Weapons maker Thales ordered to

The firm behind the Australian Defence Force’s cherished primary assault rifle will be forced to pay millions in compo. Here’s why.

A firearms maker behind the Australian Defence Force’s cherished primary assault rifle will be forced to pay millions in compensation after a court rejected a claim it solved a design issue fault.

Instead the Queensland Court of Appeal has ruled the weapons maker Thales Australia unlawfully came up with a solution for the Austeyr assault rifle after it was given a prototype and blue prints to resolve a firing issue by its original Austrian manufacturer.

Private Jackson Bartlett from the 5th Battalion Royal Australian Regiment pulls the then 2013 newly position trigger on the new Grenade Launcher Attachment (GLA) on an EF88 Austeyr weapon at Kangaroo Flats firing range, outside of Darwin. Picture:

It had been alleged the partially French Government owned subsidiary Thales based at its plant in Lithgow NSW, had unlawfully used misleading and deceptive conduct when it used the confidential plans of the Austrian manufacturer and a Queensland family-owned firm NIOA, to fix a problem with the weapon.

The issue will likely complicate moves by the Federal Government to mend relations with their French counterparts after the debacle over the submarine contract.

Actor Sylvester Stallone in scene from film ''Rambo III'' in which his modified use of an M203 grenade launcher in the 1988 action film has been associated with the design of a grenade launcher on the Steyr and Austeyr. Picture: Supplied

The Austeyr assault rifle has been a stock issue for the ADF for decades but a grenade launcher attachment – inspired by the 1988 action movie Rambo III – was added below the barrel which then caused an issue with flipping from grenades to bullets.

The problem was discovered by the Commonwealth in 2006 but not formally reported until 2007 but which time the weapon’s original Austrian designer Madritsch had come up with a trialled and tested solution.

An Australian Army soldier from 3rd Battalion, Royal Australian Regiment, conducts an EF88 Austeyr rifle reload at Lavarack Barracks in Townsville, Queensland, during Exercise Opie Trophy 2022. Picture: Sergeant Andrew Sleeman

Through its Australian partner, the Queensland family-owned NIOA arms and munitions firm, it offered the solution to weapon’s Australian maker Thales.

A non-disclosure agreement was signed over its design solution which Thales accepted was a positive outcome for the ADF and Commonwealth which was demanding a fix. Madritsch sent six prototypes and blue prints for the weapon.

Soldiers from the 6th Battalion, Royal Australian Regiment move into position using camouflage and carrying their EF88 Austeyr rifles during a live-fire defence serial during exercise Diamond Walk at Shoalwater Bay, Queensland. Picture: Private Jacob Hilton

But when it came to buying a licensing fee, Thales baulked at the price which it described as “farcical” but then refused to engage with Madritsch and NIOA.

Despite previous months of trying to resolve the issue it alleged it came up with its own design, apparently after one of its employees was hanging out his washing and was inspired by the movement of a peg to fix the double spring fault.

Thales then told the Commonwealth it had solved the issue, while deceptively stalling the other two firms while it finalised its own design.

The breach of the non-disclosure was only discovered when Thales displayed the weapons at an arms fair in Paris in 2012 and it was spotted by the Austrians. It has taken years to move through the courts.

NSW Premier Dominic Perrottet visits Thales. Picture: NCA NewsWire / Jeremy Piper

The Queensland Supreme Court found the peg claim unbelievable as well as claims Thales had come up with a solution itself so quickly after being given prototypes, and last week the decision was upheld by the Appeals Court which ordered Thales to pay both firms compensation and all legal costs.

Initial losses were claimed to be $1.9 million Madritsch and $990,000 by NIOA but the damages are now set to be higher with those figures unlikely to even cost legal costs.

In a line response, a Thales spokeswoman last night said “Thales is disappointed but respects the decision of the court.”