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ARTICLE · 02 MAY 2022

Shareholder class actions in Australia: Uncertainty for the future of market-based causation

Piper Alderman
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Recent decision creates uncertainty around what causal test the court will accept with a market-based causation claim.

AustraliaLitigation, Mediation & Arbitration
Madison Smith
Madison Smith
Nikki Stever
Nikki Stever
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In the third decision delivered in a shareholder class action in Australia,1 Iluka Resources Limited (ASX: ILU), (Iluka) succeeded in its defence of a lawsuit2 which failed to prove that the shareholders' direct reliance on Iluka's conduct caused their losses. However, the decision in favour of Iluka notably lacked any significant consideration of the second causation argument typically pleaded in shareholder class actions - market-based causation.

Background of the matter

Iluka is a large mining company and global supplier of mineral sand products. On 9 July 2012, Iluka revised its sales guidance for its products, resulting in a 25% drop in share price. The shareholders alleged that Iluka's sales guidance leading up to its announcement:

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