Woodside Energy Ltd and Ors v Electricity Generation Corporation t/as Verve Energy; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd and Ors

The High Court of Australia considered appeals and cross-appeals arising from a dispute between Woodside Energy Ltd and others (Woodside) and Electricity Generation Corporation trading as Verve Energy (Verve Energy). The core of the dispute concerned the interpretation of a contract for the supply of natural gas, specifically relating to the calculation of the price payable for gas supplied from the North West Shelf Project to Verve Energy's power stations in Western Australia. The proceedings involved complex contractual provisions and expert evidence regarding market prices and operational aspects of gas supply.

The central legal issues before the High Court were: (1) whether the price payable for gas under the contract was to be determined by reference to a formula that included a "market price" component, and if so, how that market price was to be ascertained; and (2) whether Verve Energy was entitled to a refund of alleged overpayments for gas supplied under the contract. These issues required the Court to undertake a detailed construction of the gas supply agreement, considering its various clauses, including those pertaining to price adjustment mechanisms and dispute resolution.

Kiefel and Keane JJ, in their joint judgment, focused on the proper interpretation of the contractual provisions governing the price of gas. They analysed the language of the agreement, giving particular attention to the definition of "market price" and the mechanisms for its determination. The Court found that the contract did not mandate the use of a specific external market index for determining the market price component, but rather contemplated a process of negotiation and, failing agreement, arbitration. Their Honours concluded that Verve Energy had not established that Woodside had breached the contract by failing to pay the correct price, nor that it was entitled to a refund of overpayments, as the contractual mechanisms for price determination had not been properly invoked or exhausted.

The High Court allowed Woodside's appeal and dismissed Verve Energy's cross-appeal, setting aside the orders of the Full Court of the Supreme Court of Western Australia. The Court ordered that Verve Energy pay Woodside's costs of the appeals.