Petrotimor Companhia de Petroleos Sarl v Commonwealth of Australia - [2003] FCAFC 3

FEDERAL COURT OF AUSTRALIA
Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2003] FCAFC 3
CONSTITUTIONAL LAW –whether claims made in application not justiciable or enforceable as requiring for their determination the adjudication of acts of State or the validity, meaning and effect of transactions of foreign sovereign States – whether Court has jurisdiction or will in exercise of its discretion adjudicate upon claims involving exercise by Executive of prerogative in respect of foreign affairs – whether Court should as a matter of judicial restraint adjudicate upon claims involving Australia’s international relations – whether claims made in application give rise to a “matter” within the jurisdiction of the Court – whether claims made capable of judicial determination
PRACTICE & PROCEDURE – summary disposal – whether application should be set aside, dismissed or permanently stayed by reason that matters raised in application are not justiciable or enforceable
PRACTICE & PROCEDURE – evidence – whether Court bound by Executive certificate stating territorial boundaries of Australia – whether evidence of qualified persons having conduct of Australia’s foreign affairs admissible in relation to question of potential embarrassment to Australia’s diplomatic relations
PRACTICE & PROCEDURE – associated jurisdiction of the Federal Court of Australia - whether associated claims of wrongful interference with contractual relations, constructive trust and misuse of confidential information should also be struck out – the Court has no jurisdiction to entertain claims where claims require adjudication upon validity of acts of foreign sovereign States – where validity of acts of foreign State essential to causes of action associated claims must also be struck out
Maritime Legislation Amendment Act 1994 (Cth) s 6
Seas and Submerged Lands Act 1973 (Cth) ss 3, 11, 12, 13
Petroleum (Submerged Lands) Act 1967 (Cth)
Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990 (Cth) ss 7, 8
Petroleum (Australia-Indonesia Zone of Cooperation) (Consequential Provisions) Act 1990 (Cth) s 24
Coastal Waters (State Powers) Act 1980 (Cth)
Judiciary Act 1903 (Cth) s 39B(1A)(c)
Federal Court of Australia Act 1976 (Cth) ss 20(1A), 32(1)
Acts Interpretation Act 1901 (Cth) s 13(2)
The Constitution (Cth) ss 51(xxix), 51(xxxi), 61
Petroleum Act 1936 (WA)
Petroleum (Prospecting and Mining) Ordinance 1954-1960 (NT)
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North Sea Continental Shelf Cases [1969] ICJ Rep 3 considered
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Oetjen v Central Leather Co (1918) 246 US 297 cited
Portugal v Australia [1995] ICJ Rep 90 considered
Post Office v Estuary Radio Ltd [1968] 2 QB 740 cited
Potter v Broken Hill Proprietary Co Ltd (1906) 3 CLR 479 followed
Queensland v Commonwealth (1989) 167 CLR 232 considered
R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte [2000] 1 AC 61 considered
R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte (No. 3) [2000] 1 AC 147 considered
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Sir Anthony Mason “The High Court as Gatekeeper” (2000) 24 MULR 784
Brian Opeskin “The Law of the Sea” in S. Blay et al (eds) Public International Law: an Australian Perspective (1997)
Rachel Barkow “More Supreme than Court? The Fall of the Political Question Doctrine and the Rise of Judicial Supremacy” (2002) 102 Columbia L. Rev 237
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Geoffrey Lindell “The Justiciability of Political Questions: Recent Developments” in H. Lee and G. Winterton (eds) Australian Constitutional Perspectives (1992)
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Leslie Zines “Federal, Associated and Accrued Jurisdiction” in B. Opeskin and F. Wheeler (eds) The Australian Federal Judicial System (2000)
T. Blackshield et al (eds) The Oxford Companion to the High Court of Australia (2001)
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Report of the Seventieth Conference of the International Law Association (2002)
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PETROTIMOR COMPANHIA de PETROLEOS S.A.R.L. AND OCEANIC EXPLORATION COMPANY v COMMONWEALTH OF AUSTRALIA, JOINT AUTHORITY ESTABLISHED PURSUANT TO THE TREATY OF 11 DECEMBER 1989 BETWEEN AUSTRALIA AND INDONESIA, CONOCOPHILLIPS (91 – 12) PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM (91-12) PTY LIMITED), CONOCOPHILLIPS JPDA PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM COMPANY ZOC PTY LIMITED) AND PHILLIPS PETROLEUM TIMOR SEA PTY LIMITED
NO. N 1224 OF 2001
BLACK CJ, BEAUMONT & HILL JJ
3 FEBRUARY 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1224 OF 2001

BETWEEN:

PETROTIMOR COMPANHIA de PETROLEOS S.A.R.L.
FIRST APPLICANT

OCEANIC EXPLORATION COMPANY
SECOND APPLICANT

AND:

COMMONWEALTH OF AUSTRALIA
FIRST RESPONDENT

JOINT AUTHORITY ESTABLISHED PURSUANT TO THE TREATY OF 11 DECEMBER 1989 BETWEEN AUSTRALIA AND INDONESIA
SECOND RESPONDENT

CONOCOPHILLIPS (91 – 12) PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM (91-12) PTY LIMITED)
THIRD RESPONDENT

CONOCOPHILLIPS JPDA PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM COMPANY ZOC PTY LIMITED)
FOURTH RESPONDENT

PHILLIPS PETROLEUM TIMOR SEA PTY LIMITED
FIFTH RESPONDENT

JUDGES:

BLACK CJ, BEAUMONT & HILL JJ

DATE OF ORDER:

3 FEBRUARY 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

The claims made in the Amended Application, other than the claim relating to confidential information, be dismissed.

The applicants pay the costs of the first, third, fourth and fifth respondents of the claims that have been dismissed and of this application.

The applicants notify the respondents and the Court within 21 days if they do not wish to proceed with the claim relating to confidential information.

If the applicants wish to proceed with the claim relating to confidential information, the applicants, within 21 days of delivery of these reasons for judgment, file and serve written submissions regarding the Court’s jurisdiction to hear and determine that claim, and that the respondents file and serve written submissions in reply within 14 days of the receipt of the applicants’ written submissions.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1224 OF 2001

BETWEEN:

PETROTIMOR COMPANHIA de PETROLEOS S.A.R.L.
FIRST APPLICANT

OCEANIC EXPLORATION COMPANY
SECOND APPLICANT

AND:

COMMONWEALTH OF AUSTRALIA
FIRST RESPONDENT

JOINT AUTHORITY ESTABLISHED PURSUANT TO THE TREATY OF 11 DECEMBER 1989 BETWEEN AUSTRALIA AND INDONESIA
SECOND RESPONDENT

CONOCOPHILLIPS(91 – 12) PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM (91-12) PTY LIMITED)
THIRD RESPONDENT

CONOCOPHILLIPS JPDA PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM COMPANY ZOC PTY LIMITED)
FOURTH RESPONDENT

PHILLIPS PETROLEUM TIMOR SEA PTY LIMITED
FIFTH RESPONDENT

JUDGES:

BLACK CJ, BEAUMONT & HILL JJ

DATE:

3 FEBRUARY 2003

PLACE:

SYDNEY

REASONS FOR JUDGMENT
BLACK CJ & HILL J

By a Notice of Motion dated 20 December 2001, the third, fourth and fifth respondents sought that the applicants’ claims in this proceeding be set aside, dismissed or permanently stayed on the basis that the claims are not justiciable or enforceable, and additionally or alternatively, because they do not give rise to a “matter” within the jurisdiction of the Court. On 27 February 2002, Beaumont J, as docket judge, ordered that the relief sought pursuant to the Notice of Motion be determined as a separate question. The Chief Justice, acting under s 20(1A) of the Federal Court of Australia Act 1976 (Cth), subsequently ordered that this question be determined by a Full Court. The relevant facts and background are set out in the reasons for judgment of Beaumont J and it is unnecessary for us to repeat them here. We therefore turn immediately to the submissions of the parties.
Counsel for the Australian government submitted that the issues raised by the applicants in their pleading were non-justiciable (or alternatively, the Court had no jurisdiction to hear the proceedings) because in respect of each cause of action whether specifically, or if not specifically then as a necessary ingredient of it, it was necessary either that the Court make an adjudication on an act of State of a foreign government (the grant of concessions by Portugal to the applicants in the proceedings, the respondents to the motion) or alternatively to adjudicate upon the validity, meaning and effect of transactions of foreign states or both. In consequence, it was submitted, there was no justiciable issue for the Court to decide and additionally or alternatively there was no “matter” within the jurisdiction of the Court.
It was submitted that this came about as a result of the application of one or more perhaps overlapping principles, on each of which the Commonwealth relied. These being:

The Court has no jurisdiction to determine or will not adjudicate upon claims which depend upon the exercise by the Executive of the prerogative in relation to foreign affairs and, particularly in the present context, involving the territorial boundaries of Australia’s claim to the continental shelf between Australia and East Timor. If, contrary to the submission, the Court may adjudicate on matters involving the territorial boundaries of the Commonwealth then it would be bound by a certificate from the Executive stating what those boundaries are. The Commonwealth relies upon a certificate of the Attorney General in support of this submission.
The Court will not adjudicate upon the validity of acts and transactions of a foreign sovereign State within that Sovereign’s own territory, cf Potter v The Broken Hill Proprietary Company Ltd (1906) 3 CLR 479. It is submitted that each of the claims made by the applicants in the proceeding requires the Court to adjudicate upon the validity of acts and transactions of Portugal or Indonesia as the case may be. Allied to this principle is the general principle that domestic Courts will not enforce foreign public law, cf Attorney-General for the United Kingdom v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR 30 at 41.
Alternatively, the Court should not, as a matter of judicial restraint, adjudicate upon the claims of the applicants involving matters affecting Australia’s international relations having regard to the principles in Buttes Gas and Oil Co v Hammer [1982] AC 888.
Alternatively, because the Court exercising the judicial power of the Commonwealth may only decide “matters”, that is to say, justiciable controversies, it lacks jurisdiction to determine the applicants’ claims because the issues inherent in the applicants’ pleaded case are not justiciable, that is to say, matters which are capable of judicial determination.

For the applicants it was submitted that these principles have no application to the present case because by the Seas and Submerged Lands Act 1973 (Cth) (“the SSL Act”) Parliament defined the boundaries of the area in respect of which Australian sovereign rights were to be exercised over the continental shelf and that exercise of sovereignty thereafter excluded any exercise by the Executive of the prerogative to define Australia’s boundaries except as provided for in that Act. It is the applicants’ case that the SSL Act which defined the continental shelf over which Australia had sovereignty by reference to the definition contained in the 1958 United Nations Convention on the Continental Shelf, properly construed, placed the boundary between Australia and the then Portuguese Timor along the median line between their coasts, so that the areas over which the applicants were granted concessions were outside the area over which Australia exercised sovereign rights under that Act. Accordingly, it was submitted, there was no barrier to the applicants’ concession rights being recognised by Australian courts. The Timor Gap Treaty between Australia and Indonesia operated to extinguish the rights of the applicants (and thereby leading to a right in the applicants to compensation) or alternatively had no effect upon them, either as a matter of interpretation or because the Treaty was of no effect, its ratification being beyond the executive power of the Commonwealth. The subsequent legislation to give effect to the Treaty was likewise of no effect or if it was gave rise to an entitlement in the applicants to compensation or alternatively to the result that their rights had not in fact been extinguished.
Assuming their main submission were not accepted, the applicants submitted that the doctrine of judicial restraint discussed in Buttes had no application in Australia. Rather, the only issue was whether there was a “matter” in the constitutional sense, that is to say a genuine controversy about existing legal rights. A matter was justiciable, in the sense of giving rise to a “matter”, so long as it was capable of being resolved by the exercise of judicial power, as it was submitted was the case here. English decisions on non-justiciability had no application in Australia.
Further, the applicants submitted that the Potter principle on which the respondents rely was inapplicable. The applicants sought to draw a distinction between the case where the foreign concession was a necessary ingredient of the legal relationship sought to be enforced and the case where it was not the gravamen of the cause of action. The concessions granted by Portugal were not, it was submitted, the gravamen of the causes of action on which the applicants sued. The proceedings, it was submitted, really sought to test the validity of actions of the Australian government under Australian law.
Finally, it was submitted that if Buttes was a separate doctrine it should not be followed or should be distinguished because the present case concerned the issue whether powers arising under Australian law had been exceeded or duties under Australian law breached.
It followed that the executive certificate was irrelevant to the present proceedings because it could not override the effect in Australian domestic law of the jurisdictional definition contained in the SSL Act.
Non-justiciability of the right of the Executive to define the boundaries of Australia.
The submission of the respondents, shortly put, was that it was for the Executive to define the territorial boundaries of Australia, including the territorial sea and continental shelf. Hence, if, as it was said to be the case here, an essential ingredient of an applicants’ case involved the Court in defining territorial boundaries, the Court would not enter upon an adjudication of that. This principle may, perhaps, be seen as a corollary to the other principle relied upon by the respondents, namely, that the domestic courts would not adjudicate upon the effectiveness of acts of state of foreign governments.

The Commonwealth, whose submissions on these matters were adopted by the other respondents, relied upon the decision of Gibbs J in The State of New South Wales v The Commonwealth (“Seas & Submerged Lands Case”) (1975) 135 CLR 337 at 388, where his Honour cited with approval what was said by Diplock LJ in Post Office v Estuary Radio Ltd [1968] 2 QB 740 at 753:
“It still lies within the prerogative power of the Crown to extend its sovereignty and jurisdiction to areas of land or sea over which it has not previously claimed or exercised sovereignty or jurisdiction. For such extension the authority of Parliament is not required.”
Gibbs J then continued:
‘The acquisition of territory by a sovereign state for the first time is an act of state which cannot be challenged, controlled or interfered with by the courts of that state … the same principle applies where the Crown, in the course of its relations with other nations, asserts sovereignty over an area of sea, or sovereign rights over the continental shelf, either pursuant to international treaty or even by unilateral action. The prerogatives of the Crown to acquire new territory or extend its sovereignty or jurisdiction are, in my opinion, available to the Crown in right of the Commonwealth.
An extension of sovereignty over an area of the sea not already part of the Commonwealth (and therefore not part of any State), or the acquisition of new sovereign rights over the continental shelf, might be effected by executive act, but might validly be authorized, ratified or given recognition by legislation.”
Brennan J in Mabo v Queensland (No. 2) (1992) 175 CLR 1 at 31–2 accepted without question that there could be no contest between the executive and judicial branches of government as to whether a territory was or was not within Australia.
A similar view of the law has been taken in America, see per Brennan J in Baker v Carr (1962) 396 US 186 at 212, namely that the judiciary should ordinarily follow the Executive in matters of sovereignty over disputed territory.
These principles are really not disputed by the applicants. As the short summary of their submissions already given makes clear, the applicants’ submission is quite different. They submit that Parliament by enacting the SSL Act thereafter itself defined the boundaries of Australia so far as the continental shelf between Australia and Timor is concerned, thereby superseding the right of the Executive thereafter to define the boundaries of the continental shelf within Australia, except in the manner provided by the SSL Act.
The applicants conceded that if, as at 1974, Australian law regarded the concession area as part of the continental shelf in respect of which Australia held sovereign rights, then Portugal’s purported grant of rights in respect of that area could not be recognised or enforced by an Australian court. It was further conceded by the applicants that, in the absence of legislation, the position of the Executive government in its international dealings would be conclusive as to whether a court would regard that area as part of the continental shelf in respect of which Australia exercised sovereign rights. However it was submitted on behalf of the applicants that Parliament by the SSL Act expressly provided that sovereign rights in respect of the continental shelf as defined in that Act vested in the Crown in the right of the Commonwealth.
The applicants’ submission goes beyond this by pleading that the SSL Act actually requires the boundaries of Australian jurisdiction to be so placed that the concessions granted by Portugal to the applicants fall outside the area over which Australia claims sovereignty. It is said that, properly construed, the median line between Australia and the former Portuguese Timor is the continental shelf boundary for the purposes of Australian law. This submission, the applicants say, and the submissions of the respondent would seem to support, should be decided at the hearing and not in the course of a strike out application. Indeed, it seems that the respondents had no notice of this submission prior to the hearing before us.
It is necessary, therefore, to turn to the SSL Act and to say something of its history.
In 1967 Parliament enacted the Petroleum (Submerged Lands) Act 1967 (Cth) (Act No 188 of 1967). That Act, passed with the co-operation of the States by complementary legislation, authorised the grant of exploration permits and various other petroleum titles by the “Designated Authority” in respect of a particular “adjacent area”. Adjacent areas were those specified in the Second Schedule to the Act as adjacent to a particular State or Territory. The Second Schedule provided:
“The adjacent area in respect of a State or Territory is the area the boundary of which is described in this Schedule in relation to that State or Territory, to the extent only that that area includes –
(a)areas of territorial waters; and
(b)areas of superjacent waters of the continental shelf.”
It is said to follow that the areas in respect of which the 1967 Act applies were thus expressly limited to areas within “the continental shelf”. In turn the expression “continental shelf” was defined by reference to the definition in the 1958 Convention on the Continental Shelf to which Australia was a party and which Convention is annexed to the legislation to form part of the First Schedule. Hence titles granted pursuant to the 1967 Act were authorised only to be granted within the areas which were part of Australia’s continental shelf within the meaning of the Convention.
It may be noted that at least since 1970 the Executive asserted a claim that Australia’s continental shelf extended to the bottom of the Timor Trough.
In 1973 Parliament passed the SSL Act. Section 12 of that Act empowered the Governor-General by Proclamation to declare, not inconsistently with the Convention on the Continental Shelf or any other international agreement to which Australia is a party, the limits of the whole or any part of the continental shelf. No such proclamation has been made. To that extent, at least, the power of the Executive to declare boundaries relating to the continental shelf was preserved, although Parliament has regulated the manner of its exercise.
Section 11 then declared and enacted that:
“the sovereign rights of Australia as a coastal State in respect of the continental shelf of Australia, for the purpose of exploring it and exploiting its natural resources, are vested in and exercisable by the Crown in right of the Commonwealth.”
However, it must also be noted that s 3(3) of the SSL Act provided that in the Act, including s 11, a reference to the continental shelf of Australia is to be a reference to that continental shelf “so far as it extends from time to time”. In other words the expression “continental shelf” was given an ambulatory aspect. Certainly one of the means by which the continental shelf might be redefined would be a proclamation that might be made under s 12.
When one comes to the Convention, which is set out in Schedule 2 of the SSL Act, Article 1 of the Convention defines the expression “continental shelf” in terms of its geographical limits. The Article provides:
“For the purpose of these articles, the term ‘continental shelf’ is used as referring (a) to the seabed and subsoil of the submarine areas adjacent to the coast but outside the area of the territorial sea, to a depth of 200 metres or, beyond that limit, to where the depth of the superadjacent waters admits of the exploitation of the natural resources of the said areas; (b) to the seabed and subsoil of similar submarine areas adjacent to the coasts of islands.”
It is qualified by Article 6. That Article provides relevantly:
“1. Where the same continental shelf is adjacent to the territories of two or more States whose coasts are opposite each other, the boundary of the continental shelf appertaining to such States shall be determined by agreement between them. In the absence of agreement, and unless another boundary line is justified by special circumstances, the boundary is the median line, every point of which is equidistant from the nearest points of the baselines from which the breadth of the territorial sea of each State is measured.”
It is clear that one of the purposes of the legislation was to deal with the allocation of power between the States and the Commonwealth, inter alia over the continental shelf. This is made clear by the Second Reading Speech (10 May 1973) where it was said:
“I introduce this Bill, as announced by His Excellency the Governor-General in his Speech at the opening of the current session, to remove any doubt about the exclusive right of the Commonwealth to sovereign control over the resources of the seabed off the coast of Australia and its territories, from the low water mark to the outer limits of the continental shelf…
As matters stand now, the question of jurisdiction and ownership in offshore areas is in doubt. With the State governments claiming sovereign rights in some of the same areas as the Commonwealth, we find ourselves in the absurd position of having one of the longest coastlines and most extensive continental shelves of all littoral nations, without a clear decision on this most important matter.
There are a number of moves about to take place on the international scene which are of great concern to us – the Law of the Sea Conference, determination of the width of the territorial sea, negotiation of sea boundaries with our neighbours. Although the Commonwealth’s legal power to negotiate international treaties and to enter into agreements and conventions has not been disputed, an intolerable situation may yet arise if we should have to seek State agreements before ratification…
The off-shore problems I have indicated are national problems and require national solutions. It is for us – here in the national Parliament – to provide the legislative framework which will enable the national Government to exert its sovereign national rights and to speak with authority in national terms on these matters…
The Bill will not affect the existing agreements between the Commonwealth and the States concerning off-shore petroleum however, or the legislation giving effect to those agreements, which will continue to operate for the present time….”
However, the language of s 11 is in its terms clear. It operates as a specific vesting of sovereignty over the “continental shelf” as defined, not merely for the purpose of relations between the Commonwealth and the States, but also internationally. The latter, at least, would seem to be the view taken by members of the High Court in the Seas & Submerged Lands Case (1975) 135 CLR 337, see at 457-8 per Stephen J, at 474 per Mason J and at 480 per Jacobs J, and see too Commonwealth v Yarmirr (2001) 75 ALJR 1582; (2001) 184 ALR 113 per Gleeson CJ, Gaudron, Gummow and Hayne JJ at [68] and per Kirby J at [252].
It was submitted by the Commonwealth that the exclusion of the Executive from its traditional role of declaring boundaries could only be effected by clear language. That proposition may be accepted, cf Ruddock v Vadarlis (2001) 110 FCR 491 per French J, with whose judgment on this point Beaumont J agreed at [183] and [184]. Clear language will appear where the exclusion is express or arises by necessary implication. The question is whether the conferral of power by a specific means, namely proclamation, gives rise to a necessary implication. We are inclined to the view that it does, both because s 12 of the Act provides for the manner in which the Executive may act, but also because the section prescribes the limits of such a proclamation. Clearly the Executive could not assert boundaries in a way that was inconsistent with the Act, namely wider than the defined continental shelf. However, we do not find it necessary to decide the issue, because in our view there are other reasons why the applicants’ case must fail.
This makes it unnecessary for us to consider whether, if the applicants’ submission is correct, the Court could determine for municipal law purposes what the boundaries of the continental shelf as between Australia and Timor were, given that the Convention definition is so vague as to be, it is submitted, incapable of judicial determination. Even if one puts aside the fact that the adjacent States (Australia and now East Timor) could mutually agree upon the boundaries of the continental shelf, there is the problem whether the Court could decide whether there are special circumstances and what that expression may mean in the context.
In a case where there had been no mutual agreement at the time of hearing, the fact that the boundaries might thereafter change by agreement would present no difficulty. The position of the boundaries could be decided having regard to the position at the time of hearing. Where a dispute arose as between the Commonwealth and a person claiming a title the validity of which depended upon the legislation and it was necessary to determine whether the Commonwealth had power to grant the title we can see no reason why the matter would not be justiciable in a court, which would determine the question as one of municipal law. There would in such a case clearly be a “matter” in the constitutional sense which would require adjudication. It may be the case that, as the Commonwealth submits, it would be not constitutionally valid to confer jurisdiction upon a court to determine whether there were special circumstances in a case where there was no judicially manageable standard (cf Yanner v Minister for Aboriginal and Torres Strait Islander Affairs (2001) 108 FCR 543) but there will often be cases where the court is called upon to determine whether special circumstances do exist and it may well be the case that should the issue arise a court would need to determine whether special circumstances existed as a matter of objectively ascertainable fact. As presently advised we do not think that it would be correct to say that there would be no standard pursuant to which the issue could be determined. Indeed, in our view, a court would have to determine the matter as a question of municipal law, doing the best it could.
It is also not necessary to reach a conclusion about the submission of the applicants that the proper interpretation of the Act is that the exercise of sovereignty over the continental shelf is carved out of the broader definition in the Convention and is limited to the median line. The matter is arguable, although as presently advised we think that what was intended in the legislation was that the vesting of sovereignty was over the whole of the area of the continental shelf (whatever the boundaries might ultimately be) in respect of which international law reflected Australia’s sovereignty.
The Commonwealth relied upon a certificate from the Attorney-General in the form already noted. To the extent that the applicants’ submission that the SSL Act operated to exclude the power of the Executive is not accepted, then it may be accepted that generally in matters involving foreign relations the Court may rely upon a certificate from the Executive and that certificate would be conclusive. The circumstances in which this is so are to be found in the authorities collected in Re Ditfort; Ex parte Deputy Commissioner of Taxation (NSW) (1988) 19 FCR 347 by Gummow J at 368. The certificate would then have evidentiary effect. It may also be accepted that a certificate could have no effect on the question of construction of legislation of the Parliament where the issue arises as a matter of domestic law. However, again the issue need not be decided here.
Non-justiciability of foreign acts of State where title to non-chattels is in dispute.
There is a general principle, which is often said to be a principle of international law, that the Courts of a State will not adjudicate upon the validity of acts and transactions of a foreign sovereign State within that State’s own territory. This principle is usually associated with the principle that domestic courts will not enforce a foreign penal or public law, cf Attorney-General (UK) v Heinemann Publishers Australia Pty Limited (“the Spycatcher case”) (1988) 165 CLR 30 at 40.
The Commonwealth relies upon the decision of the Privy Council in Cook v Sprigg [1899] AC 572 as authority. That case concerned a claim by the appellants as grantees of a concession from the Paramount Chief of Pondoland (Sigcau) in Africa to enforce the concession. The claim was brought against the Prime Minister of the then colony of the Cape of Good Hope. Pondoland had been annexed by the United Kingdom and had become part of that colony after the execution of the concession. The Privy Council refusing the claim said at 578:
“The taking possession by her Majesty, whether by cession or by any other means by which sovereignty can be acquired, was an act of State and treating Sigcau as an independent sovereign which the appellants are compelled to do in deriving title from him. It is a well-established principle of law that the transactions of independent States between each other are governed by other laws than those which municipal courts administer.”
Their Lordships added that no municipal court of the colony had authority to enforce the obligation if created by a private sovereign following cession by whatever means.
Cook v Sprigg was followed by the Privy Council in Winfat Enterprise (Hong Kong) Co Ltd v Attorney-General (Hong Kong) [1985] 1 AC 733 at 746. In rejecting an argument that the appellants were entitled to enforce in the municipal courts of Hong Kong rights arising from the Peking Convention between China and the United Kingdom in 1897, which ceded the New Territories to the United Kingdom for 99 years, their Lordships said:
“Although there are certain obiter dicta to be found in the cases which suggest the propriety of the British Government giving effect as an act of state to promises of continued recognition of existing private titles of inhabitants of territory obtained by cession, there is clear long-standing authority by decision of this Board that no municipal court has authority to enforce such an obligation. This was laid down by Lord Halsbury LC in Cook v Sprigg…” [references omitted]
Both Cook v Sprigg and Winfat were referred to by Brennan J with apparent approval in Mabo at 55, the former as being authority for the proposition that treaties do not create rights enforceable in municipal courts and the latter in the context of the extinguishment of private property by a foreign sovereign pursuant to a law having that effect in the territory of the sovereign.
What is probably an application of this general principle is the rule discussed by the High Court in Potter v The Broken Hill Proprietary Company Ltd (1906) 3 CLR 479, namely that the domestic courts will not enforce rights granted by a foreign sovereign. In Potter the right which was not enforced was the grant of a patent in New South Wales, where infringement proceedings were brought in Victoria and the defendant claimed that the patent was invalid. The grant of a patent was an act of the State and could not be impugned, any more than could title to foreign land be determined in a domestic court, cf British South Africa Co v Companhia de Mocambique [1893] AC 602, Deschamps v Miller [1908] 1 Ch 856 and, more recently, Hesperides Hotels Limited v Muftizade [1979] AC 508 all of which held that claims of title to foreign land could not be adjudicated nor could claims for damages be founded on such an adjudication. Griffith CJ distinguished between the rights of the domestic court to rule upon whether the foreign act was within the limits of sovereignty and the right of the domestic court thereafter to rule on the validity of the foreign act. His Honour regarded the Supreme Court of the United States as having correctly stated the law in Underhill v Hernandez 168 US 250 at 252 where Fuller CJ wrote:
“Every sovereign State is bound to respect the independence of every other sovereign State, and the Courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.”
His Honour also drew a distinction between the case where a question of title of a foreign asset is raised in the domestic court and where such a question arose merely incidentally in an action otherwise within the cognisance of the domestic court in which case jurisdiction could be exercised.

O’Connor J at 510 based his judgment on what he referred to as principles of international law which recognise that the Courts of a country would not, except subject to well-known exceptions, inquire into the validity of the acts of a foreign state, referring to the judgment of Lord Esher MR in Mocambique in the Queens Bench Division [1892] 2 QB 358 at 395, where his Lordship had said:
“With regard, then, to acts done within the territory of a nation, all are agreed that such nation has without more jurisdiction to determine the resulting rights growing out of those acts; but, with regard to acts done outside its territory it has no jurisdiction to determine the resulting rights growing out of those acts, unless such jurisdiction has been allowed to it by the comity of nations.”
O’Connor J then continued at 510:
“For instance, the Courts of most nations will refuse to adjudicate upon claims of title to foreign land in proceedings founded upon an alleged invasion of the proprietary rights attached to it.”
In his Honour’s view the domestic Courts would not adjudicate upon the validity of concessions granted by foreign governments, even if to persons residing within the domestic jurisdiction, and grants of patents were in no different position.
Mocambique has been said to be applicable in Australia in a number of cases, including Ingles v Commonwealth Bank (1972) 20 FLR 30 at 37 per Woodward J and Dagi v Broken Hill Proprietary Company Limited(No 2) [1997] 1 VR 428 where an action for trespass of land and an action in nuisance in respect of the land in New Guinea (but not chattels) was struck out because the proceedings depended upon the plaintiff establishing title. However, a claim in negligence for injurious affection was allowed to proceed, even although the damages claimed were damages to the land in New Guinea.
There are a number of exceptions to what may be described as the Potter principle. It is not applicable to chattels. Nor is it applicable to a case where the validity of the act of State arises only collaterally or, perhaps more accurately, is merely incidental. The latter exception explains why the claim of negligence was allowed to proceed in Dagi, for title to the land in New Guinea was not an essential ingredient in that claim in the same way as it was in trespass or nuisance. It is submitted by the Commonwealth that none of the causes of action pleaded by the applicants fall within the exceptions. The applicants, on the other hand, submit that the present case falls outside the Potter principle because none (or if some, then not all) of the claims pleaded depend, other than incidentally, upon the need for this Court to determine the validity of the Concession Agreements granted to the applicants by the Portuguese governments. Rather it is submitted that the gravamen of the applicants’ claims is not the vindication of the rights granted by Portugal but rather to test the validity of acts of the Australian government under Australian law which affect the applicants as holders of the right granted to them. It is submitted that the applicants’ claims could not be brought in Portugal, or for that matter, in East Timor (now the successor to Portugal) because there the claims would depend upon an act of State of the Australian government and would not be justiciable.
It may be so that the applicants’ claims could not be brought in Portugal. But that is not to the point. The applicants’ claims cannot accurately be characterised as merely claims to test the validity of actions of the Australian government under Australian law affecting the applicants as holders of the concessions. It is an essential ingredient of most of the applicants’ claims that they did hold a valuable concession.
Let us take the first of the applicants’ claims, namely, that its concessions were expropriated as a result of the execution and/or entry into force of the Timor Gap Treaty with the consequence that the Commonwealth was under an obligation to pay adequate compensation. It is a necessary ingredient of this claim that the applicants had a valid concession at the time of the entry into the Treaty which, as a result of the Treaty, was expropriated. To succeed, therefore, the applicants necessarily must prove that the concessions were granted to them validly by the Portuguese government. If they were not there could be neither expropriation nor anything of value to compensate the applicants for. In our view the Court has no jurisdiction to determine the validity of the grant of the concessions by the Portuguese government.
To the extent that the principles discussed above are but part of the same principle, of which Buttes is another manifestation, they would be subject to the same qualification as Buttes in accordance with the decision of the House of Lords in Kuwait Airways Corporation v Iraqi Airways Company [2002] 2 WLR 1353 discussed in connection with Buttes below.
Non-justiciability – the Buttes principle.
The Commonwealth relies, as well, on what was said in Buttes Gas and Oil Co v Hammer [1982] AC 888. It might be said that the Buttes principle is not necessarily a separate principle from that in Potter but that the one is a manifestation of the other. Whether that is so, it is clear that there is overlap between the two principles.
In Buttes the defendant, which had a concession granted by the ruler of Umm al Qaiwain, was sued for slander by the plaintiffs which had a concession granted by the ruler of Sharjah both concessions over an oil rich area. The defendant pleaded justification and crossclaimed for damages for conspiracy. The plea and the cross claim both called in issue the validity of the acts of the ruler of Sharjah and other States. It was held to be the very nature of the judicial process that municipal courts would not adjudicate on the transactions of foreign states. The issues before the Court were not issues upon which a municipal court could pass. Lord Wilberforce said at 938,
“there are … no judicial or manageable standards by which to judge these issues, or to adopt another phrase … the court would be in a judicial no-man’s land: the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force and to say that at least part of these were ‘unlawful’ under international law.
… this counterclaim cannot succeed without bringing to trial non-justiciable issues.”
It would seem that his Lordship saw the principle that the courts should not adjudicate upon transactions of foreign sovereign States as involving judicial restraint or abstention (see at 931). This is not surprising, given that international relations can be controversial and the outcomes of a court adjudication might well create embarrassment for the government. Indeed, the facts of the present case and the exchange of diplomatic notes between Australia and Portugal illustrate just how considerable the embarrassment could be should an Australian court adjudicate on actions of the Portuguese government, let alone the possible embarrassment which might be caused to relations between Australia and East Timor on that country becoming now independent.
In Buttes Lord Wilberforce relied upon what had been said by Fuller CJ in Underhill v Hernandez (1897) 168 US 250 at 252. The passage has already been set out at [37] above.
The principle in Buttes was referred to with approval in the Spycatcher case at 41, where it was said to rest partly on international comity and expediency.
A similar principle to that enunciated in Buttes has been adopted by the United States Courts of Appeal for the Fifth and for the Ninth Circuits (Occidental of Umm al Qaywayn Inc v A Certain Cargo of Petroleum (1978) 577 F 2d 1196 and Occidental Petroleum Corp v Buttes Gas and Oil Co (1972) 461 F 2d 1261, the latter case affirming Occidental Petroleum Corp v Buttes Gas and Oil Co 331 F Supp 92 (CD Cal. 1971)). These were cases involving civil claims for, respectively, damages for slander and conspiracy, conversion and treble damages under the Clayton Act arising out of the oil rich territory in the vicinity of the United Arab Emirates and Iran. In each case the Courts declined to entertain the proceedings since each would involve the resolution of claims that were non-justiciable. In the former case it was noted that the resolution of a territorial dispute between sovereign States was a “political question” the Court was powerless to decide and that to do so would be to “intrude the judicial power beyond its philosophical limits”. Earlier decisions in America to the same effect include American Banana Co v United Fruit Co (1909) 213 US 347 and Oetjen v Central Leather Company (1918) 246 US 297 at 302. The latter case was also cited with approval in the Spycatcher case. The Buttes principle has also, expressly, been applied by a Full Court of this Court in Minister for Arts, Heritage and the Environment v Peko-Wallsend (1987) 15 FCR 274 at 307.
In addition to the embarrassment which could be caused to Australia’s diplomatic relations should the Court pass upon the meaning of the international treaty and purport to determine the extent of Australia’s claim to the area in which the applicants’ concessions lie, the Commonwealth pointed to the discretionary factors inherent in Article 6 of the Treaty. Evidence going to embarrassment was given in the present case and read subject to the objection of the applicants. It is unnecessary to determine whether that evidence was admissible, although in our view, evidence of the opinion of qualified persons having the conduct of Australia’s foreign affairs would be admissible. The agreed facts themselves make it clear that there would be considerable embarrassment in the Court deciding what had been a most contentious issue between Portugal and Australia and which is still a subject of delicacy between Australia and the newly created East Timor.
It was submitted that the language of the Article made clear the non-justiciable norms which the Treaty created or what may be referred to as the lack of “manageable standards”, a reference to Buttes, discussed later. The Treaty was the subject of some discussion in the North Sea Continental Shelf case in the International Court of Justice (20 February 1969) where the ultimate decision of the Court was that the parties negotiate an outcome based upon various factors which are discussed in the judgment. It may be conceded that the task of interpreting Article 6 would be extremely difficult. The North Sea Continental Shelf case illustrates the difficulties that would be involved. However, with respect to the submission, if the question was merely one of difficulty the Court would be required, nevertheless, to determine the issue. The question is rather whether the question is justiciable, not whether it is difficult.
It may here be noted that the International Court of Justice in fact refused to adjudicate upon the meaning of the Timor Gap Treaty upon the grounds that Indonesia was not a party to the proceedings, that country not having accepted the jurisdiction of the Court.
The validity of the Treaty and consequential legislation in Australia to give effect to it was the subject of a challenge in the High Court in Horta v the Commonwealth (1994) 181 CLR 183. The Court found the legislation to be a valid exercise of the power of the Commonwealth under placitum (xxix) of s 51 of the Constitution but did not consider the question whether the Treaty was consistent with international law. Indeed the High Court specifically observed that the judgment was not to be understood as lending any support to the view that the propriety of the recognition by the executive of the sovereignty of a foreign nation over foreign territory could be justiciable in the courts of this country.
The applicants rely upon the very recent decision of the House of Lords in Kuwait Airways Corporation v Iraqi Airways Company (Nos 4 and 5) [2002] 2 WLR 1353 either as authority for a submission that Buttes should not be applied in Australia or in support of a submission that Buttes should be distinguished and not applied to the facts of the present case.
In the Kuwait Airways case title to planes belonging to the Kuwait Airways Corporation were by a resolution of the Revolutionary Command Council of Iraq transferred to the Iraqi state owned Iraqi Airways Co and the Corporation dissolved following upon the invasion of Kuwait by Iraq. The Corporation commenced proceedings against the Republic of Iraq and the Iraqi Airways Company claiming their return or damages. As a result of the subsequent military action four of the planes were destroyed and the remaining six aircraft were ultimately returned to Kuwait via Iran to which they had been flown by the Company. The Corporation was required to pay a substantial sum to Iran for sheltering and maintaining them.
The Corporation relied upon Buttes in its defence, claiming that the United Kingdom courts could not determine whether the invasion of Kuwait by Iraq and the subsequent transfer of the planes to the Corporation were unlawful. It was held that the Court could determine whether the Resolution was effectual to divest title in the planes from the Corporation. Lord Nicholls wrote that the Resolution was not simply a government expropriation of property within its territory but a step in an attempt to extinguish what his Lordship referred to as “every vestige of Kuwait’s existence as a separate state”. In his Lordship’s opinion, such an expropriatory decree in the circumstances was not acceptable.
Lord Steyn, in rejecting the application of the principle in Buttes, said that reliance upon it was “too austere and unworkable”. His Lordship continued at [113] in discussing Buttes:
“There were rival claims by rulers to part of the continental shelf and there was a dispute about the motives of a foreign ruler … Lord Wilberforce found that there were ‘no judicial or manageable standards by which to judge these issues’ and ‘the court would be in a judicial no-man’s land’… He added ‘it is not to be assumed that these matters have now passed into history, so that they now can be examined with safe detachment’ … Buttes was an unusual case decided on a striking out application and without the benefit of a Foreign Office certificate. But reading Lord Wilberforce’s judgment as a whole I have no doubt that counsel for IAC is wrong in seeking to derive from it the categorical rule put forward. In any event, in the present case there is no difficulty in adjudicating on Iraq’s gross breaches of international law. There is no relevant issue: Iraq accepted the illegality of the annexation and of Resolution 369. In agreement with the Court of Appeal I would reject the argument based on non-justiciability.”
The Court of Appeal decision, with which his Lordship agreed, placed emphasis upon the fact that because the Resolution itself constituted a breach of international law, it was contrary to public policy for English courts to recognise it. However, as Lord Steyn recognised in his reasons, not all breaches of international law would be contrary to public policy. What made the present case different was that the breach of international law had been determined by the Security Council acting under the United Nations Charter.
As the judgment of Lord Hope in the same case made clear, the exceptions to the act of State rule had to be confined to narrow limits. His Lordship said at [140]:
“As I see it, the essence of the public policy exception is that it is not so constrained. The golden rule is that care must be taken not to expand its application beyond the true limits of the principle. These limits demand that, where there is any room for doubt, judicial restraint must be exercised. But restraint is what is needed, not abstention. And there is no need for restraint on grounds of public policy where it is plain beyond dispute that a clearly established norm of international law has been violated.”
The applicants submit that the Kuwait Airways Corporation case required the Buttes principle to be read down. No doubt that is true to the extent that the facts of the case required that to happen. However, we do not think that anything said in the Kuwait case bears upon the facts of the present case. Indeed, Lord Nicholls, with whom Lord Hoffman agreed, said at [26]:
“In appropriate circumstances it is legitimate for an English Court to have regard to the content of international law in deciding whether to recognise a foreign law. Lord Wilberforce himself accepted this in the Buttes case, at page 931D. Nor does the ‘non-justiciable’ principle mean that the judiciary must shut their eyes to a breach of an established principle of international law committed by one state against another when the breach is plain and, indeed, acknowledged. In such a case the adjudication problems confronting the English court in the Buttes litigation do not arise. The standard being applied by the court is clear and manageable, and the outcome not in doubt.”
In summary, while it is clear that the facts in the Kuwait case were distinguishable from those in Buttes, so too the facts in Buttes are as distinguishable from those in the Kuwait case, as are the present facts. And further, the facts in the present case are much closer to those in Buttes than to those in the Kuwait case. In our view, to the extent that Buttes requires judicial restraint to be exercised in an appropriate case, the present is such an appropriate case. To the extent that in Australia the doctrine is affected by the constitutional requirement of exercise of federal jurisdiction, the consequence is not judicial restraint, but lack of jurisdiction in the Court to adjudicate the applicants’ claims. It becomes necessary now to consider the constitutional issue.
Whether there is a “matter” upon which the Court may adjudicate – the Constitutional issue?
If the Commonwealth’s submission that the issue here is non-justiciable as a matter of judicial restraint is accepted, then the question whether the Court would be exercising the judicial power of the Commonwealth to decide “matters” within Chapter III of the Constitution may be said not to arise. However, it was submitted that because the interpretation of the Treaty is non-justiciable, it followed that there would be no matter upon which the Court, constitutionally, could pass. It may be accepted that if the issue is not capable of judicial determination it would not relevantly be a “matter” upon which Parliament might confer upon the court jurisdiction: cf the article written by Sir Anthony Mason, “The High Court as Gatekeeper” Melbourne University Law Review 24 (2000) 784 at 792. Reference was made to the decision of the High Court in State of South Australia v State of Victoria (1911) 12 CLR 667 at 708 where O’Connor J emphasised that non-justiciable issues, that is to say matters unable to be decided by reference to principles of law that can be invoked, were not “matters” within Chapter III of the Constitution, although, the boundaries of the States were justiciable matters within the meaning of the Constitution. So, too, in Truth about Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591 at 606 Gaudron J made it clear that in her Honour’s opinion, there could be no “matter” in the constitutional sense, unless there was a justiciable controversy. And see too Brodie v Singleton Shire Council (2001) 180 ALR 145 per Gaudron, McHugh and Gummow JJ at 171.
In Ditfort (supra), Gummow J, then a member of this Court, rejected a submission that in determining whether a sequestration order should have been made, the question of the observance by the Australian government of statements made or assurances offered to the German government in relation to the extradition of the bankrupt was non-justiciable. His Honour’s decision depended upon the discretion which resided in the Court in determining the question under the Bankruptcy Act. It did not cast doubt upon the general principle, which his Honour accepted, that the question whether there has been a breach of Australia’s international obligations was not a justiciable issue and was not a “matter” in the constitutional sense. The general principle can be said, at least in part, to be an element of the separation of powers between the functions of the executive government on the one hand and the Courts on the other, cf Re Limbo (1989) 64 ALJR 241 at 242 per Brennan J and see Thorpe v Commonwealth of Australia (No 3) (1997) 71 ALJR 767 at 777 per Kirby J.

In Brodie v Singleton Shire Council (2001) 180 ALR 145 at 171, [92] McHugh and Gummow JJ discussed what is meant by non-justiciability in this context. Their Honours said:
“In Australia, that term and cognate expressions have been used to describe controversies within or concerning the operations of one or other branches of government which cannot be resolved by the exercise of judicial power. Examples are the exercise by the governors of the states of their function under s 12 of the Constitution, certain aspects of the conduct of the executive government of foreign relations and intergovernmental arrangements falling short of contract.”
The principle may be accepted. Indeed, as Sir Anthony Mason noted in the article referred to earlier, the consequence of non-justiciability is that the Court has no jurisdiction, rather than that the Court should abstain from exercising jurisdiction.
Despite a submission by the applicants to the effect that the reference to non-justiciability in cases such as Brodie did not have the same meaning as non-justiciability in the Buttes sense, we are of the view that it does, and that the Court would simply have no jurisdiction to adjudicate upon the application of the law of Portugal in granting to the applicants the concessions to which they claim to be entitled.
The application of the relevant principles to particular causes of action pleaded as against the Third and Fifth Respondents.
Three claims are made against the respondents other than the Commonwealth. The substance of those claims as set out in the amended statement of claim has already been summarised. For present purposes, they may be said to amount to the wrongful interference with contractual relationships of the applicants arising from the grant by Portugal of the concessions and the subsequent grant of concessions to the respondents under the Timor Gap Treaty with Indonesia; a claim for constructive trust arising out of the same matters, and a claim for use of confidential information.
Each of the first two claims depends upon both the validity of the original contractual agreement between Portugal and the applicants as well as the validity of the grant of the concessions to the respondents under the Timor Gap Treaty. The validity of these acts of state are essential to the causes of action. For the reasons we have already set out, the validity of the concessions are not merely incidental to the applicants claims and that validity is not justiciable. It follows that these claims against the Third and Fifth respondents must be struck out.
The claim for misuse of confidential information.
The claim for misuse of confidential information stands in a different situation. It does not directly depend upon the validity of the concession granted by the Portuguese government. Rather it is a claim that requires proof by the applicants that the information said to have been misused is information to which it was entitled and which was confidential and that it was subsequently used by the respondents or some of them without the authority of the plaintiffs.
It is submitted for the respondents, however, although we do not accept the submission, that it is an essential ingredient of the applicants’ claim that the applicants show the validity of the concession granted to them by Portugal. It is not clear why this is the case. The information could be confidential whether or not the concession was validly granted. For example, seismic or other information collected by a person with no petroleum title could be confidential. The claim is not clearly pleaded and the particulars supplied are sparse. But what does appear from the pleading is, one reason at least, that the claim that the information is confidential derives from Article 53 of the Concession Agreement, granted by the Portuguese government. The reference to Article 53 is not correct. It is presumably a reference to Article 54, which relevantly provides in the English translation:
1.The company, any entities that cooperate with it, and the Portuguese authorities should keep strictly confidential any technical or economical data obtained during the exercise of the activities of the concession, except with express authorisation from the Minister of Interterritorial Coordination or from the company, as applicable.
2.At the end of the concession due to lapse of time, it being forfeited or in relation to abandoned areas, the Government may freely use the data mentioned in the previous number, which shall be its property.’
It is submitted for the respondents that it would be necessary for the applicants to rely upon the Concession Agreement for their case that the information in question was confidential and for that reason the Court had either no jurisdiction or should decline to exercise its jurisdiction for the reasons already discussed. There are two answers to this submission. The first is that the applicants’ pleading does not necessarily only rely upon the provisions of the Concession Agreement with the Portuguese government. It can be interpreted more widely than that. So the particulars supplied state somewhat baldly that the information said to comprise seismic data and other information was confidential:
“in that it was not in the public domain, and was commercially sensitive”
in addition to referring to the express requirement in the Concession Agreement that the information was kept confidential. The second is that the quality of confidentiality in business information may arise, in any event, otherwise than as a result of agreement, cf the Spycatcher case at 38 and generally, The Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50 per Mason J. Indeed, it may well be argued that the validity of the grant of the Portuguese concession is really incidental to the applicants’ case, so that the principles discussed earlier in this judgment have no application at all.
The gaining of business information, for example by seismic investigation or other prospecting activities could, assuming the information not to be in the public domain, result in the information being in the legal sense, confidential without the person who obtained that information having any existing Concession Agreement. In an appropriate circumstance where confidential information was obtained as a result of the wrongful act of a person, for example, as a result of a trespass, equity might not intervene to protect the information which would otherwise be confidential. However, the pleading does not necessitate that the confidential information necessarily involved acts authorised by the Concession Agreement with Portugal. The pleading indeed suggests that some of the confidential information was purchased or at least obtained for value, which rather reinforces the view that confidentiality would not depend upon the validity of the Concession Agreement.
The applicants’ pleading refers also to the invasion in 1975 of the Indonesian Military forces and the integration subsequently of Timor into Indonesia. This averment is a prelude to an allegation that employees of the applicants were forced to flee “in extraordinary circumstances in approximately late August 1975” an event which, ultimately led, it is pleaded, to the respondents obtaining the information without authority (presumably, although this is not particularised) as a result of the information being left behind and somehow coming into the hands of the respondents or some one or more of them. It is submitted by the respondents that the case as so pleaded, therefore, requires the Court to consider the validity of the annexation by Indonesia of East Timor. In our view, this is not so. It is only necessary for the applicants to show that confidential information that was not in the public domain came into the possession of the respondents or some of them without authorisation. There would be no necessity for the Court to decide the validity or otherwise of the annexation.
It follows, in our view, that the case sought to be pleaded as against the respondents for misuse of confidential information is not precluded by virtue of any of the principles relied upon by the respondents and should not, for that reason, be struck out. We should say that the applicants’ pleading seems far from satisfactory in its present form and that it does not make clear, either from the pleading or the particulars so far given what the real case is which the respondents have to meet. But that is not a matter argued before us and accordingly we say nothing further on the matter.
There is, however, another difficulty that may lie in the path of the applicants. It is the question whether, all other claims having been struck out, the Court has jurisdiction to deal with the confidential information claim, that being the only claim left to the applicant but being one that, on its own, would not be within the jurisdiction of the Court.
There is no question that jurisdiction conferred upon the Court in respect of a matter will authorise the Court to determine all claims, federal and non federal, which are involved in the controversy: Federal Court Act 1976, (Cth) s 32. And this will, at least generally, be the case even if the federal claim is determined adversely as against the applicant. This is, however, subject to the requirement that there be a common sub-stratum of fact underlying the federal and non-federal claim: Fencott v Muller (1983) 152 CLR 570 at 607. Two questions arise in the present case upon which the Court has not heard argument. The first is whether the conclusion that the claims, other than the confidential information claim, should be struck out for the reasons here given, should produce the same result as would be the case where the federal claim was “decided” adversely to the applicants, leaving only the non-federal claim for decision. The second, and perhaps more difficult question, is whether the confidential information claim has the necessary common sub-stratum of fact to enable it to proceed to hearing on its own as an associated matter within s 32 of the Federal Court Act.
Accordingly the applicants should file and serve brief written submissions dealing with these questions within 21 days of delivery of these reasons. It may well be that the applicants would, in the circumstances, not wish to proceed with the confidential information claim. In that case the applicants should, instead of filing and serving written submissions notify the respondents and the Court of their wish to abandon that part of the claim. The respondents should, if the applicants file and serve written submissions, themselves file and serve written submissions in reply within a further period of 14 days from receipt of the written submissions of the applicants. Upon receipt of these submissions, or notification that the confidential information claim is to be abandoned, as the case may be, the Court will make orders to give effect to these reasons and also make such orders as shall be appropriate in respect of the confidential information claim.
We would accordingly dismiss summarily the whole of the applicants’ case other than the case sought to be made out for misuse of confidential information. As the respondents have been substantially successful we would order the applicants to pay the costs of all of the respondents other than the Second Respondent which did not participate in the hearing of the motion.

I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black and the Honourable Justice Hill.

Associate:
Dated:            3 February 2003

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1224 OF 2001

BETWEEN:

PETROTIMOR COMPANHIA de PETROLEOS S.A.R.L.
FIRST APPLICANT

OCEANIC EXPLORATION COMPANY
SECOND APPLICANT

AND:

COMMONWEALTH OF AUSTRALIA
FIRST RESPONDENT

JOINT AUTHORITY ESTABLISHED PURSUANT TO THE TREATY OF 11 DECEMBER 1989 BETWEEN AUSTRALIA AND INDONESIA
SECOND RESPONDENT

(CONOCOPHILLIPS (91 – 12) PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM (91-12) PTY LIMITED)
THIRD RESPONDENT

CONOCOPHILLIPS JPDA PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM COMPANY ZOC PTY LIMITED)
FOURTH RESPONDENT

PHILLIPS PETROLEUM TIMOR SEA PTY LIMITED
FIFTH RESPONDENT

JUDGES:

BLACK CJ, BEAUMONT & HILL JJ

DATE:

3 FEBRUARY 2003

PLACE:

SYDNEY

INDEX
BEAUMONT J:
Introduction
The relief sought by Petrotimor and Oceanic in their application
The basis of the claims for relief alleged by Petrotimor and Oceanic
(1)       Claims against the Commonwealth
(a)       Expropriation by executive action
(b)       Rights under Concession Agreement continue in force
(c)       Misuse of Confidential Business Information
(2)       Claims against the Joint Authority
(a)       Interference with contractual relations
(b)       Constructive trust
(c)       Respect for acquired rights
(d)      Misuse of Confidential Business Information
(e)       Legitimate expectations in decision-making
(3)       Claims against the Phillips companies
(a)       Interference with Contractual Relations
(b)       Constructive trust
(c)       Misuse of Confidential Business Information
The separate question – Phillips’ contention of lack of jurisdiction or of non-justiciability

The agreed facts
East Timor and Portugal
Australia’s claims of sovereign rights in respect of the continental shelf
The Timor Sea area
The grant of mining and petroleum rights in the Timor Sea area by Western Australia and the Northern Territory before 1967 and in 1968 - 1969
Australia’s claims to sovereign rights in the Timor Sea area
Events in East Timor
East Timor and Indonesia
The Timor Gap Treaty
Proceedings before the International Court of Justice
The end of Indonesian sovereignty over East Timor
Timor Sea negotiations

The Commonwealth’s Executive Certificate
The Commonwealth’s affidavit evidence
The Australian offshore legal regime
The respondents’ contentions in support of their application for a stay, or summary disposal, of the proceeding
Conclusion on whether the applicants’ claim for compensation for expropriation of their concession rights should be summarily disposed of
Does the Court lack jurisdiction to entertain this claim?
Assuming (contrary to my view) that jurisdiction exists, does the Court feel obliged to exercise it?
Conclusion on the compensation claim

Conclusion on whether the applicants’ (alternative) claim for a declaration that entry by the Commonwealth into the Timor Gap Treaty had no effect on the applicants’ pre-existing rights should be summarily disposed of
Conclusion on whether the applicants’ claim for a declaration that the Timor Gap Treaty was void or invalid because it contradicted public international law norms, ought to be summarily disposed of
Conclusion on whether the applicants’ claim for a declaration of the invalidity of permits granted by the Joint Authority in the Concession Area, should be summarily dismissed
Conclusion on whether the applicants’ claims that the provisions of the MLA Act are either invalid or, if not, do not affect their Concession rights, ought to be summarily disposed of
Conclusion on whether the applicants’ claims against all respondents for breach of confidence should be summarily disposed of
Conclusion on whether the claim against the Joint Authority for interference with contractual relations, for a declaration of constructive trust, for compensation for expropriation, and for a declaration that the Authority’s decision to grant a production sharing contract, ought to be summarily dismissed
Conclusion on whether the claims against the Phillips companies for alleged interference with contractual relations, and for a declaration of constructive trust, ought to be summarily disposed of
Appendix 1
The offshore legislative history
The enactment of the P(SL) Act in 1967
The amendment of the P(SL) Act in 1973
The enactment of the SSL Act in 1973
The amendment of the SSL and P(SL) Acts in 1980
Amendment of the P(SL) Act by Part 8 of the Consequential Provisions Act
Amendment of the SSL Act and the P(SL) Act by the MLA Act

Appendix 2
The principal authorities relied on by the respondents
Analysis of the English cases
Cook v Sprigg [1899] AC 572
Hesperides Hotels Ltd v Muftizade [1979] AC 508
Buttes Gas and Oil Co v Hammer [1982] AC 888
R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte [2000] 1 AC 61
R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte (No. 3) [2000] 1 AC 147
Kuwait Airways Corporation v Iraqi Airways Co (Nos. 4 and 5) [2002] 2 WLR 1353
Analysis of the Australian cases
Potter v Broken Hill Proprietary Co Ltd (1906) 3 CLR 479
Attorney-General (United Kingdom) v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR 30
Queensland v Commonwealth (1989) 167 CLR 232
Mabo v Queensland (No. 2) (1992) 175 CLR 1
Horta v Commonwealth (1994) 181 CLR 183
Attorney-General (Cth) v Tse Chu-Fai (1998) 193 CLR 128
Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 15 FCR 274
Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347
Dagi v Broken Hill Proprietary Co Ltd (No. 2) [1997] 1 VR 428

REASONS FOR JUDGMENT
(ON SEPARATE QUESTION)
BEAUMONT J:
Introduction

The separate question now before the Full Court arises out of the respondents’ motion for a stay, or summary disposal, of the applicants’ claims in the principal proceedings. It raises for determination a number of important, but notoriously difficult, issues arising at the intersection of international law and Australian municipal law, issues which are even further complicated by the “baroque complexities” of federal jurisdiction in this country.
The argument before us centred on questions of law; there was no dispute about the primary facts, or about the history of events, which were agreed by the parties. In essence, the present question is whether the claims made by the applicants for final relief here are not justiciable, or not enforceable, by virtue of the application of the private international law rule of judicial abstention, or restraint, in the area of foreign relations.
Sir Anthony Mason has observed (“The High Court as Gatekeeper” (2000) 24 MULR 787)):
“[J]usticiability … a substantive rather than a procedural gateway … is a controversial and difficult concept … because – like, its close relations, ‘political questions’, judicial power and judicial process (method) – so far it has not been susceptible to definition … [so] it is not possible to identify a precise relationship between these concepts, though my preference would be to equate justiciability in its primary sense with judicial power, at least in the context of the Australian Constitution.”
As Sir Anthony then noted, part of the problem is that the term “non-justiciable” is commonly used in a number of senses. In its primary sense, the term signifies that an issue is “not appropriate or fit” for judicial determination. Non-justiciability, in its administrative law sense, signifying that a matter is “not capable of, or susceptible to, judicial review”, as well as non-justiciability in the sense of there being “no jurisdiction to entertain an issue or to grant appropriate relief”, raise other considerations (at 788).
As will be seen, there is, however, much force in Geoffrey Lindell’s view:
“Much remains to be done in identifying the proper use of justiciability in limiting judicial review and the precise factors that help to explain why some issues do not lend themselves to judicial adjudication. The criteria suggested by [Sir Anthony] Mason will not be sufficient by themselves if the concept of justiciability is to be much more than a discretionary and subjective tool by which a court may abstain from deciding difficult issues in cases where it is otherwise properly seised of jurisdiction at the instance of a competent litigant.”
(The Oxford Companion to the High Court of Australia (2001) at 392.)

In an action in the High Court for declarations of the invalidity of the Timor Gap Treaty and of the Zone of Cooperation and the Consequential Provisions Acts, it was held by Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ: (a) the statutes were validly enacted under s 51(xxix) of the Constitution as laws with respect to the area of the Timor Gap, and with respect to the exploration for, and exploitation of, petroleum resources within that area; (b) even if the Treaty were void or unlawful under international law, or if Australia’s entry into, or performance of, the Treaty involved a breach of Australia’s obligations under international law, the statutes would not thereby be deprived of their character as laws with respect to external affairs; (c) absent a circuitous device (or sham) in order to attract legislative power, the propriety of the recognition by the Executive of the sovereignty of a foreign nation over foreign territory cannot be raised in Australian courts; and (d) accordingly, it was unnecessary to decide also whether the claim for a declaration that the Treaty was invalid was, as the Commonwealth contended, not justiciable.
For holding (c), above, the Full High Court cited (at 196) Chow Hung Ching v The King (1948) 77 CLR 449 at 467. A question there arose whether there was immunity from local criminal jurisdiction of Chinese nationals, members of a labour corps, subject to military discipline but not part of the armed forces of the Republic of China. Latham CJ said (at 467):
“There are certain matters in respect of which a statement by a Minister is accepted by a court as conclusive, e.g., the question as to whether a person is a foreign sovereign, or whether a foreign State exists, or whether territory belongs to a foreign State, or whether a person has been recognized as a foreign ambassador or as a member of a diplomatic staff, or whether a ship is a warship or a public vessel of a State. There is authority that the answer of the appropriate minister will be accepted by a court as conclusive on these matters, but, as already stated, there is no authority that such a statement is to be accepted by a court when the question is whether a particular individual belongs to a foreign navy or army or air force. Whether he so belongs or not is a matter of law and fact which does not depend upon any recognition of his position by the Government of any other country.”
Attorney-General (Cth) v Tse Chu-Fai (1998) 193 CLR 128
In considering the circumstances in which a court should take account of the views of the Executive on matters which are its peculiar responsibility, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ referred (at 149) to the “exceptional rule giving conclusive effect to official statements” and to those matters of fact “which the Executive is authorised to decide”, instancing inter alia, “the extent of the realm or other territory claimed by the Crown” (citing Ffrost v Stevenson (1937) 58 CLR 528 per Latham CJ at 549). Their Honours said (at 149):
“There is a fundamental question under Ch III of the Constitution of the competence of the Executive ... to determine conclusively the existence of facts by certificate where they are disputed constitutional facts. No such issue arises in this case. The proper construction of par (b)(ii) of the definition of ‘extradition country’ and of the term ‘Hong Kong’ in the 1997 Regulations is a matter of law. ...
As we have indicated, extradition from Australia requires statutory authorisation. It is the province and duty of courts exercising jurisdiction with respect to matters arising under such a statute to construe and apply it. The Executive, a representative of which is a party to a controversy arising under the 1988 Act, cannot, by a certificate furnished by another representative, ‘compel the court to an interpretation of statutory words which it believes to be false’. Nevertheless, as Scarman LJ pointed out in In re James ..., in construing the statutory provision which takes as a factum for its operation a matter pertaining to the conduct of foreign affairs, the communication of information by the Executive may be both helpful and relevant.” (References omitted)
Their Honours concluded (at 150):
“The certificate should be understood as a statement that, at its date, 9 September 1997, Australia dealt with the [People’s Republic of China] on the footing that it was responsible for the international relations of the [Hong Kong Special Administrative Region]. Given the conclusion of the above agreement with effect from 1 July 1997, it would be a reasonable inference that this state of affairs had been in existence on 14 July 1997, the date of the receipt of the extradition request with respect to the first respondent. The certificate should have been admitted on that basis. However, it remained for the court, against the factual background, including the terms of the Basic Law, to construe and apply the terms of par (b)(ii) of the definition of ‘extradition country’ and the term ‘Hong Kong’ in the 1997 Regulations.”
As I followed their arguments, the respondents here do not (and could not) suggest that the Attorney’s certificate is conclusive of any legal question, but they do contend for its relevance. In my opinion, it is both helpful and relevant on the question of the application of public policy considerations, viewed in the light of Australia’s domestic and external interests.
The “non-justiciability” and “act of state” doctrines have also been considered in decisions of this Court and of the Supreme Court of Victoria.
Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 15 FCR 274
In proceedings for judicial review of an Executive decision to nominate an area under the World Heritage Convention, it was claimed that such a listing would have the effect of empowering the Executive to proclaim the area as “identified property” for the purposes of the World Heritage Properties Conservation Act 1983 (Cth), with the possible consequence that the applicants’ mining activities in the area would become unlawful. The main ground relied on for judicial review was a claim of denial of natural justice, that the Executive did not afford the applicant an opportunity to be heard before the Executive made its decision to nominate. The Commonwealth’s defences were, first, that there had been no denial of natural justice because Peko had been granted, in effect, an opportunity to be heard; and secondly, that the claim was, in any event, not justiciable. The Full Federal Court (Bowen CJ, Sheppard and Wilcox JJ) accepted both arguments.
Bowen CJ said (at 278 – 279):
“… the whole subject-matter of the decision involved complex policy questions relating to the environment, the rights of Aborigines, mining and the impact on Australia’s economic position of allowing or not allowing mining as well as matters affecting private interests such as those of the respondents to this appeal. It appears to me that the subject-matter of the decision in conjunction with its relationship to the terms of the Convention placed the decision beyond review by the court.” (Emphasis added)
Wilcox J said (at 307):
“… although the decision had possible municipal legal significance, the decision primarily involved Australia’s international relations. Issues arising out of international relations have widely been regarded as non-justiciable.” (Emphasis added)
For the last proposition, his Honour cited:
·Observations of Lord Wilberforce in Buttes (at 937 – 938) (presumably those quoted above). However, as has been said, his Lordship’s remarks assume flexibility in this area, an assumption confirmed in Kuwait Airways.
·Remarks made by Brennan J (on the “political question” doctrine) in Gerhardy v Brown (1985) 159 CLR 70 (at 138) (in a different context – see below). However, as Dixon J observed, the real question is whether the relevant considerations are compelling.
·Ex parte Molyneaux [1986] 1 WLR 331 (at 336) where an application for judicial review of entry into an agreement between the United Kingdom and Ireland setting up an inter-governmental conference, claiming a declaration that the agreement was invalid, was dismissed by Taylor J on the grounds that the agreement “is akin to a treaty” and “concerns relations between the United Kingdom and another sovereign state and it is not the function of [the] court to inquire to [this] exercise of the prerogative …. or by way of anticipation to decide whether the method proposed of implementing the agreement is appropriate”. (Emphasis added)
As has been seen, no such challenge is propounded here.
·Chicago & Southern Air Lines Inc v Waterman Steamship Corp (1948) 333 US 103 at 111, where in refusing judicial review of a decision to issue foreign aeronautical certificates (a decision approved by the President), Jackson J said (at 111):
“[T]he very nature of executive decisions as to foreign policy is political, not judicial. Such decisions are wholly confided by our Constitution to the political departments of the government, Executive and Legislative. They are delicate, complex, and involve large elements of prophecy. They are and should be undertaken only by those directly responsible to the people whose welfare they advance or imperil. They are decisions of a kind for which the Judiciary has neither aptitude, facilities nor responsibility and which has long been held to belong in the domain of political power not subject to judicial intrusion or inquiry.” (Emphasis added)
As mentioned, the chequered history of the American political question doctrine since 1948 must now be taken into account.
Wilcox J added (at 307 – 308):
“In particular the courts have disclaimed the entitlement to adjudicate upon decisions by the Executive concerning the exercise of its treaty-making power….
The present case relates to a decision to implement a treaty. It raises the same problem for the courts as a decision to enter into a treaty. The decision to nominate Kakadu Stage II for recognition and better protection under the existing Convention was not different in kind from a decision to enter into a treaty to secure the recognition and better protection of this part of Australia.
In my opinion it should be concluded that the decision made in this case was not such as to be justiciable or to attract the obligations of natural justice.”
In this connection, Wilcox J cited Blackburn v Attorney-General [1971] 1 WLR 1037 (at 1040) and Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 229, both (like Molyneaux) unsuccessful attempts to obtain judicial review of the wisdom of government’s decision to enter into a treaty, a type of challenge not attempted here.
Sheppard J (at 280) “agree[d] generally” with Bowen CJ and Wilcox J.
Strictly speaking, their Honour’s reliance upon the “non-justiciability” doctrine was obiter. In so far as their reasoning appeared to depend upon the American “political question” doctrine, reference should be made to the explanatory observations of Gummow J in Re Ditfort;Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347, considered next.
Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347
A bankrupt applied for an order annulling the sequestration order on the ground that, in connection with his extradition from Germany to Australia, false and misleading statements had been made by the Australian Government to the German Government. The Deputy Commissioner of Taxation argued that inquiry into these allegations was “not justiciable”. Rejecting the contention, Gummow J said (at 367 – 368):
“It has recently been observed in this Court that issues arising out of international relations have been widely regarded as ‘non-justiciable’, and that, in particular, the courts have disclaimed entitlement to adjudicate upon decisions by the executive concerning the exercise of its treaty-making power: Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd ... at 307. On the other hand, in an influential judgment of the United States Supreme Court (Baker v Carr 369 US 186 at 211 (1962)), the subject was approached somewhat differently. Brennan J, in delivering the opinion of the Court, said (at 211):
‘There are sweeping statements to the effect that all questions touching foreign relations are political questions. Not only does resolution of such issues frequently turn on standards that defy judicial application, or involve the exercise of a discretion demonstrably committed to the executive or legislature; but many such questions uniquely demand single voiced statement of the Government’s views. Yet it is error to support that every case or controversy which touches foreign relations lies beyond judicial cognizance. Our cases in this field seem invariably to show a discriminating analysis of the particular question posed, in terms of the history of its management by the political branches, of its susceptibility to judicial handling in the light of its nature and posture in the specific case, and of the possible consequences of judicial action.’
The term ‘case or controversy’ was taken by Brennan J from Art III, s 2(1) of the United States Constitution. The term ‘matter’ in Ch III of the Australian Constitution was selected with the intention of ensuring that the content of federal jurisdiction in Australia was at least as wide as that given by the term ‘case or controversy’ ….” (Emphasis added)
Noting that the expression “non-justiciable”, when used in relation to international relations conducted by Australia, identifies several distinct legal rules or principles, Gummow J adverted (at 368) to the rule that, in some areas, including the extent of foreign territory, an Executive certificate will be conclusive. After cautioning against the use of English decisions on “non-justiciability” in an Australian federal constitutional context (at 368 – 369), his Honour said (at 369 – 370):
“Additional considerations appear where the issue is not one of alleged lack of constitutional power, but rather one of the propriety of the conduct by the Executive Government of the Commonwealth of relations with foreign governments within the scope of its constitutional powers in that behalf. The plaintiff will, as in the case with claims put forward on constitutional grounds, still have to possess the necessary standing to claim the relief sought. But there being no question arising under the Constitution or involving its interpretation, where are the disputed rights supplying the necessary content of a ‘matter’ within the meaning of Ch III of the Constitution? Dealings between Australia and foreign States will not normally, in the absence of legislation, create rights in or impose obligations upon Australian citizens or residents: Ingram v Commonwealth (1980) 54 ALJR 395; Simsek v Macphee (1982) 148 CLR 636. A breach of Australia’s international obligations of itself will not be a matter justiciable at the suit of a private citizen: Tasmanian Wilderness Society Inc v Fraser (1982) 153 CLR 270 at 274.
However, the taking of a step in the conduct of international relations, whilst of itself neither creating private rights nor imposing such liabilities, may be a step in a process which as a whole may have that effect. In such cases, the process may give rise to matters justiciable at the suit of an individual.” (Emphasis added)
Gummow J continued (at 370):
“The decision of the Full Court in the Peko-Wallsend case, that nevertheless the complaints made were ‘non-justiciable’, reflects another element in the constitutional concept of a ‘matter’. This is that, even if the plaintiff has standing in respect of the complaint sought to be agitated before a court exercising federal jurisdiction, nevertheless there will be no ‘matter’ if the plaintiff seeks an extension of the court’s true function into a domain that does not belong to it, namely the consideration of undertakings and obligations depending entirely on political sanctions. Such non-justiciable issues include agreements and understandings between governments within the federation (South Australia v Commonwealth (1962) 108 CLR 130 at 141) and between the Australian and foreign governments: Gerhardy v Brown (1985) 159 CLR 70 at 138-139. Those issues do not give rise to ‘matters’ in the sense necessary for the exercise of federal jurisdiction.” (Emphasis added)
In South Australia v Commonwealth (1962) 108 CLR 130, the High Court considered an agreement which had the sanction of statutes. But Dixon CJ (at 141) distinguished between, on the one hand, “the exercise of the jurisdiction reposed in the Court”, and, on the other, “an extension of the Court’s true function into a domain that does not belong to it, namely, the consideration of undertakings and obligations depending entirely on political sanctions”.
In Gerhardy v Brown, above, Brennan J considered the nature of the obligation to take a “special measure” imposed by the Racial Discrimination Convention (given effect to by the Racial Discrimination Act 1975 (Cth)) “when the circumstances so warrant”, observing (at 138):
“[W]hen the legal rights and liabilities of individuals are in issue before a municipal court and those rights and liabilities turn on the character of the Land Rights Act as a special measure, the municipal court is bound to determine for the purposes of municipal law whether it bears that character. But the character of a special measure depends in part on a political assessment that advancement of a racial group is needed to ensure that the group attains effective, genuine equality and that the measure is likely to secure the advancement needed. When the character of a measure depends on such a political assessment, a municipal court must accept the assessment made by the political branch of government which takes the measure. It is the function of a political branch to make the assessment. It is not the function of a municipal court to decide, and there are no legal criteria available to decide, whether the political assessment is correct. The court can go no further than determining whether the political branch acted reasonably in making its assessment:…” (Emphasis added)
After referring to the passage in Baker v Carr (at 217) cited above, Brennan J said (at 139):
“The court does not have to decide a political question; at most it must decide the limits within which a political assessment might reasonably be made. To determine the matter, it is necessary to apply any relevant legal criteria, for example, that the wishes of the beneficiaries for the measure are of great importance in satisfying the element of advancement. It is also necessary to find, as matters of fact, the circumstances affecting the racial group and the effect which the special measure is likely to have on those circumstances.” (Emphasis added)
In Ditfort, Gummow J proceeded (at 370):
“Another such issue would appear to arise where a foreign government sued in an Australian court exercising federal jurisdiction and in substance sought to enforce outside its territory a claim arising out of acts of that State in the exercise of powers peculiar to government: Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd …, a case which was not approached on the footing that the State court was exercising federal jurisdiction, and where the principle propounded was characterised primarily as a common law rule of private international law, exemplified by Huntington v Attrill [1893] AC 150 at 156.”
In Huntington v Attrill [1893] AC 150, the Privy Council applied (at 156) the rule that all breaches of public law punishable by pecuniary mulct or otherwise, at the instance of the State Government, or someone representing the public, are local in the sense that they are only cognisable and punishable in the country where they were committed.

Gummow J went on (at 370 – 371) to consider the American “political question” doctrine, noting that it had attracted “considerable criticism, not the least in its application to the conduct of foreign affairs”, and observing (at 371):
“An alternative path, though not always clearly marked as such in the United States decisions, has been that which emphasises the discretionary nature of equitable relief (by way of injunction and declaration). The result is that there may be a case or controversy properly before a United States federal court, but equitable relief may nonetheless be withheld:….” (Emphasis added)
Of the American “act of state” doctrine, Gummow J remarked (at 371):
“Some authority suggests the foreign act of State doctrine is best seen as a species of the same genus which also includes the ‘political question’ doctrine: International Association of Machinists v OPEC 649 F (2d) 1354 at 1358-1359 (1981); Sharon v Time Inc 599 F Supp 538 at 547-548 (1984). Other authority sees the doctrine as requiring a factual inquiry in each case as to whether a decision by the court will adversely affect the conduct of foreign relations or pass judgment on the laws, conduct or motives of a foreign State: Airline Pilots Association v Taca International Airlines SA 748 F (2d) 965 at 969-970 (1981); Ramirez de Arellano v Weinberger [745 F (2d) 1500 (1984)] … at 1534).” (Emphasis added)
Noting (at 371) that the Hernandez “act of state” defence “seemingly now has the imprimatur of the House of Lords in Buttes…”, Gummow J observed (at 371):
“It has not yet been necessary finally to decide if any such doctrine exists in this form in Australia, although support for it is apparent in the joint judgment in Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (supra) at 347-348, 349. In any event, the present case does not involve the doctrine. The applicant in these proceedings complains not of failings of the German Government, but of alleged shortcomings of the Australian Government.”
In concluding that the applicant had standing, and that the issues raised were elements of a “matter” within the Court’s jurisdiction, Gummow J remarked (at 372 – 373):
“… the conduct of relations between Australia and Germany enters into consideration by the court, because in the course of dealing with the matter in respect of which the court has jurisdiction (viz the application by the bankrupt for annulment under s 154 of the Bankruptcy Act ) it is necessary to construe the terms of ss 43 and 52 of the Bankruptcy Act which repose discretions in the court. In my judgment, the issues which the applicant agitates would have been properly taken into account by the court in the exercise of those discretions. Therefore, they are to be considered in deciding, under s 154, whether the sequestration order ought not to have been made. I note that in another context the Full Court has indicated that on its proper construction, the discretion given by statute to a decision-maker permitted him to have regard to particular treaty obligations of Australia: Gunaleela v Minister for Immigration and Ethnic Affairs (1987) 15 FCR 543 at 559; cf F A Mann, Foreign Affairs in English Courts (1986), pp 94-96.”
It appears that his Honour’s approach, which is reflected in the remarks of Sir Anthony Mason cited at the commencement of these reasons, is also consistent with the reasoning in Kuwait Airways.
Dagi v Broken Hill Proprietary Co Ltd (No. 2) [1997] 1 VR 428
On an application to strike out a statement of claim, in proceedings in the Supreme Court of Victoria in trespass and nuisance by persons claiming to have been injuriously affected by the discharge of by-products of a mine in Papua New Guinea, Byrne J held that such claims, which essentially concerned rights, whether possessory or proprietary, to or over foreign land, in the sense that those rights were the foundation or gravamen of the claims, were not justiciable. On the other hand, a claim in negligence, whose foundation was the plaintiffs’ loss of amenity or enjoyment of the land or waters, was held justiciable.
Byrne J said (at 441):
“In my opinion, [intellectual property cases such as Potter] demonstrate that, at common law, the court will apply the principle [explained in Moçambique] underlying the substantive distinction between claims which are local and those which are transitory to determine justiciability. They show that, at common law, the court will refuse to entertain a claim where it essentially concerns rights, whether possessory or proprietary, to or over foreign land, for these rights arise under the law of the place where the land is situate and can be litigated only in the courts of that place. The claim must not merely concern those rights; it must essentially concern them. This is because the rights must be the foundation or gravamen of the claim.”
Claims were also made in contract, alleging that the State of Papua New Guinea held on trust for the plaintiffs certain rights pursuant to various agreements and statutes, and that the plaintiffs were entitled to sue to enforce those rights as beneficiaries of that trust. It was held that, as these claims called into question the acts of the Government of Papua New Guinea, the act of State doctrine as articulated in Hernandez, prevented the court from inquiring into those acts, and those claims were therefore not justiciable.
This decision reinforces the importance of determining the true character, as a matter of substance, of the particular claim or claims sought to be propounded in the litigation.

I certify that the preceding one two hundred and twenty-seven (227) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.
Associate:
Dated: 3 February 2003

Counsel for the Applicants: Mr F. Douglas QC
Mr C. Ward
Mr G. Kennett

Solicitor for the Applicants: Deacons

Counsel for the First Respondent: Mr D. Bennett QC
Mr H. Burmester QC
Mr S. Lloyd
Ms R. Irwin

Solicitor for the First Respondent: Australian Government Solicitor

Counsel for the Third, Fourth and Fifth Respondents: Mr T. Bathurst QC
Mr S. Gageler SC
Dr A. Bell

Solicitor for the Third, Fourth and Fifth Respondents: Freehills

Date of Hearing: 16 and 17 May 2002

Date of Judgment: 3 February 2003

MAP “1”

MAP “2”

MAP “3”

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1224 OF 2001

BETWEEN:	PETROTIMOR COMPANHIA de PETROLEOS S.A.R.L. FIRST APPLICANT OCEANIC EXPLORATION COMPANY SECOND APPLICANT
AND:	COMMONWEALTH OF AUSTRALIA FIRST RESPONDENT JOINT AUTHORITY ESTABLISHED PURSUANT TO THE TREATY OF 11 DECEMBER 1989 BETWEEN AUSTRALIA AND INDONESIA SECOND RESPONDENT CONOCOPHILLIPS (91 – 12) PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM (91-12) PTY LIMITED) THIRD RESPONDENT CONOCOPHILLIPS JPDA PTY LIMITED (FORMERLY KNOWN AS PHILLIPS PETROLEUM COMPANY ZOC PTY LIMITED) FOURTH RESPONDENT PHILLIPS PETROLEUM TIMOR SEA PTY LIMITED FIFTH RESPONDENT
JUDGES:	BLACK CJ, BEAUMONT & HILL JJ
DATE OF ORDER:	3 FEBRUARY 2003
WHERE MADE:	SYDNEY

JUDGES:	BLACK CJ, BEAUMONT & HILL JJ
DATE:	3 FEBRUARY 2003
PLACE:	SYDNEY

Counsel for the Applicants:	Mr F. Douglas QC Mr C. Ward Mr G. Kennett
Solicitor for the Applicants:	Deacons
Counsel for the First Respondent:	Mr D. Bennett QC Mr H. Burmester QC Mr S. Lloyd Ms R. Irwin
Solicitor for the First Respondent:	Australian Government Solicitor
Counsel for the Third, Fourth and Fifth Respondents:	Mr T. Bathurst QC Mr S. Gageler SC Dr A. Bell
Solicitor for the Third, Fourth and Fifth Respondents:	Freehills
Date of Hearing:	16 and 17 May 2002
Date of Judgment:	3 February 2003