TONY JONES, PRESENTER: The Federal Court is poised to rule on a case that could potentially open the floodgates for employment of foreign workers on offshore energy projects on lesser wages and conditions than Australians.

Swiss contractor Allseas is employing foreigners on business and tourist visas to lay piping for a major gas project on Barrow Island off the WA coast. In a decision that could have far reaching in applications for future investment in Australia's offshore resources, the court must decide if the foreigners are working illegally and questions are being raised too about whether the workers were coached to mislead immigration authorities as they entered Australia. This report from Amy Bainbridge. It was produced by Alison McClymont.

AMY BAINBRIDGE, REPORTER: It is one of the largest natural gas projects in the world. Chevron's $43 billion Gorgon project is tapping into gas reserves under the seabed 130 kilometres off the north‑west coast of WA.

KEVIN RUDD, FORMER PRIME MINISTER: Gorgon represents a massive injection into the Australian economy which means jobs, which means growth.

AMY BAINBRIDGE: But a number of those jobs have gone to foreign workers and now the Federal Court in Perth must decide if overseas workers on board three ships off WA's coast are illegally working in Australian waters. Swiss contractor Allseas has hired them to lay piping to transfer gas to a processing plant on Barrow Island.

PROFESSOR GILLIAN TRIGGS, LAW FACULTY DEAN, UNIVERSITY OF SYDNEY: The crux of the legal problem is whether workers from other countries should be working within Australian territorial waters and continental shelf areas without a visa technically the 457 visa, which would entitle them to certain wages and conditions.

AMY BAINBRIDGE: 457 visas guarantee Australian wages and conditions. The Maritime Union claims Allseas is saving 40 to 50 per cent on wages by bringing in workers on tourist and business visas.

PADDY CRUMLIN, MUA NATIONAL SECRETARY: These guys are trying to bust the laws of Australia to get some commercial advantage and in an industry that's high risk, that requires great competency, that is high value, and of which we've got a reputation as being amongst the safest and the best in the world. So, it's just a cheap shot by Chevron and Allseas really.

AMY BAINBRIDGE: The workers are from as far away as Europe and the United States. Allseas has taken the Minister for Immigration and Citizenship to court to determine whether it is workers could be detained for working illegally.

PROFESSOR GILLIAN TRIGGS: I think it is a very significant matter for the court to determine both as a technical question, is this really a resource installation, a resource matter in Australian territory and therefore should be properly subject to Australian law and working conditions, versus the need to encourage capital investment in Australia in the resources industry.

AMY BAINBRIDGE: Under the Migration Act, a person on board a vessel and in direct contact with pipelines stretching to the seabed has entered Australia's migration zone by virtue of that contact and by virtue should be on a 457 visa. In documents tendered to the Federal Court Allseas argues it shouldn't have to use 457 visas because its foreign workers are on vessels that can't be considered a permanent fixture or installation in Australia's migration zone.

(Extract from Allseas court transcript)

"The non-citizens engaged on the vessels will not at any material time come into physical contact with any pipe on a vessel while that pipe is connected to a pipeline which stretches unbroken from the vessel to the seabed."

"There will be significantly increased costs for the applicant if the key employees and the construction crew do require 457 visas."

(End of extract)

PADDY CRUMLIN: They don't pay tax. They are coming here bludging on the system and in bludging on the system, and not paying tax, they are delivering a competitive advantage to Chevron and All‑Seas. It's a corporate disgrace. If the legislation doesn't fix it, then the legislation needs to be changed.

AMY BAINBRIDGE: A travel document that was given to overseas workers before they entered Australia told them what to say to immigration.

(Extract from travel instruction given to employees)

When completing the immigration cards on the airplane, you should indicate your purpose of stay in Australia is "Business Visit". You should not indicate "Employment" or "Work" because the Business eVisitor strictly is not the correct visa to hold to select the "Employment" or "Work" box.

If questioned about the nature of his entry in Australia, you should say "Business Visit". You should NOT say "Employment" or "Work" for the same reasons above.

(End of extract)

PROFESSOR GILLIAN TRIGGS: I think it is very powerful evidence that the company was very alert to the advantages of not falling within the visa requirements, so I think a court would certainly look at that askance. They would be disturbed by that evidence.

AMY BAINBRIDGE: The Immigration Minister, Chris Bowen, wouldn't be interviewed for this story because the matter is still before the Federal Court. The ABC contacted Allseas's offices in Australia and overseas, but the company declined to comment.

The union also says one Australian worker has been paid in euros without full entitlements which may be in breach of the Fair Work Act.

PADDY CRUMLIN: The question is are they paying tax? Are they part of a sophisticated tax avoidance process? Is their money going to an offshore account. I mean it opens up so many questions. It is highly unusual.

AMY BAINBRIDGE: Allseas has told Federal Court the operation costs $1 million a day to run and an adverse decision would jeopardise the project. The Federal Court is expected to deliver its judgment next month.

Amy Bainbridge, Lateline.