Shipping 2024 Comparisons

The primary legislation regulating shipping in Australia is the Navigation Act 2012 (Cth). The objects of the Act are to promote the safety of life at sea, promote safe navigation, prevent pollution of the marine environment and ensure that the Australian Maritime Safety Authority (AMSA) has the necessary power to carry out inspections of vessels and enforce national and international standards. The Navigation Act 2012, and other Federal and State legislation, give effect to a wide range of international maritime conventions and treaties to which Australia is a party. While all superior courts in Australia have competency to hear most maritime matters, most commercial litigation involving maritime/admiralty matters is conducted in the Federal Court of Australia.

AMSA is the federal agency authorised to conduct port state control inspections of vessels to enforce national and international standards, including compliance with the SOLAS and MARPOL Conventions. AMSA has authority to inspect international and Australian flagged vessels, issue notices for deficiencies, detain vessels in respect of marine safety and seafarer welfare issues, and is the designated authority in Australia under the Federal legislation that gives effect to the Intervention Convention. AMSA has entered into port state control memoranda with the Indian Ocean Memorandum of Understanding and the Tokyo Memorandum of Understanding.

Where marine casualties occur within State waters – ie, within three nautical miles of the coastal baseline, AMSA and state agencies can have overlapping jurisdiction. AMSA generally has jurisdiction for marine casualties that occur in Australian waters outside of state waters. State agencies have jurisdiction in respect of pollution incidents and the removal of wrecks within state waters, with AMSA having jurisdiction outside this area.

The Australian Transport Safety Bureau (ATSB) is the federal agency responsible for investigating accidents and transport safety occurrences involving commercial shipping (Australian-flagged ships, plus shipping in Australian waters or en route to Australian ports). The ATSB has broad investigative powers and operates independently of AMSA and state marine authorities.

Unlike investigations by AMSA and state authorities, ATSB investigations do not apportion blame and are not for the purposes of implementing administrative, regulatory or criminal action. Rather, their purpose is to determine the factors which led to an accident or safety incident so that lessons can be learned and transport safety improved in the future.

The Shipping Registration Act 1981 (Cth) (SRA) and the Shipping Registration Regulations 2019 (Cth) govern ship registrations in Australia. The Australian Shipping Registration Office (which sits within AMSA) is the governmental authority responsible for maintaining the records of ownership of Australian-flagged ships. AMSA is the flag state administrator responsible for issuing SOLAS and other flag state certificates.

In order to be registered on the Australian register, a ship must be Australian-owned (ie, it must be owned solely by, or the majority interest must be owned by, an Australian national(s)) or is on demise charter to an Australia-based operator. A ship under construction cannot be registered in Australia.

Australia does not permit temporary or dual registration. However, it is possible to register a ship on the Australian register where registration on the primary flag is suspended.

No Australian governmental authority maintains a central register of ship mortgages. Any financial or security interests must be registered on the Personal Property Securities Register (PPSR). Registrations are made online by completing the application form including a statement describing the basis of the security interest.

This list of ships registered on the Australian register is available on AMSA’s website. Details of the ship’s ownership can be obtained by submitting an application for current title extract with payment of a fee. Details of mortgages and other registered security interests can be obtained by conducting a search of the PPSR.

Statutory provisions relating to wrecks and salvage are set out in Chapter 7 of the Navigation Act 2012 and various state/territory legislation that confer miscellaneous powers on various authorities. Australia is considering whether to become a party to the Nairobi Convention. 

Australia is party to, and has given effect to, the CLC 92, Fund Convention 92, Bunker Convention, MARPOL and the 1976 Convention, which can impact on the liability and limitation entitlements of ship-owners.

Australian federal and state/territory legislation give effect to the Prevention of Collisions Convention (COLREGs). The application of the commonwealth or state/territory legislation giving effect to the COLREGS will depend upon the type of vessel and the location of the collision.

Australia has given effect to certain articles of the International Convention on Salvage.  The adopted articles are listed in Regulation 17 of the Navigation Regulations 2013 (Cth)

Australia is party to, and has given effect to, the 1976 Convention and the 1996 Protocol. The 2012 Amendment to the 1996 Protocol (which increases the limits of liability) entered into force in Australia on 8 June 2015. Australia has exercised its right under Article 18.1 of the 1976 Convention to exclude the application of Article 2(1)(d) and (e), which relate to rendering a ship harmless, the removal of wrecks and rendering cargo harmless. 

An application to establish a limitation fund in accordance with the 1976 Convention can be made to the Federal Court of Australia or the Supreme Court of an Australian state or territory. The application provides details of the circumstances giving rise to the claim(s) in respect of which the shipowner seeks limitation and the establishment of a fund, together with details of the ship and a calculation of the limitation amount in accordance with the formula in the 1976 Convention as amended by the 1996 Protocol. An affidavit deposing to these matters is ordinarily filed in support of the application.

There are court filing fees payable in respect of the application. However, there is no requirement for a deposit.

The Australian courts have accepted an International Group P&I Club Letter of Undertaking for constituting a limitation fund.

Australia is a signatory to the Maritime Labour Convention 2007 and has implemented it through the Navigation Act and Marine Order 11 (Living and working conditions on vessels) 2015.

Pursuant to the Carriage of Goods by Sea Act 1991 (Cth) (COGSA), a modified version of the Hague-Visby Rules (the “Modified Rules”) applies mandatorily to sea-carriage documents (ie, bills of lading, sea waybills, electronic waybills etc) issued for outward-bound international carriage from Australia. COGSA also provides that any agreement that purports to restrict the jurisdiction of the Australian courts in respect of a sea-carriage document issued for the carriage of goods inbound or outbound is invalid and has no effect. Consequently, it is not possible to contract out of Australian jurisdiction in respect of claims concerning Australian inbound or outbound shipments that arise under sea-carriage documents. 

The Hague, Hague-Visby and Hamburg Rules will be applied to in-bound international carriage where they apply as a matter of law at the place of shipment or by contract.

The determination of title to sue under sea-carriage documents is the subject of uniform legislation in each Australian state and territory, which is modelled on the Carriage of Goods by Sea Act 1992 (UK). For example, in the case of a bill of lading, the rights thereunder are transferred to the “lawful holder” of the bill who has come into possession of it in good faith upon endorsement or, in the case of a bearer bill, by any other transfer of the bill.

The Modified Rules incorporate the amendments to the Hague-Visby Rules effected by the Protocol of 1979 to amend the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (the “SDR Protocol 1979”). Accordingly, the contractual carrier is generally entitled to limit its liability to the greater of 666.67 special drawing rights (SDRs) per unit or two SDRs per kilogram, unless the nature and value of the goods is declared.

Under the Modified Rules, the shipper guarantees the accuracy of the particulars of marks, number, quantity and weight of the cargo as furnished by it and is taken to indemnify the carrier against all loss and damage arising from inaccuracies in such particulars.

Misdescribing cargo may also expose the shipper to claims under the tort of deceit or for fraudulent misrepresentation and/or under Section 18 of the Australian Consumer Law for engaging in misleading or deceptive conduct. In each case, the carrier would need to show a causative link between any loss suffered and the failure to properly declare the cargo.

As with the Hague-Visby Rules, the Modified Rules incorporate a one-year time limit for bringing suit against the carrier under a sea-carriage document. The limitation period can generally only be extended by the consent of the other party. Claims in contract or tort for damaged or lost cargo that arise otherwise than under a sea-carriage document are generally subject to a limitation period of six years

Although Australia is not a signatory to international conventions on ship arrest, the Admiralty Act 1988 (Cth) (Admiralty Act) largely gives effect to the regime of the International Convention Relating to the Arrest of Sea-Going Ships 1952 (the Brussels Convention).

Australia distinguishes between maritime liens and maritime claims.

The Admiralty Act states that maritime liens “include” a reference to a lien for:

• salvage;
• damage done by a ship;
• wages of the master, or of a member of the crew, of a ship; or
• master’s disbursements.

The Act also provides that it does not have the effect of creating any new maritime lien.

Claims with respect to loss of life, or for personal injury, sustained in consequence of a defect in a ship or in the apparel or equipment are included in the definition of “general maritime claim”.

The Admiralty Act permits the arrest of a ship in the case of:

• a common law maritime lien in respect of the ship (including those listed in the Act);
• a defined “proprietary maritime claim” concerning the ship, which includes a claim relating to possession, title, ownership and mortgage; and
• a defined “general maritime claim”.

A claim arising under a charter of a ship may constitute a general maritime claim.

Where a claim is based on a maritime lien, it is not a requirement that owners or demise charterers are liable in personam.

The general position in Australia is that a vessel can only be arrested for unpaid bunkers where the bunker supplier has direct claim in contract against the owner or the demise charterer of a vessel to which the bunkers were supplied. In the absence of an express authority permitting time charterers to order bunkers on behalf of an owner or demise charterers, a bunker supplier will not be entitled to proceed with a claim against the vessel.

Australia is considered to be a relatively “arrest-friendly” jurisdiction in which ships can be arrested quickly and at a relatively modest cost. It is not proposed to identify all the necessary procedural steps to arrest a vessel in the Federal Court of Australia. However, having filed the initiating proceeding, which includes brief particulars setting out the basis of the claim, an arrest warrant can be issued based on an application and supporting affidavit sworn by the applicant, an Australian legal practitioner, or an agent of the applicant.

It is not necessary to exhibit originals of any supporting documents to the affidavit or have them notarised and apostilled for the purposes of a successful arrest application. If supporting documents are in a language other than English, any supporting document will need to be translated into English.

The arresting party may be required to pay a security deposit for the Admiralty Marshal’s fees and expenses. Depending on the vessel and where it is to be arrested, the security deposit can range from AUD10,000 to AUD40,000.

Australian law does not permit the arrest of bunkers distinctly from the vessel itself.

There is presently no decided authority in Australia on whether freight can be arrested, although a proceeding in rem can be brought against a ship or “other property”, including a maritime lien, a proprietary maritime claim or a general maritime claim against owners or demise charters.

Australian courts have yet to rule on whether freight constitutes “other property” under the Admiralty Act, however there is commentary suggesting that it may do so.

Australian law permits arrest of a “surrogate” ship in a proceeding on a “general maritime claim” concerning a ship if the person against whom the claim is made was, when the cause of action arose, the owner or charterer of, or in possession or control of the ship in relation to which the claim arises and that person is, when the proceeding is commenced, the owner of the ship against which the proceeding is brought.

In Australia, it may be possible to obtain an injunction in the nature of a “Mareva” injunction to prevent the vessel or vessels from being removed from the jurisdiction or otherwise disposed of. However, as the primary purpose of a Mareva injunction is to preserve any assets in the jurisdiction to satisfy a future judgment, the ordering of a Mareva injunction will not ordinarily guarantee the provision of security or allow for the sale of the ship.

Australian courts will generally accept a letter of undertaking from an International Group P&I Club as valid security for releasing a vessel. Other options include payment into court, the lodging of a bail bond or a guarantee issued by a suitable bank or financial institution that is enforceable in Australia.

The procedure for a judicial sale of arrested ships is set out in the Admiralty Rules 1988 (Cth), which provide that the courts may order that a ship be sold upon application by a party “either before or after judgment” and the court may order its sale “at any stage of the proceeding”, “with or without application”, where the ship “is deteriorating in value”.

During the period of an arrest, the vessel remains in the custody and care of the Admiralty Marshal. While the arresting party may be required to pay a security deposit for any fees and expenses, the party who makes the application for the sale of the vessel gives an undertaking to pay on demand to the Marshal an amount equal to the amount of the fees and expenses of the Marshal in complying with the order, failing which the Marshal’s fees and expenses are taken from the proceeds of sale.

Broadly speaking, maritime liens take priority over all other charges and claims, including a mortgage, except paramount statutory charges.

Australia does not have a corporate restructuring regime that is equivalent to Chapter 11 of the United States Bankruptcy Code. In 2020, Australia introduced a small business restructuring regime under Part 5.3B of the Corporations Act 2001 (Cth) with some similarities to Chapter 11. However, this regime is limited to companies with liabilities of less than AUD1 million and has seen little attention since its introduction.

The most similar process in Australia to Chapter 11 is “voluntary administration” under the Corporations Act 2001 (Cth). Both systems have the ultimate goal of restructuring a company in order to avoid possible winding-up. However, under the voluntary administration scheme, an independent liquidator is appointed to administer the company’s affairs and control does not remain with the debtor.

Given that Chapter 11 does not contain similar provisions to those under Australian law for insolvent trading by directors, the processes are naturally quite different in scope and focus. However, it is notable that voluntary administration does result in a stay on certain types of proceedings being commenced or continued against the company, similar to the stay provided by Chapter 11.

If a party unreasonably and without good cause demands excessive security in relation to an arrest proceeding or obtains the arrest of a ship or other property, that party may be liable in damages to a party to the proceeding, or to a person who has an interest in the ship or property, being a party or person who has suffered loss or damage as a direct result of the unreasonable conduct.

No Australian court has ever awarded damages for wrongful arrest.

Australia has elected not to accede to the Athens Convention and there is significant uncertainty about the current liability system in Australia.

Passenger claims are generally resolved under a combination of state and territory civil liability legislation, federal consumer protection legislation and the common law. Due to the lack of a uniform regime, passenger claims in Australia are often detailed and complex and have attracted significant attention in the Australian courts.

Under Australia’s implementation of LLMC, claims for loss of life or personal injury to passengers of a ship may be limited for each distinct occasion to 175,000 SDRs multiplied by the number of passengers that the ship is authorised to carry according to the ship’s certificate.

COGSA precludes contracting out of Australian jurisdiction in respect of claims arising under bills of lading for inbound and outbound carriage. COGSA also provides that bills of lading for outbound shipments are deemed to be governed by Australian law and any term to the contrary will have no effect.

COGSA permits arbitration in Australia. Otherwise, the same principles apply to governing law and arbitration clauses of a charterparty incorporated into a bill of lading apply.

The New York Convention is largely adopted in Australian domestic law and is incorporated under Schedule 1 to the International Arbitration Act 1974 (Cth).

The enforcement of foreign arbitral awards against sovereign parties may be impacted by the Foreign States Immunities Act 1985 (Cth).

A ship can be arrested in Australia for the purpose of obtaining security for a proceeding in another jurisdiction.

The Australian Maritime and Transport Arbitration Commission (AMTAC) is a specialist commission of the Australian Centre for International Commercial Arbitration (ACICA), Australia’s international dispute resolution institution.

In circumstances where a claimant brings a proceeding in breach of a foreign jurisdiction or arbitration clause that is enforceable in Australia, in addition to staying the domestic proceeding, a court may award costs in favour of a successful defendant.

Relief from “tonnage tax” and other taxes relating to income sourced in Australia by foreign-owned vessels will depend on the ownership and charter structure, and the terms of the applicable tax treaties.

The Australian courts have considered frustration in relation to commercial contracts due to the COVID-19 pandemic and recognised the “chaos in the supply chain process caused by the COVID-19 pandemic”. However, it is important to note that each case must be decided on its specific facts and the court will consider whether, without default of either party, the contractual obligations have become incapable of performance due to the radical alteration of the nature of performance. It is not enough that performance is merely rendered more expensive or onerous.

Whether the circumstances give rise to a force majeure event under the contract that excuses non-performance will be determined by the terms of the contract.

The Federal legislation giving effect to MARPOL are the Protection of the Seas (Prevention of Pollution from Ships) Act 1983 (Cth) and Marine Order 97. The Australian states and territories also have similar legislation.

AMSA is the designated authority responsible for enforcing Australia’s implementation of IMO 2020 at a federal level, including in respect of foreign-owned vessels.

The current sulphur limit is 0.50% sulphur to all fuel used by a ship for propulsion or operation, including all gas, petrol, distillates, residual and blended fuels. However, certain ports in Australia have lower emission requirements in certain areas.

AMSA can issue detention notices or bar vessels from entering Australia should they breach IMO 2020, and owners of vessels have been prosecuted for violations of the sulphur limitation or related regulations.

In its National Compliance Plan 2022-2023, AMSA identified ship sulphur analysis as an area of regulatory focus and announced the introduction of airborne sulphur sniffing equipment to detect possible non-compliance.

Australian sanction laws are enacted by the federal government. Australia has implemented UN Security Council Sanctions, and Australian autonomous sanctions. Both types of sanctions are administered by the Australian Sanctions Office, which is a division of the Department of Foreign Affairs and Trade. Australia has implemented a wide range of sanctions in response to the Russian Federation’s hostilities against Ukraine. The Australian Minister for Foreign Affairs (or delegate) is empowered to grant a sanctions permit to allow an entity to undertake an activity that would otherwise be prohibited. In some instances, exporters may also require a permit from Defence Export Controls, the body regulating the export and supply of military and dual-use goods and technologies.

The principal direct impact on trade concerning Australia arising from the war in Ukraine has been its effect on world fertiliser supplies for the agriculture sector, with historic high prices being reached in 2022. The sanctions landscape concerning Russia has also become increasingly complex.

An important feature of the Australian legal system is the distinction between federal and state or territory laws, both of which may be relevant to shipping operations.

It is also to be noted that AMSA is widely regarded as one of the world’s most active and stringent Port State Control agencies, which vigilantly enforces international conventions as they apply in Australia, in particular with respect to seafarer welfare, vessel safety and the environment. In recent years, AMSA has regularly exercised its powers to ban certain vessels from calling at Australia as a consequence of repeated or grave breaches of convention obligations.