The Fortescue Decision in the High Court

Articles Written by Damian Reichel (Partner)

ASIC has had a difficult and ultimately unsuccessful pursuit of Fortescue Metals Group Limited (FMG) and its former Managing Director Andrew Forrest (Forrest).

ASIC alleged that FMG had overstated the effect of framework agreements which FMG signed with three Chinese government owned contractors in 2004 to build and finance the infrastructure for FMG's then embryonic iron ore project in the Pilbara. In particular:

  • FMG's announcements were misleading in referring to the 3-4 page framework agreements as 'binding agreements'; and
  • FMG should have immediately corrected the announcements under its continuous disclosure obligation.

The High Court disposed of ASIC's claim on the basis that FMG's statements were not misleading. Hence there was nothing that FMG was required to correct.

This article discusses the case and the implications of the High Court decision.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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