Issue 1: proper construction of the FW Act
17 Introduction: The FW Act is an Act relating to workplace relations and related purposes. The object of the Act, stated by s 3, is to provide "a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians" by the means set out in paras (a) to (g).
18 The Act, as explained in the overview provided by s 4(1) (as it applied at material times):
… is about workplace relations. It:
(a) provides for terms and conditions of employment (Chapter 2); and
(b) sets out rights and responsibilities of employees, employers and organisations in relation to that employment (Chapter 3); and
(c) provides for compliance with, and enforcement of, this Act (Chapter 4); and
(d) provides for the administration of this Act by establishing Fair Work Australia and the Office of the Fair Work Ombudsman (Chapter 5); and
(e) deals with other matters relating to the above (Chapter 6).
19 Chapter 2, by s 5(1), provides for terms and conditions of employment of "national system employees". A national system employee is defined by s 13 to be an individual so far as he or she is employed, or usually employed, by a "national system employer", except on vocational placement.
20 A national system employer is defined by s 14(1) to include a "constitutional corporation", so far as it employs, or usually employs, an individual. In turn, a constitutional corporation is defined by s 12 to mean a corporation to which s 51(xx) of the Constitution applies. Section 51(xx) of the Constitution applies to "foreign corporations, and trading and financial corporations formed within the limits of the Commonwealth". Thus, a national system employer may be either an Australian trading or financial corporation or a foreign corporation.
21 This leaves a question, however, as to the circumstances, if any, in which an individual employed by a foreign corporation may be considered a national system employee.
22 Part 2-2 of the FW Act, by s 5(3), contains National Employment Standards, which are minimum terms and conditions that apply to all national system employees.
23 Part 2-3 is about modern awards. By s 5(4), a modern award is one made for a particular industry or occupation and provides additional minimum terms and conditions for those national system employees to whom it applies.
24 The rights and responsibilities of national system employees and national system employers are referred to in s 6.
25 Division 3 of Pt 1-3 of Ch 1 of the FW Act deals with the geographical application of the FW Act. The heading to Div 3 is "Geographical application of this Act". Section 13(1) of the Acts Interpretation Act 1901 (Cth) (Acts Interpretation Act), as it applied at material times, provided that the headings of the Parts, Divisions and Subdivisions of an Act shall be deemed to be part of the Act.
26 Section 31(1), the first provision in Div 3, expressly provides that a provision of the Act prescribed by the regulations does not apply to a person or entity in Australia prescribed by the regulations as a person to whom, or an entity to which, the provision does not apply. Note 1 to s 31(1) also records that:
Note 1: In this context, Australia includes the Territory of Christmas Island, the Territory of Cocos (Keeling) Islands and the coastal sea (see section 15B and paragraph 17(a) of the Acts Interpretation Act 1901).
27 Note 1 appears to reflect the proper construction of the FW Act and general principles of interpretation. First, when regard is had to Div 3, its heading and s 31(1), in particular, it appears the FW Act is intended to apply in Australia in a geographical sense.
28 Secondly, s 17(a) of the Acts Interpretation Act (as it applied at material times) defined Australia as the Commonwealth of Australia and stated that, when used in a geographical sense, it includes the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, but does not include any other external territory.
29 Thirdly, s 15B(1)(b) of the Acts Interpretation Act (as it applied at material times) provided that a reference in an Act to Australia is taken to include a reference to the coastal sea of Australia. Section 15B(4)(a)(i) relevantly provided that the coastal sea includes the territorial sea of Australia. The territorial sea was not defined in the Acts Interpretation Act as it applied at material times. However, in my view, it is clear it had the same meaning as in the Seas and Submerged Lands Act 1973 (Cth) (Seas and Submerged Lands Act) (and see now s 2B of the Acts Interpretation Act as it currently operates), which, by s 3(1), adopts the meaning provided by art 3 and art 4 of the United Nations Convention on the Law of the Sea, opened for signature on 10 December 1982, 1833 UNTS 397 (entered into force 16 November 1994) (UNCLOS). This meaning recognises the territorial sea up to a limit not exceeding 12 nautical miles from the coast.
30 On the face of the FW Act, therefore, the Act does not apply to seas beyond the territorial sea. Section 33 of the FW Act, however, explicitly extends the FW Act to Australia's EEZ and waters above the continental shelf in the following terms and circumstances:
Extension to Australian ships etc.
(1) Without limiting subsection (3), this Act extends to or in relation to:
(a) any Australian ship in the exclusive economic zone or in the waters above the continental shelf; and
(b) any fixed platform in the exclusive economic zone or in the waters above the continental shelf; and
(c) any ship, in the exclusive economic zone or in the waters above the continental shelf, that:
(i) supplies, services or otherwise operates in connection with a fixed platform in the exclusive economic zone or in the waters above the continental shelf; and
(ii) operates to and from an Australian port; and
(d) any ship, in the exclusive economic zone or in the waters above the continental shelf, that:
(i) is operated or chartered by an Australian employer; and
(ii) uses Australia as a base.
(2) For the purposes of extending this Act in accordance with paragraph (1)(d):
(a) any reference in a provision of this Act to an employer is taken to include a reference to an Australian employer; and
(b) any reference in a provision of this Act to an employee is taken to include a reference to an employee of an Australian employer.
Extensions prescribed by regulations
(3) Without limiting subsection (1), if the regulations prescribe further extensions of this Act, or specified provisions of this Act, to or in relation to the exclusive economic zone or to the waters above the continental shelf, then this Act extends accordingly.
Modifications relating to extended application
(4) Despite subsections (1) and (3), if the regulations prescribe modifications of this Act, or specified provisions of this Act, for its operation under subsection (1) or (3) in relation to one or both of the following:
(a) all or part of the exclusive economic zone;
(b) all or part of the continental shelf;
then, so far as this Act would, apart from this subsection, extend to the zone or part, or to the continental shelf or part, it has effect as so modified.
(5) For the purposes of subsection (4), the regulations may prescribe different modifications in relation to different parts of the exclusive economic zone or continental shelf.
31 If each of the drilling rigs in question in this proceeding is a "fixed platform", as the applicant pleads it is, then, on the face of it, the FW Act will extend to or in relation to that rig while it is in the EEZ, pursuant to s 33(1)(b), as the parties agree each rig was, at material times, in the EEZ. (The applicant does not otherwise contend that any of paras (a), (c) or (d) of subs (1) applies in this case.)
32 There can be little doubt, in my view, that the intent of the Parliament, as to the application, in the EEZ, of s 33(1)(b) has been made abundantly clear. It is intended to apply notwithstanding any principle of international law that might otherwise suggest a reading down of its scope: see Fair Work Ombudsman v Pocomwell Ltd [2013] FCA 250 at [25].
33 If neither of the drilling rigs is a fixed platform for the purposes of s 33(1)(b), but is a "majority Australian-crewed ship", then, on the face of it, the FW Act will extend to that rig, while it is in the EEZ, pursuant to reg 1.15E of the Regulations. At material times, reg 1.15E provided that:
(5) For subsection 33 (3) of the Act, the Act is extended to and in relation to a majority Australian-crewed ship in the exclusive economic zone or the waters above the continental shelf.
Note The extension of this Act to emergency licensed ships, general licensed ships, temporary licensed ships, transitional general licensed ships and majority Australian-crewed ships in the exclusive economic zone and the waters above the continental shelf (including provisions relating to compliance and enforcement, administration and right of entry by reason of the extension of the rest of the Act, so far as it relates to the specified provisions) is subject to:
(a) Australia's international obligations relating to foreign ships; and
(b) the concurrent jurisdiction of a foreign State.
34 The respondents question the intended scope of reg 1.15E, and whether, if on its face it is capable of applying to foreign flagged ships in the EEZ, it should be considered ultra vires the FW Act or read down so as not to so apply by reason of principles of international law.
35 The primary contention of the first and second respondents is that the coastal state's rights in its EEZ are limited on the proper construction of the relevant provisions of the FW Act having regard to relevant principles of international law. They refer to art 56 of UNCLOS which, they say, limits Australia's interests in the EEZ to the management and exploitation of natural resources. It follows, they contend, that Australia's jurisdictional competence, as a coastal state, over foreign flagged ships in the EEZ is quite limited. They contend the coastal state has no jurisdiction to prescribe international (or national) standards concerning seafarers' rights for foreign flagged ships within its EEZ.
36 They also refer to art 92(1) of UNCLOS (which applies to the EEZ by virtue of art 58(2)) which relevantly states that "[s]hips shall sail under the flag of one State only and, save in exceptional cases expressly provided for in international treaties or in this Convention, shall be subject to its exclusive jurisdiction on the high seas". Further, they observe art 94(3)(b) expressly recognises the obligation of the flag state in relation to the manning of ships, labour conditions and the training of crews, taking into account applicable international instruments.
37 These respondents also draw attention to the Convention on the High Seas, opened for signature 29 April 1958, 450 UNTS 11 (entered into force 30 September 1962) (Convention on the High Seas) to which Australia is a member state. Under the Convention on the High Seas the flag state exercises jurisdiction and control in administrative, technical and social matters over ships flying its flag (art 5(1)), and to ensure safety must take all necessary measures in regard to manning and labour conditions, taking into account applicable international labour instruments: art 10(1)(b). Accountability for incidents of a penal or disciplinary nature rests either with the state of which the person is a national or the flag state in respect of incidents at sea: art 11.
38 The first and second respondents also note that Australia and the Philippines have ratified the Maritime Labour Convention, opened for signature 7 February 2006, 45 ILM 792 (entered into force 20 August 2013) (Maritime Labour Convention), pursuant to which each member state must adopt the laws and regulations specifying the matters that are to be included in the seafarers' employment agreement "governed by its national law": para 4 of standard A2.1 of reg 2.1. All seafarers shall be paid for their work in accordance with their employment agreement: para 1 of reg 2.2.
39 The first and second respondents contend that s 15AA of the Acts Interpretation Act requires an interpretation that best achieves the purpose or object of the Act. They note that s 3 states that the object of the FW Act is, inter alia, to take into account Australia's international labour obligations.
40 Also, the first and second respondents contend, [152] of the explanatory memorandum to the Fair Work Bill 2008 (Cth) (Fair Work Bill) states that limits are recognised as to the extent to which the Bill's extraterritorial application is possible and appropriate under Div 3 of Pt 1-3 of Ch 1.
41 Further, they say reg 1.15E itself, by the Note, recognises that it is "subject" to concurrent jurisdiction of other states and international obligations owed to foreign flagged ships.
42 Lastly, they draw attention to Barcelo v Electrolytic Zinc Company of Australasia Ltd (1932) 48 CLR 391, in which Dixon J stated, at 423-424, that every statute is to be interpreted and applied as far as its language admits so as not to be inconsistent with the comity of nations or with established rules of international law. Thus, it is to be understood and implied that the legislation of a country is not intended to deal with persons over which, according to the comity of nations, the jurisdiction properly belongs to some other sovereign or state. Furthermore, in Wanganui Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581, Dixon J held, at 601, that where an enactment describes acts, matters or general words so that its intended application would be universal, it is to be read as confined to what, according to the rules of international law administered or recognised in Australian courts, is within the province of the law to affect or control. General words should not be understood as extending to cases which, according to rules of private international law administered by the courts, are governed by foreign law.
43 The first and second respondents contend that they and the painters are statutorily obligated to comply with the contractual conditions laid down by the law of the Philippines as applying to such contracts and that includes the level of wage payments made under the respective contracts of employment with the painters. It follows, therefore, they say, that the purpose of the FW Act and s 33 in particular is only to extend the operation of the FW Act to work connected with platforms or ships in the EEZ consistently with Australia's obligations under UNCLOS and is ultra vires the FW Act.
44 The first and second respondents further submit, however, that, if reg 1.15E is to be construed as enabling action under the FW Act to be taken, not just in respect of Australian employers of majority Australian crewed ships, but as extending to overseas employers who make contracted payments to foreign residents on majority Australian-crewed ships in the EEZ, then reg 1.15E is ultra vires. That is, s 33(3) of the FW Act does not permit the making of regulations that are inconsistent with international law and the concomitant jurisdictional rights of another state.
45 The third and fourth respondents acknowledge that it is open to Australia to pass laws and make regulations which are inconsistent with UNCLOS. However, they submit that a statute is to be interpreted and applied, as far as its language permits, so that it is in conformity and not in conflict with the established rules of international law or with a treaty or international convention to which Australia is a party: Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 (Teoh) at 287-288 (Mason CJ and Deane J); Zhang v Zemin [2010] NSWCA 255; (2010) 79 NSWLR 513 (Zhang v Zemin) at [125]-[129] (Spigelman CJ); Sellers v Maritime Safety Inspector [1999] 2 NZLR 44 (Sellers) at 57.
46 The third and fourth respondents submit that there is nothing in s 33(3) of the FW Act to indicate that Parliament intended to authorise the making of regulations that would be inconsistent with international law. Moreover, that [167] of the explanatory memorandum to the Fair Work Bill contains a positive indication that Parliament did not intend to authorise the making of regulations that would be inconsistent with international law.
47 Accordingly, the third and fourth respondents submit that s 33(3) of the FW Act must be read as authorising only those regulations which are consistent with international law.
48 The third and fourth respondents further contend, however, that, to the extent reg 1.15E(5) purports to extend the FW Act to foreign flagged ships in the EEZ, it violates the exclusive jurisdiction of the flag state and is thus inconsistent with UNCLOS.
49 These respondents submit that the exclusive jurisdiction of the flag state is conferred by art 92 and art 94 of UNCLOS, which apply to the EEZ by virtue of art 58(2). While art 56(1)(a) does confer "sovereign rights" on the coastal state, the other paragraphs of art 56 and UNCLOS read as a whole indicate that the coastal state's jurisdiction in this regard is not intended to be at large. Specifically, the third and fourth respondents contend that it is clear from art 56(2), art 56(3), art 78(2) and art 79(2) that the sovereign rights conferred on the coastal state over the exploration and exploitation of natural resources in the EEZ and continental shelf are limited rights to be exercised consistently with the rights and freedoms of other states under UNCLOS, including the rights of a flag state over ships flying its flag.
50 The third and fourth respondents then submit that the exclusive jurisdiction of a flag state in the EEZ in administrative, technical and social matters over ships flying its flag (art 94(1)) is not incompatible with the sovereign rights conferred on coastal states for the limited purpose of exploring and exploiting its natural resources. This is the case when it is understood that these sovereign rights are not absolute but are to be exercised with "due regard to the rights and duties of other States" and "in a manner compatible with the provisions of [UNCLOS]" (art 56(2)), and so as not to "infringe or result in any unjustifiable interference with navigation and other rights and freedoms of other States as provided for in [UNCLOS]": art 78(2).
51 Finally, the third and fourth respondents submit that the role of the flag state in regulating manning and labour conditions on ships flying its flag has been confirmed by the Maritime Labour Convention.
52 The third and fourth respondents acknowledge that it appears from the Note to reg 1.15E that the regulation is not intended to contravene international law. However, they submit that, short of relying on the Note to construe the regulation as not applying to foreign flagged ships (which would give the regulation no work to do since the FW Act already applies to any Australian ship in the EEZ or above the continental shelf by virtue of s 33(1)(a)), it is difficult to see how the regulation can be read down so as not to conflict with UNCLOS and the exclusive jurisdiction of a flag state over foreign flagged ships in the EEZ. For this reason, it should be found to be ultra vires s 33(3) of the FW Act.
53 The applicant commences its submissions by insisting that there is no room for international law to have any operation whatsoever in relation to s 33(1)(b) of the FW Act because the Parliament has unambiguously provided that the FW Act extends to a "fixed platform" as defined in the EEZ. I have already noted above that I accept that argument. It is well understood that a statute is to be given effect according to its terms notwithstanding any principle of international law which might suggest a contrary outcome: see for example Polites v Commonwealth (1945) 70 CLR 60 (Polites) at 68-69 (Latham CJ); Zhang v Zemin [125] (Spigelman CJ).
54 Thus, as indeed do the respondents, the applicant focuses upon the question whether the regulation making power, particularly under s 33(3) of the FW Act, should be read down so as to limit the nature of regulations able to be made. As noted above, the respondents take the view that reg 1.15E is ultra vires the FW Act because the Act does not authorise the making of regulations "inconsistent with international law". The respondents' proposition of course depends upon the view being adopted that reg 1.15E is contrary to international law.
55 In that regard, the applicant submits that the third and fourth respondents, at least, effectively conceded in argument that the only fair reading of reg 1.15E is that it affects an extension of the FW Act to majority Australian-crewed, but foreign flagged ships, whilst they are in the EEZ.
56 The applicant disputes the proposition put by the respondents that such an extension is inconsistent with international law.
57 The applicant submits, first, that UNCLOS expressly permits coastal states to regulate all aspects of activities on board ships engaged in activities within the EEZ and in the waters above Australia's continental shelf for which the coastal state has jurisdiction. In support of this submission, the applicant refers to art 56 and art 77(1). The applicant contends that the grant of sovereign rights encompasses all powers reasonably incidental to the exploration and exploitation of the natural resources of the EEZ.
58 The applicant submits that art 56(2) does not have the effect of requiring coastal states to defer to the flag state in relation to issues of management on board any ship present in the EEZ. Instead, as a matter of practice, coastal states which permit foreign flagged ships to engage in exploration and exploitation of natural resources within their EEZ or their continental shelf do so on conditions which include regulation of a number of matters which would, on the high seas, be the preserve of the flag state. The applicant cites legislation in the United Kingdom, the Netherlands and the United States of America as examples of this "practice".
59 The applicant also contends that the effect of art 56(2) is not to preserve traditional high seas freedoms to the flag state of ships engaged by permit of the coastal state in exploration or exploitation of the natural resources of the coastal state in the EEZ. Rather, it is to ensure that ships that are not engaged in EEZ related activities are not unduly hindered by the activities of the coastal state, and that freedoms such as freedom of navigation, freedom to lay cables and pipelines and other high seas freedoms are preserved. On a holistic construction of UNCLOS, the applicant contends, it is intended to create a regime in which the coastal state can regulate all aspects of the exploitation of EEZ natural resources, but preserve to other states rights associated with the rights of navigation through the EEZ. The applicant contends that there is no interference with the freedom of navigation in art 87 in this case as the rigs are not engaged in navigation.
60 Secondly, the applicant notes that art 60(1)(b) gives the coastal state an exclusive right to regulate the construction, operation and use of structures for the purposes provided for in art 56. The applicant submits that, whether the rigs are defined as fixed platforms or ships, they are certainly "structures" and thus covered by art 60.
61 Thirdly, the applicant submits that s 33(3) of the FW Act as the source of the regulation making power contains no limitation, whether express or implied, as to consistency with international law. Further, it contends that the language of reg 1.15E and s 33(3) is entirely unambiguous. As such, the Court must give effect to the plain language of the regulation and statute: Polites at 68-69 (Latham CJ); XYZ v Commonwealth [2006] HCA 25; (2006) 227 CLR 532 at [5] (Gleeson CJ); Zhang v Zemin at [125] (Spigelman CJ). The applicant contends that, to the extent that the respondents seek to rely upon international law principles, they must point first to a relevant ambiguity in the legislation. Moreover, the Note to reg 1.15E is not part of the FW Regulations but is an extrinsic aid to the interpretation of the regulation; the words of the regulation are unambiguous.
62 Finally, the applicant submits that precisely the arguments now advanced by the respondents were considered and unanimously rejected by the High Court in Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc [2003] HCA 43; (2003) 214 CLR 397 (Re Maritime Union).
63 In response to the submission of the applicant that art 56 of UNCLOS allows a coastal state to regulate labour relations on foreign flagged ships engaged in the exploration and exploitation of the natural resources in its EEZ, the first and second respondents contend:
The Seas and Submerged Lands Act itself recognises in its heading to Pt II the distinction between "sovereignty" which Australia has over its internal waters and territorial sea and the more limited "sovereign rights" it has in respect of the EEZ.
Under art 56(2) of UNCLOS the coastal state must have "due regard" to the rights and duties under UNCLOS of other states. The rights of other states are referred to in art 58 and include freedom of navigation under art 87 as well as other high seas rights recognised in art 88 - art 115, insofar as these are not incompatible with art 56. There is no incompatibility between foreign flagged ships exercising jurisdiction under art 94(3)(b) in relation to labour conditions and the sovereign rights given to Australia for the purpose of exploring and exploiting natural resources under art 56(1)(a).
States enjoy the right of innocent passages in territorial waters of other states (art 17), although coastal states may adopt laws and regulations relating to innocent passage through the territorial sea in respect of the matters referred to in art 21. It follows that, by analogy, foreign states must have rights to at least the same degree in the EEZ.
64 In response to the submission of the applicant that, in considering whether reg 1.15E(5) is inconsistent with international law, regard should be had to the practice of other coastal states, the third and fourth respondents submit:
The United States legislation to which the applicant refers is confined to artificial islands, installations and presumably similar devices and is therefore unexceptionable as it is entirely consistent with art 60 of UNCLOS.
Foreign law is a question of fact to be proved by expert evidence or else in accordance with s 174 of the Evidence Act 1995 (Cth): Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331 at [115] (Gummow and Hayne JJ); VHAJ v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 186; (2003) 131 FCR 80 at [11] (Moore J). The applicant has adduced no such evidence and therefore the Court is not able to have regard to any such practice of other coastal states.
In any event, the applicant has only adduced two countries in which the so called practice exists and has not produced any decision in which the validity of that legislation has been considered by the courts. The mere fact that two other countries have sought to do what Australia has sought to do can have very little weight in the absence of that legislation being tested.
65 Further, the third and fourth respondents submit that s 13(1) of the Acts Interpretation Act, applicable to the construction of the FW Regulations by s 13(1)(a) of the Legislative Instruments Act 2003 (Cth), indicates that the Note to reg 1.15E is to be considered part of the regulation.
66 The starting point for the Court's consideration of the issue raised is s 33 of the FW Act which by s 33(1) extends the Act expressly to:
Australian flagged ships and fixed platforms in the EEZ or over the continental shelf (s 33(1)(a) and (b));
any ship in the EEZ or over the continental shelf that operates to and from an Australian port and that services or operates in conjunction with a fixed platform in the EEZ or over the continental shelf (s 33(1)(c)); and
any ship in the EEZ or over the continental shelf that is operated or chartered by an Australian employer and that uses Australia as a base (s 33(1)(d)).
67 As I have stated above, in my view, there is no ambiguity about the intention of the Parliament that the FW Act should apply to the ships or fixed platforms to which s 33(1) refers and so there is no relevant ambiguity concerning the application of s 33(1) and no room for international law to operate to cause that subsection to be read down in any relevant way. As noted above, and as the arguments of the parties have been developed, the focus is on the question of whether s 33(3) should be relevantly read down by reason of the operation of international law, in circumstances where the respondents contend that reg 1.15E(5) is "inconsistent with international law".
68 Further, I also accept the submission made on behalf of the applicant that the only fair reading of reg 1.15E is that it effects an extension of the FW Act to majority Australian-crewed, but foreign flagged ships, whilst they are in the EEZ.
69 Section 33(3) provides that:
Without limiting subsection (1), if the regulations prescribe further extensions of this Act, or specified provisions of this Act, to or in relation to the exclusive economic zone or to the waters above the continental shelf, then this Act extends accordingly.
70 By reg 1.15E(1) to (4) (as they applied at material times) the FW Act was expressed to extend to:
"licensed ships" (a ship to which a licence has been granted under s 288 of the Navigation Act 1912 (Cth) (Navigation Act)); and
"permit ships" (a ship to which a permit has been granted (whether for a single voyage or as a continuing permit) under s 286 of the Navigation Act);
in the EEZ or the waters above the continental shelf.
71 Regulation 1.15E(5) then additionally extended the FW Act to "majority Australian-crewed ships" in the EEZ or the waters above the continental shelf.
72 In reg 1.15B, the expression "majority Australian-crewed ship" was defined as:
majority Australian-crewed ship means a ship (other than an Australian ship, a
licensed ship or a permit ship) of which:
(a) the majority of the crew are residents of Australia; and
(b) the operator:
(i) is a resident of Australia; or
(ii) has its principal place of business in Australia, or
(iii) is incorporated in Australia.
73 The reference to a ship "other than an Australian ship…" plainly is intended to refer to a foreign flagged ship in the EEZ which has a majority Australian crew. If reg 1.15E(5) were to be construed as not applying to foreign flagged ships in the EEZ at all it would have no work to do, as the FW Act already extends to Australian flagged ships in the EEZ by virtue of s 33(1)(a). In Minister for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565 (Dover Fisheries) at 574, Gummow J noted that it is improbable that the framers of legislation (whether primary or delegated) could have intended to insert a provision which has virtually no practical effect; instead one should look to see whether any other meaning produces a more reasonable result.
74 In this regard, to the extent there is any ambiguity suggested by the phrase used, it is relevant to observe that [60] of the explanatory statement to the Fair Work Amendment Regulations 2009 (No. 1) (Cth), which inserted reg 1.15E (as it then read, which was not materially different to the provision as it applied at material times), stated:
[Reg 1.15E] ensure[s] that all seafarers working regularly in or beyond the waters of Australia's EEZ and continental shelf will have the benefit of Australian workplace relations laws and a fair safety net of employment conditions in circumstances where there is an appropriate connection with Australia.
(Emphasis added.)
75 In my view, the reference to "all seafarers working regularly in … Australia's EEZ" indicates that reg 1.15E is intended to extend the FW Act to foreign flagged ships working in Australia's EEZ, as long as there is an "appropriate connection with Australia" (an indicia which may be considered satisfied if the foreign flagged ship is a "majority Australian-crewed ship").
76 I find, therefore, that on its face reg 1.15E(5) purports to extend the reach of the FW Act to foreign flagged ships in the EEZ.
77 I should also deal with the contention made on behalf of the applicant that the terms of s 33(3) are quite unambiguous: "if the regulations prescribe further extensions of this Act ... to or in relation to the exclusive economic zone … then this Act extends accordingly". The applicant says that is exactly what reg 1.15E purports to do. On its face, s 33(3) is an unfettered and unlimited regulation making power.
78 It is arguable, in my view, that the regulation making power could be read down if it could be shown that, depending on how it is exercised, international law might be contravened.
79 Assuming, therefore, the view might be taken that the terms of s 33(3) regulation making power leave some room for debate as to the extent to which regulations can be made, having regard to principles of international law, the fundamental question arises whether reg 1.15E may be considered to lead to any inconsistency with any rule of international law. In this regard, I would accept the proposition that the full import of the Note that follows reg 1.15E will become clear once it is determined whether there is or is not a rule of international law which, in effect, preserves to the flag state the topic of regulation of conditions on board a ship whilst that ship is engaged in the exploration or exploitation of resources of a coastal state in its EEZ. I now turn to that specific issue.
80 The EEZ first acquired legal definition when UNCLOS was opened for signature on 10 December 1982 (although the treaty was not entered into force until 16 November 1994). However, the concept of an EEZ was foreshadowed by developments in state practice throughout the twentieth century, such as the assertion of "exclusive fishing zones" and proclamations of jurisdiction over economic resources on appurtenant continental shelves (for example, the so called "Truman Proclamation" by the United States in 1945). Prior to UNCLOS, though, conventions such as the Convention on the Continental Shelf, opened for signature 29 April 1958, 499 UNTS 311 (entered into force 10 June 1964) (Convention on the Continental Shelf) and the Convention on the High Seas primarily governed activities in what would become the EEZ. It is trite to note, then, that whatever is said in these conventions is to be read subject to UNCLOS. Moreover, given that the EEZ is a sui generis regime, it is important to recognise the primacy of UNCLOS.
81 Subsequent to UNCLOS, there have been a number of international treaties relating to the law of the sea, including the 1995 Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, opened for signature 4 August 1995, 2167 UNTS 88 (entered into force 11 December 2001) and the Maritime Labour Convention. This latter convention is relied upon by the respondents in their submissions. However, as the applicant observes, the convention did not enter into force until 20 August 2013. As such, it does not form part of the relevant law as it existed at times material to this proceeding.
82 Part V of UNCLOS is titled "Exclusive Economic Zone". The rights, jurisdiction and duties of the coastal state in the EEZ are outlined in art 56, which relevantly provides:
1. In the exclusive economic zone, the coastal State has:
(a) sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the seabed and of the seabed and its subsoil, and with regard to other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds;
…
2. In exercising its rights and performing its duties under this Convention in the exclusive economic zone, the coastal State shall have due regard to the rights and duties of other States and shall act in a manner compatible with the provisions of this Convention.
3. The rights set out in this article with respect to the seabed and subsoil shall be exercised in accordance with Part VI.
83 Pt VI is titled "Continental Shelf". Two relevant articles within it are art 77 and art 78.
84 The rights of the coastal state in the waters above its continental shelf are addressed in art 77, which relevantly provides:
1. The coastal State exercises over the continental shelf sovereign rights for the purpose of exploring it and exploiting its natural resources.
2. The rights referred to in paragraph 1 are exclusive in the sense that if the coastal State does not explore the continental shelf or exploit its natural resource, no one may undertake those activities without the express consent of the coastal State.
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85 The legal status of the superjacent waters and air space and the rights and freedoms of other states in the waters above a coastal state's continental shelf are outlined in art 78, which provides:
1. The rights of the coastal State over the continental shelf do not affect the legal status of the superjacent waters or of the air space above those waters.
2. The exercise of the rights of the coastal State over the continental shelf must not infringe or result in any unjustifiable interference with navigation and other rights and freedoms of other States as provided for in this Convention.
86 The rights and duties of other states in the EEZ are addressed in art 58, which provides:
1. In the exclusive economic zone, all States, whether coastal or land-locked, enjoy, subject to the relevant provisions of this Convention, the freedoms referred to in article 87 of navigation and overflight and of the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships, aircraft and submarine cables and pipelines, and compatible with the other provisions of this Convention.
2. Articles 88 to 115 and other pertinent rules of international law apply to the exclusive economic zone in so far as they are not incompatible with this Part.
3. In exercising their rights and performing their duties under this Convention in the exclusive economic zone, States shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State in accordance with the provisions of this Convention and other rules of international law in so far as they are not incompatible with this Part.
87 Article 92, in Pt VII (titled "High Seas") relevantly provides:
1. Ships shall sail under the flag of one State only and, save in exceptional cases expressly provided for in international treaties or in this Convention, shall be subject to its exclusive jurisdiction on the high seas. A ship may not change its flag during a voyage or while in a port of call, save in the case of a real transfer of ownership or change of registry.
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88 Article 94, also in Pt VII, relevantly provides:
1. Every State shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag.
2. In particular every State shall:
…
(b) assume jurisdiction under its internal law over each ship flying its flag and its master, officers and crew in respect of administrative, technical and social matters concerning the ship.
…
3. Every State shall take such measures for ships flying its flag as are necessary to ensure safety at sea with regard, inter alia, to:
…
(b) manning of ships, labour conditions and the training of crews, taking into account the applicable international instruments;
89 Essentially, the parties in this proceeding disagree on the scope of the power conferred by the grant of "sovereign rights" to the coastal state over its EEZ. The applicant says that the grant of sovereign rights encompasses the power to pass laws with respect to labour relations on foreign flagged ships when they are located within the coastal state's EEZ for the purpose of exploring and exploiting, conserving and managing the natural resources. The respondents disagree, and say that such an interpretation is inconsistent with articles such as art 87 and art 94.
90 It is not in contention that a coastal state's sovereign rights in relation to its EEZ are more limited than its "sovereignty" with respect to its territorial sea: art 2. Indeed, it appears that the term sovereign rights was deliberately chosen to make a clear distinction between coastal state rights and jurisdiction in the EEZ and coastal state rights and jurisdiction in the territorial sea, where coastal states enjoy a much broader and more comprehensive right of "sovereignty": Nandan SN and Rosenne S (eds), United Nations Convention on the Law of the Sea 1982: A Commentary (Vol II, Brill, 1993) pp 531-544.
91 Nonetheless, it is apparent that sovereign rights over natural resources means rights which are exclusively exercised by the coastal state. The coastal state is the only state that can exploit them; no other state may pursue any exploitation of natural resources without its authorisation or as per the terms it may have defined. In this respect, it has been said that the "non-living resources rights" in art 56(1)(a) "are exclusive in the fullest sense, and import no requirement for coastal states to share access, let alone benefits from their exploitation": Rothwell DR and Stephens T, The International Law of the Sea (Hart Publishing, 2010) p 89. Accordingly, in my view it appears as though the coastal state can go as far as deciding not to exploit, or prohibiting the exploitation of, the natural resources of its EEZ. (Compare art 77(2), which applies to non-living resources found in the seabed and subsoil pursuant to art 56(3).) If the coastal state can regulate who can or cannot exploit the natural resources of its EEZ, then it logically follows, in my view, that it can regulate the manner in which, and the terms on which, such resources are explored and exploited, conserved and managed.
92 Furthermore, although the respondents rely on art 94(3)(b) and say that it gives primacy to the flag state in matters relating to labour relations on board ships, in my view such a submission is too broadly drawn. Art 94(3)(b) states that "[e]very State shall take such measures for ships flying its flag as are necessary to ensure safety at sea with regard … to … labour conditions…" (emphasis added). In my view, minimum wage provisions, such as are being attempted to be enforced in the present case, are not measures "as are necessary to ensure safety at sea". Accordingly, the flag state does not under art 94(3)(b) have jurisdiction to regulate the wage conditions of the crew members of a ship flying its flag when engaged in the exploration and exploitation of the natural resources of a foreign state's EEZ.
93 In any event, it is important to note that, pursuant to art 58(2), articles such as art 92 and art 94 only apply to the EEZ in so far as they are not incompatible with Pt V. While art 92(1), art 94(1) and art 94(2)(b) (if not art 94(3)(b)) may appear to give primacy to the flag state in matters relating to labour relations on board ships, while a foreign flagged ship is engaged in the exploration and exploitation of the natural resources in a coastal state's EEZ such provisions need to be read subject to art 56(1)(a). That is, the coastal state retains the sovereign rights to regulate the manner in which the natural resources within its EEZ are explored and exploited, conserved and managed.
94 I accept that a counterargument to the generality of this construction of art 56(1)(a) may be developed when one has regard to a Report of the International Law Commission to the United Nations General Assembly, produced on 4 July 1956. This report led to the drafting of four conventions relating to the international law of the sea: the Convention on the Territorial Sea and the Contiguous Zone, opened for signature 29 April 1958, 516 UNTS 206 (entered into force 10 September 1964); the Convention on the High Seas; the Convention on Fishing and Conservation of the Living Resources of the High Seas, opened for signature 29 April 1958, 559 UNTS 285 (entered into force 20 March 1966); and the Convention on the Continental Shelf. In its commentary on the draft art 68, which became art 2(1) of the Convention on the Continental Shelf (and which is identical to art 77(1) of UNCLOS and similar to art 56(1)(a)), the Commission noted (at p 297):
… the text as now adopted leaves no doubt that the rights conferred upon the coastal State cover all rights necessary for and connected with the exploration and exploitation of the natural resources of the continental shelf.
95 In the same section, on p 298, the Commission noted that the coastal state may interfere with the rights of nationals of other states "when unavoidably necessitated by the requirements of exploration and exploitation of natural resources".
96 It is arguable that the right of a coastal state to regulate labour relations on board foreign flagged ships engaged in the exploration and exploitation of the natural resources in its EEZ should not be construed as a right "necessary for and connected with the exploration and exploitation of the natural resources of the [EEZ]", nor an "interference" with a foreign flagged ship which is "unavoidably necessitated by the requirements of exploration and exploitation of natural resources".
97 Nonetheless, noting that these comments were made in reference to a different treaty, and in the absence of further evidence (no similar evidence regarding the construction of art 56(1)(a) of UNCLOS having been provided by the respondents), I consider, having regard to the above analysis, that a coastal state's sovereign rights do encompass the right to regulate labour relations on board foreign flagged ships engaged in the exploration and exploitation of the natural resources in its EEZ.
98 This leads to the conclusion that it is unnecessary to read down the scope of s 33(3). Similarly, a conclusion that reg 1.15E is ultra vires the FW Act is not appropriate.
99 What may be stated is that coastal states exercising their sovereign rights must still respect other states' freedoms of navigation and overflight and of the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms: art 58(1). In contrast to art 88 - art 115, which apply only "in so far as they are not incompatible with [Pt V]", it appears that the listed art 87 freedoms are akin to those rights as enjoyed on the high seas, although in the exercise of these rights "States shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State in accordance with the provisions of [UNCLOS] and other rules of international law in so far as they are not incompatible with [Pt V]": art 58(3).
100 Notwithstanding these cautionary injunctions, in my view, in the present case, there is no inconsistency with the art 87(1)(a) freedom of navigation, as applies in the EEZ by virtue of art 58(1). The term "navigation" is not defined in UNCLOS. However, the use of the term throughout UNCLOS (see, for example, art 20 and art 90) suggests some act of physical movement through the water, whether on the surface or beneath: Rothwell DR and Stephens T, The International Law of the Sea (Hart Publishing, 2010) p 225.
101 I should note in passing that in this proceeding there is some evidence that at least one of the rigs, the Nan Hai VI, periodically moved around between drilling locations all within the EEZ for the purpose of exploration. Whether this movement constitutes "navigation" for the purposes of art 87(1)(a) may be open to question. However, the relevant movements seem to have been wholly within the EEZ and for the purpose of conducting further exploration in the EEZ. Thus, even if the rigs, by those movements, could be said to have been engaged in "navigation", having regard to art 58(3) the navigation freedom would not be infringed by requiring these foreign flagged ships to comply with Australian wage conditions while in the EEZ for such a purpose: compare Re Maritime Union at [48]. In such circumstances, Sellers does not assist the respondents, as that case concerned (impermissible) regulation of the freedom to navigate on the high seas, not regulation of the exploration and exploitation of the natural resources in a state's EEZ.
102 Given my views in relation to the scope of art 56, I do not need to consider further the operation of art 60.
103 There is also no need for me, in these circumstances, to consider further the examples of "state practice" suggested by the applicant and whether evidence of such "practice" is admissible and persuasive.
104 It follows, in my view, that Australia has rights under UNCLOS in relation to the regulation of labour relations on vessels that may be classified as "foreign flagged ships" that are operating in Australia's EEZ. Regulation 1.15E has such an application and is not, therefore, "inconsistent with international law" and is not ultra vires the FW Act. The extension of the FW Act to foreign flagged ships in the EEZ does not obviate or remove Australia's international obligations relating to foreign flagged ships that may pass through the EEZ for purposes not connected with Australia's sovereign rights under UNCLOS. Nor in my view does the extension of the FW Act by reg 1.15E remove any concurrent jurisdiction a foreign state may have in respect of matters for which the FW Act makes provision.
105 I find, therefore, that: reg 1.15E may apply to a foreign flagged ship in Australia's EEZ (if it is a "majority Australian-crewed ship"); that reg 1.15E is not ultra vires the FW Act; and that s 33(1)(b) applies to any relevant "fixed platform", as defined, notwithstanding that it may also be considered a foreign flagged ship.