Section 736 of the Merchant Shipping Act 1894 provides that the legislature of a British possession may by Act regulate the coasting trade of the possession, subject to certain conditions which may be summarized as follows:

1. the Act must contain a clause suspending its operation until the Royal pleasure thereon has been signified;
2. it must treat all British ships in the same manner as ships of the possession;
3. rights granted by treaty to foreign ships before the passing of the Merchant Shipping (Colonial) Act 1869 shall be enjoyed by those ships, anything in the Act notwithstanding.

Covering clause 5 of the Commonwealth of Australia Constitution Act provides that 'the laws of the Commonwealth shall be in force on all British ships, the Queen's ships of war excepted, whose first port of clearance and whose port of destination are in the Commonwealth'.

Section 51 of the Constitution empowers the Federal Parliament to make laws with respect to 'trade and commerce with other countries, and among the States'.

Section 98 provides that 'the power of the Parliament to make laws with respect to trade and commerce extends to navigation and shipping'.

The Parliament of the Commonwealth has not passed any laws by virtue of the authority conferred by section 736 of the Merchant Shipping Act. The only legislation expressly referring to the coasting trade is contained in the Customs Act 1901, Part X, sections 175-191179.

Whatever may be the case in other colonies, it seems clear that in the Commonwealth of Australia section 736 of the Merchant Shipping Act is entirely superseded by the wide and express powers of legislation given to the Federal Parliament. The Federal Parliament has power to legislate with regard to 'navigation and shipping', and its laws are in force on all British ships (other than ships of war) trading solely between ports of the Commonwealth-notwithstanding that during their voyage they may go beyond the territorial limits of the Commonwealth. The powers of the Federal Parliament are of course limited by the principle that it cannot pass laws inconsistent with Imperial Acts extending to the Commonwealth, and it cannot give its laws any further extraterritorial effect than is expressly provided by covering clause 5; but subject to those limitations it has full power to make laws with respect to 'navigation and shipping', and that power is clearly not limited by section 736 of the Merchant Shipping Act.

[Vol. 1, p. 134]