Maurice Blackburn secures $59M settlement in forex rate-rigging case

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Maurice Blackburn secured a $59 million settlement on behalf of businesses that traded in foreign currency instruments between 2008 and 2013, bringing to a successful conclusion a complex, high-stakes cartel class action against five of the world's major banks. In approving the settlement, Beach J made significant observations on the contested question of whether ‘pass through’ constitutes a defence to cartel damages claims under Australian competition law and offered pointed remarks on the future of hard class closure mechanisms in light of recent High Court dicta.

Background

The proceeding was brought against five major banks - UBS AG, Barclays Bank Plc, Citibank N.A., JPMorgan Chase Bank N.A. and NatWest Markets Plc (the Banks) - alleging cartel conduct in the global foreign exchange market. The applicant alleged that the Banks co-operated with each other, co-ordinated trading and shared non-public information (concerning current or potential future trading) in contravention of the Trade Practices Act 1974 (Cth) and Competition and Consumer Act 2010 (Cth) (CCA).

The applicant argued that this conduct artificially increased the price of FX instruments, increased volatility, decreased competition, and caused loss to the applicant and to group members. Group members were parties to FX instruments in relation to one or more affected currency pairs in Australia during the relevant period (to a minimum transaction value of AUD 500,000).

The Banks denied that there was a global FX market or Australian FX market or that they engaged in any cartel conduct which caused loss or damage to the applicant. They also argued that any loss or damage that was passed on or ‘passed through’ cannot be recovered.

Following the imposition of a soft class closure mechanism and two mediations, the parties reached an in-principle settlement in February 2025. The deed of settlement was executed on 1 May 2025.

Settlement Approval

His Honour applied the well-established principles for settlement approval under s 33V(1) of the Federal Court of Australia Act 1976 (Cth), and confirmed he was satisfied that $59 million represented a fair and reasonable compromise, having regard in particular to the confidential opinion of senior counsel and the significant litigation risks the proceeding faced, including on the question of whether any passing on or ‘pass through defence’ would be available to the Banks under Australian competition law.

Some useful observations on the ‘pass through’ defence in Australia

A central issue in the proceeding was whether any loss suffered by group members could be reduced or extinguished on the basis that they passed the FX overcharge on to their own downstream customers.

Beach J said the availability of this defence in Australia is uncertain, citing Tracey J’s comments in Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2008] FCA 1458 (at [41] to [43]);

It has yet to be determined authoritatively whether a respondent who is facing a loss and damages claim under s 82 has a defence if it is shown that the applicant has passed on to customers or clients all additional costs occasioned by the implementation of an agreement made in contravention of a provision of the Act.

His Honour noted that the US approach, which doesn’t permit consideration of any ‘pass through’, and bars claims by indirect purchasers, is not transposable to ss 82 and 87 of the CCA.  Unlike the US regime, which is more focused on imposing punitive relief, the Australian provisions are compensatory in nature, requiring a claimant to prove actual loss. Where a claimant has fully passed on an overcharge to downstream customers, it may have suffered no compensable loss at all. His Honour noted [at 47]:

The relevant comparison is between the actual financial position and the financial position the person would have been in but for the contravening conduct. If the claimant is able to pass through the overcharge to persons downstream, such that the claimant is in no worse a financial position than would have been the case but for the contravening conduct, he has suffered no loss or damage. 

The US position does not allow for indirect (or downstream) purchaser claims.  It is a corollary of that restriction, that no ‘pass through’ claim is entertained. But S 82 and 87 of the CCA look at where the true loss resides and recovery by indirect purchasers cannot be disallowed.  Accordingly, it is necessary to take into account ‘pass through’, to prevent the risk of double recovery.

Importantly, his Honour confirmed that ‘pass through’ is not a formal defence carrying any legal or evidentiary burden on the respondent - rather, it is one aspect of the claimant's obligation to prove loss. These observations, while obiter in the settlement approval context, represent the most detailed judicial treatment of this question to date and will be an important reference point for future competition class actions.

A sidenote on hard class closure

While this case did not involve hard class closure, Beach J took the opportunity to acknowledge the recent views expressed by the High Court Lendlease Corporation Ltd v Pallas (2025) 423 ALR 23, that pre-settlement orders which contingently extinguish the rights of unregistered group members, may impermissibly usurp the Court's function.

While the question of hard class closure mechanisms was not before the court in Lendlease, Beach J noted that those comments have ‘chilled the possibility of such a mechanism being further pursued at the moment’ and it may be that ultimately legislative reform will be needed, to resolve the issue.

J Wisbey & Associates Pty Ltd v UBS AG (No 3) [2025] FCA 1018

Federal Court of Australia | Beach J | 15 August 2025 

Applicant's Solicitors: Maurice Blackburn
Respondents' Solicitors: Herbert Smith Freehills Kramer; Clayton Utz; Allens; Allen Overy Shearman Sterling; King & Wood Mallesons

AustLII Link

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