The Australian High Court has ruled in favor of Fortescue Metals Group (ASX:FMG) in a case brought against the mining giant eight years ago by the Australian Securities and Investments Commission (ASIC).
According to the Australian Financial Review the High Court ruled unanimously on Tuesday that Fortescue and chairman Andrew "Twiggy" Forrest did not mislead investors as alleged by ASIC and determined by the Australian Federal Court, and that the company had fulfilled its obligations under the Corporations Act with respect to honest disclosure.
ASIC had accused Fortescue of lodging misleading statements with respect to agreements between itself and Chinese state-owned companies in 2004 for the purchase of iron ore from Fortescue's mines in Western Australia's Pilbara region.
A full bench of the Federal Court found Forrest guilty of misleading and deceptive conduct in February last year, on the grounds that the Fortescue founder and chairman had given the impression that the agreements were binding contracts.
The High Court has ruled, however, that Fortescue had the Chinese counter-parties had "entered into agreements that each intended to be binding" and that "this representation was neither false nor misleading."
The High Court's reversal of the Federal Court decision is a major blow for ASIC, whose decision to pursue the case against Fortescue came under scrutiny when two of the three Federal Court judges expressed their reservations over lack of evidence of loss sustained by misled investors.
In an official statement Fortescue's Deputy Chairman Herb Elliot hailed the decision as bringing an end to an eight-year "expensive distraction" which "was ultimately determined to be wrong."