An Indonesian fisherman who had his boat destroyed by the Australian government in 2008 has been awarded $44,000 in compensation by the Federal Court in Darwin.

Lawyers for the fisherman say it is a test case for other boat owners, captains and crew who have had their boats seized and destroyed.

Sahring, 43, lives in a village in West Timor with his family and has been a fisherman all of his working life.

The Royal Australian Navy patrol vessel HMAS Broome apprehended his boat while it was in Indonesia's exclusive economic zone, before burning it at sea.

Indonesia's exclusive economic zone includes Australia's continental shelf.

In Sahring's statement to the court he said the Navy mistakenly believed he was fishing for trepang, also known as sea cucumber, on the Australian seabed.

He said his boat, the Ekta Sakti, was strictly for catching fish.

"At the time I did not have any understanding that the vessel was in Indonesian waters but over the Australian seabed," his statement said.

"I was fishing in an area that has been commonly used by fishermen from my village for as long as I can remember."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 2 minutes 9 seconds 2 m 9 s Sahring has been awarded $44,000 in compensation.

The Federal Court awarded Sahring $25,000 for the loss of his boat, $15,000 for the loss of his fishing income and $4,000 for unlawful detention.

In making the orders, Justice John Mansfield said Sahring had not committed an offence under the Fisheries Management Act and there were no reasonable grounds for the boat's seizure.

The judge has not yet provided reasons for his decision, but said these would be available by early next week.

Sahring's lawyer Greg Phelps said a precedent had been set.

"It's established now that fishing by the Indonesian fisherman in Indonesian waters under their licence is not an offence, unless they're proven to be violating our rights on the seabed," he said.

"Many of the fisherman are struggling because they've lost their fishing craft. I know that Sahring's children have been out of school for four years.

"I know that when this decision and the compensation reaches him that he'll be able to put his children back to school and he'll be able to provide for his family again."