I don't have a problem with hunting whales, but is Japan doing some international tresspassing at all? I think if Japan is killing whales in Aussie waters, then I think that might be a legit problem. If the Aussies put their whale sanctuary in international waters, the animal huggers need to dry up.
I think this quote answers your question about where the sanctuary is. If the Japanese were violating territorial waters or the EEZ, the Aussies would say so. This is some kind of unilateral declaration of a sanctuary in international waters with no legal support.