This was a pre-trial interlocutory hearing. Pocomwell Ltd (the first respondent) was a company incorporated in Hong Kong that employed specialist painters to perform work on fixed platforms in Australia’s Exclusive Economic Zone. The painters were Filipino nationals and were employed on fixed term contracts, required to work 12 hours a day, seven days a week and paid USD 900 per month.

Supply Oilfield and Marine Services Inc (the second respondent) was a company incorporated in the Philippines that acted as agent for the first respondent by engaging the painters. Survey Spec Pty Ltd (the third respondent) was incorporated in Australia. In March 2009 the second respondent agreed to provide the painters to the third respondent to work on the rig Nan Hai VI. The second respondent was responsible for the payment of the painters’ wages while the third respondent paid a hire fee of USD 92 per day for each of the painters. The third respondent was aware the painters were being paid less than AUD 92 per day by the second respondent.

Between March and July 2009, the operator of the Nan Hai VI, Maersk Drilling Australia Pty Ltd agreed to pay the third respondent AUD 400 per day for each of the painters.

The Fair Work Ombudsman (the applicant) alleged that the painters performed work in Australia pursuant to sub-class 456 visas and that the respondents contravened the Fair Work Act 2009 (Cth) by failing to pay the painters the minimum wage, allowances, overtime rates, weekend and public holiday rates.

The first and second respondents sought a permanent stay of proceedings on two grounds. First, an Australian court was a clearly inappropriate forum to exercise jurisdiction in relation to the obligations of the first and second respondents to the painters for work allegedly undertaken by them in Australia’s EEZ. Further and alternatively, the relevant sections of the Fair Work Act and regulations were both subject to the concurrent jurisdiction of other states and to Australia’s international obligations. The first and second respondents submitted that there is a presumption that domestic legislation such as the Fair Work Act should, where possible, be construed so as to avoid a conflict with international law. In support of this argument, they undertook an analysis of UNCLOS.

The applicant contended that at all material times the two rigs (mobile offshore drilling units or MODUs) were ‘fixed platforms’ as defined in s 12 of the Fair Work Act or, alternatively, were ‘ships’ as defined in s 12 of the Fair Work Act having ‘majority Australian crew’. Accordingly, the applicant contended that s 33 of the Fair Work Act extended to the rigs because they were fixed platforms or, alternatively, extended to the rigs pursuant to reg 1.15E of the Fair Work Regulations because they were ships as defined.

The first and second respondents' arguments based on UNCLOS were as follows. Art 55 of UNCLOS states that both the rights and jurisdiction of the coastal state (Australia) and the rights and freedoms of other states are governed by UNCLOS provisions. Art 57 defines the extent of the EEZ. Art 58(2) states that arts 88-115 relating to the high seas and other pertinent rules of international law apply to the EEZ in so far as they are not incompatible with Pt V. Accordingly the EEZ definition under the Fair Work Act limits the sovereign rights and jurisdiction of Australia, as the coastal state, to its rights and obligations under UNCLOS. Art 56 of UNCLOS describes rights over the seabed and also requires the coastal state in exercising its rights and duties in the EEZ to have regard to the rights and duties of other states (art 56.2). Under art 58, all states enjoy the freedoms referred to in art 87 relating to the operation of ships and navigation and other lawful uses of the sea, such as innocent passage (arts 17, 18, 19 and 24). Art 59 states that, where conflict between the coastal state and any other state arises, this should be resolved on the basis of equity and other named factors.

As the applicant contended that the MODUs were ‘ships’, exclusive jurisdiction would vest in the flag state, not Australia. Art 58.2 invokes the operation of art 92.1. Art 94.3.b expressly recognises the flag state’s obligations in relation to the manning of ships, labour conditions and the training of crews, taking into account applicable international instruments.

The coastal state’s rights can be summarised as relating to the management and exploitation of natural resources (art 56). The rights enjoyed by other states in the EEZ include freedom of navigation (art 58.1). Therefore, the jurisdiction of the coastal state over foreign ships is quite limited. It has legislative and enforcement jurisdiction only in respect of conservation and management of fish and other living resources (arts 62.4 and 73); certain forms of pollution from ships (arts 21, 211.5, 211.6, 216, 220 and 234); the conduct of marine scientific research (art 246 and following); and the entry in to, and presence within, safety zones around artificial islands, installations and structures (arts 60 and 80). It follows that the coastal state has no jurisdiction to prescribe international (or national) standards concerning seafarers’ rights for foreign ships within its EEZ.

Both Australia and the Philippines had ratified the Maritime Labour Convention 2006 and, although it had not entered into force at the time, the respondents argued that it embodied UNCLOS principles, including art 94 which provides that the flag state shall take all necessary measures in regard to the manning of ships, labour conditions and the training of crews.

The first and second respondents submitted that they (and the painters) were statutorily required to comply with the contractual conditions laid down by the law of the Philippines as applying to such contracts and that included the level of wages to be paid. Therefore it followed that the purpose of the Fair Work Act is to extend the operation of the Act to work connected with platforms or ships in the EEZ only where doing so is consistent with obligations under UNCLOS. Regulation 1.15E was expressly made subject to concurrent jurisdiction and Australia’s obligations under international law which both indicated that the Philippines was the appropriate sovereign state to enforce any breaches of the kind committed.

The third and fourth respondents made similar written submissions but recognised that their arguments did not support the grant of a stay order given that the applicant’s primary case was advanced under s 33 of the Fair Work Act. They submitted that, to the extent that reg 1.15E purports to extend the Fair Work Act to foreign ships in the EEZ, it violates the exclusive jurisdiction of the flag state and is inconsistent with UNCLOS.

The respondents said that s 33 of the Fair Work Act should not be construed as authorising a regulation (reg 1.15E) which purports to ignore Australia’s international law obligations.

The applicant contended that UNCLOS expressly permits coastal states to regulate all aspects of activities on board vessels engaged in activities within the EEZ and in waters above Australia’s continental shelf for which the coastal state has jurisdiction, citing arts 56, 77.1 and 60.

Held: The stay was refused. This was not a case in which the principles of forum non conveniens were properly engaged. The relevant test to be applied is whether the Court is a clearly inappropriate forum, not whether there is some comparatively appropriate forum. As the applicant was seeking to apply the Fair Work Act it could not be said that Australia was a clearly inappropriate forum. There was no prospect that any alternative foreign forum would be available to determine the rights and duties of workers pursuant to the application of an Australian law.

The difficulty with the submissions made on behalf of the first and second respondents was that the interlocutory application must be determined on the assumed basis that the two rigs are fixed platforms for the purposes of the Fair Work Act. That was the primary matter to be determined at trial.

The arguments regarding the validity of reg 1.15E are complex and may need to be determined at trial, depending on the findings made on the primary case as to whether s 33.1.b of the Fair Work Act applies.