The Western Force is challenging its exclusion from next year's Super Rugby competition on the basis that its agreement with Australian Rugby Union does not expire until the end of 2020 and the national body has not acted in good faith by terminating it unilaterally.
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The Perth-based team, backed by the billionaire mining magnate Andrew "Twiggy" Forrest, has vowed to fight the ARU's decision to axe it from the competition under an international agreement to reduce the number of teams from 18 to 15.
Justice David Hammerschlag granted leave to Western Australian Rugby Union to appeal its axing in the Supreme Court on Wednesday, after it lost an arbitration earlier this month.
The hearing will be crucial to the future of the Perth side, coming a day after the ARU rejected an offer of $50 million from Mr Forrest to take on the financial burden of the struggling team.
WA Rugby Union barrister Robert Newlinds SC said the contract between his client and the ARU held until December 31, 2020, unless the commercial terms of SANZAAR's (Super Rugby's governing body) broadcasting agreements were altered earlier, in which case the rugby bodies could renegotiate the terms of their contract in good faith.
"The consequence of there being a renegotiation of the broadcast agreements is good faith negotiations between the two parties as to what happens next between them, which might involve the termination of an agreement or might not," Mr Newlinds said.
But the changes to the SANZAAR broadcasting agreement did not rule out five teams from Australia continuing to play in the competition and should not have triggered the termination of the contract with Western Force, he said.
"It used to say no fewer than 18 teams. It now says no fewer than 15 teams," Mr Newlinds said.
"It used to say at least five from Australia. It now says at least four from Australia.
"Well, five is at least four."
But Justin Gleeson SC for the ARU said the new terms of the SANZAAR broadcasting agreements were sufficient to trigger a change to the agreement between the ARU and WA Rugby Union.
"When SANZAAR resolved earlier this year that it would reduce the competition from 18 to 15, that was a binding contracted promise between each of the five unions and it's a promise that could not be fulfilled without an amendment to the definition of the Super Rugby competition," Mr Gleeson said.
"Because if the teams were reduced to 15, SANZAAR would not be delivering the product which it had promised [to the broadcasters]."
The hearing continues.
