Australia: Shipping

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding Shipping in Australia.

This Q&A is part of the global guide to Shipping.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/shipping

  1. What system of port state control applies in your jurisdiction? What are their powers?

    Australia has a stringent system of port state control. The Australian Maritime Safety Authority (AMSA) is the regulatory body that governs and controls vessels approaching, entering, using or leaving any Australian port to ensure that those vessels comply with Australian applicable laws and regulations including a range of international conventions to which Australia is a signatory or contracting party (see further below).

    Under the Navigation Act 2012 (Cth) (Navigation Act), AMSA may give a direction to the master or owner of a vessel that the vessel must not enter or use any port in Australia or its exclusive economic zone and that the vessel must comply with specified requirements while it is approaching, entering, using or leaving any port in Australia or its exclusive economic zone (s 246). Additionally, AMSA may detain a vessel if it reasonably suspects that the vessel is unseaworthy or substandard, or that the vessel or master, has or will be, in contravention of the Navigation Act (s 248). AMSA may board a vessel at any time to inspect the condition of the vessel, test any equipment on board and review documentation and certificates on board (ss 257 and 259). If AMSA finds any deficiencies in contravention of Australian law or non-compliance with international conventions to which Australia is a signatory, then it may detain the vessel until all deficiencies are resolved.

    In 2018, AMSA inspected 2,922 foreign ships, found 5,260 deficiencies and detained 161 foreign ships (approximately 56% of all inspected vessels).

  2. Are there any applicable international conventions covering wreck removal or pollution? If not what laws apply?

    Australia is a signatory to a number of international conventions covering wreck removal and pollution including the:

    • International Convention for the Prevention of Pollution from Ships 1973 (MARPOL Convention) which has effect in Australia through the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), which creates a range of offences (including strict liability offences) for any breach of the MARPOL Convention.
    • International Convention on Civil Liability for Oil Pollution Damage 1992 (Civil Liability Convention), although only select provisions are given effect in Australia by the Protection of the Sea (Civil Liability) Act 1981 (Cth). The Civil Liability Convention gives rise to a presumption of strict liability on an owner for oil pollution damage caused by cargo which has escaped or been discharged from their vessel.
    • International Convention on the Establishment of an International Fund for Oil Pollution Damage 1992 (Fund Convention) and the select provisions of the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (Bunker Oil Convention) are given effect in Australia by the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth). The Fund Convention and Bunker Oil Convention compensate victims in circumstances where an owner’s liability is insufficient, including by reason of limitation, to compensate the entirety of the loss caused by an oil spill.

    Further, the Navigation Act gives AMSA broad powers in relation to wrecks. AMSA’s powers extend to wrecks of Australian-registered vessels wherever located and wrecks of foreign vessels located in the territorial sea of Australia. In addition, AMSA may exercise its powers under the Navigation Act, in respect of wrecks of Australian-registered vessels located in the exclusive economic zone, in order to mark, remove, destroy or sink wrecks. AMSA may exercise this power, only if it considers it necessary for the purposes of saving human life, securing the safe navigation of vessels or protecting the marine environment, if there is no legal owner of the wreck, or the owner fails to comply with a notice by AMSA.

  3. Are there any applicable international conventions covering collision and salvage? If not what laws apply?

    In Australia, a number of international conventions cover collision and salvage, including the:

    • International Regulations for Preventing Collisions at Sea 1972 (COLREGS), which are generally given effect in Australia by the Navigation Act and a ship’s breach of the COLREGS would be highly persuasive in determining liability for negligence.
    • International Convention on Salvage 1989, where Australia has adopted selective articles, again through the Navigation Act. A person who renders a service that successfully saves or helps to save maritime property (being a vessel, shipwreck, freight or cargo) from danger, may be entitled to a "salvage reward" assessed by the court up to the value of the property or interest in the property salved.

    Additionally, damage caused by collision is actionable in Australia as a general maritime claim under the Admiralty Act 1988 (Cth) (Admiralty Act). The general principles of negligence will apply in determining liability. An Australian court will determine the apportionment of liability between colliding vessels according to their degree of fault.

    Further, a claim in respect of salvage is a general maritime claim and gives rise to a maritime lien against a vessel under Admiralty Act. A salvor may also exercise a common law possessory lien on the salved property and has a right of action in personam against the owners of the salved property.

  4. Is your country party to the 1976 Convention on Limitation of Liability for Maritime Claims? If not, is there equivalent domestic legislation that applies? Who can rely on such limitation of liability provisions?

    Australia is a party to the 1976 Convention on Limitation of Liability for Maritime Claims, and as amended by the 1996 Protocol and further amendments of 2012 (Limitation Convention). The Limitation Convention has force of law in Australia by operation of The Limitation of Liability for Maritime Claims Act 1989 (Cth) (Limitation Act).

    Under the Limitation Act, a shipowner, charterer, manager, operator or salvor of a sea-going vessel may be entitled to limit its liability with respect to certain maritime claims including with respect to loss of life, personal injury or loss of or damage to property; or claims for delay in the carriage by sea of cargo, passengers or their luggage.

    However, shipowners, charterers, managers, operators or salvors of sea-going vessels are not entitled to limit liability with respect to:

    (a) claims concerning the raising, removal, destruction or the rendering harmless of a ship that is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such a vessel; and
    (b) claims concerning the removal, destruction or the rendering harmless of the cargo on the vessel.

    In addition, liability cannot be limited for claims for salvage, contributions to general average or claims for oil pollution damage.

    A shipowner is not entitled to limit its liability where the loss resulted from the owner's personal act or omission, committed with the intent to cause such loss, or recklessly and within its knowledge that such loss would likely result. This is a difficult limitation to break as the onus is on the claimant (seeking to break the limitation) to establish that the operating mind and body of the shipowner (not just the master or crew) had the requisite intention or acted recklessly.

  5. If cargo arrives delayed, lost or damaged, what can the receiver do to secure their claim? Is your country party to the 1952 Arrest Convention? If your country has ratified the 1999 Convention, will that be applied, or does that depend upon the 1999 Convention coming into force? If your country does not apply any Convention, (and/or if your country allows ships to be detained other than by formal arrest) what rules apply to permit the detention of a ship, and what limits are there on the right to arrest or detain (for example, must there be a “maritime claim”, and, if so, how is that defined)? Is it possible to arrest in order to obtain security for a claim to be pursued in another jurisdiction or in arbitration?

    Although Australia is not a party to the international arrest conventions, the Admiralty Act, gives effect to the international arrest regime and Australia is recognised as an "arrest friendly" jurisdiction. In Australia, claims for which it is possible to arrest a vessel fall into the following categories:

    • Maritime lien, limited to liens for salvage, damage done by a ship, wages of the master or crew member, master's disbursements (s 15);
    • Proprietary maritime claim, including a claim relating to possession, title to, ownership, mortgage of a ship or freight, a claim between co-owners relating to possession, ownership, operation or earnings of the ship, a claim for the satisfaction or enforcement of a judgment or a claim for interest for any of these claims (s 4(2));
    • General maritime claim. Some examples include claims arising out of an agreement relating to carriage of goods or the use or hire of a ship, a claim in respect of goods, materials or services provided to the ship, claims for personal injury or death, claims for loss or damage to goods, claims in relation to salvage, towage, pilotage and claims in respect of the construction of a ship (s 4(3)).

    In order to arrest a vessel pursuant to a maritime lien or proprietary maritime claim the relevant claim must relate to the vessel being arrested.

    For general maritime claims, it is possible to arrest the vessel to which the claim relates provided the claim is made against a "relevant person" (i.e. the person who would be liable for the claim if it were brought in personam) who was the owner or charterer at the time the claim arose and is the owner of the vessel at the time the claim is commenced (s 17). Alternatively, a claim can be brought against a surrogate vessel provided the relevant person was the owner, charterer or person in control of the vessel to which the claim relates and is the owner of the surrogate vessel at the time the proceedings are commenced (s 19).

    It is not uncommon for vessels to be arrested as security for a claim or arbitration to be pursued in another jurisdiction. Once security is provided (see further below) the vessel will be released and there may then be stay or other applications made.

  6. For an arrest, are there any special or notable procedural requirements, such as the provision of a PDF or original power of attorney to authorise you to act?

    To arrest a vessel in Australia, the applicant must commence in rem proceedings against the vessel (not the owner) by filing a writ pursuant to the Admiralty Rules 1988 (Cth) (Admiralty Rules), usually in the Federal Court of Australia. An arrest application is also filed with the writ along with an affidavit particularising the claim and a draft arrest warrant.

    If the registrar is satisfied the documents as filed are in order, the arrest warrant will be finalised and issued to the relevant Admiralty Marshal who arrests and takes custody of the vessel.

  7. What maritime liens are recognised?

    As indicated above, the maritime liens which are recognised in Australia are set out in s15(2) of the Admiralty Act and are liens 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.

    In 2015 there was a test case in the Federal Court of Australia relating to the vessel the Sam Hawk, which was arrested on the basis of a contractual lien in a bunker supply contract purportedly governed by US law. At first instance, the judge recognised the foreign maritime lien but this was overturned on appeal in 2016 and it is now settled law in Australia that a foreign maritime lien will not be recognised in Australia unless the underlying claim is substantively the same or analogous to a maritime lien as set out in s15 of the Admiralty Act.

  8. Is it a requirement that the owner or demise charterer of the vessel be liable in personam? Or can a vessel be arrested in respect of debts incurred by, say, a charterer who has bought but not paid for bunkers or other necessaries?

    As detailed above, the type of maritime claim asserted will have a bearing on who the "relevant person" is (i.e. the person who would be liable in personam) and therefore whether an arrest can be maintained.

    As far as demise charterers are concerned, an applicant may bring a general maritime claim or proprietary maritime claim against a ship if the relevant person:

    • was the owner or charterer or was in possession or control of the ship at the time the cause of action arose; and
    • is a demise charterer when the proceedings are commenced (s18).

    Accordingly, a vessel can be arrested (provided the above conditions are met) in respect of debts incurred by a demise charterer but will not be recognised as a maritime lien.

  9. Are sister ship or associated ship arrests possible?

    Yes. Under the Admiralty Act, proceedings concerning a maritime claim may be commenced as an action in rem against a surrogate (sister ship) vessel, provided that the person who would be liable for the claim (or relevant person):

    (a) was the owner or charterer or in possession or control of the vessel to which the claim relates at the time the claim came into existence; and
    (b) is the current owner of the surrogate vessel at the time proceedings are commenced.

  10. Does the arresting party need to put up counter-security as the price of an arrest? In what circumstances will the arrestor be liable for damages if the arrest is set aside?

    Counter-security is not required in order to arrest a vessel. However, the arresting party must provide an undertaking to the Court to pay to the Admiralty Marshal, on demand, any amount requested by the Admiralty Marshal in relation to the costs of maintaining the vessel under arrest which, if ongoing, can become significant.

    Also, the party who commenced proceedings against the vessel may be liable for damages if the arrest is set aside in circumstances where the court finds that it does not have jurisdiction as the claim does not arise under the Admiralty Act (i.e. is a wrongful arrest). A person with an interest in the vessel or who has suffered loss or damage as a direct result, can claim damages for an unjustified arrest where:

    (a) a party unreasonably and without good cause:
    (i) demands excessive security in relation to the proceeding; or
    (ii) obtains the arrest of a ship or other property; or

    (b) 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.

  11. How can an owner secure the release of the vessel? For example, is a Club LOU acceptable security for the claim?

    Under the Admiralty Rules, a party can apply to the Registrar of the Court to release a vessel from arrest (r51).

    A vessel will be released from arrest if the vessel owner pays into court or a bail bond is filed, an amount equivalent to the value of the claim or the value of the vessel, whichever is less.
    Alternatively, security such as a bank guarantee or letter of undertaking from an international group P&I Club are ordinarily found to be acceptable.

    However, the Registrar may refuse to release the vessel if payment of the Admiralty Marshal's expenses in relation to the arrest have not been satisfied.

  12. Describe the procedure for the judicial sale of arrested ships. What is the priority ranking of claims?

    In Australia, if a vessel is under arrest, a party to the arrest proceedings may apply to the Federal Court of Australia for an order that the vessel either be valued, valued and sold or sold without valuation. The Court has discretion to order the sale of the vessel if it is deteriorating in value.

    However, if the applicant for a sale has not commenced in rem proceedings, the Court will require that be done before it will grant an order for valuation of the judicial sale.

    The Court will ordinarily order that the Admiralty Marshal engage a ship broker to organise the sale, including advertising the sale in newspapers, such as Lloyd's List (now Daily Cargo News in Australia) and Tradewinds. The broker will also organise the relevant inspections and communicate with potential buyers. The applicant must also provide an undertaking to the Court that it will pay, on demand, the Admiralty Marshal's costs and expenses in relation to the sale.

    The broker will have the vessel valued which remains private and is stored in the District Registry's safe. The valuation will set out the minimum purchase price of the vessel.

    Prospective bidders will make bids directly to the broker. Prospective bidders generally have four weeks from the notice of the sale to enter their bids with the broker. Once all of the bids are recorded, the Admiralty Marshal, the District Registrar and the broker will meet privately at the court, ahead of the sale, to formally record the details of each bid.

    Ordinarily, the highest bidder will be successful. However, the Admiralty Marshal may seek an order from the docket judge permitting the sale of the vessel be made to the highest bidder or to re-advertise the vessel if the bids entered do not meet the minimum purchase price of the vessel.

    In terms of priority of claim, the proceeds of the sale will first pay all of the Admiralty Marshal's costs and expenses incurred in relation to the arrest and sale. If the winning bid does not cover the Admiralty Marshal's expenses, the arresting party will still need to pay those costs directly. A successful plaintiff / arresting party will then be paid its costs and expenses of the arrest. Any unpaid wages owing to the Master or crew will be paid out of the proceeds, ahead of general maritime claimants, maritime lien holders and mortgagees.

  13. Who is liable under a bill of lading? How is “the carrier” identified? Or is that not a relevant question?

    In Australia, liability for marine cargo claims is governed by the Carriage of Goods by Sea Act 1991 (Cth) (COGSA) which, in turn, incorporates an Australian amended version of the Hague-Visby Rules called the "amended Hague Rules" and set out in Schedule 1A to COGSA (see further below).

    The carrier may be liable for a range of claims made under a bill of lading made by a cargo owner or the lawful holder of a bill of lading or sea carriage document (under the amended Hague Rules). The carrier may also be liable for claims made by the person to whom the goods are to be delivered under a sales contract (in the case of sea waybills) or the person identified on a ship's delivery order (in the absence of a bill of lading).

    The shipper or consignee (or anyone defined as a "Merchant" under the relevant bill of lading terms) may also be liable to the carrier, in accordance with the terms of the bill of lading (or alternatively, at common law), for claims such as delay or damage caused by misdeclaration of cargo, shipping dangerous goods or container demurrage and detention charges and related expenses.

    Whilst liability for marine cargo claims is governed by COGSA, which is federal legislation, the transfer of rights and liabilities which enables a claimant to establish title to sue is governed by the Sea Carriage Documents Act in each State and Territory (except in Victoria, where these issues are dealt with in the Goods Act 1958 (Vic)).

    The carrier is ordinarily identified on the bill of lading. However, in some cases the "contractual" carrier will be a freight forwarder who has issued a house bill of lading, or a charterer. In such cases, it can be a complex exercise to establish the correct defendant against whom a cargo claim should be brought. Factors to be considered include who signed the bill of lading (or other sea carriage document), whether an ocean bill of lading has been issued, the provisions in any underlying charterparty regarding issuing of bills of lading and the nature of the relevant sea carriage document (e.g. whether it is a straight bill, negotiable document or sea waybill or other).

  14. Is the proper law of the bill of lading relevant? If so, how is it determined?

    The majority of bills of lading or other sea carriage documents will include a choice of law clause selecting whichever law is most comfortable for, or convenient to, the carrier and will frequently also include what is known as a "clause paramount" which is often a cascading clause applying either the Hague, Hague-Visby or other rules as applied compulsorily in various jurisdictions. In Australia, those clauses will have varying levels of effectiveness depending upon the port of shipment and port of destination.

    As a starting point, COGSA compulsorily applies the amended Australian version of the Hague Visby Rules (called the amended Hague Rules) to all shipments from a port in Australia to a port outside Australia and invalidates any agreement (or choice of law clause) which purports to preclude or limit that compulsory choice of law (see ss11(1) and 11(2(a)). However, because cargo claims will often be heard by a court in the country of destination, those courts may not be inclined to apply the Australian amended Hague Rules and may opt to apply the original rules by force of their own law and/or may have regard to the choice of law clause in the bill of lading.

    Conversely, the Australian amended Hague Rules will apply (again by force of law through COGSA) to shipments from ports outside Australia to a port in Australia unless the contract would otherwise be governed by a different version of the rules (or the Hamburg Rules) by agreement or by law of another Contracting State (or a Contracting State to the Hamburg Rules). In other words if the law of another jurisdiction compulsorily applies another regime in the port of shipment (such as from, say, the United States), then that law will apply if the relevant jurisdiction is a Contracting State or if the bill of lading provides for the application of that law. For example, if a cargo claim is made in relation to a shipment from the United States, an Australian court should apply the unmodified version of the Hague Rules (without the Visby protocol) which applies compulsorily by force of US law which is a Contracting State to the Hague Rules. By way of further example, if the claim relates to a shipment from the United Kingdom, an Australian court should apply the Hague-Visby Rules and not the Australian version of those rules.

  15. Are jurisdiction clauses recognised and enforced?

    In addition to compulsorily applying the Australian amended Hague Rules to outward bound shipments, COGSA also provides that any agreement which purports to preclude or limit the jurisdiction of an Australian Court (whether Commonwealth or State/Territory level) will have no effect for both outward and inbound shipments (see s11(2)(b) and (c)).

  16. What is the attitude of your courts to the incorporation of a charterparty, specifically: is an arbitration clause in the charter given effect in the bill of lading context?

    Arbitration clauses or agreements in bills of lading and other sea carriage documents are also ineffective by virtue of s11(3) of COGSA unless they provide for arbitration conducted in Australia. Again, however, it is questionable whether foreign courts would regard a foreign arbitration clause as invalid if challenged elsewhere simply by operation of s11 of COGSA in Australia.

    Until relatively recently, there was a question mark as to whether s11 extended to arbitration or clauses in a voyage charter party as a "sea carriage document". A 2013 decision of the Full Court of the Federal Court of Australia held that an arbitration clause in a voyage charterparty (despite arguments that such a document fell within the definition of a sea carriage document) was not invalid for the purposes of s11(3). Part of the reasoning was that charterers do not require the same level of protection as shippers and consignees from being forced to litigate or arbitrate in jurisdictions outside Australia.

    In summary, arbitration clauses in a bill of lading will be valid only if they provide for Australian arbitration whereas arbitration clauses in charterparties, even if they provide for arbitration in a jurisdiction outside Australia, will be valid.

  17. Is your country party to any of the international conventions concerning bills of lading (the Hague Rules, Hamburg Rules etc)? If so, which one, and how has it been adopted – by ratification, accession, or in some other manner? If not, how are such issues covered in your legal system?

    As indicated above, Australia is a Contracting State to, and has ratified, the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, done at Brussels on 25 August 1924 as amended by the Visby Protocol of 23 February 1968 and the SDR Protocol of 21 December 1979 (together, the "Hague Visby Rules").

    Australia compulsorily applies a slightly amended version of the Hague Visby Rules called the amended Hague Rules by force of law in s8 of COGSA. See above discussion for when various versions of the Hague Visby Rules or amended Hague Rules apply to cargo claims.

  18. Is your country party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? If not, what rules apply? What are the available grounds to resist enforcement?

    The Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 in New York (New York Convention) is given effect in Australian law through the International Arbitration Act 1974 (Cth). That Act also provides that the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985 and amended by the United Nations Commission on International Trade Law on 7 July 2006 has the force of law in Australia (see s16).

    Accordingly, a foreign award to which the New York Convention applies will be enforced as if it were a judgment of an Australian court. The grounds for resisting enforcement are set out in s8(5) and includes the usual reasons as set out in the New York Convention such as, for example, enforcement being contrary to public policy, the invalidity of the underlying arbitration agreement, no proper notice of appointment of arbitrator or proceedings etc.

  19. Please summarise the relevant time limits for commencing suit in your jurisdiction (e.g. claims in contract or in tort, personal injury and other passenger claims, cargo claims, salvage and collision claims, product liability claims).

    Each State and Territory has its own legislation setting out time limits for various causes of action and, although the majority of limitation periods are uniform as across the States and Territories, the relevant State or Territory legislation should be considered carefully on a case by case basis.

    As a general rule, causes of action in contract (other than a deed, which is 12 years) ordinarily have a time limit for commencing proceedings of six years from the date of any alleged breach.

    Similarly, most causes of action in tort also carry a limitation period of 6 years from the date the cause of action accrued (ordinarily when the damage was sustained). There are some exceptions such as defamation actions (which have a 1 year time limit, subject to some extensions) and personal injury or death actions which carry a 3 year limitation period (subject to some extensions).

    However, it is important to note that an action against a vessel or an owner of a vessel for loss of life or personal injury suffered onboard must be brought within two years of the date when the damage, loss or injury is caused (see eg s22(3) Limitation Act NSW 1969).

    An action to enforce a claim or a lien in respect of salvage services is also subject to a two year limitation period from the date the salvage services are rendered (s23(3) Limitation Act).

    As far as cargo claims are concerned, the limitation period will depend upon any contractual limitation set out in the bill of lading terms and whether the Hague, Hague-Visby or other rules apply. If the Hague or Hague-Visby Rules apply, the limitation period for claims against the carrier or the ship will be 1 year from the date of delivery of the goods or the date when the goods ought to have been delivered (art 3 rule 6). Any clause in a bill of lading or other sea carriage document to which the Hague or Hague-Visby rules apply and which provides for a shorter period of time will be null and void by virtue of article 3, rule 8.

    There is also an overarching limitation period of 3 years in the Admiralty Act 1988 (Cth) for maritime claims or maritime liens or other charges made pursuant to that Act unless another limitation period would have applied had the proceeding on the claim been brought otherwise than under the Act (see s37(1)).