Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16]

Mineralogy Pty Ltd sought a declaration and injunctions from the Federal Court of Australia against Sino Iron Pty Ltd, regarding the interpretation of a long-term contract's royalty payment clause and the implications of the redundancy of the former benchmark pricing system for iron ore. The central dispute was about the criteria for determining market pricing in the contract to derive royalty payments following the redundancy of the former benchmark pricing system in 2010. Mineralogy argued that the royalty payment clause was severable, while Sino Iron contended that the clause was non-severable and sought an implied term for a fair and reasonable royalty. Additionally, the court considered whether the expert determination clause granted the expert jurisdiction to interpret and apply aspects of the market reference pricing clause.

The court had to decide several legal issues, including the interpretation of the ambiguous royalty payment clause in the contract, the severability of the royalty component, the scope of the expert's jurisdiction under the expert determination clause, and the implied term for fair and reasonable royalty. The court also needed to determine whether the Eshelby constraint applied to royalty payments falling due after the proceedings commenced, and whether the court was exercising its jurisdiction conferred by cross-vesting legislation.

The court held that the royalty payment clause was severable, and the expert had jurisdiction to interpret and apply the market reference pricing clause. The court rejected the implied term for a fair and reasonable royalty, finding that the contract's terms were clear enough to require no implication of terms. The court also found that the Eshelby constraint did not apply to royalty payments falling due after the proceedings commenced. The court exercised its jurisdiction under the cross-vesting legislation, confirming that section 11(1)(c) of the Cross-vesting Act applied.

The court ordered that the royalty payment clause was severable, and the expert's determination was binding. Mineralogy was required to pay the expert's fees. The court did not imply a term for a fair and reasonable royalty. The court also ruled that the Eshelby constraint did not apply to the royalty payments in question.