Raytheon Australia P/L & Ors
[2008] SAEOT 3
•31 March 2008
EQUAL OPPORTUNITY TRIBUNAL
(District Court Administrative and Disciplinary Division)
In the Matter of APPLICATIONS FOR EXEMPTION FROM CERTAIN PROVISIONS OF THE EQUAL OPPORTUNITY ACT 1984
RAYTHEON AUSTRALIA P/L & ORS
[2008] SAEOT 3
Reasons for Decision of His Honour Judge Beazley, Member Ms A Bachmann and Member Mr D Shetliffe
31 March 2008
DISCRIMINATION LAW
Application for exemption from the operation of sections 52, 54 and 103(1) of the Equal Opportunity Act 1984 (S.A.) - Exemptions sought to permit discrimination on grounds of nationality or national origin of employees, prospective employees and contract workers - The applicants, having contracted with the Australian Department of Defence, require access to sensitive technology controlled by the government of the United States of America. In order to access such technology the applicants are obliged to discriminate against certain persons on the basis of their nationality - Whether in the exercise of the power to exempt under section 92 of the Act the Tribunal is entitled to have regard to broader considerations including private commercial interests unrelated to issues of discrimination - Balancing of interests in determining whether there is a rational basis for the discriminatory conduct - Whether administrative mechanisms available to avoid discrimination - Application granted upon conditions.
Equal Opportunity Act 1984 (SA) ss5, 52, 54, 92 and 103(1), referred to.
Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR at [15];; R v The Australian Broadcasting Tribunal (1979) 144 CLR 45 at 50; Commissioner for Equal Opportunity v ADI Limited [2007] WASCA 261; Pulteney Grammar School v Equal Opportunity Tribunal & Ors [2007] SASC 308, applied.
Re: Raytheon Australia Pty Ltd & Others [2008] QADT 1; Boeing Australia Holdings Pty Ltd (Anti-Discrimination Exemption) [2007] VCAT 532; Exemption application re: Raytheon Australia Pty Ltd and Ors [2007] VCAT 2230; BAE Systems Australia Ltd [2008] SAEOT 1; Exemption application re: Boeing Australia Holdings Pty Ltd & Ors [2003] QADT 21; Re: Raytheon Australia Pty Ltd & Others [2008] QADT 1; Qantas Airways Ltd v Christie (1998) 193 CLR 280 at [34], considered.
RAYTHEON AUSTRALIA P/L & ORS
[2008] SAEOT 3Introduction
Raytheon Australia Pty Ltd and its subsidiaries, Aerospace Technical Services Pty Ltd, Australian Maritime Surveillance Pty Ltd and Aeronautical Consulting, Training and Engineering Pty Ltd (“the applicants”) all seek, by application filed on 13 April 2007, orders pursuant to s 92(1)(b) of the Equal Opportunity Act 1984 (SA) (“the Act”) exempting them from the requirements of ss 52, 54 and 103(1) of the Act insofar as those sections prohibit them from taking into account the nationality and national origin of their respective current and prospective employees and contract workers.
The Commissioner for Equal Opportunity (“the Commissioner”) intervened, as of right, by counsel at the hearing, to oppose the application for exemptions.
As will appear from these reasons the applicants have entered into contractual arrangements with the Australian Government, through the Department of Defence, to commercially supply defence industry equipment, technology and services.
In order to meet their contractual obligations, the applicants are required to access defence technology emanating from the United States of America. To obtain such access, the applicants are contractually obliged by the suppliers of such technology, to comply with certain legislation enacted in the United States of America, and in particular, the United States International Traffic In Arms Regulations; and the Export Administration Regulations (collectively referred to as the “ITAR”). The “ITAR” is the means by which the United States seeks to maintain control over its defence technology and, by denying access to such technology by certain proscribed countries and their nationals; whether directly or indirectly by United States based suppliers or foreign based third parties.
The immediate effect of the “ITAR” is that the defence technology cannot be transferred to a person in a third country or to a national of a third country except as authorised by the U.S. Department of State. Over the years the authorisation process has been streamlined. It is the applicants’ case that notwithstanding the freeing up of the process, the major obstacle which remains, is the means by which they must establish the “nationality” of employees and contract workers, so as to comply with the basic requirement of the “ITAR”. They concede that in order to elicit that information they may well engage in discriminatory conduct in the manner of their advertising, requests for personal information about employee backgrounds; and that from information so gained, it is likely to influence the appointment, redeployment and termination of such personnel.
In consequence of the “ITAR”, various contractors providing services to the Australian Defence Department (the “ADD”) have made applications for exemptions from the Act, and from comparable legislation in interstate jurisdictions. Such applications have all succeeded, although the conditions attaching to such exemptions have to some extent varied. The difficulties faced by the applicants are not therefore unique to them, nor indeed to Australia.[1]
[1] See Commissioner for Equal Opportunity v ADI Limited (2007) WASCA 261; BAE Systems Australia Limited (2008) SAEOT 1; Boeing Australia Holdings Pty Ltd (2007) VCAT 532; Boeing Australia Holdings Pty Ltd & Ors (2003) QADT 21 together with exemption orders made under the Anti-Discrimination Act 1977 (NSW) on behalf of Boeing Australia Holdings Pty Ltd on 11 February 2005 and ADI Limited & Ors on 1 July 2005.
The successful contractors in those applications in Queensland, New South Wales, Victoria, Western Australia and, more recently in this State are respectively competitors of the applicants for the supply of defence services to the “ADD”. The applicants have sought similar exemptions in Victoria, Queensland, New South Wales and the Australia Capital Territory. On 17 October 2007, after the completion of the within hearing, these applicants, in an uncontested hearing before the Victorian Civil and Administrative Tribunal, were granted exemptions from comparable legislation namely the Equal Opportunity Act 1995 (Vic).[2] Exemptions upon the same conditions as have been sought herein, were also granted to the present applicants on 25 January 2008 by the Queensland Anti-Discrimination Tribunal.[3]
The Act
[2] Raytheon Australia Pty Ltd (2007) VCAT 2230.
[3] Raytheon Australia Pty Ltd & Ors (2008) QADT 1.
(a) The prohibition against discrimination
Division II of Part IV of the Act prohibits discrimination in employment on the ground of race. Section 56(2) enables an application to be made for an exemption from this Division in the circumstances where “it is a genuine occupational requirement that a person be of a particular race”. In this case the applicants did not seek to argue that this exemption applied. c.f. Qantas Airways Ltd v Christie (1998) 193 CLR 280 at [34].
Section 5 of the Act defines “race” as -
“race of a person means the nationality, country of origin, colour or ancestry of the person or persons or of any other person with whom he or she resides or associates”.
The relevant prohibition against discrimination in employment is given effect as follows:
“Section 52 -
(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;
(b) by denying or limiting access to opportunities for promotion, transfer or training, or to any other benefits connected with employment;
(c) by dismissing the employee;
(d) by segregating the employee from persons of other races;
or
(e) by subjecting the employee to any other detriment”.
“Section 54 -
(1) This section applies to a principal for whom work is done by contract workers in pursuance of a contract between the principal and the employer of those contract workers.
(2) It is unlawful for the principal to enter into a contract or arrangement with an employer or contract workers under which the employer is to discriminate against a person 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 which the contract worker is allowed to work;
(b) by not allowing the contract worker to work;
(c) by denying or limiting access to any benefit connected with employment;
or
(d) by subjecting the contract worker to any other detriment”.
“Section 103 –
(1) A person must not publish or cause to be published an advertisement that indicates an intention to do an act that is unlawful by virtue of this Act.
Penalty: Division 8 Fine”.
(b) The Power to grant exemptions
The applicants seek an exemption, from the prohibitions in these sections, pursuant to s 92 of the Act which provides as follows:
“(1) The Tribunal may, upon application under this section, grant exemptions from or the provisions of this Act in relation to:
(a) a person, or class of persons;
(b) an activity, or class of activity;
(c) any circumstances of a specified nature.
(2) An exemption under this section:
(a) may be granted unconditionally or upon conditions;
(b) may be revoked by the Tribunal upon breach of the conditions;
and
(c) subject to revocation, remains in force for a period, not exceeding 3 years, determined by the Tribunal, but may be renewed from time to time for a further period, not exceeding 3 years determined by the Tribunal.
(3) An application for the grant, renewal or revocation of an exemption may be made to the Tribunal by the Commissioner or any other person.
(4) …
(5) …
(6) In determining an application under this section, the Tribunal may –
(a) have regard (where relevant) to the desirability of certain discriminatory actions being committed for the purpose of redressing the effects of past discrimination;
and
(b) have regard to any other factors that the Tribunal considers relevant.
(c) The scope of the discretion to exempt in section 92(6) of the Act
In s 92(6) of the Act Parliament set out the matters to which this Tribunal may have regard in determining whether to grant an exemption.
While it expressly referred, in subsection (a) of that subsection, to the purpose of redressing the effect of past discrimination; it expressed in quite general terms, in subsection (b), “any other factors that the Tribunal considers relevant”.
There was until recently some debate about the proper construction of subsection 92(6)(b).
Indeed in her written submissions, which were apparently prepared before the recent decision of the Full Court of the Supreme Court in Pulteney Grammar School v Equal Opportunity Tribunal and Others [2007] SASC 308, the Commissioner submitted that subsection (b) ought be construed narrowly so as to advance the sole purpose of the legislation, which she submitted was to prevent discrimination. She submitted, that where the discrimination arose from the manner in which any business chose to conduct its operations, no exemption ought be granted simply because it is of commercial benefit to an applicant, because that benefit could not be said to advance the purpose of the Act. By contrast, the applicants referred to the unqualified nature of the statutory discretion contained in that subsection.
It is trite that such a discretion must be exercised judicially, and that where, as in subsection (b) the factors to which the Tribunal may have regard, “are not expressly stated, they must be determined by implication from the subject matter, scope and purpose of the Act”.[4]
[4] Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at [15] and R v The Australian Broadcasting Tribunal (1979) 144 CLR 45 and 50.
It does not follow however that the commercial benefit to an applicant is irrelevant to the exercise of the discretion.
The scope of s 92, and comparable legislation in other states was recently considered in the respective cases of Pulteney Grammar School v Equal Opportunity Tribunal and Others [2007] SASC 308; and Commissioner for Equal Opportunity v ADI Limited [2007] WASCA 261 (this latter judgment of the Court of Appeal in Western Australia being delivered on 28 November 2007, again after the completion of the within hearing).
In the Pulteney Grammar case, White J. for the Full Court referred to the long title of the Act. His Honour noted that the prevention of discrimination was not the sole object of the Act, but that its objects included “the promotion of equality of opportunity between the citizens of the State, and the facilitation of the participation of citizens in the economic and social life of the community”. The Court concluded that the purposes of the Act went beyond the prevention of discrimination simpliciter. His Honour said at [33]:
“In my opinion it is also natural to construe the EOA as intending to achieve some larger purpose than the mere elimination of discrimination for its own sake. The elimination of discrimination is a means of achieving the wider purpose of equality of opportunity amongst all citizens of the State”.
Although His Honour made it clear that he did not intend to state exhaustively the circumstances which would justify the grant of an exemption he referred to three circumstances as follows, at [14]:
“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 applicants 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 circumstances of particular cases may reveal other occasions in which the grant of an exemption will be appropriate”.
The Western Australian Court of Appeal subsequently in the ADI case determined that a similar form of exemption, to that sought by the applicants have, was properly granted.
Martin C.J. for the Court construed the relevant discretion in a manner similar to White J. stating at [72]:
“In summary, in my opinion when exercising the discretion conferred upon it by [the relevant W.A. section] 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”.
These respective factors were considered by this Tribunal, as differently constituted, in granting an exemption in its recent decision in BAE Systems Australia Ltd [2008] SAEOT 1. That Tribunal did not have the benefit of the reasons of the Western Australian Court of Appeal in the ADI case.
The issues
The applicants, in seeking exemptions from the provisions of the Act, concede that any such exemption ought be restricted so as to cause the minimum disruption by way of discriminatory conduct. They submit that a reasonable form of exemption is one which will place them in a position merely to comply with the specific requirements of the laws of the United States as detailed in the “ITAR”. The Commissioner very properly conceded that the applicants have no control over nor input into the decision made by “the ADD” to employ United States defence technology in its defence systems.
The Commissioner submitted quite correctly that great care must be exercised before any exemption is granted, including exploring whether alternative mechanisms are available to the applicants, because the consequence of the grant of such exemptions is the erosion of individual rights. She suggested that the present application is distinguishable from those heard in other jurisdictions previously, because policy changes, recently effected by the Australian and United States Governments, have administratively improved access to the technology. The Commissioner queried whether there was any need for an exemption. She submitted that those recent policy changes have had the effect of administratively exempting contractors, such as the applicants, from the discriminatory effects of the obligations in the “ITAR”.
In essence the dispute centred upon:
1.Whether the applicants needed an exemption at all in light of administrative changes entered into by the respective U.S. and Australian Governments, and which are designed to expedite approvals.
2.If such exemption was necessary and justified on the evidence, the scope of the exemption.
The Commissioner abandoned written submissions to the effect that the applications were inconsistent with both the Racial Discrimination Act 1975 (Commonwealth) and the Workplace Relations Act 1996 (Commonwealth).
The evidence
A large bundle of documentary evidence was tendered by the applicants in support of their application. That evidence was principally contained in the affidavit of Scott Leigh Jones sworn 19 March 2007. Mr Jones, the applicants’ Director of Legal Affairs, was cross-examined as to whether the applicants had other administrative mechanisms available to them to avoid the requirements of the “ITAR”.
He accepted that the “ADD”, independently of the “ITAR”, does impose on some contractors the obligation for such contractors and their employees to obtain security clearances from the “ADD”.
Mr Jones conceded that by letter dated 10 October 2006, from Mr Hillen of the U.S. State Department, (“the Hillen letter”) the United States Government had indicated that it would permit access to be given to individuals who had already received an “ADD” security clearance; are not nationals or dual nationals of proscribed countries, and had a valid need to know.
He said however that the implementation of this new policy does not provide an adequate solution for the applicants.
The new policy does not apply to a national of a proscribed country even if such a person had a valid security clearance from the “ADD”. In addition the U.S. Department of State retained a power of veto, notwithstanding that an individual otherwise satisfied the criteria in the Hillen letter. As to implementing an obligation that all employees, whether existing or prospective, must obtain an “ADD” security clearance, Mr Jones explained that such a demand may be more onerous than compliance with the “ITAR”. He said that many of the applicants’ employees did not need an “ADD” security clearance to undertake their work currently; and experience showed that to obtain such clearances may take several months. He said that there are some positions where a security clearance, is not required, but compliance with the “ITAR” is. He expressed the view that an “ADD” security clearance is more intrusive for employees than the “ITAR” requirements.
He said that timing could be crucial, on a case-by-case basis. He said it may be necessary to employ a highly skilled individual on an urgent basis. Such skills are highly sought after, and the contract work cannot be held up to await an “ADD” security clearance.
He further explained that in the past the question of a security clearance did not present a problem. The applicants only had a small work force initially, and quite fortuitously, all had previously obtained the relevant security clearances. That situation, he said, is to be contrasted with the need for an expanded workforce both from within and out of Australia in the future. He said that some of these were neither nationals of Australia nor the United States. Many of them would not require an “ADD” security clearance to perform their work.
Further he opined that security enquiries had intensified dramatically since the events of 11 September 2001, and that this explained the long delays in obtaining such clearances.
Mr Scott was pressed about other mechanisms which could be employed to avoid the consequences of the “ITAR”. He indicated that the applicants would identify and thereby reduce the number of employees and contract workers who actually needed access, and would encourage their parent company to press the U.S. Government into being more selective about the amount of technology that needed to be classified within the “ITAR”. The former had the negative effect that those permitted access would need to be identified, by means of a badge, and indeed those “special employees” would be placed on lists. All of these approaches did not overcome the bare minimum prerequisite that the applicants were obliged to ensure that an employee or contract worker was not a national or dual national of a proscribed country.
In addition the applicants tendered by consent an affidavit of Michael John Ward, sworn 10 September 2007. Mr Ward, the applicants’ General Manager – Strategy, deposed that the applicants presently had an Australia-wide workforce of over 1200 persons. He deposed to the various projects the applicants have now and will in the future have in South Australia. Some of those projects were not security sensitive and did not require access to the type of technology, the subject of the “ITAR”. Of those that did, he said that from a practical point of view there was no alternative other than to ask questions of employees as to their respective nationality. He recognised that the consequence of failing to get the approval of the State Department for an employee was, at a minimum, that access to the technology by such an employee had to be prohibited. Further, and in all probability, such prospective employees would have their applications rejected. He asserted that without an exemption the applicants will be forced to relocate their staff to other jurisdictions including those interstate jurisdictions where exemptions have been granted.
An affidavit of Edward Krauland, sworn 19 March 2007 was also tendered. Mr Krauland, a U.S. Attorney practising in Washington D.C. deposed to those provisions of the United States Legislation which have the effect of restricting access to US Technology and contained in the Arms Export Control Act, the International Traffic In Arms Regulations and the Export Administration Regulations.
He pointed to an ambiguity in the United States Legislation as to the meaning of the word “National”. He opined that the way in which it was treated by the Department of State was to include the place of birth, the notion of citizenship; the question of whether a person has active passports from other countries; and, potentially, even somewhat less obvious ties with proscribed countries.
The applicants also tendered letters of support from the Chief Executive Officer of the Australian Defence Material Organisation dated 29 August 2007; the Acting Deputy Premier of the State dated 13 September 2007, and a written statement released by the Prime Minister of Australia dated 5 September 2007 foreshadowing administrative changes between Australia and the United States for the transfer of US defence technology.
On 5 September 2007 the Australian Prime Minister announced the execution of the Australian-United States Treaty on Defence Trade Co-operation. The treaty was intended “to cut red tape and simplify processes for sharing equipment, information and technology between Australian and US Defence Companies”. It had not at the date of hearing been ratified.
While it is not necessary for us to consider the effect of the Treaty while it remains unratified, we note that third country nationals who do not hold Australian nationality will not be permitted access under the treaty without the prior authorisation of the US and Australian governments.
The Facts
As there was no dispute as to the balance of the evidence tendered on behalf of the applicants, the following narrative of the facts represents our findings.
Each of the applicants is incorporated in Australia and is a subsidiary of The Raytheon Company, a U.S. Corporation. Despite their US parent being a long established defence contractor with approved access to the US secret defence technology, each of the applicants is treated for the purposes of U.S. law as a foreign entity. The applicants, who presently employ 200 personnel in South Australia, almost exclusively source their work from the “ADD”. It is expected that the applicants will in due course employ approximately 350 employees in South Australia, to undertake the work allocated to them by the “ADD”.
The decision to employ U.S. protected information and technology was solely that of the “ADD”. Neither the applicants nor their US parent had any control over the choice of US technology.
The applicants are the prime systems integrator engaged on major defence projects. That role, described as “the control nervous system”, involves the integration of highly complex technology. If not exempted, it would be difficult for the “ADD” to obtain an alternative prime integrator without substantial delays to at least one of the major defence contracts to be undertaken in South Australia. It is neither necessary nor desirable to further detail the nature of the work contracted to be performed by the applicants.
The work undertaken by the applicants locally and their parent company in the United States is by its nature, security sensitive. We accept that it is essential that the applicants gain access to protected defence technology and information from US Government Agencies in order to properly undertake the work required by their contracts with the “ADD”. The US parent, The Raytheon Company, which “sponsors” the applicants, is directly subject to the laws and regulations of the United States. The applicants and their parent run the risk of engaging in discriminatory conduct by ensuring that the protected information and technology is not provided to proscribed countries or to those foreign nationals who have not been otherwise approved.
For foreign persons such as the applicants to obtain access to the “ITAR” controlled materials, it is necessary for them to enter into what is described as, Technical Assistance Agreements and Manufacturing License Agreements, such documents must be reviewed and approved by the relevant United States Government Agencies. Those agreements must provide that no technical data can be transferred to a person in a third country or to a national of a third country except as specifically authorised in the agreement or alternatively with the prior written approval of the U.S. Department of State. In consequence the applicants must, at least determine that their personnel, requiring access to the technology, are not nationals or dual nationals of proscribed countries.
In order to comply with their obligations, the applicants are obliged to obtain from prospective employees and contract workers personal information which enables them to determine their dual national or third country foreign national status. A breach by the applicants of these contractual obligations may result in the revocation of any approval; a prohibition against further approvals; and render the principal company The Raytheon Company liable to civil and criminal penalties.
We have had regard to the letter from the Acting Deputy Premier of the State dated 13 September 2007. We accept that a viable defence industry is essential to the success of this State’s economy. The applicants’ contracts involve sums of the order of hundreds of millions of dollars. Accordingly there is a wider public interest in the South Australian community being able to acquire skills in the field of defence technology.
All current employees of the applicants, whose work requires access to “ITAR” controlled technology, are currently eligible to access that material. The exemption is therefore sought to enable the badging and identification of a special class of workers, and with respect to generally engaging future employees and contract workers.
Submissions
The Commissioner
In written submissions, supplemented by oral submissions, the Commissioner submitted that no exemption ought be granted as:
·In principle, individual commercial interests cannot outweigh the public interest against discrimination; and in particular “contractually acquired discrimination”;
·By inference from a national point of view the US technology will be accessed anyway by the applicant’s competitors who have already been granted exemptions, and by implication by the applicants, interstate. It is a matter for the Australian Government to either legislate or to take up with the U.S. Government, rather than permit the erosion of rights under the Act.
·In the alternative a blanket exemption could not advance the purposes of the legislation nor was there any public interest in such an exemption being granted;
·The applicants were in a position to properly regulate their arrangements with prospective employees and contract workers such that they would not breach the requirements of the Act.
·On the evidence the applicants had not established a need for such an exemption. If there was such a need it was limited to a very small number of people who had not otherwise been granted a security clearance. The legislation should not be diluted simply to cover such a miniscule group.
·In the alternative the Commissioner submitted that if any exemption were granted it needed to be expressed as narrowly as possible. It was submitted that the draft Minutes of Order prepared by the applicants, albeit in the same form as that granted by Tribunals in interstate jurisdictions, was expressed too widely. In general, it was submitted, the workforce ought to be encouraged to obtain an “ADD” security clearance, as that may permit an exemption from the “ITAR”.
·The Commissioner invited us, if we were minded to grant an exemption, to leave it to the parties to attempt to agree a form of order.
The Applicants
The applicants submitted that:
·We should find that no alternative mechanism, whether it be by ensuring that all of their employees had “ADD” security clearances or otherwise was a satisfactory or reasonable alternative to the grant of an appropriate exemption under the Act. It was not satisfactory, as it would not solve the impasse created by the need to identify nationals of proscribed countries.
·Further it was unreasonable to demand that all of the applicants’ prospective employees ought submit themselves to the more intrusive requirements of an “ADD” security clearance.
·An exemption would not prevent anyone from seeking access to this Tribunal. Such aggrieved personnel who claimed to be discriminated against would be entitled to seek relief, and the Tribunal would consider each case on its own merits to determine whether any discriminatory conduct fell within the terms of an exemption.
·Finally the Act must be seen in context. The application for exemptions was for the benefit of the State as a whole; and in this case both the public interest and the State’s economic interests outweigh the detriment flowing from rendering as lawful the discriminatory conduct referred to. They adopted the matters contained in the Letter of Support from the South Australian Government, and conceded the need for the conditions being placed upon an exemption as contained therein as follows:
· That the exemption be limited to such conduct as is necessary to enable the applicants to comply with “ITAR”.
· That the applicants take all reasonable steps to avoid any discriminatory conduct and to minimise any harm occasioned by the grant of the exemption.
· That the applicants take all reasonable steps to find alternative employment for both existing and potential employees affected by the requirements of the “ITAR”, and to explain the reasons for such effects upon them.
· That the applicants adhere to an appropriate report and review procedure.
·These matters point inevitably to the grant of a suitably conditioned exemption.
Discussion
For the reasons expressed in the respective judgments in the Pulteney Grammar School case [2007] SASC 308; and the ADI case [2007] WASCA 261, we accept that an exemption may be granted in the exercise of our discretion where, inter alia, the general prohibition against discriminatory conduct under the Act would be unreasonably harsh or burdensome in the applicants’ respective circumstances or there is some wider public interest.
As we have already found, access to the United States defence technology is an obligation upon the applicants which has been imposed by the “ADD”.
Subject to any other mechanisms available to the applicants to exempt themselves from the discriminatory consequences of the “ITAR”, we accept that it is necessary in a practical as well as a commercial sense, for them to obtain an exemption pursuant to s 92 of the Act. We also accept that it would be unreasonable to refuse an exemption, if otherwise justified, when similar exemptions have been granted to these applicants interstate, as well as to their competitors within this State.
It is clear that the U.S. Government has exempted certain classes of people, subject to veto, from the “ITAR” in consequence of the Hillen letter. Further the proposed freeing up of access, as outlined in the Australian United States Treaty on Defence Trade Co-operation is an encouraging sign. However the Treaty has not been ratified, and the method by which the process will be simplified has not been identified.
While we accept, in theory, that the Australian Government may have the capacity to influence the U.S. Government to further ameliorate the effects of the “ITAR”, this avenue is not within the power of the applicants. We also do not accept the submission that because the Australian Parliament may be able to enact legislation in respect of national security and thereby override the Act, that this in some way ought prevent the grant of an exemption.
At present the discriminatory conditions imposed by the United States Government in the “ITAR” remain prerequisites, unless otherwise exempted, for any access being permitted to the subject technology.
We have concluded that at present there are no other reasonable alternatives open to the applicants whether by means of obtaining of “ADD” security clearances, or otherwise, which would enable the applicants to avoid the effects of the “ITAR”.
We accept that there will from time to time be a need for the applicants to source highly skilled workers on short notice; making a security clearance impractical. We further accept that an application for an “ADD” security clearance is quite intrusive in nature, and that it is unreasonable to require the applicants’ employees to obtain them.
There can be no doubt that it is in the commercial interests of the applicants that an exemption be granted.
In our opinion it is in the wider public interest that Australians gain access to the high level U.S. defence technology. It is further in the interests of the State of South Australia for it to develop a viable defence based industry. This will ensure that its workers have the opportunity to undertake tertiary education and develop skills in areas previously unavailable to them.
We accept that if the applicants were unable to access the U.S. technology, or, more correctly, were unable to employ that technology in South Australia, it would have significant adverse consequences for the defence-based industry in this State. At the least, the applicants may be forced to relocate their business to those interstate jurisdictions where an exemption has already been granted to them.
The Applicants acknowledged that if an exemption were granted it would be necessary for them to amend their employment policies to make it clear, to those potentially effected employees, that the request for information as to “Nationality” was solely for the purpose of meeting the requirements of the U.S. Legislation.
Against these factors must be weighed the fact that if an exemption is granted, conduct which was unlawful as being discriminatory, will be deemed lawful. As the Commissioner submitted, the grant of any exemption, has the effect of watering down the fundamental human right which we all have to be protected from discrimination.
While we accept generally the argument of the Commissioner that little weight ought be given to private commercial interests where an application is made simply on the basis of convenience, we are satisfied that this is not a case of mere convenience. We find that the applicants have no other practical alternative than to obtain an exemption under the Act.
In our opinion the public and private interests in the grant of the exemption ought prevail as they outweigh the detriment flowing from the discriminatory conduct. The scope of the exemption must be restricted to the bare minimum necessary to enable the applicants to comply with the “ITAR”. Such conditions attaching to the exemption should achieve the effect of minimising the discriminatory conduct. We accept the evidence from Mr Krauland that to determine whether a person is a national or dual national of a proscribed country, the enquiry may have to extend to a range of factors including the prospective employee’s place of birth; where they have resided in the past; their changes of citizenship; and their use of passports. It ought not extend to cultural, language, religious or other characteristics which might be described as “ethnicity” as opposed to “Nationality”. We point out that care must be exercised by the applicants as any worker potentially affected by conduct of the applicants, made in purported reliance upon any exemption granted, will be entitled to seek a determination as to whether that conduct was so exempted.
Conclusion
Subject to appropriate conditions we have concluded that the applicants should each be exempted from compliance with the provisions of sections 52, 54 and 103(1) of the Act for a period of 3 years.
We have been somewhat troubled by the form of the draft Minutes of Order submitted to us. In the initial draft the applicants detailed in items (a) to (g) inclusive thereof, the specific conduct, permitted by the exemption. It purported to authorise enquiries as to “Nationality”. Those Minutes defined the “Disqualifying Criteria”, as being “whether the prospective worker held a passport or was a citizen of; or had previously held a passport from or citizenship of; or had other legal ties such as permanent residency to; or was born in a country other than Australia or the United States of America”.
Having regard to Mr Krauland’s evidence, it may be that enquiries limited to the “disqualifying criteria” are not extensive enough to satisfy the test of “Nationality” adopted by the U.S. State Department.
We note that in the application by BAE Systems Australia Ltd, [2008] SAEOT 1 at [63-66], the orders made by this Tribunal also specified the type of conduct which was authorised by the exemption. Those orders also detailed the remedial activities imposed upon those applicants to minimise the effects of the discriminatory conduct; to report and to provide notice to their employees.
In amended Minutes filed at the hearing the applicants abandoned the more specific approach, seeking, instead, a general exemption as follows:
“(a)The exemption applies only in respect of actions or omissions which are reasonably necessary for the applicants to meet the requirements of the Department of State of the United States of America, the United States Department of Commerce and the 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, an applicant.
(b)For an applicant 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. In particular, the applicants are required, prior to taking any action permitted by this exemption order, to:
(i)assess the reasonableness of gaining a specific exemption for an employee, prospective employee or employees 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 and/or citizenship;
(B) a reasonable explanation in plain English of the nature of any adverse effects of such action to them;
(C) information about how they can apply for Australian citizenship;
and
(D) information regarding their rights under the Racial Discrimination Act 1975 (Cth) and the Equal Opportunity Act 1984 (SA), and, in particular, the complaints procedure under those Acts and the rights of aggrieved persons to take their complaints to the SA Equal Opportunity Commission and the (Australian) Human Rights and Equal Opportunity Commission;
(iii)provide all current employees with ongoing and regular education and training in anti-discrimination, 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 the applicants’ 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 and/or citizenship;
(B)a document containing a reasonable explanation in plain English of the nature of this exemption order that the contractor may provide to the contractor’s employees; and
(C)guidance to enable the contractor to conduct training in anti-discrimination and particularly race discrimination
(v)implement comprehensive anti-discrimination policies governing all aspects of the work and workforce, including management, and with particular regard to race discrimination.
(c)The applicants are required to provide a written report to the Equal Opportunity Commission every six months from the date of this exemption order, over the three year period specified in the order, detailing:
(i) the steps they have taken to comply with the above conditions;
(ii)the number of persons affected by this exemption order, the nature of the effects, and the steps taken to redress any adverse effects; and
(iii) implementation and compliance generally with the terms of this exemption order.
The applicants’ compliance with these orders as demonstrated in its reports will be a factor considered by the Equal Opportunity Tribunal in connection with any future renewal of these orders.”
These alternative Minutes of Order are in the same form as was approved by the respective Tribunals in Victoria and Queensland. As can be seen they are expressed more broadly to enable conduct “as is reasonably necessary” to meet the requirements of “the ITAR”. They do not contain any reference to the topic of “Nationality” nor do they specify what are the “disqualifying criteria” in the “ITAR”.
In addition these Minutes specify that Notice be given to all current and prospective employees of the applicants that they may be adversely affected by the exemption granted. We are concerned that current employees who do not require access to the technology ought not be alarmed by such a notice. We anticipate that such clauses ought be suitably phrased so as to ensure that notice is only given to those employees and prospective employees who may be affected by the exemptions.
We accept that reasonable minds might well differ as to the appropriate form of an exemption. We appreciate the flexibility inherent in the form of the general clause in paragraph (a) of the alternate Minutes of Order. It would enable the applicants to do whatever is objectively reasonable to comply with the requirements of the “ITAR” without the need to specify the conduct which is exempted. The downside in such a form of order, is that it will not be clear to an employee just what conduct is necessary to meet the requirements of the “ITAR”. It has the potential to invite disputes about what conduct is reasonable in the circumstances, and as to how far enquiries may extend.
We of course understand that it may not be possible to adequately specify the exempted conduct, and consequently any attempt to do so may lead to it being expressed too widely. Notwithstanding that difficulty, and subject to further argument, we generally favour the approach taken by this Tribunal in the BAE Application. We were requested by the Commissioner to give her the opportunity to further address us as to the form of orders. We have decided to give the parties that opportunity. We invite them to submit Minutes of Order reflecting the views expressed herein or alternatively to provide written submissions as to the form of order that we ought make within 14 days from the date hereof.
We indicate that at that time we will grant the exemption as outlined above for a period of 3 years from the date of the final order.
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