In AghaeiRad v Plus500AU Pty Ltd (Stay Application) [2025] FCA 1602, the Federal Court of Australia was asked to consider whether to dismiss a stay application on the grounds that the arbitration agreement in question was unfair and unconscionable pursuant to sections 12BF and 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

Plus500 is part of a global multi-asset fintech group operating technology based trading platforms. Mr AghaeiRad completed an online registration process to enable him to trade on Plus500’s trading platform, and in doing so, confirmed that he had read, understood and agreed to the terms contained in various hyperlinked documents, including a User Agreement which contained an arbitration agreement at clause 23.

Mr AghaeiRad’s trading activities on the platform resulted in losses and he commenced representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth), alleging that Plus500 engaged in misleading or deceptive conduct and unconscionable conduct in breach of the Corporations Act 2001 (Cth) and the ASIC Act.

Plus500 sought orders that the proceedings be permanently stayed and the parties be referred to arbitration, relying on clause 23 of the User Agreement and s 8(1) of the Commercial Arbitration Act 2010 (NSW) (CAA). Section 8(1) of the CAA requires a court to refer parties to arbitration where an action is the subject of an arbitration agreement, unless the agreement is found to be null and void, inoperative or incapable of being performed.

Mr AghaeiRad contended (amongst other things) that s 8(1) of the CAA did not apply because:

• the arbitration term is an unfair contract term voided by s 12BF of the ASIC Act; and
• Plus500’s enforcement of the arbitration term would involve statutory unconscionability contrary to s 12CB of the ASIC Act.

In considering whether clause 23 of the User Agreement was unfair within the meaning of the ASIC Act, the Court determined that the clause:

• was not transparent, as it was embedded within a lengthy document which was not prominently disclosed, and it did not explain the practical consequences for users, including the restriction on their ability to access the courts or participate in a class action;
• created a significant imbalance in the parties’ rights and obligations as the cost of arbitration relative to the likely value of a claim meant that the availability of arbitration was “theoretical only”;
• was not reasonably necessary to protect the parties’ legitimate interests as it failed to provide a fair means to resolve a typical complaint because no rational customer would use arbitration in the circumstances; and
• would cause detriment and deprive consumers of the ability to prosecute their claims in an appropriate forum, along with the various advantages of class action proceedings.

As to whether the arbitration agreement was unconscionable under s 12CB of the ASIC Act, the Court referred to and considered s 12CC of the ASIC Act which contains an extensive list of matters a court may consider, including bargaining powers, undue influence, disclosure, good faith and whether the terms are reasonably necessary to protect legitimate interests.

The Court held that reliance on, or enforcement of, the arbitration agreement in the User Agreement was “outside the norms of acceptable commercial behaviour as explicity and implicitly found in the ASIC Act”. The Court considered that the clause prevented the examination of claims made against Plus500 due to the cost and impracticality of bringing those claims in an arbitration and the inability to make those claims in a court proceeding.

The Court held that clause 23 of the User Agreement contravened the requirements of ss 12BF and 12CB of the ASIC Act and dismissed the stay application.

The judgment is available here.