Precious Metals Australia Limited v Xstrata (Schweiz) AG

Precious Metals Australia Limited (PMA) sought to recover damages from Xstrata (Schweiz) AG for breach of a contract. The dispute was heard and determined in the Federal Court of Australia. PMA alleged that Xstrata had breached a contract whereby it guaranteed certain payments to PMA in the event of default by a third party, and also indemnified PMA against any losses incurred as a result of such a default. Xstrata denied liability, arguing that the guarantee and indemnity clauses were not intended to cover the losses PMA claimed.

The central legal issue was the interpretation of the guarantee and indemnity clauses in the contract between the parties. The court needed to determine whether the clauses were intended to cover the losses PMA alleged, and whether Xstrata was liable for those losses. The court considered the language of the clauses, the surrounding circumstances of the contract, and the intentions of the parties at the time of entering into the contract.

The court found that the guarantee and indemnity clauses were intended to cover the losses PMA alleged. It held that the clauses were clear and unambiguous, and that Xstrata was liable for the losses incurred by PMA as a result of the third party's default. The court rejected Xstrata's argument that the clauses only covered losses that were foreseeable at the time of entering into the contract. It held that the foreseeability of the losses was not a relevant consideration in determining the scope of the clauses.

The court ordered Xstrata to pay PMA damages in the amount of $4.8 million, plus interest and costs.