Conciliation between Australia and Timor-Leste

On Monday, Australia made its opening statement to the Conciliation Commission in a case initiated by Timor-Leste over maritime boundaries in the Timor Sea. As with all disagreements with respect to boundaries, emotions tend to run high with a lot at stake in terms of resources and national pride.

It is important to consider the merits of relevant arguments logically and not allow emotion to overwhelm the key principles in play: that of adherence to international law - including the UN Convention on the Law of the Sea (UNCLOS) - and fairness to all sides. Australia’s position advances both these principles. 

To understand why this is so, history and context is required. 

In the years after Timor-Leste independence in 2002, and most recently in 2004, Australia and Timor-Leste sought to negotiate permanent maritime boundaries, but without success. As an alternative to an unproductive stalemate, both countries agreed on the Certain Maritime Arrangements in the Timor Sea (CMATS) to enable joint development of seabed resources, in particular the Greater Sunrise field. 

A crucial element of CMATS is that the agreement placed a fifty year moratorium on negotiating definitive maritime boundaries so that joint development could get under way. It is the validity of CMATS that Timor-Leste is ultimately seeking to annul.  

There are several things to note about Australia’s determination to preserve existing treaties with Timor-Leste. 

First, UNCLOS explicitly encourages countries to negotiate such agreements in coming to a practical resolution that benefits both sides as Timor-Leste and Australia have done. We set aside our sovereignty claims in favour of joint resource development. It is a practical way of working together to overcome difficult disputes. 

Indeed, the arrangements between Timor-Leste and Australia are widely cited as international best practice in this context. CMATS represents a legally binding agreement which both sides have adhered to since it was signed in 2006. The point is that Australia takes its treaty obligations seriously and wanting to abide by these agreements is a firm expression of respect and regard for international law. 

The second issue is that of fairness. Under current arrangements, Timor-Leste receives 90 per cent of the revenues from the Joint Petroleum Development Area (JPDA) despite that area being claimed by both countries. CMATS provides for an even split between Australia and Timor-Leste from the Greater Sunrise field, despite 80 per cent of the disputed area lying in an area of exclusive Australian seabed jurisdiction. 

Australia made these concessions due to the enormous challenges faced by not just the newest country in the world when it achieved independence in 2002 but also the poorest nation in Asia on a per capita basis. 

It was Timor-Leste that initially proposed the solution embodied by CMATS, including the moratorium on maritime boundary negotiations - and it was sound reasoning. The necessary large-scale investment by petroleum firms would not have occurred without the stability guaranteed by the treaties. 

Since then, Timor Leste has made admirable gains in poverty reduction. It has done so largely on the back of oil and gas profits which account for about 95 per cent of government revenue. The profits from JPDA have allowed Timor-Leste to accumulate a Petroleum Fund in excess of $16 billion which is more than eight times its annual GDP according to World Bank figures. 

Not surprisingly, Dili has until recently been a strong supporter of the Timor Sea treaties.

Australia is participating in two arbitrations initiated by Timor-Leste and will abide by the decisions of the arbitrators – just as we have called on the Philippines and China to do the same in the South China Sea. We are also participating in the current non-binding conciliation process in good faith, and in full accordance with our legal obligations. 

We are convinced that current arrangements are the best way to manage resources in the Timor Sea well into the future. It will offer petroleum firms the certainty they need to invest further and maximise revenues for both countries. 

We are also committed to our relationship with Timor-Leste despite differences that friends occasionally have. It is why we have a $93.7 million overseas development assistance program with Timor-Leste.

Australia will have the opportunity to set out the facts and put our case to the Commission. In the period ahead, we are confident both countries can overcome their differences in the Timor Sea in a manner that is fair to the interests of both countries and in accordance with our obligations under international law.