Plus500AU Pty Ltd v AghaeiRad [2026] FCAFC 125

Tom French | Shevaun Stringer | Naoisa McNelis

Key takeouts

• Suppliers who include mandatory arbitration clauses in standard form contracts directed at consumers or small businesses should stress-test those clauses against the unfair contract terms regime (UCT Regime). Care is needed where the clause is buried in lengthy terms, excludes court proceedings, or makes arbitration economically out of reach for the counterparty.
• When considering whether an arbitration clause is caught by the UCT Regime, courts will weigh the general policy favouring arbitration, but that policy cannot override the UCT Regime.
• A term that applies equally to both parties on its face can still cause a ‘significant imbalance’ if, in practice, one party holds extensive self-help remedies while the other faces costs that make arbitration economically unrealistic.
• Transparency is not established by a click-box acknowledgment. Where a term’s significant practical consequences, including loss of court access and the right to bring proceedings, are not obvious, they must be flagged in plain language and with real prominence.

Facts

Plus500AU Pty Ltd (Plus500AU) operated an online platform through which retail investors traded over-the-counter contracts for difference (CFDs), marketed broadly to non-professional investors (approximately 80% of whom lost money). In August 2020, Mr AghaeiRad opened an account by completing an online registration process in which he checked a box confirming he had read, understood and agreed to a 50-page User Agreement (User Agreement). Mr AghaeiRad had not in fact opened the User Agreement. By June 2021, he had lost his $111,948 deposit.

Clause 23 of the User Agreement contained a tiered dispute resolution regime, involving referral to senior officers, then mediation and, if unresolved, submission to arbitration under the Resolution Institute Arbitration Rules (cl 23.3). Clause 23.4 preserved customers’ entitlement to resort to the Australian Financial Complaints Authority (AFCA).

In November 2023, Mr AghaeiRad commenced a class action alleging misleading or deceptive conduct, unconscionable conduct and breach of contract. Plus500AU sought a stay of the class action proceedings and referral to arbitration under s 8(1) of the Commercial Arbitration Act 2010 (NSW) (CAA). The primary judge refused the stay on two independent bases:

1. the arbitration clause was void as an unfair contract term under s 12BF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); and

• the enforcement of arbitration and stay on the class action would constitute statutory unconscionability contrary to s 12CB of the ASIC Act.

Plus500AU appealed the decision.

Decision

The Full Court (Lee, Banks-Smith and Stewart JJ) dismissed both appeals.

Transparency

Lee J held the primary judge was entitled to find the arbitration clause did not transparently convey its most significant consequences, namely loss of court access and inability to participate in a class action proceeding, given its burial in a 50-page document and its absence from the summary page. His Honour described it as having ‘an air of fairyland’, the suggestion that an ordinary consumer who clicks a box will have read the terms and appreciated consequences apparent only to a lawyer.

Significant imbalance

The mere fact an arbitration agreement excludes recourse to a court cannot, alone, render the term unfair. But s 12BG(1)(a) looks at the parties’ rights and obligations in practice, and the Court rejected reliance on the clause’s apparent even-handedness.

Plus500AU held extensive self-help powers (margin calls, closing transactions, deducting funds) and rarely needed to sue customers. Arbitration costs made the forum ‘theoretical only’ for most customers, leaving the dispute resolution clause as a barrier to the only practical means of pursuing uneconomic claims. Between September 2017 and March 2021, Plus500AU received 566 complaints: 277 were resolved through internal dispute resolution and 289 were escalated to AFCA. Not one proceeded to arbitration, confirming the practical imbalance.

Reasonable necessity

The interests Plus500AU identified in including an arbitration agreement were legitimate. However, the primary judge was entitled to find that mandatory arbitration was not required: internal dispute resolution, mediation and AFCA already substantially protected those interests, no customer had ever arbitrated, and alternatives such as an exclusive jurisdiction clause were available.

Plus500 Limited’s ‘coherence’ argument, that policy support for arbitration should inform the unfair contract terms test, was accepted ‘only to a point’. Legislative support for arbitration does not immunise an arbitration clause from the UCT Regime.

Practical implications

Although Plus500 arose in a retail financial services context, the reasoning is not confined to financial services and could equally apply to standard form contracts in the construction industry. The analysis applies to any mandatory arbitration clause in a standard form contract directed at consumers or counterparties meeting the UCT small business thresholds.

Clauses that are buried in lengthy standard conditions, prevent litigation proceedings, or make arbitration economically out of reach for the counterparty will be particularly vulnerable.

Parties imposing such clauses should consider whether a workable low-cost alternative, such as industry-specific adjudication, a tiered internal dispute resolution mechanism, or recourse to a statutory scheme, sits alongside the arbitration requirement.