Maritime review of the year

The Murrays Legal were pleased to attend the annual presentation at Norton Rose Fulbright on international maritime law developments given on 22 June 2017 by Professor Martin Davies of Tulane University Law School, and a Professorial Fellow of Melbourne Law School.

These and other cases were discussed.

Reiter Petroleum v The Sam Hawk

What was anticipated to produce a significant decision from a 5 judge bench of the Federal Court in this case did not perhaps eventuate.  

As a reminder, a Canadian bunker supplier provided bunkers to the Sam Hawk in Turkey, with the supply contract governed by Canadian law, but with US law governing the existence and enforcement of any maritime lien. US law gives a maritime lien to necessaries providers under the US Commercial Instruments and Maritime Lien Act (CIMLA). The bunker supplier arrested Sam Hawk in Albany, WA, claiming it had a maritime lien by operation of contract and US law. The Full Federal Court overturned the trial decision that the US maritime lien should be recognized. The essence of the finding was that a contractual choice of US law could not provide for the existence of a maritime lien.  Neither the ship owner nor the ship agreed to US law applying to the supply of bunkers in Turkey; the contract was between time charterer and bunker supplier.

However, four of the five judges (not Rares J) adopted the following test:

Step one: identify the relevant foreign law right by reference to the lex causae. The law which governs the choice of law rules is the law of the forum. In the absence of a choice of law rule in s 15 of the Admiralty Act that system of law is the common law of Australia: John Pfeiffer Pty Ltd v Rogerson 203 CLR

In this case, a US necessaries supplier has a right to a maritime lien under US law.

Step two: characterize the identified foreign right by reference to Australian law to see if it gives a maritime lien with the same priority. This requires the characterisation of those rights, in the circumstances in which they arose, for the purposes of Australian law to determine whether they can be described as a “maritime lien”.

But in this case, Australian law would not give that right the same priority as in the US, so there is no maritime lien available in Australia: see The Ship “Sam Hawk” v Reiter Petroleum Inc [2016] FCAFC 26.

The Bulk Juliana

This involved a bunker contract governed by the “General Maritime Law of the United States”, which the trial judge found to include a lien for necessaries, under the CIMLA. Such a clause would lead to wholesale liens claims in the US, perhaps not satisfactory from a US policy viewpoint.  Most unusually, there is an application for certiorari to the US Supreme Court seeking to challenge this, filed on 23 May 2017, on the same bases as the Full Federal Court decided in The Sam Hawk. However, the writ has since been refused, on 26 June 2017.

The Ocean Victory

This involved a bareboat charter for use “between good and safe ports”, which is assessed depending on the features of the ship itself. The Ocean Victory was hit by a typhoon with force 9 winds at its berth at the difficult Japanese port of Kashima.  While trying to depart, through the long channel at Kashima, she was driven aground and broke up. At first instance, the judge held that Kashima was an unsafe port for the Ocean Victory. But the Court of Appeal disagreed, and a further appeal to the Supreme Court of the UK was dismissed: Gard Marine and Energy v China National Chartering Company [2017] UKSC 35 (10 May 2017). Strong winds and a heavy swell constituted an “abnormal occurrence”, and there was no breach of the safe port obligation.

Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Ltd

Watkins Syndicate v Pantaenius [2016] FCAFC 150 concerned a yacht returning from competing in a Fremantle to Bali race. Returning from Bali, the yacht ran aground near Darwin before re-clearing Customs. Pantaenius paid the owner’s claim, and sought contribution from Lloyd’s. The claim was allowed, under s 54 of the Insurance Contracts Act 1984 (Cth) (not the Marine Insurance Act 1906). Section 54 provides that an insurer may not refuse an insurance claim when the only reason for doing so would be some act of the insured that did not cause or contribute to the loss. 

Maritime Union of Australia v Minister for Immigration and Border Protection [2016] HCA 34

Since 2014, any non-citizen participating or supporting an “offshore resources activity” must have an Australian visa. The Minister has power to except an operation or activity. In 2015, the Minister determined that any vessel or structure that was not an Australian resources installation was not an “offshore resources activity” so non-Australians on non-Australian installations would not need a visa. MUA successfully applied directly to the High Court for a declaration that the 2015 Declaration was invalid.  The exception created by the 2015 Declaration was so broad-ranging that it exceeded the powers of the Minister and was invalid. It effectively negated the general rule and so was not an exception but an abrogation of the rule that the Parliament had enacted to require visas for non-Australians.

The Murrays Legal with Professor Martin Davies

Other current maritime issues

There are several inquiries into maritime law in Australia.

  • The Senate inquiry into the “increasing use of so-called Flag of Convenience shipping in Australia” is due to report by 19 July 2017.
  • An inquiry into the effect of red tape on cabotage has been closed because the Government has subsequently announced consultations on proposed coastal shipping reforms. 
  • The future of Australia’s naval shipbuilding industry remains under a Senate committee, with further topics added, including the tender process for the Royal Australian Navy’s new supply ships.  The committee is now to report under amended terms of reference by 1 December 2017.


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