High Court approves extraterritorial application of Australian Consumer Law unfair contract provisions

7 December 2023

The High Court of Australia has determined a notable issue concerning the extra territorial application of the ACL's unfair contract provisions to a contract made outside of Australia.

The case, Karpik v Carnival plc [2023] HCA 39, concerned a class action arising from a COVID 19 outbreak on the Ruby Princess cruise ship. 696 class members were overseas based travellers who bought tickets outside the jurisdiction that included "US Terms and Conditions" which contained a choice of law clause applying the general maritime law of the US; an exclusive jurisdiction clause in favour of the United States District Courts; and a class action waiver clause.

Carnival sought to rely on the exclusive jurisdiction clause, which would exclude the operation of the ACL. Karpik contended that the unfair contract terms of the ACL applied to the effect that the class action waiver was void.

The Court held that s5 of the CCA addresses the extraterritorial application of the ACL, and "if a corporation carries on business in Australia, then a price of doing so is that the corporation is subject to and complies with statutes intended to provide protection for consumers." The Court went on to determine that the class action waiver was an unfair contract term including because it did not protect any legitimate interest of Carnival and would have otherwise had the effect of discouraging the 696 passengers from vindicating their legal rights because the cost to do so "may be uneconomical."

Justin Gleeson SC and Ryan May appeared for the Karpik interests on instructions from Vicky Antzoulatos of Shine Lawyers. Ruth Higgins SC appeared for the ACCC as intervener in support of the Karpik interests.

Link to judgment