IG Power (Callide) - Case Update

The Federal Court has rendered a key decision in favour of the administrators of IG Power (Callide) (IGPC) and certain other respondents in a dispute arising from a joint venture agreement (JVA) with Callide Energy Pty Ltd (CEPL), a company ultimately controlled by the State of Queensland, concerning the Callide C Power Station in Queensland.

We previously wrote about this dispute in November 2024, when administrators John Park and Benjamin Campbell of FTI Consulting successfully sought directions that the proposed sale of IGPC’s parent company, IG Energy Holdings (Australia) Pty Ltd (IGEH), to Sev.en Global Investments a.s. (Sev.en), did not trigger CEPL’s pre-emptive rights on a transfer of interest or change of control under the JVA.

Justice Derrington of the Federal Court in that case found that IG Power Holdings and IGEH, the parties technically disposing of the relevant controlling interest, were not parties to the JVA and had not agreed to be bound by it. The Court stated that in agreements of this nature, it might be commonplace for there to be a covenant by IGPC to secure an agreement from its related companies to be bound by the terms of the pre-emption clauses, however, no such provision appeared in the JVA.

CEPL made many of the same arguments in this case before Justice Shariff of the Federal Court. Specifically, CEPL contended that IGPC was an agent of its upstream parent companies and had the authority to bind them to these obligations. Alternatively, CEPL argued that the Court should imply terms into the JVA such that the pre-emption clauses would apply to the proposed sale to Sev.en. The respondents, IGPC’s administrators and Sev.en, opposed this and argued that CEPL’s rights were not engaged. The respondents also argued that the reasoning of Derrington J in the prior judgment should be followed unless there was a compelling basis to depart from it. In this case, there was not.

Justice Shariff agreed, finding that the Derrington J’s November judgment provided a well-reasoned and persuasive interpretation of the JVA, particularly concerning the scope of CEPL’s pre-emptive rights. Justice Shariff also noted that CEPL had not presented any new legal arguments or evidence that would justify a departure from the prior ruling.

On the substantive issues, Shariff J rejected CEPL’s agency argument, finding insufficient evidence that IGPC acted with actual authority from its parent companies to bind them. The JVA carefully distinguished between different corporate entities and did not suggest that IGPC could bind its parents. Furthermore, CEPL’s argument that IGPC was obligated to use reasonable endeavours to procure compliance from its parents was inconsistent with corporate realities—IGPC, as a subsidiary, could not compel its parent companies to act.

The Court also rejected the argument that it should imply terms into the JVA or interpret the JVA in the manner suggested by CEPL, which “would require rewriting the contract in a way not supported by the language or the commercial context”.

The Court ultimately dismissed CEPL’s application, concluding that the JVA’s pre-emptive rights were not triggered by the proposed sale. CEPL was ordered to pay the respondents’ costs.

Read the case here.

Professionals involved:

• David Sulan SC and Ryan Jameson of Banco Chambers (instructed by White & Case) for the administrators (John Park and Benjamin Campbell of FTI Consulting)

• Vanessa Whittaker SC of Banco Chambers and Bradley Smith of Tenth Floor Chambers (instructed by Quinn Emanuel Urquhart & Sullivan) for Sev.en

• Michael Hodge KC and Stewart Webster KC of Level Twenty Seven Chambers and Alexander Psaltis of Northbank Chambers (instructed by Clayton Utz) for CEPL