As organisations grapple with the breadth of Australia's Foreign Relations (State and Territory Arrangements) Act 2020 (Cth) (AFRA) and processes for compliance, a key issue for universities in evaluating its counterparties is whether foreign universities have institutional autonomy.
If a foreign university does not have institutional autonomy, then arrangements with that foreign university will need to be notified under the AFRA. The university will be subject to the Foreign Minister's powers where the Minister is satisfied that a proposal or arrangement may affect Australia's foreign relations, or be inconsistent with Australia's foreign policy.
What has happened?
The Department of Foreign Affairs and Trade (DFAT) recently released guidance on the concept of institutional autonomy. This will assist public universities affected by the AFRA to determine the types of arrangements that will require notification. The guidance is a helpful indicator of the approach that is likely to be taken by DFAT in its interpretation of institutional autonomy, and the foreign universities that are captured, under the AFRA.
What is institutional autonomy?
Conceptually, a foreign university does not have institutional autonomy if a foreign government is in a position to exercise substantial control over the university.
There are three indicators that a foreign university lacks institutional autonomy, and importantly, those circumstances must be required by a law or the university's governing documents. The indicators are set out at 4(a) to 4(c) below.
Practically, Australian public universities should consider:
- Is the foreign university listed in any existing arrangements on the public register?
- What are the laws affecting a foreign university's operations? For example, establishing legislation, education laws, or references to education in a country's constitution.
- What are the governing documents of the foreign university? For example, the foreign university's constitution or other governing documents, charters, rules or official policy documents.
- Having regard to the laws or governing documents found for (2) and (3) for a foreign university, are any of the following indicators met in relation to the foreign university?
(a) a majority of the members of the university’s governing body are required to be members or part of the political party that forms the foreign government;
(b) education provided or research conducted at the university is required to adhere to, or be in service of, political principles or political doctrines of the foreign government or the political party that forms the foreign government; or
(c) the university’s academic staff are required to adhere to, or be in service of, political principles or political doctrines referred to in (b) above, in their teaching, research, discussions, publications or public commentary.
What are the next steps for universities?
DFAT's guidance provides a decision-making matrix for use by universities, and notes its expectation that the majority of universities will have institutional autonomy. This helpful guidance will need to be incorporated into universities' existing due diligence processes for proposals and agreements with foreign parties.
Universities should also ensure that any proposals or agreements entered into with foreign parties have appropriate contractual clauses to facilitate compliance with the AFRA. This includes for circumstances where it is not clear, after conducting the relevant due diligence, whether a university has institutional autonomy.
Our MinterEllison team can assist you with any questions concerning the above, preparing due diligence procedures, or drafting appropriate contractual provisions.
