Trans-Tasman Ship Arrests: A Missed Opportunity

• Author: Luke Strom
• Position: BA/LLB (Hons) Student, University of Auckland. The author is grateful to Associate Professor Paul Myburgh for his helpful comments and encouragement
• Pages: 53-69

(2015) 29 ANZ Mar LJ

53

TRANS-TASMAN SHIP ARRESTS: A MISSED OPPORTUNITY

Luke Strom*

1 Introduction

On the 12 May 1995, the ship Barde Team was in dock at Timaru, New Zealand. While it was discharging

goods, it tilted and caused damage to machinery below deck. The damage was estimated at USD 3 000 000. The

owners of the machinery did not arrest the ship in Timaru and the ship sailed for Australia. The ship was

arrested on its arrival inAustralia to recover damages for the damaged machinery. The case was heard in

Australia, however, the damaged machinery, witnesses and evidence were mostly in New Zealand.1

This scenario is not uncommon in shipping. Ships come and go quickly from ports. The chance to arrest a ship

and have an action in rem heard within the same jurisdiction as that which gave rise to the claim is often missed.

This paper enquires into whether there is a more effective way of dealing with trans-Tasman Admiraltydisputes

in light of the commercial and legal developments that h ave taken place between Australia and New Zealand.

The Australia-New Zealand Closer Economic Relations Trade Agreement (CER),2the Single Economic Market

initiative (SEM) and the Trans-Tasman (Proceedings) Acts(TTPAs) of Australia3and New Zealand4have

brought both countries closer in trade, commerce and law. Importantly, the TTPAs have made it easier to initiate

proceedings or to have judgments recognised and enforced between Australia and New Zealand. This allows

trans-Tasman civil disputes to be resolved more effectively and efficiently. However, despite these

improvements, actions in rem and arresting prope rty have been excluded from the TTPAs. This exclusion means

that the majority of Admiraltylaw is also excluded from the TTPAs. Thus, desp ite the improvements to trans-

Tasman disputes under the TTPA, if the Barde AS was decided today, the machinery owner would still not be

able to bring their claim in New Zealand while an Australian court held the ship on arrest for the New Zealand

claim.

2 The Relationship Between Australia and New Zealand

The relationship between Australia and New Zealand is close. In a recent poll of feelings toward other countries,

Australia ranked New Zealand as the most favourable nation out of a group of 21 nations including the United

States, the United Kingdom and Canada.5We have fought alongside each other in war and against each other on

the sports field. We share similar histories of British colonialism and still retain the monarch as our respective

Head of State. New Zealand was under the jurisdiction of the New South Wales Colony until 1840 and was

invited to join the Federation in 1901.6Furthermore, Australians and New Zealanders have moved freely

between the two countries since the 1840s, with the free movement becoming formalised in the 1920s and in

1973.7We also share similar judicial and political systems based on the British model.8Most obviously, we are

geographically proximate.

Trade between Australia and New Zealand is also substantial. Trade in goods between the two countries exceeds

NZD 18 billion per annum and grows each year.9Australia is New Zealand’s largest trading partner.10Australia

* BA/LLB (Hons) Student, University of Auckland. The author is grateful to Associate Professor Paul Myburgh for his helpful comments

and encouragement.

1Barde AS v ABB Power Systems[1995] FCA 1602 (17 October 1995) (‘Barde AS’).

21983, [1983] ATS 2.

3Trans-Tasman Proceedings Act 2010(Cth).

4Trans-Tasman Proceedings Act 2010(NZ).

5Alex Oliver, The Lowy Institute Poll 2014(Lowy Institute, 2014) 15.

6Michael Kirby, ‘Trans-Tasman Federation – Achievable, Impossible, Unnecessary?’, (2010) 16 Canterbury Law Review1, 4-5. The

Australian Constitution still leaves open the possibility of New Zealand joining the Federation by defining the States of Australia to include

New Zealand. See Commonwealth of Australia Act 1900(Imp) cl 6. See also John H Farrar, ‘Harmonisation of Business Law Between

Australia and New Zealand’, (1989) 19 Victoria University of Wellington Law Review435, 436-7.

7Robert Scollay, Christopher Findlay and Uwe Kaufmann, Australia New Zealand Closer Economic Relations Trade Agreement

(ANZCERTA) and Regional Integration(Institute of Southeast Asian Studies, 2011) 21.

8Kirby, above n 6, 9; and Scollay, Ibid, 19.

9New Zealand Ministry of Foreign Affairs and Trade (NZMFAT), Australia – Trade and Economic Links(2013) ; and

Australian Department of Foreign Affairs and Trade (ADFAT), Australia-New Zealand Closer Economic Trade Agreement(2014)

.

10By the March 2013 Quarter, China overtook Australia for the largest market of imports and exports of goods into New Zealand. However,

Australia is still that largest trading partner when goods and services are combined. See ADFAT, New Zealand Country Brief(2014)

.

Trans-Tasman Ship Arrests: A Missed Opportunity

(2015) 29 ANZ Mar LJ

54

takes 23% of all New Zealand’s exports. Conversely, New Zealand is Australia’s 7th largest trad ing partner.

Since 1991, trade between the two countries has grown on average 6.2% per annum.11Shipping supports most

of the trade between Australia and New Zealand as our major goods of trade are oil and petroleum products,

gold, timber, cars and wheat.12In fact, ships transported 87% of exports and 76% of imports by value to and

from New Zealand between the years 2000-2010.13Several moves have been made to strengthen commercial

and political ties between Australia and New Zealand over the last several decades.14The developments have

brought the two countries so close that it has even been argued that the relationship forms a sort of ‘loose

confederation’.15

3 CER and SEM

Agreements between Australia and New Zealand to liberalise trade are not a recent phenomenon. In 1966, both

countries signed the New Zealand Australia Free Trade Agreement(NAFTA).16However, the agreement was

seen as largely unsuccessful.17There was a desire to continue to liberalise trade between the two countries and

thus a new agreement was entered in to. CER came into force in 1983. The objectives of the agreement included :

the strengthening of the broader relationship between the countries; developing c loser economic relations

through mutually beneficial trade; eliminating barriers to trade; and developing conditions of fair competition in

trade.18CER was designed to create a relationship or framework for trade that would benefit both countries and

by 1990s, trade in goods was completely liberalised.19The CER model has generally been viewed as a

success.20The World Trade Organisation describes CER as ‘the world’s most comprehensive, effective and

mutually compatible free trade agreement’.21

The framework of CER included measures to review the relationship. In 1988, further agreements were reached

and the governments of both countries signed a Memorandum of Understanding (MOU) toward the

harmonisation of business law.22The MOU recognised that more was required to liberalise trade than simply

removing barriers and tariffs. It recognised that different business laws and regulations may impede trade

between the countries and that harmonisation of business laws would create a trade environment thatwould be

mutually beneficial. The MOU noted that the governments would look into areas of business law that might be

harmonised. These included such areas as: companies, securities and futures law; competition law; consumer

protection; intellectual property; commercial arbitration; sale of goods and services law; and m utual assistance

between regulatory agencies. Additionally, agreements were made to look into harmonising quarantine

procedures.23

In 1992, the governments met again. The result was another commitment to business harmonisation, the

inclusion of services under th e CER umbrella, and a scheme to mutually recog nise product standards and

registration of occupations.24In 1995, a further review led to improving regulatory impediments such as food

standards and establishing an annual review of CER. In 2000, a further MOU was signed to replace the 1988

MOU with a renewed focus on specific areas of business law harmonisation.25

The thread running through these developments between Australia and New Zealand under the CER umbrella is

built on the idea of harmonisation. Paul Myburgh noted as early as 1995 that ‘it has be come usual, indeed

almost obligatory, to discuss the issue of harmonisation of New Zealand and Australian laws within the context

of CER and its harmonisation programme’.26The concept of harmonisation might be an elusive concept to nail

down.27However, for the purposes of this paper, harmonisation under CER seems to be a process of developing

11NZMFAT, Australia(2013) .

12Ibid.

13Statistics New Zealand, Methods of transporting imported and exported goods(2012) .

14Discussed below.

15JLR Davis, ‘Closer Economic Relations – A Trans-Tasman Confederation?’, (2010) 16 Canterbury Law Review47, 60.

161966, [1966] ATS 1; ADFAT, Closer Economic Relations: Background guide to the Australia New Zealand Economic Relationship

(AGPS, 1997) 6.

17Scollay, above n 7, 22.

18NAFTA Art 1.

19Scollay, above n 7, 26.

20Scollay, above n 7, 18.

21NZMFAT, above n 11.

22See Farrar, above n 5, 442-5.

23Ian Barker and B A Beaumont, ‘Trans-Tasman Legal Relations – Some Recent and Future Developments’, (1992) 66 Australian Law

Journal 566, 567.

24ADFAT, above n 16, 7.

25Scollay, above n 16, 46-47.

26Paul Myburgh, ‘The Harmonisation of New Zealand And Australian Maritime Laws’,(1995) 6 Canterbury Law Review69, 69.

27 For an in-depth look at the topic of harmonisation and CER, see Ibid, 70-73.