Riding the resources boom

With Australian exports on the rise as well as plans to overhaul the country's shipping industry, Briana Everett discovers that it's busy times ahead for Australian maritime lawyers.

Promoted by Lawyers Weekly 18 October 2011 Big Law
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With Australian exports on the rise as well as plans to overhaul the country's shipping industry, Briana Everett discovers that it's busy times ahead for Australian maritime lawyers.

Despite fears of another global downturn, Australia's trade surplus surged from $1.817 billion to $3.1 billion, including an 8 per cent increase in shipments from Australia, between July and August this year.

This growth of Australia's exports in the face of another global slump demonstrates the significance of Australia's shipping industry - the fourth largest in the world. In 2009-10, 1052.4 million tonnes of cargo moved across Australian wharves, 81.9 per cent of which were exports.

Yet despite these impressive numbers, Australia's shipping industry is in need of an overhaul.

The industry has been in a state of decline for years and, since 1996, the number of Australian registered trading vessels has more than halved from 55 to 22.

As a result, on 9 September this year the Minister for Infrastructure and Transport, Anthony Albanese, announced the Federal Government's shipping policy reform, Stronger Shipping for a Stronger Economy - the most significant shipping reform in Australia's history.

The proposed reforms are the result of a parliamentary inquiry into coastal shipping, commissioned by the Labor Government in 2008, which recommended that Australian shipping be revived.

According to Albanese, the package of reforms is aimed at ensuring Australia's shipping industry does not cease to exist, to make Australia a "force in world shipping once more" and to "turn Australia from a shipper to a shipping nation".

While 99 per cent of Australia's international trade is carried by ships, only 0.5 per cent of that trade is carried by Australian-owned vessels, which are, on average, 20 years old - eight years older than the world average.

The reforms proposed by the Government include tax reforms to remove barriers to investment in Australian shipping (corporate tax rate of zero for Australian ship operators); a simplified regulatory framework; the establishment of an Australian International Shipping Register; and the establishment of a Maritime Workforce Development Forum to progress maritime skills and training priorities.

“It will certainly be a joy to see a great deal more Australian-owned shipping and Australian-managed shipping operating on an international trade basis up and down the coast”

Hazel Brewer, partner, Holman Fenwick Willan

Discussing the reforms, Middletons partner Stephen Thompson says their impact could be "very significant", depending on the detail which is yet to be released. "It is fair to say, as the Government says, that this is the most far reaching, single block of reforms, probably ever in this country," says Thompson.

While it's difficult to predict the impact the reforms will have at this early stage, Thomson says there will be a number of areas in which legal work will be required, particularly on the tax front.

"If [the reforms have] the desired effect and attract more investment into Australian shipping, then there will be people looking to establish shipping entities, building ships for Australian flag operations - making sure they secure for themselves the tax benefits," he says.

"A lot of the benefits [of the reforms] are linked to the engagement of Australian crew, the application of Fair Work to ships while they're on the Australian coasts. There will be work for our core maritime team, our tax guys, our employment relations team. There will be, I would expect, some corporate structuring work going on as well."

Likewise, Holman Fenwick Willan partner Hazel Brewer says the reforms have the potential to broaden Australia's shipping base, making it a more attractive business for Australians to get back into.

"It will certainly be a joy to see a great deal more Australian-owned shipping and Australian-managed shipping operating on an international trade basis up and down the coast," she says.

Another positive element of the reforms, according to Thompson, is the move towards nationalisation of industry safety regulation.

“That’s to be contrasted to other sectors of the maritime law industry, such as maritime insurance where you’ve seen a progressive decline in work over the years, as that sort of work tends to go more in-house”

Ernie Van Buuren, partner, Norton Rose

Currently, the Australian Maritime Safety Authority monitors foreign ships coming into Australia but, on a state level, there are separate bodies responsible for the safety of commercial vessels within state waters. Under the reforms, this regulation will be nationalised.

"[At the moment] any commercial vessel moving around the Australian coast is subject to different requirements. It's part of the federal curse," says Thompson. "In that sense, [nationalisation] will probably take work away, but it's a very positive step for the general efficiency of the industry around the coast."

While the Government has claimed that these reforms are a positive move for Australia's maritime industry - the details of which are scheduled to be released towards the end of this year - the Shadow Minister for Infrastructure and Transport, Warren Truss MP, said Albanese was using "flamboyant language" to sell the proposed changes.

"Knowing how beholden Minister Albanese and Labor are to the Maritime Union, Australian shipping has every reason to be suspicious about this so-called reform package," said Truss on 9 September.

"While it promises benefits to some shippers, everything will depend on the undisclosed detail and the accord being proposed between shippers and the unions."

The maritime market

While the true impact of the proposed reforms is yet to be seen, lawyers working in the maritime space have plenty of work to keep them busy thanks to the growth in Australian industry sectors such as mining, energy, and infrastructure.

"On the commercial industrial side, we're pretty excited about infrastructure projects," says Thompson, whose core team of approximately 12 lawyers does nothing but transport and logistics work, including maritime work.

"With the continued importance of the transport sector with the resources boom, there are significant implications for the shipping industry, as well as road, rail and port structures generally. We've got guys here working almost full time on a big port project in the Pilbara."

Similarly, Brisbane-based Norton Rose partner Ernie Van Buuren has noticed particular growth in the energy and commodities sectors.

"That's to be contrasted to other sectors of the maritime law industry, such as maritime insurance, where you've seen a progressive decline in work over the years, as that sort of work tends to go more in-house," he says.

For Brewer, who primarily works on the underlying sale and purchase contracts of the shipping industry, the blackberry and laptop are "both a blessing and a curse".

“What’s happened is firms like Norton Rose and Holman Fenwick, in particular, that have traditionally had a strong transport and trade background, tend to just pick up a local team”

Stephen Thompson, partner, Middletons

"Flexibility in shipping is the key to everything," she says, adding that working in the shipping area is particularly interesting because two issues are very rarely the same.

"You've got different ships, different cargo, different clients, different receivers and things going on in different countries," she says.

The international nature of the shipping industry has meant that the global firms entering Australia, with expertise in the area of maritime law, have been able to easily pick up local work with the help of local Australian lawyers.

"What's happened is firms like Norton Rose and Holman Fenwick, in particular, that have traditionally had a strong transport and trade background, tend to just pick up a local team," says Thompson.

"Holmans, for example, picked up some guys from our Melbourne practice about five or six years ago and Norton Rose picked up most of the Blakes team ... It's good for them because they get to tap into their international work. It makes life interesting for us but I haven't seen it have a significant impact on our practice profile at this stage."

An advantage of the arrival of global firms such as Norton Rose, according to Thompson, is the referral work firms like Middletons are receiving.

"It gives us an opportunity to pick up from everyone else other than Norton Rose. We get quite a bit of referral work from some of those traditional London firms."

For Van Buuren, previously at Mallesons Stephen Jaques and Blake Dawson, his move to Norton Rose in February this year was a result of his desire to be part of a global shipping practice.

"A challenge is keeping up with it all. Now I'm talking on a daily basis to different practice groups across the firm, like tax, corporate and commercial," says Van Buuren. "I'm also now dealing with offices in Singapore, Hong Kong, China, London, Africa and Canada - that is a challenge and something different."