Current trends in Australian disputes 2025-26

High Court settles important questions in class actions

Australian companies continue to face a broad range of class actions in 2026, including consumer, employment, financial services, shareholder, product liability, privacy, and government.

In shareholder class actions, a key area to watch this year will be whether claimants can overcome the ongoing challenges of proving loss. While most shareholder class actions end in a court approved settlement, no shareholder class action in Australia to date has resulted in an award of damages by a court following a finding of liability. Claimants have been unable to show that they suffered loss as a result of any continuous disclosure breach or misleading conduct, as the expert evidence has failed to deal with the facts as found by the court. This has led to an application for special leave in the High Court to address questions about how causation is established and how the Court should assess damages. Courts have also opened the door to the possibility of determining loss at a hearing of a separate question following a decision on liability.

The High Court of Australia has settled important outstanding questions in a series of recent class action decisions. The decision in Lendlease Corporation Limited v Pallas was relevant to class action settlements and should be viewed as helpful for those seeking certainty as to the size of a claim being mediated. The Court confirmed the availability of "soft" class closure orders in representative proceedings, holding that there is power to issue notices foreshadowing that orders will be sought to "close" the class as part of settlement (i.e. extinguish the claims of those group members who neither registered nor opted out prior to mediation). The decision confirms that courts in NSW, like those in the Federal and Victorian jurisdictions, may approve soft class closure notices in appropriate circumstances (although there remain challenges in having such notices issued where this is not being sought by agreement).

The High Court's decision in Kain v R&B Investments is relevant to class action risk because it concerns the incentives for litigation funders and plaintiff firms. The Court confirmed that common fund orders can be made upon a class action settlement or judgment. A common fund order is an order requiring each participating group member to contribute equally to the payment of the funder's commission. On the other hand, "Solicitors' CFOs" cannot be made in favour of solicitors which fund class actions, due to the prohibition on contingency fees under the Legal Profession Uniform Law. Accordingly, Victoria remains the only Australian jurisdiction in which contingency style fees can be awarded in class actions, through a Group Costs Order (permitted under statute in the Victorian class action regime). Relatedly, the High Court recently rejected a transfer application in relation to the Bogan v Smedley class action in the Victorian Supreme Court, noting that the Group Costs Order could not travel with it to the NSW Supreme Court. Most recently, in Hunt Leather Pty Ltd v Transport for NSW, the High Court held that the damages to which the claimants were entitled should not include the reasonable costs they incurred in obtaining litigation funding.

Generative AI safety, risks, and potential harms loom large for organisations

Generative AI is now embedded in Australian business workflows and consumer-facing services. Ashurst's report Navigating the legal landscape: AI in Australia suggested Australia’s existing, technology neutral legal regimes for consumer, privacy, employment, online safety and foreign interference already reach many foreseeable AI uses. In December 2025, the Australian government announced a National AI Plan. The plan identifies safety from AI harms as a key goal of the Australian Government, alongside capturing the opportunity and spreading the benefit. The practical implications are that companies should ensure enterprise AI governance maps clearly to existing obligations; and expect uplifted expectations on transparency, record keeping, and human oversight as regulatory guardrails mature.

A recent US decision found the copying of books during training of an AI-system to be "fair use" due to its “transformative” character. That analysis turns on the US fair use concept and does not translate to Australia’s narrower fair dealing defence. The Australian defence only applies when the work is used for specific and narrow purposes such as research, study, criticism, review, parody or satire. The use of electronic books to train an AI service for profit in Australia could lead to a different result. The Australian Government has established a Copyright and Artificial Intelligence Reference Group to advise on the intersection of AI and copyright and at this stage, the Government has indicated that it will not include a text and data mining exemption. Rather, the Government is considering whether a licensing model for the training of AI systems using copyright material should be introduced. This will be a space to watch in 2026.

Disputes practice continues to adapt to both opportunities and risks presented by developments in Generative AI. Parties are rapidly deploying new technologies to assist with workflows such as research, drafting and document review. At the same time, pitfalls have emerged such as hallucinations, deepfakes, demands to disclose prompts, and potential risks to privacy, confidentiality or privilege. Some courts now prohibit or regulate the use of Generative AI in certain contexts, and require certifications for evidence and submissions.

Domestic clarity and global uncertainty in investigations

In Australia, attention has focused recently on the implications of voluntarily disclosing privileged information, in particular investigations reports, to regulators.

In 2024, in ASIC v Noumi, a single judge of the Federal Court held that the provision of a privileged report to ASIC pursuant to a Voluntary Disclosure Agreement (VDA) resulted in a waiver of privilege because the VDA permitted "derivative use" of the report. That decision was appealed by both ASIC and the privilege holder, with the Full Court of the Federal Court overturning the primary judge's decision. In reasons published on 6 February 2025, the Full Court determined, amongst other things, that ASIC's "derivative use" of the report (permitted under the VDA) was not equivalent to "disclosure". It thus confirmed that the VDA regime remains a valid and workable mechanism for disclosing privileged information to ASIC on a confidential basis, without waiving privilege more broadly.

While providing welcome clarity in the domestic investigations landscape, the same has not been true globally, with a divergence in approaches on a range of topics now evident in regimes to combat, for example, foreign bribery.

In July, we examined how this was true particularly of the so-called "facilitation payments defence" which permits, in certain circumstances, minor payments to foreign officials to expedite routine government actions. While this is a recognised defence in the United States, it is unavailable in a number of jurisdictions such as the United Kingdom, Canada, and Brazil. Australia has adopted a mid-way position: the defence is formally available under section 70.4 of the Criminal Code, but Government guidance strongly discourages Australian companies from making such payments.

With national approaches becoming increasingly unaligned (a trend we expect to continue in 2026) companies pursuing business opportunities internationally must remain vigilant, adopting policies and procedures appropriate to each of the jurisdictions in which they operate.

Scams, whistleblowing, digital assets and private markets feature in financial regulation

In the last twelve months, we have seen increased activity from Australia's key financial services regulators on a number of fronts.

On 13 February 2025, the Commonwealth Parliament passed the Scams Prevention Framework Bill, which requires designated entities to prevent, detect, disrupt, respond, and report scams and attempted scams. The Australian Financial Complaints Authority (AFCA) has welcomed the bill, which will see it become the "single door" arbitrator for consumers seeking redress from scams. 2026 may see AFCA, for the first time, adjudicating disputes involving digital platforms and telecommunications firms, in addition to banks and other financial services institutions.

In April, we observed that whistleblowing may be another area that would benefit from improved regulation. In particular, we noted the difficulties faced by the private sector when the ATO issues a compulsory notice calling for whistleblower information (protected from on-disclosure under Part 9.4AAA of the Corporations Act). In this circumstance, entities face the difficult choice of either complying with the notice — which would be an offence under the Corporations Act (as disclosures to the ATO are not protected) — or not complying, which would be an offence under the Taxation Administration Act. The situation is self-evidently unsatisfactory, and underscores the need for legislative change to ensure coherence between the complex, and not always consistent, elements of Australia's whistleblower protection framework.

ASIC, meanwhile, has been grappling with how to provide greater clarity for digital asset industry participants regarding how their activities fit within its regulatory perimeter. In October, ASIC issued a 'no action letter' which allowed existing industry participants until 30 June 2026 to apply for an AFSL, or notify ASIC of an intention to apply for a markets license or clearing and settlement facility license. With activities involving digital assets becoming increasingly common, we anticipate that ASIC's detailed guidance concerning when a digital asset is likely to be a financial product will be a valuable resource in 2026 and beyond for businesses across Australia's financial ecosystem.

ASIC has also been concerned, in the last 12 months, with feedback it has received on its first ever Discussion Paper on public and private markets, which in early 2025 proposed improvements to strengthen public markets, and introduce greater transparency and accountability in private markets. Following the release of ASIC's response to the Paper in November, we predicted that surveillance efforts in the private credit industry would continue into 2026. For fund managers and trustees, a lack of transparency in portfolio mix and reporting, aggressive marketing and distribution policies, and opaque fee structures, all represent areas of potential risk which may attract the attention of ASIC as its seeks to embed a culture of (in its words) "doing [private credit] well".

Consumer protection drives uptick in cybersecurity and digital disputes

The protection of Australian consumers in the digital sphere remains a priority for regulators and government, with businesses in the telecommunications and financial services sectors coming under particular pressure to respond to risks associated with emerging technologies.

On 10 June 2025, legislation creating a new statutory tort of serious invasion of privacy took effect. Individuals are now able to bring direct legal action for a serious invasion of privacy without relying on the regulator to act. Whilst the new right is framed to address "serious" privacy harms, the ambit of this has not been tested in the courts. For large corporations, this may mean greater exposure, in the short term, to risks around data retention and potential cyber incidents, and the emergence of new avenues for employees, activists, and vulnerable individuals to ventilate claims.

In October, the new reality of increased regulatory scrutiny and consequences for privacy failures was highlighted by the penalty judgment against Australian Clinical Labs (ACL). ACL was fined $5.8 million following a data breach, the first civil penalty imposed in Australia under the Privacy Act. Importantly, the Court intimated that the penalty was at the lower end of the permissible range, sounding a warning to business that serious breaches of privacy laws could result in very substantial penalties. Other proceedings involving more recent cyber incidents continue to work their way through the Courts.

2026 will also likely see digital currencies return to focus, with ASIC's appeal of the Block Earner decision pending before the High Court. ASIC is seeking the Court's ruling, effectively, on whether it may regulate crypto-asset based products under existing financial services laws. The decision is being closely watched and, if ASIC is successful, will enhance its ability to establish and police the bounds of what is acceptable conduct for those trading in, and marketing, digital products.

Climate litigation and commercial hurdles present risks in the energy transition

The energy transition is proceeding apace in Australia, and companies grappling with this rapid change are confronting a complex landscape of public policy settings and risks arising from commercial arrangements.

As governments around the world come under pressure to actively legislate, monitor and enforce climate-related standards — through such means as the International Court of Justice (ICJ) advisory opinion on climate change — investor capital is increasingly being directed towards organisations with credible energy transition strategies. On the flip side, companies seen as lagging in this space have been targeted in climate-related lawsuits, brought variously by activists, investors, or impacted communities.

Australia is not immune from this global trend, indeed, it has been a hotspot for climate-related litigation for a number of years now. Whilst there is no recognised climate change duty of care either for governments or for private companies in Australia, plaintiff law firms and regulators have been targeting businesses overstating their environmental credentials, or failing to disclose material climate risks to the market. As time passes, courts may look increasingly to international law and evolving ESG standards as persuasive authority in such cases, especially where claimants allege that companies have failed to act in line with "best practice".

This is not to say that private actors at the vanguard of the energy transition are immune from risk. As we discussed in September, the wind power industry is increasingly become a site of significant and costly disputes.

However, this need not be the case. Developers of wind farm projects and their suppliers can seek to avoid (or at least better manage) many commercial hurdles by being clear on the costs consequences of particular risk events, detailing milestones and the implications of failing to meet them, and incorporating appropriate dispute resolution and governing law clauses in their agreements. Taking the time to get the drafting right, in what is an increasingly complex and active market, has never been more important.

Potential challenges for large infrastructure projects 

Australia's occupation with infrastructure projects of various types continues, and this is particularly true in Queensland and its capital, Brisbane, which will be hosting the Brisbane 2032 Olympic and Paralympic Games. 

In June, we outlined some proactive dispute management processes that stakeholders such as governments, developers, and contractors, could put in place to ensure that the necessary sporting and associated infrastructure, and the sustainability outcomes in relation to the Games are delivered successfully. 

By focusing on robust contract management procedures, consistency in dispute resolution clauses, regularly monitoring and auditing key metrics, and leveraging alternative dispute resolution mechanisms (such as Dispute Boards and arbitration), it can be possible to avoid the expensive and consuming disputes that often accompany large-scale projects. For an undertaking as vast as the delivery of the Games, such a preventative, risk-based approach to dispute resolution can be a project enabler (rather than a costs sink), and source of competitive advantage.

Even beyond the Games, the intersection of sustainability and infrastructure delivery looks set to remain a hot topic for boards and project delivery authorities. That is particularly so given the passage through the Federal Parliament, in November, of long-awaited reforms to Australia's environmental laws.

Some parts of the new laws, such as the framework for making National Environmental Standards, have already taken effect. However, the full impact of the laws is yet to be seen (and will not be seen until at least 2027). We anticipate that these new laws will have an impact on major project approvals, environmental compliance for existing projects, management of environmental incidents and engagement with stakeholders (including First Nations groups). It is also likely they will change the way that environmental decision-making occurs at both a State and Federal level.

Sovereign immunity again tested in high-profile arbitration cases

Australia’s arbitration landscape continues to be outward facing and pro enforcement. The extent to which sovereign immunity applies to the enforcement of investment arbitration awards continues to be tested in Australia.

Late in 2025 the High Court of Australia heard an appeal against a decision of the Full Federal Court setting aside recognition and enforcement of an investment award against India in Republic of India v CCDM Holdings. The Full Court found that, despite the Republic of India being a contracting state to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention), India had not waived its foreign state immunity under section 9 of the Foreign States Immunities Act 1985 (Cth) on the basis of a "reservation" made by it to its ratification of the New York Convention.

The Full Federal Court's decision distinguishes the High Court’s approach in the 2023 Kingdom of Spain case, involving the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (ICSID Convention), where the High Court held that the treaty text effected a clear waiver of jurisdictional immunity.

In its appeal to the High Court, CCDM Holdings contends that India's reservation does not operate reciprocally to limit another contracting state’s enforcement powers. The High Court has reserved its decision.

Against this backdrop, the recent Australian Arbitration Week held in Sydney emphasised “future proofing” practice through careful contract design, sophisticated procedural management and an informed approach to geopolitical risk. Sessions highlighted the High Court’s confirmation in 2024 in Tesseract that proportionate liability regimes apply in arbitrations unless excluded, reinforcing the need for precise drafting to preserve party autonomy. Panels on international projects and energy transition disputes stressed risk allocation, supply chain fragility and the strategic selection of seat, rules and enforcement pathways. Ashurst hosted events throughout the week and a number of the Australian and international members of Ashurst's global arbitration group were speakers at various sessions.

Important guidance offered for dealmakers in M&A transactions

The recent Cosette / Mayne Pharma decision captured the attention of Australia's M&A professionals, demonstrating that Australian courts will not lightly allow a proposed acquirer under a scheme of arrangement to walk away from its public commitments to proceed with a transaction. The NSW Supreme Court found in favour of Mayne Pharma, denying Cosette's attempt to terminate the deal.

While the Federal Treasurer subsequently accepted the Foreign Investment Review Board's recommendation to block the transaction on national interest grounds, the case offers practical lessons on termination rights for material adverse change and breach of warranty.

US-based Cosette Pharmaceuticals had agreed to acquire ASX-listed Mayne Pharma Group, and entered into a scheme implementation deed. In May 2025, just days after the NSW Supreme Court made orders convening a scheme meeting of shareholders, Cosette asserted that a material adverse change had occurred based on financial results and regulatory concerns. Mayne Pharma commenced court proceedings to determine whether or not Cosette's notice of termination was valid.

The judgment of Justice Black is an important one for Australian M&A. It provides rare and detailed guidance on the operation of MAC clauses, the efficacy of disclaimers, the interpretation of warranties regarding due diligence information, and the effect of an acquirer's post-signing conduct on its termination rights.

Ashurst's update on the decision identified some key takeaways. First, a bidder seeking to invoke a MAC clause must demonstrate, with clear and objective evidence, that the specified threshold has been met. Unmet expectations, such as missed financial forecasts, in isolation, are not MACs. Secondly, specific disclaimers as to forward-looking information are not read down by the "reasonable care" warranties relating to due diligence information, which concern the data room as a whole, not specific pieces of information contained in it. Finally, a bidder seeking to terminate must act consistently with this intention, to avoid affirmation of the contract.

Government avoids liability for climate change related damage

Government liability for damage due to climate change continues to be tested in Australian courts. Australia is already one of the most active jurisdictions for climate litigation outside the United States.

The 2025 Pabai case, now on appeal to the Full Federal Court, sought recognition of a novel climate change duty of care in the tort of negligence. The case is part of a broader international movement towards using the courts to drive climate action. Recent decisions in Europe, the Americas, and at an international court level have recognised duties of care or human rights obligations relating to climate change.

As explained in our July update on the first instance Pabai decision, the Federal Court held that the Commonwealth Government did not owe a duty of care to people of the Torres Strait Islands to protect them from the impacts of climate change, because decisions on emissions targets and adaptation measures are matters of core or high government policy, not suitable for determination by the courts. The law does not require the Commonwealth to set targets solely based on scientific advice, as broader policy, economic, and social considerations are involved.

This decision, along with the Full Federal Court’s earlier judgment in the Sharma case, currently presents a significant obstacle for future novel climate change duty of care cases in Australia against both governments and companies. As such, the Commonwealth retains a broad discretion on climate policy decisions, including the allocation and administration of adaptation funding, and setting emissions reductions targets. If confirmed on appeal, the decision will provide a significant shield against similar future claims and lower the risk of liability in negligence for alleged inadequacies or delays. Nonetheless, we expect climate litigation will continue to be relevant in Australia, with other causes of action available to plaintiffs such as misleading or deceptive conduct, directors duties, and administrative law challenges.

Other authors: Jeremy Chenoweth, Partner; James Clarke, Partner; Nina Fitzgerald, Partner; Felicity Healy, Partner; Rani John, Partner; Nicholas Mavrakis, Partner; John Pavlakis, Partner; Nick Perkins, Counsel; Sally-Anne Stewart, Counsel; Phillip Aquilina, Senior Associate and Josh Krechman, Senior Associate.