The Commonwealth of Australia is a federation of six States (New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania), two internal Territories (Northern Territory and the Australian Capital Territory) and a number of minor external Territories.

A written Constitution divides power between the central Federal Parliament, located in Canberra in the Australian Capital Territory, and the eight State and Territory Parliaments. The Constitution gives the Federal Parliament the power to make laws relating to foreign investment, including legislation concerning corporations, taxation, trade and commerce, communications, banking, insurance, bankruptcy and insolvency, intellectual property, immigration and industrial disputes.

Each State has legislative power to make any laws it desires, except in relation to a few matters reserved to the Federal Parliament. Federal law prevails over State or Territory law to the extent of any inconsistency.

Any foreign investment proposal must comply with both Federal law and the law of the State or Territory in which the investment is located. In some cases, local Government law is also relevant, especially in relation to planning and building approvals.


There are two primary sources of law in Australia: statute law and common law.

Statute law is the body of legislation enacted by the various levels of Government, and includes subordinate legislation such as regulations, rules and by-laws. Common law is the body of law arising out of decisions of the various Federal, State and Territory courts.

Each State and Territory has its own court system, consisting of a Supreme Court and a number of minor courts. The Federal Government has its own court system consisting of the High Court, the Federal Court, the Family Court and the Federal Circuit Court. The High Court hears appeals (if leave is granted) in civil and criminal matters from the Federal Court and the State and Territory Supreme Courts. In addition, there are numerous panels and tribunals administering particular areas of law. The High Court also functions as Australia's superior constitutional court. Both the High Court and the Federal Courts may hear matters requiring the interpretation of the Australian Constitution.

Australia is also a party to various international treaties and conventions. However, these don't create rights or obligations for individuals in Australia unless they are given effect by an Australian statute. International law may be used by an Australian court as an interpretative aid should the court find a statute ambiguous.