RAYTHEON AUSTRALIA P/L - [2014] SAEOT 5

EQUAL OPPORTUNITY TRIBUNAL
(District Court Administrative and Disciplinary Division)
In the Matter of AN APPLICATION FOR EXEMPTION UNDER THE EQUAL OPPORTUNITY ACT 1984
RAYTHEON AUSTRALIA P/L
[2014] SAEOT 5
Judgment of Her Honour Judge Cole, Member Ms A Bachmann and Member Ms H Jasinski
13 October 2014
HUMAN RIGHTS - DISCRIMINATION - GROUNDS OF DISCRIMINATION
Application for an exemption from the provisions of s 52 and s 54 of the Equal Opportunity Act 1984 (SA). The applicant seeks an exemption so as to lawfully discriminate against its prospective employees and contractor workers, on the grounds of nationality. The applicant's business activities require access to highly sensitive defence related material controlled by the government of the United States of America. The exemption is sought on the basis of the likely impact on the defence capacity of Australia, and the public interest.
Held: The exemption sought is in the public interest. The exemption is granted for a period of three years subject to conditions.
Equal Opportunity Act 1984 (SA) ss 5, 52, 54, 29, 92; Defence Trade Controls Act 2012 (Cth), referred to.
BAE Systems Australia Ltd [2008] SAEOT 1; Pultney Grammar School v Equal Opportunity Tribunal, Walford Anglican School for Girls Inc & Annesley College [2007] SASC 308; Raytheon Australia Pty Ltd [2008] SAEOT 3, considered.

RAYTHEON AUSTRALIA P/L
[2014] SAEOT 5

On 22 April 2014, Raytheon Australia Pty Ltd (“Raytheon”) applied pursuant to s 92 of the Equal Opportunity Act 1984 (SA) (“the Act”) for an exemption from the provisions of s 52 and s 54 of the Act for a period of three years. In a sense, this is an application for the “renewal” of an exemption from those sections which was granted to Raytheon in 2011, which, in turn, followed an exemption granted in 2008.
This Tribunal heard the matter on 24 June 2014. Affidavit evidence from Mr Waddoups, Director of Legal Affairs and Company Secretary of Raytheon, and from Mr Evans, General Manager, Air Warfare Destroyer for Raytheon, was tendered on behalf of the applicant. The exemption sought was granted for a period of three years beginning on 4 July 2014. We now set out our reasons for granting the exemption.
History
In his affidavit, Mr Waddoups, the Director of Legal Affairs and Company Secretary of Raytheon said:[1]
9.Raytheon Australia maintains offices and facilities in Canberra, Sydney, Brisbane, Melbourne, Adelaide, Perth and many smaller locations such as Exmouth (WA), Nowra (NSW) and Amberley (QLD). Raytheon Australia is a medium to large enterprise with 2013 revenue of over AU$400 million and more than 1200 employees. Similar or increased sales are expected for the near future and the Company is projecting growth in employee numbers in future years.
10.Raytheon Australia has numerous contracts for the supply of defence systems, equipment or services to the DMO,[2] either as a prime contractor or as a sub-contractor to other parties (the Contracts). The Contracts represent purchasing decisions, including product and technology selections, by the DMO from among a range of defence products, services and suppliers available worldwide.
11.In order to supply the products, services and technology selected by the DMO under most of the Contracts, Raytheon Australia must have access to relevant defence-related technology and information of US origin, including that available through US companies such as Raytheon Company and other major unaffiliated US aerospace and defence companies.
12.The majority of the Contracts require Raytheon Australia to establish and maintain contractual arrangements with a large number of other US companies, such as subcontractors or suppliers, and/or with the appropriate US Government agencies.
13.Raytheon Australia also relies on defence-related technology and information provided by US Government agencies, defence-related drawings, manuals and specifications provided by the Australian Government and on project specific data developed in Australia in order to complete the Contracts.
[1] Exhibit A1, Affidavit of Mr Gregory Lee Waddoups sworn on 9 April 2014.
[2] DMO is the Defence Materiel Organisation, which is a Commonwealth Government agency.
The US regulates the export and transfer of its defence technology. Mr Waddoups outlined some of the relevant regulation:
17.Under US law, the US President is authorised to control the export, re-export, transfer, brokering and temporary import of defence items that are subject to US jurisdiction.[3] The President has delegated his power to promulgate regulations under the Arms Export Control Act (AECA) to the US Secretary of State,[4] who in turn has authorised other officials and agencies within the US Department of State, including the DDTC, to issue and administer regulations implementing the AECA, These regulations are known as the International Traffic in Arms Regulations (ITAR).[5] A complete copy of the ITAR is at Tab 2 of Exhibit GLW.
…
24.The ITAR in various provisions seeks to extend its application beyond the “foreign person” who first receives ITAR Controlled Material (ie Raytheon Australia) to any subcontractor, supplier or end user (for example, the Australian Department of Defence) who later receives that ITAR Controlled Material.[6]
[3]    Section 38, Arms Export Control Act, 22 US Code 2778 (AECA).
[4]    Executive Order of the [US] President, No. 11958 (January 18, 1977), as amended.
[5]    22 CFR, Parts 120-130 (ITAR).
[6]    See 22 CFR sections 127.1(c), 123.9(b) & (c), 123.10(a) and 124.8(5) (ITAR).
The ITAR controls access to the defence technology material to both the entity which first receives it, in this case Raytheon, and also to any subcontractor, supplier or end user. Mr Waddoups said, in his affidavit:
26.Accordingly, Raytheon Australia is bound from both a regulatory and contractual perspective to comply with all applicable US laws and regulations relating to the ITAR Controlled Material it receives. Failure to comply with the ITAR can result in Raytheon Australia being denied access to ITAR Controlled Material and could expose the Company, as well as its US Sponsors, to substantial penalties, both civil and criminal, under US law (see paragraphs 68-81 below).
In order to comply with the ITAR, Raytheon needs to be able to obtain certain information from prospective employees and contract workers. Mr Waddoups said, in his affidavit:
31.Raytheon Australia must obtain personal information from prospective and existing employees and contract workers in order to determine their eligibility to access ITAR Controlled Material under the Agreements.[7] This personal information includes:
(a)     current and past citizenship;
(b)     country of birth;
(c)     current and past passports held; and
(d)     current and past residential status in any country other than the US, (collectively, Personal Information).[8]
[7]    See 22 CFR section 126.18 (ITAR).
[8]    See, eg, section 3.5.2.d.1-4 of the DDTC Agreements Guidelines (DDTC vetting of third country and dual nationals).
In his submissions, Mr Arthur said that recent amendments to the ITAR have eased the restrictions on the transfer of the defence technology material to a limited extent, and there was evidence of this in Mr Waddoup’s affidavit.[9] A Cooperation Treaty between Australia and the US has also been implemented in Australia by way of the Defence Trade Controls Act 2012 (Cth).[10] We are satisfied, on the basis of the affidavit evidence, that neither the amendments to the ITAR nor the Defence Trade Controls Act 2012 (Cth) overcomes Raytheon’s need for an exemption from the Act.
[9] Exhibit A1, paras 33-53.
[10] Exhibit A1, paras 59-67.
Law
The Act provides, in s 92:
92—The Tribunal may grant exemptions
(1)The Tribunal may, on application under this section, grant exemptions from a provision of this Act in relation to—
(a)     a person, or class of persons; or
(b)     an activity, or class of activity; or
(c)     circumstances of a specified nature.
(2)An exemption under this section—
(a)     may be granted unconditionally or on conditions; and
(b)     may be revoked by the Tribunal on breach of a condition; and
(c)     subject to revocation, remains in force for a period, not exceeding three years, determined by the Tribunal, but may be renewed from time to time for a further period, not exceeding three years, determined by the Tribunal.
…
(6)In determining an application under this section, the Tribunal may—
(a)     have regard (where relevant) to the desirability of certain discriminatory actions being permitted for the purpose of redressing the effect of past discrimination; and
(b)     have regard to other factors that the Tribunal considers relevant.
Raytheon sought an exemption from subsections 52 and 54 of the Act, which provide:
52—Discrimination against applicants and employees
(1)It is unlawful for an employer to discriminate against a person on the ground of race—
(a)     in determining, or in the course of determining, who should be offered employment; or
(b)     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 race—
(a)     in the terms or conditions of employment; or
(b)     by denying or limiting access to opportunities for promotion, transfer or training, or to other benefits connected with employment; or
(c)     by dismissing the employee; or
(d)     by segregating the employee from persons of other races; or
(e)     by subjecting the employee to other detriment.
…
54—Discrimination against contract workers
(1)This section applies to a principal for whom work is done by persons (contract workers) under a contract between the principal and another where the contract workers are employed or engaged by a person other than the principal.
(2)It is unlawful for a principal to enter into a contract or arrangement with another for work to be performed by contract workers under which a person is to discriminate against a contract worker on the ground of race.
(3)It is unlawful for the principal to discriminate against a contract worker on the ground of race—
(a)     in the terms or conditions on which the contract worker is allowed to work; or
(b)     by not allowing the contract worker to work; or
(c)     by denying or limiting access to a benefit connected with the employment or position concerned; or
(d)     by subjecting the contract worker to other detriment.
In s 5 of the Act, “race” is defined to mean:
5—Interpretation
(1)In this Act, unless the contrary intention appears—
…
race of a person means the nationality (current, past or proposed), country of origin, colour or ancestry of the person;
…
In Pulteney Grammar School v Equal Opportunity Tribunal, Walford Anglican School for Girls Inc & Annesley College,[11] White J, with whom Nyland J and Kelly J agreed, said this:
[14]Looked at generally it can be seen that the EOA seeks to establish norms of social conduct. It does so by making discrimination on the specified grounds of sex, sexuality, marital status and pregnancy unlawful.[12] The grant of an exemption pursuant to s 92 has the effect that certain conduct which would otherwise be unlawful is to be permitted. While it is the policy of the EOA that there may be a derogation of its prohibitions in some circumstances, the effect of an exemption is to qualify the norms of conduct which it seeks to establish. This is an important factor to be considered by the Tribunal in the exercise of its discretion to grant an exemption. It leads naturally to the inference that the Tribunal must, in considering an application for an exemption, have regard to the general objects of the EOA and must be satisfied that proper grounds for the exemption are established. The applicant has the onus (on the balance of probabilities) of establishing the facts relied upon for such grounds and of persuading the Tribunal that the grant of an exemption is appropriate. The grounds for an exemption will usually be found in one or more of three circumstances: the exemption is desirable, if not necessary, to achieve a purpose of the EOA; the general prohibition would be unreasonably harsh or burdensome in the applicant’s particular circumstances; or there is some wider public interest (perhaps to be found in other legislation) which the grant of the exemption will serve. The redress of the effects of past discrimination is an example of the first purpose. I do not intend by this to state exhaustively the circumstances in which the grant of an exemption may be appropriate. The circumstances of particular cases may reveal other occasions in which the grant of an exemption will be appropriate. It is to be expected, however, that an applicant for an exemption will need to establish more than that compliance with the relevant prohibition is inconvenient or irksome.
[11] [2007] SASC 308.
[12] Equal Opportunity Act 1984 (SA), s 29(1).
In considering this application for an exemption, we bear in mind the norms which the Act seeks to establish with respect to race as that word is defined in s 5 of the Act. We bear in mind that the grant of an exemption would qualify those norms.
Mr Arthur submitted that access to ITAR controlled material is fundamental to Australia’s defence preparedness. Ongoing contracts have been entered into, in reliance upon the past exemptions. Raytheon would be unable to perform and complete its contracts with DMO if the exemption now sought is not granted. In addition, jobs would be lost in South Australia, and there would be an adverse impact upon the building of a capable defence industry base in Australia.
Mr Arthur pointed out that the ITAR restrictions are an external limitation imposed upon Raytheon in the course of its business,[13] and we agree that this weighs in favour of the granting of the exemption sought.
[13] See BAE Systems Australia Ltd [2008] SAEOT 1 at [53]; Raytheon Australia Pty Ltd [2008] SAEOT 3 at [67].
Mr Arthur said, in his written submissions:
7.16The public interest considerations that are relevant to determining the present application have previously been applied by this Tribunal when granting exemptions in the following cases:
BAE Systems Australia Ltd [2008] SAEOT 1;
Raytheon Australia Pty Ltd & Ors [2008] SAEOT 3;
Raytheon Australia Pty Ltd [2011] SAEOT 6.
7.17A number of decisions in other Australian jurisdictions have also held that the public interest considerations of national security and employment are sufficient to justify exemptions from discrimination legislation. These cases include:
Boeing Australia Holdings Pty Ltd [2003] QADT 21;
ADI Limited (Government Gazette of the State of New South Wales dated 11 February 2005);
Boeing Australia Holdings Pty Ltd (Government Gazette of the State of New South Wales dated 1 July 2005);
ADI Limited [2005] WASAT 259;
Raytheon Australia Pty Ltd and Ors [2008] QADT 1;
Raytheon Australia Pty Ltd and Commissioner for Equal Opportunity [2008] WASAT 266 (19 November 2008);
ADI Limited [2004] VCAT 1963;
Boeing Australia Holdings Pty Ltd [2007] VCAT 532;
Raytheon Australia Pty Ltd [2007] VCAT 2230;
ADI Limited [2007] VCAT 2242;
BAE Systems Australia Ltd [2008] VCAT 1799;
Raytheon Australia Pty Ltd and Commissioner for Equal Opportunity [2008] WASAT 266 (19 November 2008);
Raytheon Australia Pty Ltd & ACT Human Rights Commission [2008] ACTAAT 19;
Thales Australia Limited and ADI Munitions Pty Ltd [2011] VCAT 729.
Raytheon Australia Ltd (Anti-Discrimination Exemption) [2011] VCAT 796.
BAE Systems Australia Ltd (Anti-Discrimination Exemption) [2012] VCAT 349;
Thales Australia Limited and Commissioner for Equal Opportunity [2012] WASAT 222; and
Raytheon Australia Pty Limited and Commissioner for Equal Opportunity, orders of State Administrative Tribunal of Western Australia dated 8 November 2013 (unreported).
Conclusion
Having regard to all of the evidence and submissions put before us, and having regard, in particular, to the likely impact on the defence capacity of Australia in the event that the exemption were to be refused, we determine that it is in the public interest that the exemption sought be granted.
For the foregoing reasons, the Tribunal has made the following order:
Under the provisions of section 92(1) of the Equal Opportunity Act 1984 (SA) (the Act), but for the purposes only of meeting the Applicant’s contractual obligations and the International Traffic in Arms Regulations (ITAR), the Applicant is granted an exemption from the provisions of sections 52 and 54 of the Act for a period of three years commencing on 4 July 2014 in the following terms:
A.Pursuant to section 92(1) of the Act, the Applicant is exempt from compliance with the provisions of sections 52 and 54 of the Act to the extent that it may:
1.1    request Personal Information from existing and potential employees and contract workers and require employees to provide details of any changes to their Personal Information;
1.2    take the Personal Information into account in determining who should be offered employment or contract work in areas requiring access to ITAR Controlled Material and when making decisions as to the participation of employees or contract workers in such work;
1.3    maintain records of the Personal Information of all employees and contract workers who have or may have access to ITAR Controlled Material;
1.4    ensure that ITAR Controlled Material is disclosed only to persons who are authorised by ITAR controls to receive it;
1.5    impose limitations or prohibitions on persons of particular nationalities having access to ITAR Controlled Material;
1.6    disclose to other defence contractors for whom the Applicant performs work and to the USA and Australian governments, the Personal Information of all employees and contract workers who will have access to ITAR Controlled Material in the performance of their work; and
1.7    establish security systems which will prevent the unauthorised re-export or re-transfer of ITAR Controlled Material.
B.This exemption is granted for a period of three (3) years commencing on 4 July 2014 subject to the following conditions:
1.1    It will apply only to conduct by the Applicant where:
(a)that conduct is necessary to enable it to enter into, perform and ensure compliance with contractual undertakings and the ITAR where access to ITAR Controlled Material is required for performance of contracts;
(b)it has taken all steps that are reasonably available (including steps which might be taken in negotiating and performing the terms of their agreements with contractors in the USA) to avoid the necessity for engaging in conduct which would otherwise be in breach of sections 52 and 54 of the Act.
1.2    Where, in the exercise of this exemption, an employee or contract worker is moved from a project involving the use of ITAR Controlled Material to any other work controlled by the Applicant or any of its related entities, the Applicant must through a duly authorised officer explain to the person why he or she is being transferred and must otherwise take all reasonable steps to avoid or limit harm or loss to that person.
1.3    Where the Applicant uses a system of security passes to reflect the fact of access to ITAR Controlled Material or levels of access to any security-sensitive material by employees and contract workers, the passes may be coded but not in such a way as to identify the nationality of the person or the reasons for that person’s level of access.
1.4    All information relating to security passes, security clearance levels and access to ITAR Controlled Material shall be restricted to designated authorised Company personnel with responsibility for export/import operations, Human Resources, legal, compliance and similar functions, or their properly appointed nominee, on a “need to know” basis.
C.On 31 December 2014, and every six months thereafter, for the duration of this exemption, the Applicant must report to the Equal Opportunity Commissioner on its compliance with the exemption requirements and changes in its procedures to reflect amendments to the ITAR, and as to how its employees and contractors are affected.
In this Exemption Order:
“Applicant” means Raytheon Australia Pty Ltd.
“ITAR Controlled Material” means defence articles, technical data and defence services regulated by the ITAR.
“Personal Information” includes:
(a)current and past citizenship;
(b)country of birth;
(c)current and past passports held; and
(d)current and past residential status held in any country other than the USA or Australia.