EXPLANATORY STATEMENT
INTERNATIONAL ORGANIZATIONS (PRIVILEGES AND IMMUNITIES) ACT 1963
BANK FOR INTERNATIONAL SETTLEMENTS (PRIVILEGES AND IMMUNITIES) REGULATIONS
Statutory Rules 1989 No. 284 issued by the authority of the Minister of State for Foreign Affairs and Trade
Section 13 of the International Organizations (Privileges and Immunities) Act 1963 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Section 5 of the Act provides that the regulations may declare an organisation to be an international organisation to which the Act applies.
Sub-paragraph 6(1)(a)(i) of the Act provides that the regulations may confer upon an organisation to which the Act applies juridical personality and such legal capacity as is necessary for the exercise of its powers and the performance of its functions. Sub-paragraph 6(1)(a)(ii) of the Act provides that the regulations may confer all or any of the privileges and immunities specified in the First Schedule to the Act on an international organisation.
The Regulations prescribe the Bank for International Settlements (the Bank) as an international organisation to which the Act applies, and to extend certain privileges and immunities to the Bank.
The Bank is an international financial institution established under the 1930 Hague Agreements on Reparations, to which Australia is a party. The Bank’s role now, however, is to promote international monetary co-operation, to provide special banking facilities to central banks, and to act as a “central banks’” bank. The Reserve Bank of Australia is a member bank of the Bank.
Almost all deposits held by the Bank are placements of official reserve assets by central banks and international organisations. The Bank intends to invest substantial sums in Australia, but has requested exemption from paying tax on income or gains that it derives from these investments. The Treasurer agrees that the exemption be granted.
Details of the Regulations are as follow:
Regulation 1 is a citation clause.
Regulation 2 is an interpretation provision.
Regulation 3 provides for the Bank to be declared to be an international organisation to which the Act applies.
Regulation 4 provides that the Bank will have juridical personality and legal capacities.
Regulation 5 exempts the Bank from paying tax on income or gains it derives from investments in Australia which would normally be either assessable income for the purposes of the Income Tax Assessment Act 1936, or subject to witholding tax under that Act.
Overview
The International Organizations (Privileges and Immunities) Act 1963 was enacted to address the need to provide privileges and immunities to international organisations operating in Australia, ensuring their effective functioning without interference from the Australian legal system. The Act was passed by the Parliament of Australia and its primary policy objective is to facilitate the operations of international organisations by granting them certain legal protections and exemptions. The Act allows the Governor-General to make regulations that declare an organisation as an international organisation to which the Act applies, and to confer upon it juridical personality and the necessary legal capacities, as well as the specified privileges and immunities. The Bank for International Settlements (Privileges and Immunities) Regulations 1989 were made under the authority of the Minister of State for Foreign Affairs and Trade, in accordance with section 13 of the Act, to extend specific privileges and immunities to the Bank for International Settlements. These regulations declare the Bank as an international organisation to which the Act applies and exempt it from paying tax on income or gains derived from investments in Australia.
Scope and Application
The International Organizations (Privileges and Immunities) Act 1963 applies to entities recognised as international organisations, granting them certain privileges and immunities to facilitate their operations. The Bank for International Settlements (BIS) is declared under the Act as an international organisation, thereby extending to it juridical personality and legal capacities necessary for the exercise of its powers and the performance of its functions. The Act's jurisdictional reach is federal, with the Act applying across Australia. The Bank for International Settlements (Privileges and Immunities) Regulations 1989 further extend the application of the Act by specifically conferring certain privileges and immunities on the BIS, such as exemption from tax on income or gains derived from investments in Australia. These regulations are made under the authority of the Minister of State for Foreign Affairs and Trade and are not inconsistent with the overarching Act. The regulations are designed to implement the provisions of the Act in relation to the BIS, ensuring that it can operate effectively without undue financial burdens.
Key Provisions
The International Organizations (Privileges and Immunities) Act 1963 (the Act) is designed to provide international organisations with certain privileges and immunities. Section 13 of the Act empowers the Governor-General to make regulations that are not inconsistent with the Act, to prescribe matters required or permitted by the Act, or necessary or convenient to give effect to the Act. Specifically, the Act allows for the declaration of an organisation as an international organisation (Section 5) and for the conferral of juridical personality and legal capacity to such organisations (Sub-paragraph 6(1)(a)(i)). Moreover, the Act enables the granting of privileges and immunities specified in the First Schedule to the Act to these organisations (Sub-paragraph 6(1)(a)(ii)).
The Bank for International Settlements (Privileges and Immunities) Regulations 2018 (the Regulations) were made under this authority, declaring the Bank for International Settlements (the Bank) as an international organisation to which the Act applies. Regulation 3 specifically provides for this declaration, ensuring that the Bank is recognised under the Act. Regulation 4 further confers upon the Bank juridical personality and such legal capacities as are necessary for the exercise of its powers and the performance of its functions. These provisions are crucial as they establish the Bank’s legal standing and operational capabilities in Australia.
The Regulations also impose obligations and requirements on the Bank, most notably in Regulation 5, which exempts the Bank from paying tax on income or gains derived from investments in Australia. This exemption is granted because almost all deposits held by the Bank are placements of official reserve assets by central banks and international organisations. The Bank has requested and been granted this exemption by the Treasurer, in line with the Bank’s role in promoting international monetary cooperation and providing special banking facilities to central banks.
Failure to comply with the requirements of the Act and the Regulations may result in significant consequences. The Act does not explicitly outline specific offences, penalties, or consequences for non-compliance, but breaches of the privileges and immunities granted by the Act may lead to legal challenges or diplomatic disputes. The Regulations, on the other hand, do not specify penalties for non-compliance, but it is understood that any misuse of the granted privileges or failure to adhere to the declared obligations could result in the revocation of the privileges and immunities, potentially impacting the Bank’s operations in Australia.