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Full Court upholds class action waiver in Ruby Princess litigation

The Full Court of the Federal Court of Australia has upheld the validity of a class action waiver clause in the passage contract between a Canadian passenger and Princess Cruise Lines Limited: see [2022] FCAFC 149.  This is likely to have significant implications for the class action proceedings arising from the voyage of the Ruby Princess in March 2020.  Counsel for the successful appellants were David McLure SC, Thomas Prince, Amy Reid and Henry Cooper.

On 8 March 2020, the Ruby Princess departed Sydney for a two-week cruise around New Zealand.  On 15 March 2020, the Australian Government gave notice of its intention to close the borders to cruise ship arrivals.  The ship returned to Australia on 18 March 2020.  After disembarkation, several passengers tested positive for COVID-19.  In September 2020, a class action was commenced on behalf of the 2,671 passengers against Princess Cruise Lines Limited (Princess) and Carnival plc  (Carnival).  The proceedings claim damages for negligence and breach of the Australian Consumer Law.

The passengers on the Ruby Princess came from various places around the world.  Those passengers who purchased their tickets in North America contracted on terms that included an exclusive jurisdiction clause favouring the United States District Court for the Central District of California and a further clause waiving the right to proceed by way of class action.  Class action waiver clauses are relatively common in the United States and have been held to be valid by the United States Supreme Court.  The validity of such clauses has not been previously considered by superior courts in Australia.

In the Ruby Princess class action, the Court ordered that a sub-group be established for those passengers who contracted on the North American ticket terms.  Princess and Carnival sought a stay of the claims brought on behalf of the sub-group or at least the lead applicant of the sub-group, on the basis of the exclusive jurisdiction clause and the class action waiver clause.  The primary judge rejected the application, however, the Full Court allowed an appeal brought by Princess and Carnival.

The Full Court (Allsop CJ and Derrington J; Rares J dissenting) held that the North American ticket terms were incorporated into the contract of the lead applicant of the sub-group.  The Court held that the exclusive jurisdiction clause and the class action waiver clause were not unfair within the meaning of s 23 of the Australian Consumer Law.  The Court rejected the applicant’s argument that the class action waiver clause was contrary to the class action regime provided for in Part IVA of the Federal Court of Australia Act.

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