Australia: Shipping in Australia 2020

Australia

NEW BUILDING CONTRACTS

Transfer of title

  1. When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?

The parties may agree by contract when title in the ship is to pass to the shipowner. If the contract does not specify when title passes, title will pass at the earlier of the following events:

  • completion and delivery; or
  • completion and approval by the purchaser.

Subject to normal considerations around variations of contracts (such as execution of a deed of variation) the parties may agree to change when title will pass.

Refund guarantee

  1. What formalities need to be complied with for the refund guarantee to be valid?

Refund guarantees are governed by common law with the usual formalities, such as the demand conforming with the requirements of the guarantee, the guarantee being unexpired at the time it is triggered and the guarantee covering the events claimed. Court-ordered delivery

Court-ordered delivery

  1. Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?

Shipbuilding contracts are governed by the ordinary law of personal property and the sale of goods. A purchaser may seek specific performance of the contract if damages for breach is an inadequate remedy.

Defects

  1. Where the vessel is defective and damage results, would a claim lie in contract or under product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage?

Claims by a purchaser for a defective vessel could be brought under the construction contract's warranty provisions (if a warranty has been provided) or breach of contract. A third party that has sustained damage could bring an action in tort. Product liability provisions in the Australian Consumer Law are limited to products sold for less than A$40,000.

SHIP REGISTRATION AND MORTGAGES

Eligibility for registration

  1. What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country?

All Australian-owned or operated commercial and demise chartered ships, 24 metres and over in tonnage length and capable of navigating the high seas must be registered. All other craft, including government ships, fishing and pleasure craft need not be registered, but may be if the owner or operator desires.

  1. Who may apply to register a ship in your jurisdiction?

Registration in the General Register is open to all Australian-owned ships. The Shipping Registration Act (Cth) provides that an Australian-owned ship is a ship that is:

  • owned by an Australian national or Australian nationals and by no other person;
  • owned by three or more persons as joint owners, where the majority of those persons are Australian nationals; or
  • owned by two or more persons as owners in common, where more
  • than half of the shares in the ship are owned by an Australian national or Australian nationals.

Registration in the International Register is restricted to Australian-owned commercial ships that are engaged in international trade. These must be at least 24 metres in tonnage length and trading ships that are Australian-owned, wholly owned and operated by Australian residents or nationals, or on demise charter to Australian-based operators.

Australian national means an Australian citizen, a body corporate established by or under a law of the Commonwealth or of a state or territory or the commonwealth or a state or territory.

An application to register a ship is made by lodging a written application that is signed by the ship's owner with the Registrar.

Documentary requirements

  1. What are the documentary requirements for registration?

The documents required for registration are as follows:

  • application for registration (Australian Maritime Safety Authority (AMSA) 168);
  • declaration of ownership and nationality (AMSA 208);
  • notice of appointment of registered agent (AMSA 157);
  • builder's certificate (AMSA 211) or statutory declaration for builder's certificate (AMSA 222);
  • evidence of ownership (often by way of Bill of Sale);
  • certificate of deletion: if applicable;;
  • demise charter party: if applicable;
  • tonnage certificate: if applicable;
  • call sign licence: if applicable;
  • evidence of marking of ship; and
  • registration fee.

Dual registration

  1. Is dual registration and flagging out possible and what is the procedure?

Pursuant to section 17 of the Shipping Registration Act 1981 (Cth) the Registrar must not enter a ship on the register if it is registered under a law of a foreign country. Where an owner/operator is seeking registration of a ship last registered under a foreign law they are to provide evidence from the foreign registration authority showing that the registration is closed. This must be done before a registration certificate can be issued.

Mortgage register

  1. Who maintains the register of mortgages and what information does it contain?

Since 30 January 2012, the Personal Property Securities Register(PPSR) (www.ppsr.gov.au) has been the single national register of security interests in personal property.

LIMITATION OF LIABILITY

Regime

  1. What limitation regime applies? What claims can be limited? Which parties can limit their liability?

The Convention on Limitation of Liability for Maritime Claims 1976 (CLLMC), as amended by the 1996 Protocol, has force of law in Australia under the Limitation of Liability for Maritime Claims Act 1989 (Cth) (LLMCA). The new limits applied from 8 June 2015.

Shipowners (including owner, charterer, manager and operator of a seagoing ship) and salvors may limit their liability per article 1 for the claims set out in article 2.

The LLMCA does not apply in relation to a ship that belongs to the naval, military or air forces of a foreign country.

Procedure

  1. What is the procedure for establishing limitation?

Pursuant to section 25 of the Admiralty Act, a party wishing to constitute a limitation fund may commence limitation proceedings in the Federal Court before any claims have been made. Limitation funds are commonly established by paying the limitation amount into court, or producing an acceptable protection and indemnity (P&I) club letter of undertaking.

The fund is calculated using the method set out in the convention. A party may apply to limit their liability without constituting a limitation fund, but this is the exception rather than the rule.

A person may apply to constitute a limitation fund where a claim has been made, or is expected to be made, which may be limited under the convention.

Break of limitation

  1. In what circumstances can the limit be broken? Has limitation been broken in your jurisdiction?

In accordance with article 4 of the CLLMC, a person liable shall not be entitled to limit his or her liability if it is proved that the loss resulted from his or her personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

The limit has not been broken in Australia. However, in Strong Wise Limited v Esso Australia Resources Pty Ltd [2010] FCA 240, the court ordered that two limitation funds be constituted for claims arising from the navigation of one vessel over the course of one hour.

Passenger and luggage claims

  1. What limitation regime applies in your jurisdiction in respect of passenger and luggage claims?

None. Australia is not a party to the 2002 Protocol to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea and limitation of liability for passenger and luggage claims is governed by the terms of the contract.

PORT STATE CONTROL

Authorities

  1. Which body is the port state control agency? Under what authority does it operate?

AMSA is the agency responsible for port state control. AMSA operates under the Australian Maritime Safety Authority Act 1990 (Cth).

Sanctions

  1. What sanctions may the port state control inspector impose?

Under the Navigation Act 2012 (Cth), AMSA has the power to detain a vessel or bring it to another appropriate place if AMSA reasonably suspects that the vessel or a seafarer or person on board the vessel is unseaworthy, has been or will be involved in a contravention of the Navigation Act, or if the master or a seafarer of the vessel do not produce certificates or documentary evidence when requested.

If the detention is reasonable, the owner of the vessel is liable to pay AMSA compensation of a reasonable amount in respect of the detention of the vessel.

Criminal and civil penalties apply for failing to comply with directions of AMSA.

Appeal

  1. What is the appeal process against detention orders or fines?

AMSA's decision to detain a vessel may be reviewed by application to the Administrative Appeals Tribunal.

If detention was not reasonable, AMSA is liable to pay compensation to the owner for costs of or incidental to the detention and any loss or damage incurred by the owner as a result of the detention.

If the parties cannot agree on the amount of compensation, they may commence proceedings in an eligible court, usually the Federal Court of Australia.

A person who receives an infringement notice may apply to AMSA within 28 days for it to be withdrawn and bring any relevant facts and matters to AMSA's attention.

CLASSIFICATION SOCIETIES

Approved classification societies

  1. Which are the approved classification societies? AMSA recognises the following classification societies:
    • American Bureau of Shipping;
    • Bureau Vertitas;
    • China Classification Society;
    • DNV Glas;
    • Korean Register of Shipping;
    • Lloyd's Register; and
    • Nippon Kaiji Kyokai.

Liability

  1. In what circumstances can a classification society be held liable, if at all?

Classification societies may be held liable for breach of contract, or for negligence if a duty of care can be established.

In Natcraft Pty Ltd & Anor v Det Norske Veritas & Anor [2002] QCA 284, the court held that Det Norske Veritas did not have a duty of care to warn the plaintiffs that the manner in which the vessel was built was not compliant with Department of Harbours and Marine requirements.

COLLISION, SALVAGE, WRECK REMOVAL AND POLLUTION

Wreck removal orders

  1. Can the state or local authority order wreck removal?

AMSA may order removal of any wreck of an Australian or foreign vessel or remove the wreck if necessary for the purposes of saving human life, securing the safe navigation of vessels or protecting the marine environment.

International conventions

  1. Which international conventions or protocols are in force in relation to collision, wreck removal, salvage and pollution?

The proportionate fault rule for losses caused by the fault of two or more vessels found in the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910 is given effect by the Navigation Regulation 2013 (Cth).

Australia has signed but not ratified the Nairobi International Convention on the Removal of Wrecks 2007. The Navigation Act 2012 (Cth) regulates wrecks and addresses the same points as the Convention except for insurance.

Australia has ratified the International Convention on Civil Liability for Oil Pollution Damage, which is given effect by the Protection of the Sea (Civil Liability) Act 1981 (Cth).

Australia has signed but not ratified the International Convention on Salvage 1989. The Navigation Act regulates salvage and gives effect to the main parts of the Convention. The provisions apply to territorial waters.

Salvage

  1. Is there a mandatory local form of salvage agreement or is Lloyd's standard form of salvage agreement acceptable? Who may carry out salvage operations?

There is no mandatory local form of salvage agreement and Lloyd's Standard Form of Salvage Agreement is commonly used.

A salvor must be a volunteer, but can be motivated by self-interest if they intend to rescue maritime property for its owner. A salvor acting at the request of AMSA is still considered a "volunteer" in obeying a statutory obligation. A salvor must obtain permission from the owner of the salvable property and local authorities to carry out salvage operations.

SHIP ARREST

International conventions

  1. Which international convention regarding the arrest of ships is in force in your jurisdiction?

Australia is not party to any international convention regarding the arrest of ships. Ship arrest is governed by the Admiralty Act 1988 (Cth).

Claims

  1. In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?

Under the Admiralty Act, claims can be made in rem against a ship for maritime liens (section 15), proprietary maritime claims (section 16), general maritime claims (section 17) and demise charterer's liabilities (section 18).

A time-chartered vessel cannot be arrested for claims against the time charterer (though in theory, if not in practice, bunkers owned by a time charterer on a time chartered vessel may be injuncted if the requirements for an injunction can be satisfied).

Maritime liens attach to a ship and are enforceable against the ship notwithstanding changes in ownership. The four maritime liens actionable in Australia are for:

  • salvage reward;
  • damage done by a ship;
  • wages of the master or a member of the crew; and
  • master's disbursements.

Australia follows the UK position, whereby a maritime lien will only be enforceable if it corresponds to a local Australian maritime lien.

Proprietary maritime claims attach to a ship in rem and include claims relating to:

  • the possession, title, ownership or mortgage of a ship or of a share in a ship or of a ship's freight;
  • claims between co-owners of a ship relating to the possession, ownership, operation or earnings of the ship;
  • enforcement of a judgment against a ship; and
  • interest in relation to the above.

General maritime claims attach to a ship in rem and include claims in connection with:

  • damage done by a ship (whether by collision or otherwise);
  • liability of the owner of a ship arising under the Protection of the Sea (Civil Liability) Act 1981 (Cth);
  • loss of life, or personal injury;
  • an act or omission of the owner or charterer of the ship in the navigation or management of the ship, including in connection with the loading of or unloading of goods, embarkation or disembarkation of persons, and the carriage of goods or persons on the ship;
  • loss or damage of goods carried by a ship;
  • an agreement that relates to the carriage of goods or persons by a ship or to the use or hire of a ship, whether by charter party or otherwise;
  • salvage, general average, towage or pilotage of a ship;
  • goods, materials or services for a ship's operation or maintenance;
  • the construction of a ship, alteration, repair or equipping of a ship;
  • a liability for port, harbour, canal or light tolls, charges or dues, or tolls, charges or dues of a similar kind, or a levy in relation to a ship;
  • disbursements incurred by a master, shipper, charterer or agent on account of a ship;
  • an insurance premium, or for a mutual insurance call, in relation to a ship;
  • wages or other amounts owing to a master or a member of the crew;
  • the enforcement of, or a claim arising out of, an arbitral award made in respect of a proprietary or general maritime claim; and
  • interest in respect of the above claims.

Under section 18, proceedings against a demise charterer can be commenced against a demise-chartered ship if the demise charterer was the owner, charterer or in possession and control of that ship when the cause of action arose.

In order to effect an associate or surrogate arrest in Australia the provisions of section 19 of the Admiralty Act must be satisfied which provide that a general maritime claim concerning a ship can be pursued against another ship if:

  • a relevant person in relation to the claim was, when the cause of action arose, the owner or charterer of, or in possession or control of the first-mentioned ship; and
  • that person is, when the proceedings are commenced, the owner of the second-mentioned ship.

For the purposes of section 19, an owner includes an equitable owner.

Maritime liens

  1. Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?

Maritime liens are recognised in Australia. Maritime liens attach to a ship and are enforceable against the ship notwithstanding changes in ownership. The four maritime liens currently recognised in Australia (see section 15 of the Admiralty Act) are for:

  • salvage reward;
  • damage done by a ship;
  • wages of the master or a member of the crew; and
  • master's disbursements.

Australia follows the UK position, whereby a maritime lien will only be enforceable if it corresponds to a local Australian maritime lien.

Wrongful arrest

  1. What is the test for wrongful arrest?

Pursuant to section 34 of the Admiralty Act, a claim can be made for damages for unjustified arrest by a person with an interest in the ship or who has suffered loss or damage as a direct result when:

  • a party unreasonably and without good cause:
  • demands excessive security in relation to the proceeding; or
  • obtains the arrest of a ship or other property; or
  • a party or other person unreasonably and without good cause fails to give a consent required for the release from arrest of a ship or other property.

This section has not been subject to a judgment in Australia. However, obiter in other cases and leading commentary recognises that the threshold to establish unjustified arrest in Australia is very high and will only be satisfied where a party 'unreasonably and without good cause' obtains the arrest of a ship.

Bunker suppliers

  1. Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?

No. Under the Admiralty Act the relevant person must be the person who would be liable in personam, and the owner of the ship.

A bunker supplier could (in theory) obtain a freezing order or Mareva injunction.

Security

  1. Will the arresting party have to provide security and in what form and amount?

The solicitor applying for an arrest warrant must give the court an undertaking to pay the marshal's costs and expenses associated with the arrest. The Marshal will obtain indemnity for the period the vessel is in the custody of the Marshal. The costs of that insurance will be an expense incurred by the Marshal payable by the party issuing the application for the arrest of the vessel.

No other security is required.

  1. How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?

Security is not generally ordered by a court but is negotiated by the parties. Once the arresting party has been offered adequate security it will generally consent to the release from arrest. Note that a failure to consent to release when offered adequate security may render the continued arrest wrongful.

The alternative to negotiated security is bail bond under Part VII of the Admiralty Rules.

The arresting party is entitled under Australian law to security for its best arguable case. This will normally include:

  • total claim;
  • interest, often six to nine months up to the likely date of judgment; and
  • costs associated with enforcement including legal costs, including potential appeals.

In practice, a party will rarely provide security in excess of the value of the arrested vessel, in which case the court may order a judicial sale of the vessel.

Formalities

  1. What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?

The lawyer authorised to make an arrest application must be an Australian legal practitioner. No power of attorney is required.

The arresting party will need to prepare an affidavit in support of the application for arrest. The affidavit will annex supporting documents that will need to be in English or in translation and the deponent can be the local solicitor or the arresting party as appropriate. Original documents are not required; scanned and emailed copies of originals will generally be sufficient.

Once the affidavit has been prepared, proceedings can be commenced and the vessel arrested within a matter of hours.

Ship maintenance

  1. Who is responsible for the maintenance of the vessel while under arrest?

The marshal who arrests a ship has custody of the vessel while under arrest. The arresting party will need to provide funds for the maintenance of the vessel.

Proceedings on the merits

  1. Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?

If security is provided and the terms of the underlying contract provide for the proceedings on the merits to be determined elsewhere, an Australian court will usually stay the arrest proceedings.

Injunctions and other forms of attachment

  1. Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?

Parties can also consider applying for a freezing order (also known as Mareva orders or asset preservation orders). The court is empowered to make a freezing order, with or without notice to the respondent, to prevent the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.

Freezing orders are not a general security for a potential judgment: they prevent the disposal of assets to frustrate the court's processes by depriving the plaintiff of the fruits of any judgment.

A freezing order is an exceptional order. They are not granted lightly, and will be tailored to the specific circumstances of the case. They must generally be supported by an undertaking as to damages.

Delivery up and preservation orders

  1. Are orders for delivery up or preservation of evidence or property available?

Yes, see question 32.

Bunker arrest and attachment

  1. Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?

Generally, no. The ability to commence in rem proceedings against the bunkers or fuel on board a ship independently of any proceeding against the ship itself has been significantly constrained (if not ruled out completely) by the decision and dicta of the Full Court of the Federal Court in Scandinavian Bunkering AS v the bunkers on board the fishing vessel 'Taruman' (2006) 151 FCR 126.

However, parties can potentially apply for a freezing order to have the bunkers discharged from the ship. Such orders can be difficult to obtain.

JUDICIAL SALE OF VESSELS

Eligible applicants

  1. Who can apply for judicial sale of an arrested vessel?

The court may, on application by a party to a proceeding or on its own motion, and either before or after final judgment in the proceeding, order that a ship or other property that is under arrest in the proceeding:

  • be valued;
  • be valued and sold; or
  • be sold without valuation.

Procedure

  1. What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated?

If it becomes apparent that the in rem proceedings are unlikely to be defended, the Court may order on application by the arresting party or on the Court's own motion, that the vessel be sold.

Once such orders are made the marshal will generally oversee the process and a broker will be appointed to conduct the sale.

We estimate the costs of this will be:

  • legal fees: A$30,000;
  • advertising: A$30,000;
  • broker's commission: 1 per cent of sale price; and
  • insurance: A$50,000.

The marshal will usually prepare an estimate of costs of marshal's expenses in relation to the valuation and sale of the vessel. The broker may be the best (only) valuer. This estimate is usually based on a period of eight weeks from the date the order for sale was made to the date of delivery of the ship.

If the defendant does not appear, the vessel can be sold, the proceeds paid into court and then distributed subject to priorities. If it becomes obvious that the defendant owners will not appear, the sale process could commence within three weeks and could be finalised with two months.

The Admiralty Rules require the party applying for the sale to pay the costs and expenses of the marshal in complying with orders under the rules for valuation, valuation and sale, or sale without valuation. That is an unexceptionable requirement to take account of any risk of a shortfall on sale, leaving the marshal out of pocket.

The cost of a marshal retaining safe custody of a ship or property (including carrying out a judicial sale or performing other functions) is calculated at the hourly rate of salary payable to the marshal plus a 20 per cent loading for overheads. It also includes an on-call allowance paid to the marshal.

Claim priority

  1. What is the order of priority of claims against the proceeds of sale?

The Admiralty Act is silent about the principles governing the priority of claims on a fund representing the proceeds of sale but the equitable principles referred to in the English cases are followed by Australian courts in determining priorities.

Broadly speaking, a maritime lien on a vessel takes priority over any interests including a mortgage on the vessel, whether registered or unregistered, and whether prior or later in time.

Legal effects

  1. What are the legal effects or consequences of judicial sale of a vessel?

The legal effect of a judicial sale is that clean title is given to the purchaser and is free of all charges or encumbrances of whatever nature and is good against the world. The judicial sale extinguishes all prior liens and encumbrances on the vessel, including maritime liens.

Foreign sales

  1. Will judicial sale of a vessel in a foreign jurisdiction be recognised?

Australian courts will recognise the judicial sale of a ship in a foreign jurisdiction.

International conventions

  1. Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?

No.

CARRIAGE OF GOODS BY SEA AND BILLS OF LADING

International conventions

  1. Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?

The Carriage of Goods by Sea Act 1991 (Cth) incorporates into Australian local law a variant on the Hague-Visby Rules (called 'the amended Hague Rules'). The amended Hague Rules apply to all shipments out of Australia.

In the case of imports the Australian court will apply the version of the relevant convention (being either the Hague, Hague-Visby or Hamburg Rules) applicable to the shipment by agreement or law.

The amended Hague Rules apply 'CY to CY', that is from the container yard at the port of export in Australia to the container yard at the place of import.

Multimodal carriage

  1. Are there Conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?

No.

Title to sue

  1. Who has title to sue on a bill of lading?

Under the Sea-Carriage Documents Acts, all rights under the contract of carriage in the case of a bill of lading are transferred to each successive lawful holder of the bill, all rights under a contract of carriage in the case of a sea waybill are transferred to the specified consignee, and all rights under a contract of carriage in the case of a ship's delivery order are transferred to the person to whom delivery of the goods is to be made in accordance with the order (for example section 8(1) of the Sea-Carriage Documents Act 1997 (NSW)).

The rights are vested in the transferee as if the person had been an original party to the contract (for example section 8(2) of the Sea-Carriage Documents Act 1997 (NSW)) and the transfer extinguishes the rights (but not liabilities) of the original party to the contract of carriage (for example, section 9 of the Sea-Carriage Documents Act 1997 (NSW)).

Charter parties

  1. To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?

Generally, provisions of a specified charter party directly relevant to the subject matter of a bill of lading such as shipment, carriage and delivery of goods will be recognised as being incorporated into the bill of lading.

However, clauses which are not directly relevant to the bill of lading may not be incorporated into the bill of lading unless it is explicitly clear in either the bill of lading or charter party (discussed in Hi-Fert Pty Ltd v United Shipping Adriatic [1998] FCA 1622). Also, charter party terms, which are inconsistent with the terms of the bill of lading, will not be incorporated into the bill of lading.

If the incorporating clause in the bill of lading does not expressly mention an arbitration clause, for example, it will generally not be adequate to incorporate the arbitration clause unless it is broad enough to, for instance, include disputes under the bill of lading. An arbitration clause in a charter party should be expressly referred to in the bill of lading in order for it to be recognised by an Australian court.

In any event Australian courts have mandatory jurisdiction in respect of both import and export bills of lading pursuant to section 11 of the Carriage of Goods by Sea Act.

Demise and identity of carrier clauses

  1. Is the 'demise' clause or identity of carrier clause recognised and binding?

In relation to the existence of carrier clauses and demise clauses, Australian courts are likely to follow the English House of Lords decision in Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003] 1 Lloyd's Rep. 571, where it was held that where the bill of lading was signed on its face by an agent for the charterer that was described on the face of the bill as the carrier, the charterer was clearly identified as the contractual carrier and there was no need to consider the demise clause on the reverse side of the bill of lading.

Shipowner liability and defences

  1. Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers?

Shipowners can be liable in bailment or tort or negligence for cargo damage even when not the contractual carrier.

Forbearance to sue and circular indemnity clauses in bills of lading have been held to be effective in Australian jurisdictions.

Sub-bailment on terms of the bill of lading would also be an avenue of defence as would a Himalaya clause, both of which have been upheld in Australian jurisdictions.

Deviation from route

  1. What is the effect of deviation from a vessel's route on contractual defences?

At common law, the carrier impliedly promises that the contractual voyage will be undertaken without unjustifiable deviation. Also, article 4, rule 4 of the Hague-Visby Rules and the Australian modification provides that any deviation in saving or attempting to save life or property at sea, or any reasonable deviation, should not be considered a breach of the rules or of the contract of carriage. Departure from the normal route in these circumstances will not be a deviation.

However, when there is a deviation, this will be a breach of contract rendering the carrier liable for losses caused by the deviation, and if loss arises while the vessel is deviating the carrier will only escape liability if it can prove that the loss would have happened anyway. In usual circumstances, the contractual route is the direct geographical route from the port of loading to port of discharge and deviation will occur if the ship leaves that route.

Where there is a liberty clause in the contract that gives the carrier rights over and above those provided in the Hague-Visby Rules, the carrier is entitled to follow any route permitted by the clause and is entitled by article 4, rule 4 to make reasonable deviations from that route.

Liens

  1. What liens can be exercised?

A shipowner can register rights to lien sub-freights as charges against the charterer in order to obtain protection under the Personal Property Securities Act 2009 (Cth) in the event that the charterer becomes insolvent.

An Australian court is likely to recognise a properly drafted and incorporated lien and cesser clause.

Delivery without bill of lading

  1. What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?

Australian courts have held carriers liable for delivery without bills of lading. See, for example, Westpac Banking Corporation v 'Stone Gemini' [1999] FCA 434.

Shipper responsibilities and liabilities

  1. What are the responsibilities and liabilities of the shipper?

At common law, in a contract for carriage of goods by sea the shipper impliedly undertakes:

SHIPPING EMISSIONS

Emission control areas

  1. Is there an emission control area (ECA) in force in your domestic territorial waters?

No.

Sulphur cap

  1. What is the cap on the sulphur content of fuel oil used in your domestic territorial waters? How do the authorities enforce the regulatory requirements relating to low-sulphur fuel? What sanctions are available for non-compliance?

Annex VI of the International Convention for the Prevention of Pollution from Ships is given effect in the Protection of the Sea (Prevention of Pollution from Ships Act) 1983 (Cth) and Marine Order 97, marine pollution prevention, air pollution.

The maximum sulphur content of fuel oil for ships operating in domestic territorial waters is 3.5 per cent. From 1 January 2020 sulphur content of fuel oil must not exceed 0.5 per cent.

The maximum penalty for a reckless or negligent breach of the provisions is A$360,000. A strict liability penalty may be up to A$90,000. AMSA may also detain vessels that pose a risk to the environment.

SHIP RECYCLING

Regulation and facilities

  1. What domestic or international ship recycling regulations apply in your jurisdiction? Are there any ship recycling facilities in your jurisdiction?

The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal is given effect in Australia under the Commonwealth Hazardous Waste (Regulation of Exports and Imports) Act 1989. This act applies controls in the import and export of vessels that may contain hazardous waste, such as asbestos.

There are no commercial ship recycling facilities in this jurisdiction.

JURISDICTION AND DISPUTE RESOLUTION

Competent courts

  1. Which courts exercise jurisdiction over maritime disputes?

The Federal Court of Australia and the Supreme Courts of each State and Territory have jurisdiction in respect of proceedings that may be commenced under the Admiralty Act 1988 (Cth) in rem, such as proceedings on a maritime lien or a proprietary maritime claim.

The Federal Court, the Federal Circuit Court and the courts of each state and territory have jurisdiction over actions in personam on a maritime claim (defined in section 4 of the Admiralty Act) or on a claim for damage done to a ship.

Service of proceedings

  1. In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?

For in rem proceedings, sections 22 and 23 of the Admiralty Act 1988 (Cth) prohibit service of court proceedings brought under that Act on a defendant located out of the jurisdiction (at any place outside Australia, including a place outside the limits of the territorial sea of Australia).

For in personam proceedings, service of documents outside Australia is governed by the Uniform Civil Procedure Rules (UCPR), which implement the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 (the Hague Convention). Leave of the court is not required for originating processes to be served in accordance with the Hague Convention, or for the claims set out in Schedule 6 of the UCPR.

If leave of the court is required, the court may grant an application for leave if satisfied that:

  • the claim has a real and substantial connection with Australia;
  • Australia is an appropriate forum for the trial; and
  • in all the circumstances, the court should assume jurisdiction.

Arbitration

  1. Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?

The Australian Maritime and Transport Arbitration Commission and the Maritime Law Association of Australia and New Zealand both keep a register of arbitrators and mediators with experience in maritime and transport matters. No statistics are published but they are reasonably active.

Foreign judgments and arbitral awards

  1. What rules govern recognition and enforcement of foreign judgments and arbitral awards?

The Foreign Judgments Act 1991 (Cth) (FJA) provides for the registration of foreign judgments handed down by superior courts of the countries set out in Schedule 1 to the Foreign Judgments Regulations 1992, and certain inferior courts of Canada, Poland, Switzerland and the United Kingdom. Judgments must be money judgments and final and conclusive.

Judgments of New Zealand courts are recognised under the TransTasman Proceedings Act 2010 (Cth).

Judgments not covered by the FJA may be enforced under the common law if the foreign court had jurisdiction over the defendant according to Australian rules of private international law, the judgment is for a fixed money sum and is final and conclusive (but the judgment may be subject to appeal).

Australia is a signatory to the New York Convention on the Recognition and Enforcement of Arbitration Awards 1958, which is substantially reflected in the International Arbitration Act 1974 (Cth).

Asymmetric agreements

  1. Are asymmetric jurisdiction and arbitration agreements valid and enforceable in your jurisdiction?

Yes.

Breach of jurisdiction clause

  1. What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?

Subject to contractual interpretation, Australian courts have discretion to stay proceedings where parties have agreed to exclusively bring proceedings in relation to the particular dispute in a forum other than that in which the proceedings were commenced.

There is a mandatory stay of any court proceedings commenced in breach of an arbitration agreement.

  1. What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?

See question 59.

LIMITATION PERIODS FOR LIABILITY

Time limits

  1. What time limits apply to claims? Is it possible to extend the time limit by agreement?

Various limitation periods are set out in state and territory legislation. In general, claims for breach of contract and liability in tort may be made up to six years after the cause of action arose (with the exception of the Northern Territory, where the limitation is three years). Limitation periods may generally be altered by agreement (subject to applicable consumer laws).

The Limitations Act 1969 (NSW) imposes a two-year limitation period on actions in rem in Admiralty, but this may be extended on such terms as a court thinks fit, including if there has not been reasonable opportunity to arrest the vessel.

Under the Admiralty Act 1988 (Cth), a proceeding may be brought on a maritime claim, or on a claim on a maritime lien or other charge, at any time before the end of the limitation period that would have been applicable if the proceeding had not been brought under the act. If no proceeding could have been so brought, a proceeding may be brought before the end of three years after the cause of action arose.

Court-ordered extension

  1. May courts or arbitral tribunals extend the time limits?

Courts have the power to extend limitation periods in certain circumstances, such as in cases of disability, or fraud and deceit or if there are exceptional circumstances requiring an extension of time.

Limitations Acts enacted in the states and territories generally apply to arbitration in like manner as they apply to court proceedings.

MISCELLANEOUS

Maritime Labour Convention

  1. How does the Maritime Labour Convention apply in your jurisdiction and to vessels flying the flag of your jurisdiction?

Australia has ratified the Maritime Labour Convention, which was implemented in Australia by Schedule 13 of Marine Order 11 under the Navigation Act 2012 (Cth) and associated delegated legislation. The Convention will apply to Australian vessels and foreign-flagged vessels in Australian ports.

Relief from contractual obligations

  1. Is it possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract where economic conditions have made contractual obligations more onerous to perform?

Generally, no. In the absence of an appropriately worded force majeure clause, contracts relating to shipbuilding, sale or purchase or hire of a ship and contracts for the carriage of goods on a ship are not generally interpreted to contain relief in circumstances of changed economic conditions.

Other noteworthy points

  1. Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?

As discussed in question 23, to effect a surrogate arrest in Australia, one must establish that the 'relevant person' was, when the cause of action arose, the owner or charterer of, or in possession or control of the firstmentioned ship; and that the person was, when the proceedings are commenced, the owner of the second-mentioned ship.

The decision in Euroceanica (UK) Ltd v The Ship 'Gem of Safaga' [2009] FCA 1467 examined the issue of 'control' in the first limb and concluded that the term must be interpreted in the 'practical, business sense'. In that case, the court gave meaning to the word by considering whether the relevant person provided instructions to the masters, decided the ports of call and the cargoes to be carried and the nature of the correspondence issued on behalf of the vessel.

This is the first Australian judgment to give an alternative meaning to the word 'control' and it has widened the potential application of section 19 of the Admiralty Act.

UPDATE & TRENDS

Emerging trends

  1. Are there any emerging trends or hot topics that may affect shipping law and regulation in your jurisdiction in the foreseeable future?

While not binding on Australian Courts, the decision of the UK Supreme Court in Volcafe Ltd v Compania Sud Americana De Vapores SA [2018] UKSC 61 will impact on the Australian jurisdiction particularly given the Australian High Court's decision in The Bunga Seroja [1999] 1 Lloyd's Rep 512 which was not followed by the Supreme Court. Intermediate Australian courts must continue to apply Bunga Seroja, until the question is determined by the High Court.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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