Legal development

High Court holds non-residents can be group members in Australian class actions

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    What you need to know

    • The High Court has confirmed that all persons, including Australian non-residents, can participate as group members in Australian class actions. This contrasts with the position in the UK and many other jurisdictions, where there are restrictions on foreign members being included in a class action, either at all or unless they register to participate.
    • There remains uncertainty about the practices and procedures Australian and foreign courts will adopt where parallel class actions are commenced across multiple jurisdictions.
    • Defendants facing the prospect of class actions across multiple jurisdictions including Australia should seek advice on global strategy.
    • Multi-jurisdictional companies may wish to review insurance arrangements to ensure that claims brought by persons outside of Australia are not excluded.


    BHP Group Ltd is the respondent in a class action commenced in the Federal Court, in which it is alleged that BHP contravened continuous disclosure obligations and otherwise engaged in misleading or deceptive conduct in relation to the failure of the Fundão Dam in Brazil in 2015.

    Group members are persons who purchased shares in BHP or BHP Billiton Plc in Australia, the UK and South Africa and suffered loss as a result of the alleged breaches. A substantial percentage of the group members are located outside of Australia.

    Interlocutory application and High Court decision

    BHP sought orders to remove non-resident group members. BHP argued that s 21(1)(b) of the Acts Interpretation Act 1901 (Cth) and the common law presumption against extraterritoriality apply so that the class action regime must be interpreted as excluding group members that do not reside in Australia. Both Moshinsky J at first instance and the Full Federal Court dismissed BHP's argument.

    As did the High Court, unanimously holding that Pt IVA permits class actions to be brought on behalf of group members irrespective of where they reside.

    The High Court held that the common law and statutory presumptions against exterritoriality had no application because Part IVA simply establishes powers and procedures by which the Court can exercise its pre-existing jurisdiction to adjudicate on claims brought before it. If the underlying claims brought on behalf of foreign residents could be properly adjudicated before the Court, and there was valid service on the respondent, then there was no reason to exclude foreign residents as group members for those claims.


    Scope to bring securities class actions against companies with multiple listings

    Companies listed on the ASX that also have listings on other stock exchanges, or have substantial interests in companies listed on other stock exchanges, could face class actions in multiple jurisdictions which increases the complexity of managing their exposure.

    Complexity in managing parallel class actions around the world

    Ordinarily a judgment by an Australian Court would bind all persons other than those who had opted out of the proceeding, under s 33ZB of the Federal Court of Australia Act and its state based equivalents. However, an Australian judgment in a class action may or may not be binding or enforceable in other jurisdictions. Defendants who face multiple potential class actions including in Australia, will need to develop global strategies to manage class action risk.

    Contracting out to mitigate class action risk

    More generally, to mitigate class action risk (particularly outside of the shareholder context), companies contracting with non-residents should consider whether there is scope to require contract counterparties to waive any right to participate in a class action. However, in Australia such class action waivers may be void unfair contract terms if they are included in a standard form consumer or small business contract (read more here).

    Authors: Lucinda Hill, Partner; Andrew Westcott, Expertise Counsel; Kyle Dolbey, Lawyer; and Oscar Han, Graduate.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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