of the treaty will be that Australians with dual nationality will no longer be prevented from accessing ITAR Controlled Material. Accordingly, the Commissioner submitted that once the Defence Cooperation Treaty is ratified, an exemption would not be required. Counsel for Raytheon submitted that even once the treaty was ratified, it would not eliminate the need for an exemption because joint government approval would be required for projects before the provisions of the treaty would apply, and because the treaty will not apply to Australian permanent residents who are not citizens without the prior authorisation of both the United States of America and Australia. It is unnecessary for us to pursue these issues. As the treaty has not yet been ratified, its possible impact, if and when it is ratified, is presently irrelevant.
We therefore accept that there is a need for the grant of the exemption, and that there is no non-discriminatory way in which the same object can be achieved other than by the grant of an exemption.

Conclusion: an exemption should be granted

In determining whether the exemption should be granted, the question for us is whether the interests to be served by granting an exemption, which will permit Raytheon to discriminate against its present and prospective employees and contract workers on the grounds of their nationality, outweigh the detriment that would flow from that discriminatory conduct: ADI at [74] [75] (Martin CJ, Wheeler JA and Pullin JA agreeing). We have concluded that they do. We set out below our findings in relation to:
1)the detriment that would flow from the discriminatory conduct permitted by the proposed exemption;
2)the private interests that will be served by the grant of the exemption; and
3)the public interests that will be served by the grant of the exemption.
We also set out the reasons why we consider the interests served by the grant of an exemption will outweigh the detriment from the discriminatory conduct permitted by that exemption.

The detriment which would flow from the discriminatory conduct permitted by the proposed exemption

The grant of an exemption appears likely to result in some detriment, although the nature and extent of that detriment was not the subject of submissions by either Raytheon or the Commissioner. If Raytheon were granted an exemption it would be able to discriminate against its present or prospective employees or contract workers on the grounds of race. It is very likely that Raytheon will need to require its employees and contract workers to provide information about their nationality. It is difficult to see how that requirement, of itself, would necessarily be productive of substantial detriment. The greater concern would lie in the use made of that information.
Having regard to the basis for Raytheon's application, we understand that the kinds of discriminatory conduct likely to be engaged in by Raytheon would include it deciding not to employ a person to work on a particular project, or not providing existing employees with the opportunity to work on a particular project, if their nationality was such that they would be unlikely to be authorised to access ITAR Controlled Material (for example if they were a national of a country proscribed under the ITAR).
In the absence of any evidence, or even submissions, about the detriment which might flow from that conduct, we are unable to do more than identify possibilities. Were action of this kind taken, the adverse impact on individual employees and contract workers may be very serious. Quite apart from its effect on individuals, the potential may exist that over time the conduct could impact on Raytheon's workforce as a whole, by undermining the respect of staff for each other, or for staff of particular nationalities, or by creating a culture of two tiers of employees. However, we are unable to reach any firm conclusion on the gravity or extent of that possible detriment.

The private interests which will be served by the grant of the exemption

The grant of an exemption would clearly advance Raytheon's private interests, and possibly the private interests of the Raytheon Company, and the private interests of the US companies that are party to the Agreements. The grant of an exemption would mean that Raytheon would be able to comply both with the EO Act, and with its obligations under the Agreements, including compliance with the ITAR. There is a substantial economic benefit to Raytheon in doing so.
The grant of an exemption would avoid the possibility that by complying with the EO Act, Raytheon would be unable to obtain approval for its employees to access the ITAR Controlled Material, and so be unable to perform the Contracts. The adverse financial impact for Raytheon of non-performance of the Contracts is self-evident.
Alternatively, compliance with the EO Act may result in Raytheon breaching the requirements of the ITAR. Paragraph 126.7 of the ITAR permits the DDTC to revoke, suspend or amend any licence, approval or exemption under the ITAR if it believes that the terms of any export authorisation (which would include the Agreements) have been breached by any party to the export or any other person having a significant interest in the transaction. Mr Haseman gave evidence that the broad power of revocation given to the DDTC under the ITAR meant that it could revoke not only the approval applicable to a particular incident of non-compliance but also to all other approvals issued to a party. In addition, if there is a contravention of the ITAR, the US Assistant Secretary of State for PoliticalMilitary Affairs may prohibit a person from participating in the export of the ITAR Controlled Material. A contravention of the ITAR by Raytheon could, therefore, lead to it, the Raytheon Company, or one of the other US companies which is party to the Agreements, being debarred from participating in the export, use or receipt of the ITAR Controlled Materials.
Those US companies could also be prosecuted for any breach of the ITAR resulting from an unauthorised transfer of the ITAR Controlled Material to a person who is not an Australian national. Mr Haseman deposed that substantial civil and criminal penalties may be imposed if there is a wilful violation of the ITAR. In support of this, Mr Haseman referred to a number of examples of US companies with subsidiaries in countries including Australia, that have been subjected to penalties for the illegal release of ITAR Controlled Materials to foreign national and dual-nationals.
The likelihood of these adverse consequences occurring might be said to be more theoretical than real. That is, if we refused to grant an exemption it seems far more likely that Raytheon would consider restructuring its operations so that work requiring access to ITAR Controlled Material could be performed in jurisdictions where an exemption from the application of equal opportunity legislation has been granted. However, the potential need for Raytheon to do so, and the financial and administrative cost in its doing so, constitutes a further aspect of its private interest in the grant of the exemption.
The Commissioner submitted that the exemption is necessary solely or mainly for Raytheon's commercial purpose, and should not be granted. We reject that submission, for two reasons. First, the private interests of Raytheon, the Raytheon Company, and other US companies party to the Agreements are not the only interests which would be advanced by the grant of the exemption. There are other public interests that would also be served by the grant of an exemption. These are discussed below. Secondly, it is evident from the EO Act, and it was confirmed by the Court of Appeal in ADI, that in determining whether an exemption should be granted it is appropriate for the Tribunal to take into account private interests which would be served by the grant of an exemption.

The public interests which will be served by the grant of the exemption

Raytheon submits that if it is necessary for it to comply with the requirements of the EO Act, its participation in the import of ITAR Controlled Material from the US would be significantly hampered, and it would be unable to perform the Contracts. We find that there are three primary interests of a wider, or public, nature which would be served by avoiding this outcome: the interests of Australia's defence capabilities and the readiness of Australia's defence forces; the interests of Raytheon's workforce in Western Australia; and the interests of the State more generally, particularly its economic interests.
Raytheon submitted that if it were unable to complete the Contracts this would potentially compromise Australia's defence capabilities and in some cases may impact on the readiness of Australia's defence forces. The Commissioner disputed that conclusion. She submitted that as Raytheon has been granted exemptions under equal opportunity legislation in other Australian jurisdictions its contractual obligations could be performed in those other jurisdictions, avoiding any adverse impact on Australia's defence capabilities. We are unable to accept that submission, in view of the evidence of Mr Haseman, which was unchallenged.
In his affidavit, Mr Haseman pointed to the fact that Raytheon is the prime systems integrator for the Replacement Combat System for the Collins Class submarines for the Royal Australian Navy in Western Australia. If Raytheon were unable to participate in the import of ITAR Controlled Material from the US, Mr Haseman's evidence was that it was highly unlikely that the Navy could find another integrator to provide the services provided by Raytheon, with the result that there would be a substantial delay for the project and an impact on the operational upgrade of the submarines. While we have some reservations as to whether consequences of this kind would ultimately lead to a less capable defence industrial base in Australia, as Mr Haseman suggested, we do accept his evidence that there would be substantially increased costs for the Department of Defence, and delays in the completion of significant defence projects.
We also accept that if Raytheon were unable to complete the Contracts there would be an adverse impact on its workforce in Western Australia. Raytheon's clients would need to seek out other companies to provide the services which would otherwise have been provided by Raytheon. Mr Haseman's evidence was that as all Australian companies would face the same issues as Raytheon in relation to breach of equal opportunity legislation or breach of the ITAR, it is likely that the work would be sent offshore or to a competitor to which an exemption had been given under equal opportunity legislation in another jurisdiction. Mr Haseman's evidence was that a restriction on Raytheon's ability to work in ITAR related projects could directly impact on 80% of Raytheon's workforce, and would impact on all of its 90 employees in Western Australia. Mr Haseman also pointed out that the redeployment of Raytheon's staff would be difficult because if its staff were unable to access ITAR Controlled Material Raytheon's prospects of obtaining new work would decrease. The loss of its technical workforce would also give rise to a need to reduce administrative and support staff.

Raytheon would also be unable to proceed with its present plans to expand its Western Australian operations in the 12 to 18 months following the hearing and to hire additional staff for that purpose, because all of those staff would require access to ITAR Controlled Material. Mr Latham's evidence was that if Raytheon were unable to obtain an exemption it would be restricted from hiring additional staff in Western Australia, and may be forced to take steps to have work performed in other jurisdictions where compliance with the ITAR was possible as a result of the grant of an exemption there.
Raytheon also contended that if we refused its application for an exemption, so that it was unable to complete the Contracts, the interests of the State and particularly its economic interests, and in turn the interests of the Commonwealth, would be adversely affected. Mr Haseman suggested that a restriction on Raytheon's ability to work in ITAR related projects and the consequential decrease in Raytheon's workforce in Western Australia would have a significant impact on Western Australia's economy. The Commissioner questioned the impact on Western Australia's economy which Raytheon asserted would follow if the exemption were not granted. Given the relatively small number of staff employed by Raytheon in Western Australia, we think there is some merit in the Commissioner's submission. We have doubts as to whether the likely impact on Western Australia's economy would be significant. Ultimately, however, the quantum of the impact on Western Australia's economy is not determinative of the issue. Clearly the loss of the highly skilled staff employed by Raytheon, and a downsizing of Raytheon's Western Australian operations, would have some adverse impact on the Western Australian economy.
Support for the conclusion that there would be an adverse impact on Western Australia's interests and on its economy also came in the form of a letter to the Tribunal dated 14 November 2008 from the Hon Troy Buswell MLA, the then Treasurer and Minister for Commerce; Science and Innovation. Mr Buswell indicated that the State had provided a financial incentive to attract Raytheon to the Australian Marine Complex in Henderson and if Raytheon were to transfer its operations to a jurisdiction where it had been granted an exemption, this would represent an unfavourable outcome for the State's investment. Mr Buswell also indicated that Raytheon's role in projects relating to the Collins Class submarines is integral to the development of the defence industry sector in the State, and were it to transfer its operations, including its highly skilled personnel, to another jurisdiction, there would result a reduction in the local industrial base.

The interests served by the grant of an exemption will outweigh the detriment from the discriminatory conduct permitted by that exemption

We are of the view that the detriment which would flow from the discriminatory conduct, will be outweighed by the interests which will be served by the grant of the exemption. Raytheon is in the position where it is unable to comply with both the EO Act and with its obligations under the Agreements, including compliance with the ITAR. There is nothing it could reasonably be expected to do to avoid having to comply with the ITAR, if it wishes to continue to engage in the provision of defence systems. Its interests, and the various public interests which will be served by the grant of the exemption are, in our view, compelling.
In contrast, although we identified possible detriment which may flow from discriminatory conduct in which Raytheon may engage in reliance on the exemption, it was not possible for us to assess the gravity or extent of this detriment. At the same time, we take into account the fact that the order proposed by Raytheon, and which we made, requires that Raytheon take reasonable steps to avoid or reduce the adverse effect of any discrimination that might occur as a result of the existence of the exemption order. Mr Haseman referred to three means by which Raytheon intended to do this. First, where possible, Raytheon will obtain authorisation for its existing dual national and third country foreign national employees and contract workers to access ITAR Controlled Material, and for future agreements will seek 'up front' authorisation from the DDTC in relation to its dual national and third country foreign national employees and contract workers. Mr Haseman also indicated that Raytheon intends to engage in discussions with the DDTC to minimise the licensing burden, and to limit the amount of personal information it is required to supply to the DDTC, for future approvals.
Secondly, Raytheon will take steps to reduce, as far as possible, the number of employees and contract workers requiring access to ITAR Controlled Material. Mr Haseman considered that this would substantially reduce the potential for Raytheon to need to rely on the exemption.
Thirdly, Mr Haseman indicated that if it is necessary for Raytheon to rely on the exemption in order to discriminate against a current or prospective employee or contract worker on the ground of nationality or national origin, Raytheon will take reasonable steps to ensure that any employee adversely affected by the exemption order remains employed by Raytheon and does not suffer a reduction in wages, salary or opportunity for advancement. If an employee has to be moved from one project to another, Raytheon will take reasonable steps to explain the reason why that transfer has occurred. In the case of prospective employees who would otherwise have been acceptable candidates for employment, Raytheon will make all reasonable efforts to employ the person in another position which does not require access to ITAR Controlled Material.
The order we made also required that prior to taking any action permitted by the exemption, Raytheon assess the reasonableness of gaining a specific exemption (that is, an authorisation or approval) for a current or prospective employee or contract worker. In addition, Raytheon is required to provide its current and prospective employees with:
1)express notice that they may be adversely affected by the exemption if they are not an Australian national or hold dual nationality with another country apart from the US;
2)an explanation of the nature of the adverse effects on them of any action taken pursuant to the exemption order;
3)information about how they may apply for Australian citizenship;
4)information regarding their rights under the Racial Discrimination Act 1975 (Cth) and the EO Act; and
5)ongoing and regular anti-discrimination education and training.
Raytheon is also subject to similar obligations in relation to its contractors.
The order we made also requires Raytheon to implement comprehensive anti-discrimination policies governing all aspects of its work and workforce, with particular regard to discrimination on the ground of race. Raytheon provided evidence of its existing commitment to ensuring that its workplaces are free from discrimination, including the policies and programmes which it has implemented to avoid discrimination and encourage diversity.
We are fortified in our view that the interests served by the grant of the exemption in Western Australia outweigh the detriment likely to flow from the grant of the exemption order, by the fact that Raytheon has been granted an exemption from equal opportunity legislation in the other States (other than Tasmania where, at the time of the hearing, one had not been sought) and in the Australian Capital Territory. Similar considerations to those arising under s 135 of the EO Act are relevant to the grant of an exemption in those jurisdictions.

The terms of the exemption order

The Commissioner submitted that if an exemption were granted it should be limited to a period of three years, rather than the five year period sought by Raytheon. The Commissioner relied on the fact that Raytheon had been granted an exemption in other jurisdictions for three years rather than five years. However, in several of those jurisdictions, three years is the maximum period permitted for an exemption order. We consider that a five year term is appropriate for the order in this case. That period permits reasonable commercial certainty, while at the same time it requires the existence of the order to be reconsidered after a reasonable interval, so as to take into account whether there has been a change in circumstances which mean that an exemption is no longer warranted.
The Commissioner also submitted that the terms of the exemption order sought by Raytheon were broader than necessary because the order would apply to employees who do not require access to ITAR Controlled Materials. We do not accept this submission. The exemption order sought by Raytheon, and which we ultimately adopted, was expressed in narrow terms, so that the effect of the exemption order would be confined to those acts or omissions which were reasonably necessary for Raytheon to comply with its obligations deriving from the ITAR.
Raytheon submitted that the Tribunal should include within the exemption order the following term:
The Applicant is required to provide a written report to the Western Australian Equal Opportunity Commission every six months from the date of this exemption order, over the five year period specified in the order, detailing:
1)the steps it has taken to comply with the above conditions;
2)the number of persons affected by this exemption order, the nature of the effects, and the steps taken to redress any adverse effects; and
3)implementation and compliance generally with the terms of this exemption order.
The Applicant's compliance with these orders as demonstrated in its reports will be a factor considered by this Tribunal in connection with any future renewal of these orders.
The Commissioner submitted that if she were to be ordered to monitor compliance with the exemption order, then the order should specify what materials and information Raytheon would need to provide to the Commissioner on a periodic basis so that the Commissioner could monitor compliance with the exemption order. Alternatively, the Commissioner submitted that the exemption order should permit the Tribunal to monitor compliance with the terms of the exemption.
As we indicated to the parties at the conclusion of the hearing, we do not consider it appropriate to make an order containing a term of the kind set out above, for two reasons. First, the EO Act does not require nor contemplate that the Commissioner should have a role in monitoring compliance with exemption orders. Secondly, the creation of such a role for the Commissioner is likely to have a tendency to encourage applications for exemptions which are not properly justified, or which are in wider terms than can be justified, on the basis that monitoring by the Commissioner would be a panacea for any disadvantage caused by the grant of an exemption. That outcome would be undesirable. The preferable course is to grant exemptions in terms which excuse only that conduct which is demonstrably justified.
We do, however, consider it appropriate to include in the exemption order the statement that Raytheon's compliance with the exemption order will be relevant to any application for variation or renewal of this exemption in the future. Although that term of the order simply makes express what would otherwise be the case in any event, it nevertheless emphasises the importance of compliance with the exemption order.
On the basis of the reasons above we made the orders set out below.

Orders

The orders we made on 19 November 2008 as varied by these reasons are:
1.The correct applicant is Raytheon Australia Pty Ltd;
2.Pursuant to s 39(1)(e) of the State Administrative Tribunal Act 2004 (WA), leave is granted to Mr Kirk and Ms Priestly to appear for the applicant in these proceedings;
3.Pursuant to s 135(1) of the Equal Opportunity Act 1984 (WA) (EO Act), the Tribunal grants an exemption to Raytheon Australia Pty Ltd from the operation of s 37, s 39, and s 49 of the EO Act on the following conditions:
a)The exemption applies only in respect of actions or omissions which are reasonably necessary for Raytheon Australia Pty Ltd to meet the requirement of the Department of State of the United States of America, the United States Department of Commerce and United States Federal Aviation Authority, contained in or referable to the International Traffic in Arms Regulations and the Export Administration Regulations (the US Security Regulations), so far as those requirements apply directly or indirectly to work carried on or on behalf of, or at the request of, or under the control or supervision of, Raytheon Australia Pty Ltd;
b)For Raytheon Australia Pty Ltd to take the benefit of the exemption in relation to an action or omission which adversely affects an existing or potential employee or employee of a contractor, it must take reasonable steps to avoid or reduce the adverse effect; and
c)Prior to taking any action permitted by the exemption, Raytheon Australia Pty Ltd must:
i)assess the reasonableness of gaining a specific exemption for an employee, prospective employee or employee of a contractor who does not satisfy the US Security Regulations;
ii)provide all current and prospective employees with:
A)express notice that they may be adversely affected by the exemption if they are not an Australian national or if they hold dual nationality or citizenship;
B)a reasonable explanation in plain English of the nature of any adverse effects to them of any action;
C)information about how they may apply for Australian citizenship; and
D)information regarding their rights under the Racial Discrimination Act 1975 (Cth) and the EO Act, and in particular the complaints procedure under those Acts and the rights of aggrieved persons to take their complaints to the Commissioner for Equal Opportunity (WA) and the Australian Human Rights and Equal Opportunity Commission;
iii)provide all employees with ongoing and regular education and training in antidiscrimination, particularly race discrimination, and the internal and external procedures available to receive, investigate and resolve discrimination complaints and grievances and in particular those relating to race;
iv)provide to Raytheon Australia Pty Ltd's contractors:
A)express notice that the contractor's employees may be adversely affected by the exemption if they are not an Australian national or if they hold dual nationality or citizenship;
B)a document containing a reasonable explanation in plain English of the nature of the exemption that the contractor may provide to the contractor's employees; and
C)guidance to enable the contractor to conduct training in antidiscrimination and particularly race discrimination; and
v)implement comprehensive antidiscrimination policies governing all aspects of the work and workforce, including management, and with particular regard to race discrimination.
4.Order 3 made on 19 November 2008 is varied by deleting the reference to s 68 of the EO Act;
5.This exemption is for a term of five years commencing on 19 November 2008; and
6.Raytheon Australia Pty Ltd's compliance with these orders will be relevant to any application for variation or renewal of this exemption.

I certify that this and the preceding [74] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE J ECKERT, DEPUTY PRESIDENT

[2008] WASAT 266

21 OCTOBER 2008