Fortescue, Forrest win appeal against Asic
Fortescue Metals Group (FMG) has won a six-year court battle against the Australian Securities and Investments Commission (Asic), paving the way for Andrew Forrest to return as an executive director.
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The case stemmed from public statements FMG made in 2004 regarding an agreement with three Chinese state-owned entities to build, finance and transfer the railway, port and mine components of its proposed Pilbara Iron Ore and Infrastructure Project.
In March 2006, Asic commenced proceedings against FMG in Australia’s Federal Court, alleging that because the agreements were not enforceable under Australian law, FMG had therefore engaged in misleading or deceptive conduct when the company and Forrest made representations that the agreements were binding.
Asic further alleged that FMG and Forrest had contravened the continuous disclosure requirements of the Corporations Act by not correcting the false or misleading information and that Forrest had failed to discharge his duties as a director of FMG.
The trial judge dismissed Asic’s claims but the Full Court of the Federal Court allowed the commission’s appeal.
FMG and Forrest then appealed to the High Court.
On Tuesday October 2, the High Court said FMG and Forrest did not contravene the Corporations Act and that the statements that Fortescue and the Chinese state-owned entities had entered into agreements “that each intended to be binding”.
“This representation was neither false nor misleading,” the court ruled.
“Asic’s allegations have been an expensive distraction. We can now focus our full attention to ensuring the continued success of Fortescue Metals Group for many years to come,” FMG deputy chairman Herb Elliott said in a statement.
FMG has been awarded full costs from each of the Federal Court, Full Federal Court and High Court proceedings, the statement noted.