Foreign Arrangements Scheme
This page provides an overview of the Foreign Arrangements Scheme (FAS) and how it applies to University made arrangements.
What is the Foreign Arrangements Scheme (FAS)?
The Foreign Arrangements Scheme establishes a formal notification process that applies to all Australian public universities. The Scheme is established by the Australia’s Foreign Relations (State and Territory Arrangements) Act 2020 (Cth) (the Act). Public universities are included in the definition of “State/Territory entities” along with all Australian State, Territory and local governments.
The Foreign Arrangements Scheme legislative summary diagram provides an overview of the operation of the Scheme.
Any foreign arrangements in operation or established from 10 December 2020 must be notified under the Scheme.
What is the purpose of FAS?
The purpose of the Act is to protect and manage Australia’s foreign relations. The FAS is the statutory notification and assessment process managed by the Department of Foreign Affairs and Trade (DFAT) to support compliance with the Act.
What is a foreign arrangement?
A foreign arrangement is a written agreement, contract, understanding or undertaking between an Australian State/Territory entity and a foreign entity, whether or not there are any other parties to the arrangement or whether it is legally binding or not. It may include MOUs or formal proposals set out in emails.
What is a foreign entity?
A foreign entity is defined by the Act to include foreign governments and related public institutions, and includes a tertiary education institution located in a country that does not have institutional autonomy because it is subject to substantial control by a foreign government or political party. Indicators of government control of a tertiary education institution may be evident in the laws of the foreign country; the institution’s governance arrangements; laws or rules that require academics to conform to specific political ideas in their teaching and research. Some helpful resources are available on the About your foreign partner webpage.
A detailed table setting out the legislative criteria for foreign entities is provided in page 2 of the FAS due diligence explainer.
What does the University have to do?
The University must notify the Minister of Foreign Affairs that it: 1. proposes to enter and 2. it has entered into an arrangement with a foreign entity. This means that the University must generally make 2 notifications: 1. When an arrangement is certain but before it has been finalised (e.g., terms are being agreed); and 2. once the arrangement has been finalised (e.g., an agreement has been signed by the parties). An arrangement that has been finalised must be notified within 14 days.
An arrangement between the University and a foreign entity is defined under the Scheme as a “non-core” foreign arrangement. This is different from a “core” foreign arrangement which involves an Australian government entity and a foreign entity. It is possible that the University could be involved in a “core” foreign arrangement if, for example, the SA Government is a party.
Australian entities involved in multi-party arrangements can agree which entity will make the notification (usually the lead entity). You should seek further advice about the obligations that may apply to multi-party or multi-agreement arrangements.
Who is authorised to make a notification for the University?
What happens after a notification is made?
Once lodged, an arrangement will be listed on a public register. The Act also authorises the Minister for Foreign Affairs to determine whether an arrangement is compatible with Australia’s foreign relations and policy. The Minister may declare an arrangement to be invalid and unenforceable or that it must be altered or terminated. If such a declaration is made, the Minister will write to the University. If an entity fails to notify an arrangement, a court injunction may be sought to stop the arrangement.
A declaration would mean that the purpose of arrangement cannot be given effect or be held by the parties to be in effect. If the University receives such a declaration, it must take steps to notify the parties involved and cease all activities.
Given the possibility that an arrangement may be disallowed, special contract clauses should be included in relevant agreements. Standard form contracts will be updated soon. Should a negative declaration be made, the consequences for any subsidiary (secondary) arrangements that have been made under the auspices of the foreign arrangement will need to be considered. An arrangement is subsidiary to a foreign arrangement if it has been anticipated by, or supports the implementation of, that arrangement.
What information is considered by the Minister before making a Declaration?
The purpose of the Scheme is to ensure that certain arrangements with foreign entities do not adversely affect Australia's foreign relations and are not inconsistent with Australia's foreign policy.
Where an assessment indicates the contrary, the Minister may declare an arrangement to be invalid, unenforceable or require it to be alerted or terminated (depending on the nature of the arrangement). A declaration may also be applied to subsidiary arrangements.
The Minister must consider significant consequences of a declaration where it has the potential to adversely affect the functioning of an Australian State or Territory. It is not sufficient that there are consequences for the University alone. Usually this would mean consequences for South Australia, but the University might be involved in an arrangement with another Australian jurisdiction.
Under section 51(2) of the Act, consideration must be given by the Minister if a declaration would:
- Impede activity intended to assist or enhance the functioning of the State or Territory
- Impair the continued existence of the State or Territory as an independent entity
- Significantly curtail or interfere with the capacity of the State or Territory to function as a government
- Have significant financial consequences for the State or Territory
- Impede the acquisition of goods or services by the State or Territory, including, for example, for the purposes of infrastructure
- Have an effect on the capacity of the State or Territory to complete an existing project that is to be delivered under the arrangement (either at all, or within the intended timeframe)
In circumstances where a declaration would have such significant consequences for the State, a written submission should be prepared, noting however, that it may not be taken into account unless that submission has been endorsed by the State. The Minister is only required to take into account information provided by the relevant State or Territory.
What do I need to do?
Before proceeding, all arrangements involving a foreign partner must be submitted for a compliance review and may require endorsement or approval by senior managers.
To ensure all regulatory obligations are met, you should apply the ‘C, D, E, F process for foreign compliance:
- Compliance: know the regimes
- Due diligence: know your partner, activity & risks
- Endorsement: the Foreign Engagement Compliance Review
- Fruition: bring to Fruition, with a formal agreement if needed
Refer to the Global Engagement Foreign Compliance website for full details.
Your arrangement will need to be notified for FAS compliance if one or more of your partners are foreign entities as defined under the legislation. The FAS due diligence explainer (page 2) sets out the legislative criteria you should refer to as a part of your due diligence assessment.
Any arrangement involving a foreign entity will be referred to Global Engagement as a part of the endorsement phase. Global Engagement will action the notification process if required.
If notification is required, additional FAS clauses should be included in relevant written agreements. Legal and Risk can be contacted for advice.
Where can I get further advice?
The Department of Foreign Affairs and Trade Foreign Arrangements Scheme website contains further guidance on the implementation of the Scheme, including:
- Foreign Arrangement Scheme Fact Sheets
- Foreign Arrangement Scheme FAQs
Other foreign compliance obligations
The Foreign Arrangements Scheme is one of a number of compliance obligations that may apply to University arrangements with foreign entities or individuals – for more information about other requirements you may need to observe, refer to: