Protesters have gathered outside Australia's embassy in Dili demanding an end to the dispute with Timor-Leste over undersea oil and gas fields, according to the SMH.
The dispute is about who owns the highly valued oil and gas reserves under the sea between these two neighbours. It goes back to the 2002 Timor Sea Treaty (TST) and the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS). Timor-Leste maintains that the second Treaty was invalid because Australia had bugged the cabinet room in Dili during the negotiations in 2004, and so managed to get the wording to favour Australia. Anthony Bergin's piece from 2013, has a good summary of the history.
Each word in these Treaties is very important to both countries because they form the basis on which highly valuable offshore oil and gas resources in the Greater Sunrise area will be shared. Bergin's view is that, although Timor-Leste had the option of cancelling the Treaty, it decided to try to secure a decision that it had never really existed, thus allowing the possibility for permanently resolving the maritime boundaries. These have never been fully settled, and theTreaties do not resolve it.
According to treaty law, under Article 49 of the Vienna Convention on the Law of Treaties (to which both Australia and Timor-Leste are party):
a state that is induced to conclude a treaty by the fraudulent conduct of a negotiating state may invoke the fraud to invalidate its consent to be bound by the treaty.
Spying to gain advantage in treaty negotiations may be defined as deceitful behaviour. What is not certain is whether this deceitful behaviour actually induced Timor-Leste to enter the CMATS treaty. If Timor is able to prove deceitful inducement, that may be a way out. Australia might also have the dubious distinction of being the first known state to have a treaty declared invalid on account of fraud, according to Professor Don Anton in ASIL.
This is just the latest lump of mud to be slung across the fence between these two neighbours. Back in 2011, New Matilda published accusations based on information from Wikileaks, that Australia had deliberately incited unrest in Timor-Leste, for its own ends. As they say, good fences make good neighbours, but these two have not yet agreed where the fence should be built.
Since it is Australia's position that it is not valid for the International Court of Justice (ICJ) to decide on such disputes or for them to be settled through the dispute settlement provisions of the United Nations Law of the Sea Convention (LOSC), Timor's only option was to invoke the TST dispute settlement provisions to challenge its own consent to the CMATS treaty.
Timor brought a dispute to the ICJ at The Hague in January 2014. The ICJ is the principal judicial organ of the UN, established to adjudicate on disputes between States. In March 2014, the ICJ ordered that certain documents apparently taken from Timor-Leste by Australian security should be kept 'under seal'. It seems that on 3 December 2013 Australian security had seized documents and data from the offices of Timor's legal representative.
Could there be smoke for Timor's accusation of espionage during Treaty negotiations?
In September 2014, it was agreed to suspend the ICJ proceedings and instead to proceed with settlement negotiations. In March 2015, Australia agreed to return the documents in question and did just that in May 2015. In turn, Timor-Leste asked the ICJ to discontinue the case, on 11 June 2015. There's a good time-line of events on Lexology.
But, that as not the end of it! On September 24th 2015, the Timor government submitted another dispute to an arbitration Tribunal. This issue is not going to be over this year and certainly not before February 2017.The CMATS Treaty can be terminated if a development plan for the Greater Sunrise area has not been approved within six years of the entry into force of the Treaty. That deadline passed in 2013 and Timor could have terminated CMATS. CMATS can also be terminated if production from Greater Sunrise has not commenced within ten years of its entry into force. Since CMATS was brought into force on Friday 23 February 2007, that 10 years won't be up until February 2017. That is just one important date in this story!
The duration of CMATS is until 2057, and because it piggy backs onto TST, it also extends the TST until 2057. Significantly, it also establishes a moratorium on claims to sovereign rights and jurisdiction and maritime boundaries for the period of the treaty and excuses the parties from any obligation to negotiate in good faith over permanent boundaries until 2057. These arrangements do not sit comfortably with Timor, so they are trying to get out!
If they secured a ruling that CMATS was never valid, what would Timor do then? For one, it would be possible to re-negotiate resource exploitation arrangements and possibly with a different partner.
Commentators say that everything hinges on settling the unresolved boundary dispute. Last November Reuters also reported that Timor is unhappy with the split of taxes it gets from current production. This part of the dispute relates to the pipeline which goes to the refining plant in Darwin. The refining operations are where the real money and economic development comes from.
So, Timor wants the border to be half way mark between it and Australia, but Australia wants it to follow the line of its Continental Shelf. In 2008 Australia got a a ruling from the UN on the size of its continental shelf from the CLCS, (the UN's Commission on the Limits of the Continental Shelf, which administers the LOSC). This ruling was made on the basis of geological evidence that Australia's continental shelf extends farther than previously defined. The implications being that any border between the two is a lot closer to Timor's mainland and therefore gives Australia greater proportion of the shared resources under the sea. For Timor this line is an uncomfortable fit.
Opening the border dispute might result in an uncomfortable result for all. There are fears that it may also prompt Indonesia to enter the conversation, and possibly even gain ownership of the oil fields in question. Its a risky move for a number of reasons. Invalidating CMATS would not provide an incentive to develop Greater Sunrise area, in my view, it’s more likely to result in the development languishing in the ‘too hard’ basket, or there might just be a lack of interest.
As I said in my previous post, some commentators are projecting that thirty years from now there will be a huge amount of oil available – but no buyers!
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The full text of CMATS can be found on austlii.
