The issue in this case was whether a company supplying crew to a ship was 'operating' that ship under s 10 of the Navigation Act 1912 (Cth). Two of the proceedings involved employees' compensation claims for personal injury. The remaining two proceedings involved their employers' claims against the Administration Appeals Tribunal (the Tribunal). They sought to determine whether the Tribunal had jurisdiction under the Administrative Appeals Tribunal Act 1975 (Cth) to review decisions on claims for compensation by seafarers under the Seafarers Rehabilitation and Compensation Act 1992 (Cth) (the Compensation Act).

The Compensation Act provides that an employee who suffers an injury may claim compensation for the injury and cost of the medical treatment. An 'employee' includes a seafarer employed in any capacity on a 'prescribed ship'. An employer who does not determine a claim within the specified time period is deemed to have disallowed the claim. The employee may request the employer to reconsider a determination, and apply to the Tribunal to review a 'reviewable decision'.

Bergvall claimed compensation from ASP Ship Management Pty Ltd (ASP). Bergvall worked on the Flinders, an oil tanker owned by Mobil Shipping & Transportation Co (Mobil US) and demise chartered to Mobil Oil Australia Ltd (Mobil Australia). While on demise, the Flinders was registered in Australia, and ASP had a contract with Mobil Australia to manage it. On the expiry of the demise charter, the Flinders was registered in Panama and the 'ultimate management' of Flinders was put in the hands of a UK company, Mobil Shipping Co Ltd (Mobil UK). ASP and Mobil UK had a ship management agreement, based on the BIMCO Standard Ship Management Agreement form (SHIPMAN 98). Bergvall's injury occurred during the period of this ship management agreement.

Kelk claimed compensation from Mermaid Labour & Management Ltd (Mermaid). Anthony Kelk worked on the Lorelay, a pipe-laying vessel owned by a Swiss company, Société D'Exploration du Lorelay SA, and registered in Panama. Allseas Construction Contractors SA (Allseas Construction), an associate of Allseas Marine Contractors SA (Allseas Marine), was the contractor engaged to lay the Bass Strait Pipeline as part of the Tasmanian Natural Gas Offshore Pipeline Installation Project. Mermaid and Allseas Construction had a contractual arrangement, but this agreement was a labour and catering agreement supplemented by a construction labour agreement, not a management agreement.

The Tribunal determined that ASP's and Mermaid's decisions disallowing Bergvall's and Kelk's compensation claims were 'reviewable decisions'. The Tribunal determined that ASP at least 'operated' the Flinders in association with Mobil UK and possibly Mobil US as well, and that Mermaid 'operated' the Lorelay in association with Allseas Construction, Allseas Marine, or both.

Bergvall, Kelk, ASP, and Mermaid appealed to the Federal Court.

Held: Bergvall's and Kelk's appeals are dismissed. In respect of ASP and Mermaid's appeals, the Tribunal is prohibited from entering into a consideration of the merits of the employees' applications under the Compensation Act unless and until it finds, according to law, that the relevant vessels were being 'operated by' ASP or Mermaid at the time of the employees' injuries.

The phrase 'operated by' in s 10 of the Navigation Act encompasses notions of a real, substantial, and direct role in the management and control of the ship's commercial, technical, and crewing operations. It involves the practical workings of, and responsibility for, the ship as a chattel and an enterprise. The direct responsibility for the management and control of the ship can be shared between or among entities, all of whom report individually to the owner or a supervising controller.

The legislative history of s 10 clarifies that a ship 'operated by' an Australian entity, whether or not in association with another entity, requires an Australian nexus. Both ASP and Mermaid are incorporated in Australia, and the crew members of Flinders and Lorelay were mostly residents of Australia. However, it is not sufficient that the crew has a very strong association with Australia, even if 100 per cent of the crew were resident in Australia. There must be an additional aspect to establish a connection with Australia.

The words 'operator' and 'to operate' in s 10 can be used at several levels of abstraction, and much depends on context. The meaning can encompass working the ship, but the context requires management and control of the ship. The phrase 'a ship which is operated by' and the word 'operator' of a ship do not carry a precise content from maritime law or history. Various dictionary definitions suggest that the phrase 'to operate a ship' has technical and commercial aspects (see eg Brodie's Dictionary of Shipping Terms (4th edn); Sullivan's Marine Encyclopedic Dictionary (2nd edn, Lloyd's of London 1988)).

The Tribunal made an error in its interpretation of the meaning of 'operator'. A company is not an 'operator' merely by providing the crew and being the employer of the crew. The words 'operator of a ship' and 'to operate a ship' are also not only limited to the legal entity or entities (human or corporate) which have ultimate and final decision-making power over how the ship is to be commercially deployed or run, and to those final decision-making activities. The person or entity who has the commercial disposition of a ship, or who has the final authority on operational matters may be entirely divorced from the practical day-to-day activities of the ship.

The person or entity having management and control of the ship has operational responsibilities concerning the commercial deployment of the ship, such as the technical safety and adequacy of the ship as a complex integrated working entity, and the choice, supervision, care and discipline of the master and crew on board the ship. The commercial enterprise undertaken (eg the types of cargoes lifted, the ports visited and the routes taken on voyages) is not unrelated to the maintenance of an appropriate standard of technical adequacy of the ship for the tasks involved in carrying out that enterprise.

The LLMC 1924, LLMC 1957, and LLMC 1976 did not ascribe any particular technical meaning to the word 'operates' or 'operator'. The history of limitation of liability in England, and the attempts at international harmonisation, as set out by David Steel J in CMA CGM SA v Classica Shipping Co Ltd [2003] 2 Lloyd's Rep 50, [14]-[27], reveals an expansion of the categories of persons entitled to limit their liability (see also McDermid v Nash Dredging Ltd [1986] 1 QB 965, 980-82). The extension of limitation to operators first appeared in the LLMC 1924, and was later repeated in the LLMC 1957, and the LLMC 1976, in slightly varying terms. The drafters appear to have intended an ordinary meaning in the context of the use of a ship, and the Court of Appeal in CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd's Rep 460 (CMI728) clarified the issue: an ordinary meaning should be given to the words of the LLMC 1976 when designating the parties entitled to limitation, without infusing them with qualifying notions based on ownership.

The Tribunal made no findings as to the extent to which either ASP or Mermaid was in a position to exercise control over relevant aspects of crewing for the respective ships. The Tribunal also made no findings as to the power, right, or practice of the employers to direct the activities of the crew in relation to the running and operation of the respective ships.

The Tribunal misdirected itself to the inquiry it sought to embark. The concept of 'operation' may involve elements relating to the physical operation of the ship and that relating to its commercial operation; ie the management and control of the vessel. This concept is wider than the Tribunal's approach of dividing the concept into two meanings: (1) to cause or direct the working of the ship in the sense of its physical operation; and (2) to operate the ship as a commercial enterprise.