Australia's Offshore Legal Jurisdiction: History & Development

• Author: Michael William White
• Position: QC, B.Com, LLB, PhD (law), Adjunct Professor, University of Queensland. The author acknowledges the excellent research assistance rendered by James Green (BEcon (Hons), LLB (Hons)), Michael Wells (LLB (Hons), BA) and especially by Rosemary Gibson (BA, LLB (Hons))
• Pages: 3-18

(2011) 25 A&NZ Mar LJ

AUSTRALIA’S OFFSHORE LEGAL JURISDICTION: PART 1 – HISTORY &

DEVELOPMENT

Mic ha e l White*

1 Introduction

Australia’s offshore jurisdiction is comprised of a matrix of Commonwealth, State and Northern Territory areas

and the laws in place offshore reflect this. They are jumbled, overlap geographically and by activity, and are

generally complex and inefficient. This is the first of two related articles which set out the history and

development of the Australian offshore jurisdiction and these laws and takes the reader chronologically from the

start of their being exercised to a description of the current structure. Part 1 begins with regulation of the

offshore petroleum industry by the Offshore Petroleum Agreement 1967, which was then modified and expanded

after major constitutional tensions by the Offshore Constitutional Settlement 1979. It then develops the story of

the legislation and the High Court cases up to the current situation. Part 2, which is published concurrently, is

less detailed and sets out the international offshore zones that underpin the Australian offshore jurisdiction. It

then sets out the offshore areas as described in the terminology used in the legislation and describes the wide-

ranging ambit of the various areas and activities before drawing some conclusions. The articles aim to mention

all of the relevant international conventions, Commonwealth-State agreements, Hig h Court cases and legislation

to give the reader an educated overview of their history and development.

Australia’s present offshore jurisdiction has its origins in the British laws that were applied to the new colony of

New South Wales (NSW) on establishment of the penal colony in 1788. The British government claimed a

territorial sea off its shores of three nautical miles (in these articles ‘miles’) and these claims also applied to its

colonies. Hence, NSW and the other British Australian colonies claimed, in turn as they were established, a

territorial sea offshore for three miles.

When the colonies came to discuss federation, the Founding Fathers of the Australian Constitution (the

Constitution) did not address the offshore issues,1

so when federation occurred in 1901 no mention of the issues

was included. This situation continued for over 50 years until, as will be seen shortly, a need for proper and

coordinated regulation of the offshore petroleum industry arose.

The development of the offshore constitutional jurisdiction issues are best understood against their historical

development, so this article sets out the history of their various aspects, commencing with the earlier offshore

petroleum regulation and taking the story forward to the current situation. Numerous footnotes are included so

that, if they wish, readers may take a deeper interest in the topics addressed in the text. As mentioned, since the

topic is too long to address in the one article, it is divided into two.

2 Offshore Pe tro le um Agre eme nt 1967

Oil and gas exploration in Australia started with a single oil bore on the Coorong in South Australia in 1892.2

Development gradually occurred in various areas and then by the mid-1960s major finds in the Gippsland Basin

off the Victorian coast and elsewhere heralded the importance and coming of age of the Australia n offshore

energy industry. Until the mid-1960s, general Commonwealth legislation existed which encouraged exploration

and exploitation of minerals (including oil and gas) but there was no Commonwealth legislation exercising

specific jurisdiction over offshore areas.3

This legislation instead came from the various States and the many

differences in their regimes made efficient business difficult for the industry.

International law was also developing over offshore areas and it increasingly regulated the marine pollution

aspects of offshore oil and gas exploitation. The 1958 High Seas Convention required states to control

* QC, B.Com, LLB, PhD (law), Adjunct Professor, Univer sity of Queensland. The author ackn owledges the excellent research assi stance

rendered by James Green (BEcon (Hons), LLB (Hons)), Michael Wells (LLB (Hons), BA) and especially by Rosemary Gibson (BA, LLB

(Hons)).

1 The early drafts of the Constitution may be seen in M White and A Rahemtula, Sir Samuel Griffith: The Law and the Constitution

(Lawbook, 2002) appendices 1-5, where it may be seen in the drafts that there is no mention of the issue.

2 Government of Victoria, Off Shore Oil and Natural Gas: Exploration and Legislation (Statement, Government Printer, 1968).

3 See generally R Cullen, Federalism in Action: The Australian and Canadian Offshore Disputes (Federation Press, 1990) chs 3

and 4.

3

Austra lia ’ s Offshore Leg a l Jurisdiction – Histo ry & De ve lo pme nt

(2011) 25 A&NZ Mar LJ

exploitation in general terms4 and the 1958 Continental Shelf Convention obliged states to take appropriate

means to protect living resources of the sea from harmful agents around continental shelf installations.5 The

United Nations Convention on the Law of the Sea6 later replaced these conventions and made similar

provisions requiring states to adopt laws and regulations to prevent pollution from seabed activities and

artificial islands in their offshore jurisdiction.7

So, as will be seen in more detail shortly, Australian domestic

law and international law developed concurrently and became increasingly inter-related.

In 1962, the Commonwealth Minister for National Development and the various State Ministers for Mines

decided to refer the matter of a cooperative approach on the subject of offshore petroleum regulation to the

Standing Committee of Commonwealth and State Attorneys-General (SCAG). No government was confident

as to the outcome of any litigation on the vexed question of jurisdiction over the territorial sea or further

offshore. Advisory opinions from the High Court were not available8 so in true federal spirit the

Commonwealth and States consulted and discussed the issue. The result was the Australian Offshore

Petroleum Agreement 1967 (the 1967 Agreement). This provided that the Commonwealth and the States

would each introduce complementary legislation to establish a regime within which offshore petroleum

exploration and exploitation could be undertaken and royalties would be shared.9

The 1967 Agreement summarised its terms in the heading and Preamble, which state in part:

AND WHEREAS the Governments of the Commonwealth and of the States have decided, in the national

interest, that, without raising questions concerning, and without derogating from, their respective

constitutional powers, they should co-operate for the purpose of ensuring the legal effectiveness of authorities to

explore for or to exploit the petroleum resources of those submerged lands;

AND WHEREAS the Governments of the Commonwealth and of the States have accordingly agreed to

submit to their respective Parliaments legislation relating both to the continental shelf and to the sea-

bed and subsoil beneath territorial waters and have also agreed to co-operate in the administration of

that legislation;

NOW IT IS HEREBY AGREED as follows...

The Agreement provided for a cooperative approach between the Commonwealth and the States with the one

set of laws covering these activities. The detail was to be decided by joint committees on which all interested

government entities were to have a say.

The second clause of the Recitations to the 1967 Agreement stated that ‘Australia’ had rights over the

continental shelf beyond the territorial sea and the fifth clause recited that the Agreement was made without

raising concerns about the parties’ ‘respective constitutional powers.’ Hence, the fifth clause merely preserved

their respective constitutional rights, which could be fought out later if the need should arise; as it did in due

course.

The main premise of the 1967 Agreement required the Commonwealth, the States and the NT (collectively

referred to as ‘the States’) to agree on a Common Mining Code, which would, by suitable legislation, be

enacted by all parties.10 No changes would be allowed except by agreement.11

4 Convention on theHigh Seas, opened for signature 29 April 1958, 450 UNTS 11 (ent ered into force 30 September 1962). It came into force

in Australia on 13 June 1963. Article 24 provides: ‘Every State shall draw up regulations to prevent the discharge of oil from ships and

pipelines or resulting from the exploitation and explorati on of the seabed and its subsoil, taking account of existing treaty provision s on the

subject.’

Each State would administer

5 Convention on the Continental Shelf, opened for signature 29 April 1958, 499 UNTS 311 (entered into force 10 June 1964). Article 5(1)

provides: ‘The exploration of the continental shelf and the exploitation of its natural resources must not result in any unjustifiable

interference with navigation, fishin g or the conservation of the living resources of the sea, nor result in any int erference with fundamental

oceanographic or other scientific resea rch carried out with the intention of open publication’.

6 United Nations Convention on the Law of the Sea, opened for signature 10 December 1982, 1833 UNTS 3 (entered into force 14 November

1994) (‘UNCLOS 1982’).

7 UNCLOS 1982 art 208(1) was the main provision, which stated: ‘Coastal States shall adopt laws and regulations to prevent, reduce and

control pollution of the marine environment arising from or in connection with seabed activities subject to their jurisdiction and from

artificial islands, installations and structures under their jurisdiction, pursuant to articles 60 and 80’.

8 Re Judiciary and Navigation A cts (1921) 29 CLR 257.

9 For a fuller descripti on of these events see Cullen, above n 3, ch 3.

10 For some discussion on the powers under the Constitution for the ‘request and consent’ in relation to offshore mining and petroleum laws,

see M Crommellin, ‘Offshore Mining and Petroleum: Constitutional Issues’ (1981) 3 Australian Mining and Petroleum Law Journal 191.

Both of Richard Cullen’s two books are most helpful in setting out these matters in detail: Cullen, above n 3; R Cullen, Australian

Federalism Offshore (University of Melbourne, 1985).

11 Off shore Petroleum Agreement 1967, cl 25 (‘1967 Agreement’).

4