Skip to main content

Clifford Chance

Clifford Chance
Briefings<br />


Class actions in Australia - foreign resident group members: in the class or out?

Two Recent Australian authorities have provided guidance on who falls within the group in Federal Court class action proceedings. These highlight the balance to be struck by the Court between the terms of class action waivers and access to justice, as well as the risks faced by offshore businesses being brought into Australian class action proceedings absent clear contractual provisions excluding this form of dispute resolution.


In BHP Group Limited v. Impiombato & Anor [2022] HCA 33 ("BHP"), the High Court of Australia permitted foreign resident shareholders to participate in Australian class action 'stock drop' proceedings, citing access to justice in support of expanding the group. By contrast, the Full Federal Court's decision in Carnival plc v Karpik (The Ruby Princess) [2022] FCAFC 149 ("Ruby Princess") excluded from the group foreign resident cruise passengers who had signed up to US terms & conditions for travel that included a class action waiver clause. Further guidance on the treatment of foreign resident group members can be expected from the High Court if special leave is granted to the representative claimant to appeal the Ruby Princess decision. Set out below are key takeaways from both decisions.


The BHP class action proceedings relate to the 2015 failure of the Fundao Dam in Brazil. The group members entered into contracts to acquire an interest in fully paid-up ordinary shares in BHP and other BHP entities on the Australian, London and Johannesburg stock exchanges. The group members allege BHP breached its continuous disclosure obligations under the ASX Listing Rules and the Corporations Act 2001 (Cth) and engaged in misleading or deceptive conduct contrary to Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act, in failing to disclose information in relation to the Dam. At an interlocutory stage, BHP sought an order that foreign resident shareholders be excluded from the group. In the Full Federal Court of Australia ("FCAFC"), the FCAFC decided that members resident outside Australia were included in the class action group. BHP appealed to the High Court.

In the High Court, the key issue was whether Part IVA of the Federal Court of Australia Act 1976 (Cth) permits representative proceedings to be brought on behalf of group members who are not resident in Australia.

BHP argued that, in considering the operation of Part IVA, Australian legislation such as s21(1)(b) of the Acts Interpretation Act 1901 (Cth) and the common law presumption against extraterritoriality apply. On this basis, Part IVA must be interpreted as precluding non-residents from being included in class actions brought in Australia. Further, the Australian parliament did not intend its legislation to extend to persons in another jurisdiction, despite the fact Part IVA contains no express restrictions against any persons located outside Australia who may wish to join a class action group.

The High Court unanimously dismissed BHP's arguments. It held that provided a group member could advance a claim falling within jurisdiction of the Federal Court, they are free to do so without being a resident. The location of the defendant was also an important consideration.

Ruby Princess

The High Court's decision in BHP contrasts with that of the FCAFC in Ruby Princess. In that case, the claims of certain foreign group members were stayed on the basis of a contractual class action waiver clause. The FCAFC held that certain group members who had purchased cruise tickets in North America could not bring class action proceedings in Australia. This was because they had waived their right to do so in a so-called "passage agreement" they signed up to when purchasing their tickets electronically. By agreeing to the terms of the passage agreement, they had signed up to an exclusive jurisdiction clause restricting any claim to be brought individually in the courts of California, and to a class action waiver precluding membership from Australian group proceedings.

The FCAFC also considered whether the passage agreement was unenforceable under s23 of the Australian Consumer Law ("ACL") on the basis it was an "unfair term." This question turned on whether the passage agreement created a significant imbalance in the parties' rights and obligations or caused detriment to ticket-holders. In finding there was no such imbalance or detriment, the FCACA held the passage agreement did not limit recovery – rather, it clearly prescribed the relevant forum as being an individual claim in a Californian court and not a group action in Australia. It also found the cruise operator, as an international corporation engaged in business across multiple territories, had a legitimate interest in requiring actions brought against it to be conducted in its home jurisdiction and that any action be brought on an individual rather than group basis.

While submissions were made on the extraterritorial operation of s23 of the ACL, the FCAFC reserved any final view for another occasion.[1] However, the judges delivered differing obiter which highlights divergent approaches to resolving the question. Derrington JA suggested s23 of the ACL is limited only to contracts governed by Australian law, meaning offshore litigants would not have recourse to the "unfair term" protections under the ACL in disputing the applicability of exclusive jurisdiction clauses and class action waivers. Allsop CJ's reasons indicated a contrary view, with s23 of the ACL potentially having extra-territorial application. The ultimate resolution of this question will affect offshore respondents drawn into Australian class action proceedings, as to whether they can rely on clear authority excluding the ACL's unfair terms provisions from their agreements.

An application for leave to appeal the FCAFC's decision has since been filed.


  • What does this mean for litigants in Australian class actions? The BHP decision increases the scope of respondents' potential liability in class action proceedings, to include claimants outside Australia. Respondents may now face difficulty in identifying how many group members may ultimately comprise the group. Where foreign group members are involved, there may be practical difficulties in communicating with group members located outside Australia and to involve them in mediation or other out-of-court settlement processes.
  • On the other hand, the decision in Ruby Princess demonstrates the importance of clear, well drafted class action waiver clauses in offshore jurisdictions. Such clauses provide a potential mechanism for excluding foreign residents from Australian class action proceedings, which is a legitimate interest of businesses operating across multiple territories seeking to limit litigation to their home jurisdiction, brought only on an individual rather than group basis. Ruby Princess suggests a reluctance by courts to override the clear intentions of parties evidenced in contracts. However, litigants should expect such waivers to be considered on a case-by-case basis. Relevantly, they may be considered unenforceable if they are otherwise considered to be unfair or unconscionable under Australian Consumer Law, although Ruby Princess shows this is a high bar to clear.
  • Whether offshore respondents drawn into Australian class action litigation can argue the ACL's "unfair terms" provisions have no extraterritorial reach is an important question still to be resolved. Ruby Princess makes clear the issues relevant to such resolution are complex, with judges differing on the scope of the ACL's reach.
  • In addition, reliance on class action waivers in seeking to limit the scope of the group will only be possible where such waivers exist in contract. Not all class action claims, including, for example, shareholder class actions, will be subject to contractual terms which would include class action waivers.
  • Businesses should anticipate further guidance from the High Court on these questions if the Ruby Princess application for special leave is granted.

[1] An occasion which would, potentially, include submissions from the Australian Competition and Consumer Commission as the regulator responsible for the enforcement of the ACL.

  • Share on Twitter
  • Share on LinkedIn
  • Share via email
Back to top