FEDERAL COURT OF AUSTRALIA
IN THE FEDERAL COURT OF AUSTRALIA
DATE OF ORDER:
THE COURT ORDERS THAT:
2. The appellant pay the first respondent’s costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
QUEENSLAND DISTRICT REGISTRY
QUD 81 of 2011
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
GOVERNMENT OF THE REPUBLIC OF VANUATU
DOWSETT, RARES AND REEVES JJ
4 NOVEMBER 2011
REASONS FOR JUDGMENT
1 The appellant was the master of a ship named MV Retriever 1. He claims that the ship was seized or detained in Port Vila, Vanuatu in January 2007 by the Government of the Republic of Vanuatu (Vanuatu) or its officers for which it is vicariously liable. The appellant claimed that he, or a company he controlled, was the beneficial owner of the ship. He commenced proceedings in this Court against Vanuatu and a former business associate, Michael Hatcher. The appeal does not concern Mr Hatcher who did not appear.
2 The primary judge found that Vanuatu was immune from the jurisdiction of the Court pursuant to s 9 of the Foreign States Immunities Act 1985 (Cth) and dismissed the claim against it. His Honour also ordered that service of the application on Vanuatu be set aside.
The appellant’s argument
3 The appellant contended that the primary judge erred because his Honour failed to find that the Admiralty Act 1988 (Cth) gave the Court jurisdiction over Vanuatu. He argued that the proceedings related to a ship, Retriever 1, and that he had in personam claims under the Admiralty Act against Vanuatu.
4 The appellant relied on a variety of provisions of the Admiralty Act to support those claims. First, he argued that he had a proprietary maritime claim under ss 4(2)(a) and 16 of the Admiralty Act based on his assertion of Vanuatu’s interference with his rights as owner or a person entitled to possession of Retriever 1 or “other property”. Secondly, he claimed that he had a general maritime claim under an unspecified paragraph of s 4(3) of the Admiralty Act, within the meaning of ss 17, 18 and 19, in respect of which he claimed that Vanuatu was a “relevant person”.
5 The appellant contended that the primary judge ought to have confirmed service of the application on Vanuatu on its territory under the provisions of O 8 r 3(1)(b) and O 8 r 3(5) of the Federal Court Rules 1979 (Cth).
The legislative schemes
(a) The Foreign States Immunities Act 1985 (Cth)
6 The Foreign States Immunities Act relevantly provided:
“9 General immunity from jurisdiction
Except as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding.”
One exception was created by s 18. Section 18(1) provided that a foreign State was not immune in a proceeding insofar as it concerned an action in rem against a ship concerning a claim in connection with the ship that, at the time the cause of action arose, was in use for a commercial purpose (including, as provided in s 3(5), a trading, business, professional or industrial purpose). There were also extensions to permit actions in rem against a sister ship also in use for commercial purposes (s 18(2)), as well as against cargo that was, at the time when the cause of action arose, a commercial cargo (s 18(3)). The in rem exemptions were conditional on the ship or cargo being commercial property as defined in s 32(3) (i.e. relevantly, property that was not diplomatic or military, and was in use by the foreign State substantially for commercial purposes (s 18(5)). However, the in rem exemptions did not permit the arrest, detention or sale of a ship or cargo (s 18(4)).
7 A foreign State could be served with initiating process in accordance with an agreement to which it was a party (s 23) or by delivering the initiating process to the Attorney-General for transmission by the Department of Foreign Affairs to the equivalent in the foreign State (s 24(1)). A court must set aside so much of a process issued in a proceeding if, on the application of a foreign State, the court is satisfied that the process is inconsistent with an immunity conferred by or under the Foreign States Immunities Act (s 38).
(b) The Admiralty Act 1988 (Cth)
8 The Admiralty Act conferred jurisdiction on the Court in respect of proceedings commenced in personam on a maritime claim (s 9(1)(a)) and in respect of proceedings that may be commenced as action in rem under that Act (s 10). The only rights to commence actions in rem under the Admiralty Act are on a claim in respect of a ship or other property (s 14) being:
a maritime lien or charge (s 15(1));
a proprietary maritime claim within the meaning of s 4(2) (s 16);
a general maritime claim if a relevant person was the owner, or charterer, or in possession, or control, of the ship or other property when the cause of action arose and that person was the owner of the ship or other property when the proceeding was commenced (s 17);
a maritime claim if a relevant person was the owner, or charterer, or in possession, or control, of the ship when the cause of action arose and that person was a demise charterer of the ship when the proceeding was commenced (s 18);
a general maritime claim against another ship if a relevant person in relation to the claim was, when the cause of action arose, the owner, or charterer, or in possession, or control of the first ship and that person was the owner of the other ship when the proceeding was commenced (s 19).
9 Under s 22, a proceeding commenced in this Court as an action in rem may be served on a ship or other property, and a ship or other property in such a proceeding may be arrested, at any place within Australia, including a place within the limits of the territorial sea of Australia, except where the arrest of the ship, or cargo on board, would be inconsistent with a right of innocent passage being exercised by the ship (s 22(1) and (4)).
10 The primary judge found that none of the exceptions in Pt II of the Foreign States Immunities Act applied to the appellant’s proceedings against Vanuatu. The appellant did not argue that his Honour made any error in that finding. His Honour was undoubtedly correct to have so found. Accordingly, s 9 applied so as to confer immunity from this Court’s jurisdiction on Vanuatu. The acts of Vanuatu complained of by the appellant were assertions of the character of acts of State or sovereignty in respect of a ship within its sovereign jurisdiction. All those acts were done by Vanuatu or its officials or agencies on its territory. The appellant’s failure to identify to the primary judge, or on his appeal, any basis on which an exception to Vanuatu’s right to immunity under s 9 could be established is fatal to the appeal.
11 The appellant’s argument that the Admiralty Act created rights for him to proceed against Vanuatu independently of the operation of the Foreign States Immunities Act must be rejected. Nothing in the Admiralty Act expressly deals with any immunity of foreign States that is created by s 9 of the Foreign States Immunities Act. The latter Act created an exception to the immunity of a foreign State in s 18 in respect of certain classes of proceedings commenced as actions in rem.
12 The purpose of this exception was explained in the report of the Australian Law Reform Commission, Foreign State Immunity (ALRC 24). The Foreign States Immunities Act substantially gave effect to the recommendations in ALRC 24. In PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2011) 192 FCR 393 at 440  Rares J said, with the agreement of Lander and Greenwood JJ (at 396  and 406 ):
“The ALRC also recommended that a foreign State not be immune in certain in rem proceedings brought against a ship in use for commercial purposes (ALRC 24 at ). This was reflected in s 18. Although the Admiralty Act 1988 (Cth) had not yet been enacted, in rem proceedings could then be brought where persons had certain maritime claims, including maritime liens for damage caused by a ship: see generally Civil Admiralty Jurisdiction: Australian Law Reform Commission (ALRC 33) esp Ch 4; Harmer v Bell (“The Bold Buccleugh”) (1852) 7 Moo. PC 267 at 284-285 [13 ER 884 at 890-891]; The Tolten  P 135 esp at 145-147 per Scott LJ; cf: Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45. Once again, the potential scope of operation of the exclusion in s 18 of the Foreign States Immunities Act was wider than maritime claims arising from contracts or other transactions of a commercial nature.”
13 And, as Lander and Greenwood JJ noted, s 9 reflected, subject to the exceptions created in the Foreign States Immunities Act itself, the previous common law position that an independent sovereign State may not be proceeded against, without its consent, in the Courts of another State: PT Garuda 192 FCR at 398 , see too at 415  per Rares J.
14 The Admiralty Act was enacted after, and gave effect to recommendations in, another report of the Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33): Owners of “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 416 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. The Commission said in that report (ALRC 33 at ):
“200. Foreign State Vessels. The question of suits in personam and in rem against foreign state-owned vessels was comprehensively dealt with in the Commission’s Reference on Foreign State Immunity (ALRC 24, Foreign State Immunity, AGPS, Canberra, 1984, para 139-44). Now that the relevant provisions of the Draft Bill proposed in that Reference have been enacted, nothing need be done in the proposed admiralty legislation on the point (Foreign States Immunities Act 1985 (Cth) s 18).”
15 The Admiralty Act created or conferred jurisdiction on particular courts, including this Court, in respect of particular causes of action in proceedings commenced in rem or in personam. In contrast, the Foreign States Immunities Act, in s 9, created a general immunity for a foreign State from the ordinary jurisdiction of a court in Australia in a proceeding already instituted in that court. That is, s 9 operated on the jurisdiction that a court of this nation would, or could arguably, exercise in proceedings over a foreign State. The immunity created or recognised by the Parliament in its enactment of s 9, represents a legislative policy choice to refrain from asserting the sovereignty of Australia over a foreign State unless particular exceptions, carefully set out in Pt II of the Foreign States Immunities Act, apply.
16 There is no basis to think that the Parliament intended to do away with the immunity of a foreign State from jurisdiction by Australian courts, conferred by s 9 of the Foreign States Immunities Act, when it enacted the Admiralty Act. Each Act is capable of operating, and was intended to operate, harmoniously with the other. Thus, assuming that the appellant were able to establish (and we do not accept that he did) that the Court had any jurisdiction under the Admiralty Act in respect of his claims against Vanuatu, that State was entitled to avail itself of the immunity from any such jurisdiction conferred by s 9 of the Foreign States Immunities Act. The assertion of jurisdiction under the Admiralty Act would be inconsistent with Vanuatu’s immunity from the jurisdiction of the Court.
17 The primary judge was correct to be satisfied under s 38 of the Foreign States Immunities Act, that the appellant’s claims made in his application in this Court were inconsistent with Vanuatu’s assertion of its immunity. Hence, his Honour was correct to set aside the application, and service of it, as against Vanuatu.
18 His Honour was also correct to have refused to confirm service on Vanuatu in that State under O 8 r 3(1)(b). Once Vanuatu asserted its immunity, as it did before the primary judge, ss 9 and 38 of the Foreign States Immunities Act compelled the conclusion that service on Vanuatu would be an abuse of the process of the Court because the proceedings against it were foredoomed to fail by force of those sections: Walton v Gardiner (1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ. Vanuatu was protected from the exercise of jurisdiction in the proceedings by its immunity.
19 It follows that the appeal must be dismissed with costs.