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Tuesday, 3 December 1974
Page: 3073

Senator WRIEDT (Tasmania) (Minister for Agriculture) - Mr Temporary Chairman,I move:

Leave out the proposed sub-section, substitute the following sub-section:

(6)   Regulations under this section may provide that no act or thing done, or contract or other transaction entered into, is invalid or unenforceable by reason only that the provisions or the regulations have not, or a particular provision of the regulations specified in the regulations has not, been complied with, but regulations so made shall not be construed as having the effect of preventing a person from being convicted of an offence against the regulations by reason of his having failed to comply with a provision of the regulation.'.

The Government has decided to move this amendment which is intended to allow certain contracts, acts and transactions which lack the necessary exchange control authority to be more readily enforceable in overseas courts. Under the present legislation, in the absence of the proper exchange control authority, not only could a transaction between a resident in Australia and an overseas resident be illegal and subject to penalty under the Banking Act, it could also be null and void. In most cases where exchange control authority is not obtained the persons involved would be unaware of the need to obtain approval and in many cases the absence of exchange control approval does not present a problem to the parties concerned. However, the fact that such contracts could be invalid could lead to people using the alleged invalidity of such transactions to renege on their debts or other obligations. This would clearly be undesirable.

Clause 3, as it relates to sub-section (6) of proposed section 39, is intended to make provision for regulations to be made in effect to validate transactions which will be entered into in future without the proper exchange control authority. Clause 3, as it relates to sub-section (6) of proposed section 39, would have the effect of preventing a party or parties to the contract from raising the question of the invalidity of a contract in Australian courts on the grounds that exchange control approval was not obtained. That is, it is merely a procedural clause. The result would be that a contract which is void because of the absence of exchange control authority would probably remain void by reason of these clauses, but parties to the contract would be unable to use this invalidity in any proceedings in Australia. The result would be that parties seeking to use a loophole in the Banking (Foreign Exchange) Regulations to renege on their debts would be prevented from doing so. Unfortunately, this procedural form of validation would make it difficult to enforce such contracts or collateral contracts in overseas courts, because if a contract remains void in Australia it is also void outside Australia and may be unenforceable in the courts of other countries. The Government proposes to amend clause 3 as it relates to sub-section 6 of proposed section 39 as far as is practicable to remedy the defect. The amendment to sub-section 6 of proposed section 39 would enable regulations to be made that provide for acts or transactions entered into in the future without exchange control approval not to be invalid or unenforceable by reason only of the absence of the necessary exchange control authority. I would assume that Senator Missen or Senator Cotton will comment further on this amendment, and that from there we can indicate the Committee's feelings about the amendment.

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