INTERNATIONAL LAW PRINCIPLES AND THE PROTECTION OF PRIVATE RIGHTS UNDER THE TRANSITIONAL ARRANGEMENTS OF THE MARITIME BOUNDARIES TREATY BETWEEN AUSTRALIA AND TIMOR-LESTE.

• Author: Murphy, Amanda

I INTRODUCTION

On 30 August 2019, the Treaty between Australia and Timor-Leste establishing their Maritime Boundaries in the Timor Sea ('Maritime Boundaries Treaty') came into force, (1) permanently delimiting the maritime boundaries between the two States and extinguishing the Joint Petroleum Development Area ('JPDA') created by the Timor Sea Treaty. (2) The Maritime Boundaries Treaty was borne out of the first ever compulsory conciliation procedure undertaken pursuant to the United Nations Convention on the Law of the Sea (' UNCLOS')? This is an historic event in itself, which reinforced the international rule of law and confirmed the UNCLOS compulsory conciliation procedure as a means by which States may peacefully resolve maritime boundary disputes. However, petroleum activities were already being undertaken in the Timor Sea and the rights of companies undertaking petroleum activities were protected by the obligation of Australia and Timor-Leste to provide 'conditions equivalent' if the Timor Sea Treatywzs to be replaced. Consequently, the Maritime Boundaries Treaty also included transitional mechanisms to address the transfer of those commercial interests from the JPDA to the new regime under the Maritime Boundaries Treaty. The article considers the Maritime Boundaries Treaty's requirement for 'conditions equivalent' to be provided to commercial operators, as well as other transitional provisions, (4) by reference to the primary underlying international law principles, namely the doctrine of acquired rights, good faith and pacta sunt servanda. The deployment of these principles through the requirement of 'conditions equivalent' has proven to be a successful component of the JPDA regime, and so serves as a good precedent for other zones of joint petroleum development where there are disputed boundaries.

II THE PATH TO COMPULSORY CONCILIATION UNDER UNCLOS

1. Historical background

   The UNCLOS compulsory conciliation procedure and resultant entry into the Maritime Boundaries Treaty by Australia and Timor-Leste is an historic achievement by both nations that has reaffirmed the rule of international law and the peaceful resolution of boundary disputes by States. The achievement is particularly significant when considered in light of the historical background to the negotiation of this treaty and the economic and political interests at stake for both countries. Before considering the transitional arrangements agreed and implemented under the Maritime Boundaries Treaty, it is necessary to first briefly canvass this historical background to provide the context for these arrangements, particularly the obligation to provide 'conditions equivalent'. (5)

   Geographically, the Timor Sea spans a distance of approximately 300 nautical miles between the coasts of Timor-Leste to the north and Australia to the south. (6) The seabed which lies beneath the Timor Sea has been proven to be highly prospective for oil and gas. The first deposit was discovered in the Timor Sea during the 1970s, coinciding with a period of significant political upheaval for Timor-Leste. The Troubadour gas field was first identified in 1974 upon successful drilling of the Troubadour-1 well by Woodside, followed by the Sunrise-1 well in 1975. (8) In November of the same year, Timor-Leste declared its independence from Portugal, ending over two centuries of Portuguese colonial rule. (9) However, its independence was short lived as Indonesian armed forces moved to occupy Timor-Leste shortly thereafter. (10) Indonesia administered Timor-Leste as a province for the next 25 years until the Timor-Leste people voted in favour of independence in a UN supervised referendum on 30 August 1999." The result of the referendum was met with widespread violence so on 20 September 1999 the International Force for East Timor (INTERFET), led by Australia, was deployed to de-escalate the violence. (12) On 25 October 1999, the UN Security Council established the UN Transitional Administration in East Timor ('UNTAET'), which temporarily administered Timor-Leste until independence was finally achieved on 20 May 2002." During this period the neighbourly relationship between Australia and Timor-Leste grew and developed, (14) however, Timor-Leste/Australia bilateral relations would soon become strained. (15)

   In the period leading up to Timor-Leste's vote for independence, the Sunrise and Troubadour fields remained unappraised until they attracted renewed attention in the period between 1997 and 1999. (16) The mid-1990s also saw other oil and gas fields in the Timor Sea being explored and identified, including the Elang-Kakatua oil field, the Bayu-Undan oil and gas field, the Laminaria gas field, the Corallina gas field and the Buffalo oil and gas field. The Kitan gas field was discovered later in 2008. Given that these fields were located in an area where maritime boundaries had not been delimited, the exploitation of these resources depended upon joint development arrangements pending border delimitation. The following section details the arrangements in the Timor Sea that provided for joint exploitation of some of these resources until delimitation of permanent borders under the Maritime Boundaries Treaty.

2. International arrangements concerning the Timor Sea

   The Timor Sea has been the subject of numerous treaties, initially between Australia and Indonesia, and then Australia and Timor-Leste once it gained independence in 2002. The first of these was the 1972 Seabed Treaty between Australia and Indonesia (' 1972 Seabed Treaty) which delimited the boundaries as between Australia and Indonesia, (1) but left a gap with respect to the boundary in the area adjacent to the Timor-Leste coast that became known as the 'Timor Gap'. At the time of entering into the 1972 Seabed Treaty, it was anticipated that theTimor Gap would be delimited pursuant to an agreement between Australia and Portugal, although formal negotiations between those two States never commenced. (18) After Indonesia became the ruling power of Timor-Leste, formal treaty negotiations between Australia and Indonesia commenced in February 1979 to 'close' the Timor Gap. It took almost a decade for the States to agree the Timor Gap Treaty? (19) which did not delimit a maritime boundary but instead established a zone of co-operation ('ZOCA') in the Timor Gap. The Timor Gap Treaty was designed to be an interim measure to allow joint development of petroleum resources pending delimitation of permanent boundaries. (20) The 'coffin-shaped' (21) area the subject of the Timor Gap Treaty was divided into three zones, named Area A, Area B and Area C. (22) Area B was located closest to Australia and Area C was closest to Indonesia, and both were subject to the laws and regulations of the closest coastal State (with an obligation to provide 10% of revenues derived from that area to the other State). Area A was the central, largest and most economic area. It was subject to joint control by both States, managed by a Joint Authority and overseen by a Ministerial Council consisting of an equal number of representatives from each party.

   On 19 October 1999, Indonesia renounced its claim to the territory of Timor-Leste, resulting in the Timor Gap Treaty being no longer in force. (23) As an interim measure, Australia and UNTAET (as Timor-Leste's administrator) made an exchange of notes on 10 February 2000, by which it was agreed that the terms of the Timor Gap Treaty would continue to apply until further arrangements were made. Negotiations continued and on 5 July 2001 Australia and UNTAET entered into the Timor Sea Arrangement (24) which introduced the concept of the JPDA. The JPDA covered what was previously known as Area A under the Timor Gap Treaty, (25) and provided for a 90:10 split of petroleum revenue in favour of Timor-Leste.

   On 20 May 2002, the Timor Sea Treaty between Australia and Timor-Leste (' Timor Sea Treaty') entered into force. (26) The Timor Sea Treaty formally established the JPDA and a framework for the exploration and exploitation of petroleum resources within the JPDA, and generally reflected the concepts agreed in the Timor Sea Arrangement. The Timor Sea Treaty was intended to be in effect until a permanent seabed delimitation between Australia and Timor-Leste was agreed, or for 30 years, whichever was shorter. (2) " In other words, the Timor Sea Treaty was a provisional arrangement between Australia and Timor-Leste that allowed for joint exploitation of resources (and consequent financial benefits) whilst the States sought to agree on a permanent boundary. It is important to note that the Timor Sea Treaty did not settle the maritime boundary claims as between Timor-Leste and Australia.

   Upon achieving its hard fought independence in 2002, Timor-Leste was keen to settle its maritime boundaries as a priority. (28) Indeed, it seems that Australia's refusal to enter into negotiations was a source of increasing frustration for the Timorese. (25) Australia and Timor-Leste began negotiations to delimit these boundaries in late 2003. (30) However, rather than reach agreement in relation to their maritime boundaries, the parties ended up entering into another treaty on 23 February 2007, known as Certain Maritime Arrangements in the Timor Sea ('CMATS'). (31) CMATS amended certain aspects of the Timor Sea Treaty, most notably introducing a moratorium on Australia or Timor-Leste asserting, pursuing or furthering by any means, claims of sovereignty over the disputed maritime boundary in the Timor Sea for an agreed period. CMA TS replaced the duration clause of the Timor Sea Treaty, extending the joint development arrangements to 50 years from CMATS" entry into force or five years after the date on which exploitation ceased.

   II STRAINED RELATIONS: ARBITRATION AND CONCILIATION PROCEEDINGS

1. The Timor Sea arbitration

   Bilateral relations between Australia and Timor-Leste came under intense strain when Timor-Leste...