Empire Shipping Co Inc (Empire) and Yamashita-Shinnihon Steamship Co Ltd (YSL) owned United Transport Investment Inc (UTI), the parent company of Seven Seas Transport Inc (Seven Seas), in equal shares under a joint venture agreement. Seven Seas owned the Liberian-flagged ore carrier, the Seven Seas Conqueror.

Empire and YSL executed a flag change agreement. YSL would nominally purchase the Seven Seas Conqueror from Seven Seas and hold full ownership. The eventual ownership remained on a 50/50 basis between YSL and Empire's agent, Van Shipping Co Ltd (Van). When the original loan amount was repaid, either Seven Seas or another joint venture company equally owned by YSL and Van would buy back the vessel.

YSL became the owner of the vessel and registered it as the Shin Kobe Maru in Japan. Subsequently, YSL did not transfer the Shin Kobe Maru back to Seven Seas or another joint venture company as per the flag change agreement.

Empire sued YSL in the Federal Court of Australia. It sought various orders:

1. An order to sell the Seven Seas Conqueror and remit 50% of the sale proceeds to Empire or as the Court otherwise directs.
2. An order to transfer all the shares in the Seven Seas Conqueror to Seven Seas or to another joint venture company equally owned by or on behalf of Empire and YSL.
3. An order that ownership and possession of the Seven Seas Conqueror be transferred to Seven Seas or to another joint venture company equally owned by or on behalf of Empire and YSL.

Empire submitted that the claim could be commenced as an action in rem within the jurisdiction of the Federal Court. It was a proprietary maritime claim as defined in the Admiralty Act 1988 (Cth) (the Act).

YSL resisted the claim. It was a claim for a third party's possession, title, or ownership of a ship and not one related to the possession, title, or ownership of a ship. The Federal Court and the Full Court rejected YSL's contention. YSL appealed to the High Court.

Held: Appeal dismissed.

The transfer of ownership of the Shin Kobe Maru as per the agreement was a proprietary maritime claim. Empire's claim, asserting a contractual right to have Seven Seas or another joint venture company put into ownership and possession of the Shin Kobe Maru, bore the legal character of a proprietary maritime claim.

The Act defines a proprietary maritime claim as one which related to the possession of, title to, the ownership of, a share in a ship, or the mortgage of a ship, or a dispute between co-owners and related to the possession, ownership, operation, or earnings of a ship.

On the natural and ordinary meaning of the words in the Act, 'a claim relating to … ownership' included a claim that a third party was or had been or was entitled to become the owner of the property in question (The Lady of the Lake (1870) LR 3 Adm & Ecc 29). If the Act had said that proprietary maritime claims included 'a claim to ownership', the outcome would be different (see also Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance Co (1985) AC 255, 270-271 (CMI694)).

The Act aligned Australia's admiralty jurisdiction more closely to the practice and principles adopted in the Arrest Convention 1952. The Act was intended to reform Australian law on the admiralty jurisdiction. One object of the Law Reform Commission's draft legislation was 'to strike a balance between following the English legislation and seeking to clarify and simplify the law' (The Law Reform Commission, Civil Admiralty Jurisdiction (1986) para 95). The 'English legislation' referred to the Supreme Court Act 1981 (UK). That Act repeats the substance of the Administration of Justice Act 1956 (UK), enacted to give effect in England to the Arrest Convention 1952 (see Gatoil 255, 263-264, 266; The Antonis P Lemos [1985] 1 Lloyd's Rep 283, 286). Sections 4(2)(a)(i)-(ii) and 4(2)(b) of the Act have obvious similarities with art 1.1.o and art 1.1.p of the Arrest Convention 1952 which relate, respectively, to 'disputes as to the title to or ownership of any ship' and 'disputes between co-owners of any ship as to the ownership, possession, employment or earnings of that ship'.

Sections 4(2)(a) and (b) of the Act do not indicate that the expression 'a claim ... relating to ... ownership' of a ship should be read down in a way that would exclude a claim by which a plaintiff asserts rights which involve or may involve another's ownership.

A 'proprietary maritime claim', as characterised in s 4(2)(a) or (b) of the Act, is of a kind generally accepted by maritime nations as within the special jurisdiction of their courts concerned with matters relating to marine commerce and navigation. The word 'maritime' in s 76(iii) of the Constitution serves to equate the jurisdiction there referred to with that of maritime nations generally (see De Lovio v Boit (1815) 7 Fed Cas 418, 441-443; People's Ferry Company of Boston v Beers (1857) 61 US 393, 401).

The admiralty jurisdiction is not qualified or limited based on jurisdictional divisions peculiar to English law. The Arrest Convention 1952 also construes s 4(2)(a) and (b) to be in favour of jurisdiction.

Accordingly, a claim that satisfies the definition of 'proprietary maritime claim' is a claim which can be brought in rem even though the appropriate remedy may not be an admiralty remedy, but specific performance (Antares Shipping Corp v The Capricorn (1979) 111 DLR (3d) 289) or some other equitable remedy (Foong Tai v Buchheister (1908) AC 458, 467-468).