Surrogacy has been in the news lately, raising many questions about exactly what is the law as it effects the biological parents, the birth mother and the child. In Australia each State has its own laws covering surrogacy, and they do vary slightly. In NSW the law is covered in the Surrogacy Act 2010 and came into operation on 1 March 2011.

It defines surrogacy as an arrangement where a woman agrees to bring to gestation in her uterus the ovum of another woman fertilized outside the body and introduced artificially. Surrogacy is allowed if the woman is over 25 and it is not a commercial arrangement - however "reasonable costs" of the birth mother can be covered.

Both sides must receive counseling and legal advice before surrogacy can go ahead. Thirty days after the birth, the intended parents can apply to the Supreme Court for a "parentage order" giving them full parenting rights and their name on the baby's birth certificate.

Commercial surrogacy is banned in every Australian state and territory - except the Northern Territory that does not regulate the practice. In NSW paying a woman to carry a baby in her womb for others risks two years jail and fines up to $275,000. NSW residents also break the law if they travel outside the State for commercial surrogacy.

It's hard to find a woman willing to have a fertilised egg inserted into her uterus, then carry the fetus to term and finally hand over the baby to the biological parents - with no compensation for her efforts and emotional commitment.

The demand for surrogacy has grown as many couples unable to conceive search for ways to have a child of their own. Hundreds go overseas in search of a commercial arrangement. Australians are among the highest per capita users of international commercial surrogacy - about 500 a year mostly to women in India and Thailand.

The fate of a baby boy born with downs syndrome to a commercial surrogate mother in Thailand has prompted calls to review the laws in Australia. But questions will always remain: What happens if the biological parents won't or can't take the baby? What if the birth mother won't give up the baby? Is the contract broken if the fetus develops health problems? If the biological parents don't pay up who gets the baby? Can intending parents force the birth mother to abort the baby if they change their mind or the fetus is unhealthy?

It's a vexed area, and anyone contemplating surrogacy arrangements would be wise to get good legal advice before proceeding.

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