By Sarah McKibbin, University of Southern Queensland
Epic Games, the developer of the highly popular and lucrative online video game Fortnite, recently won an appeal against tech juggernaut, Apple, in Australia’s Federal Court. Fortnite is played by over three million Apple iOS users in Australia. In April 2021, Justice Perram awarded Apple a temporary three-month stay of proceedings on the basis of an exclusive foreign choice of court agreement in favour of the courts of the Northern District of California. Despite awarding this stay, Justice Perram was nevertheless ‘distinctly troubled in acceding to’ Apple’s application. Epic appealed to the Full Court.
On 9 July, Justices Middleton, Jagot and Moshinsky found three errors of principle in Justice Perram’s consideration of the ‘strong reasons’ given by Epic for the proceedings to remain in the Federal Court — despite the exclusive foreign choice of court agreement. Exercising its own discretion, the Full Court then found ‘strong reasons’ for the proceedings to remain in the Federal Court, particularly because enforcement of the choice of court agreement would ‘offend the public policy of the forum.’ They discerned this policy from various statutory provisions in Australia’s competition law as well as other public policy considerations. The appeal highlights the tension that exists between holding parties to their promises to litigate abroad and countenancing breaches of contract where ‘serious issues of public policy’ are at play.
1 Exclusive Choice of Foreign Court Agreements in Australia
Australians courts will enforce an exclusive choice of court agreement favouring a foreign court either by granting a stay of local proceedings or by awarding damages for breach of contract. The usual approach is for the Australian court to enforce the agreement and grant a stay of proceedings ‘unless strong reasons are shown why it should not.’ As Justice Allsop observed in Incitec v Alkimos Shipping Corp, ‘the question is one of the exercise of a discretion in all the circumstances, but recognising that the starting point is the fact that the parties have agreed to litigate elsewhere, and should, absent some strong countervailing circumstances, be held to their bargain.’ The burden of demonstrating strong reasons rests on the party resisting the stay. Considerations of inconvenience and procedural differences between jurisdictions are unlikely to be sufficient as strong reasons. Read more...