The historic 1992 Mabo decision of the High Court (Mabo No.2) overturned the foundational doctrine of terra nullius ('empty land') as the basis of the British obtaining sovereignty over Australia, and recognised that a pre-existing and in some cases continuing proprietary interest in land was held by Indigenous people. The court called this interest 'native title'.

The Court made a declaration that the plaintiffs, the Miriam people of the Murray Islands, continued to hold native title over their land, but it did not consider this question with respect to other parts of Australia.

A majority of the Court also confirmed that sovereignty over Australia had been acquired by the Crown through settlement, but that native title continued to coexist with the Crown's ultimate title unless specifically extinguished by a valid grant or dealing with the land that amounted to exclusive possession. Freehold land fell into this category, but Crown leasehold land and unalienated Crown land offered instances where native title could continue to exist. The question of extinguishment was not answered by the Court.

What was confirmed was that native title was an inferior form of common law title that yielded to Crown grants or Crown dealings with the land which were inconsistent with the continued exercise of native title rights and interests. This vulnerability of native title places responsibility on the Government to ensure that measures are in place to protect native title rights from unfair or discriminatory impairment or extinguishment.

The response of the Keating Labor Government to Mabo was to enter into negotiations with Indigenous people and other stakeholders to find a legislative solution. This process resulted in the Native Title Act 1993. The Act included a statutory 'right to negotiate' for native title holders which sought to address the vulnerablility of native title rights within existing non-indigenous land tenure and land management systems.

The Government also left the courts to determine the unanswered question of whether native title was extinguished by grants of leasehold.