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Back to "Community & Associations Newsletter - November 2016"


The Timor-Leste – Australia Maritime Boundary Dispute: A return to “in good faith” negotiations?

On 19 September 2016, the United Nations Permanent Court of Arbitration issued its decision to facilitate conciliation between Timor-Leste and Australia in regards to the two countries’ unresolved maritime boundary dispute. The decision forces both countries to undertake conciliation by five independent conciliators. Although any decision of the conciliation commission will not be binding, the process necessarily induces the two states to continue the negotiation process; a process which Timor Leste argues that it has been stymied by lack of good faith in the negotiations on the part of Australia. Australia has indicated it will accept the conciliation commission’s decision.

The dispute centres on the “Timor Gap” and oil deposits estimated to be worth $40 billion lying beneath it. For several years, the question of Timor’s maritime border with Australia has been held in abeyance without it being formally resolved. In short, Timor wants the boundary to be fixed along the median point between Australia and East Timor. Australia on the other hand, argues that the status quo should continue and relies on a set of three treaties negotiated with Timor between 2002 and 2006, which, it argues defer setting the boundary for another 50 years. The status quo allows Australia a more significant profit share in oil extraction activities, whilst a border with equidistance would place the entirety of oil reserves within Timor-Leste’s claim.

In the background of the dispute, however, is the allegation that Australia has failed to act in good faith during negotiations with Timor-Leste. Indeed, there are signs that this has contributed towards a deterioration in goodwill between the parties for some time.

In 2002, Australia legally withdrew its consent to be bound by any International Court of Justice settlement under the UN Convention on the Law of the Sea (UNCLOS) prior to concluding the 2002 Timor Sea Treaty with Timor-Leste. Nonetheless, that steps prevents Timor-Leste from launching proceedings against Australia in an independent court. Negotiation has thus become the only means by which Timor-Leste can resolve its dispute.

Negotiations had reached stalemate, but recently the Australian government has stated that it will resume. The history of the dispute so far suggests Australia will have much to do in order to restore goodwill.

In 2012, it was revealed by a former Australian intelligence officer that listening devices had been planted in the Cabinet offices of the Timor-Leste government in Dili by Australian authorities as boundary negotiations continued. The passport of the whistle-blower was confiscated as the witness attempted to give evidence regarding the allegations to the permanent court of arbitration. Timor-Leste alleged that the treaties were invalidated by Australia’s engagement in espionage during the negotiations.

As Timor-Leste prepared for arbitration in 2013, AFP and ASIO officers seized legal documents from the Canberra office of Timor-Leste’s legal representative, Bernard Collaery. That incident was referred to the International Court of Justice which ordered Australia to refrain from interfering with Timor-Leste’s legal communications. ASIO returned all documents it had seized in exchange for Timor-Leste’s withdrawal from arbitration, and the continuation of bilateral negotiations. Those bilateral negotiations reached an impasse: hence the resort to the conciliation commission.

Timor-Leste is clearly the weaker player in this dispute. Not only is it economically poor, but in negotiation terms it doesn’t have a clear BATNA (better alternative to a negotiated agreement) without a binding adjudication. Yet, despite appearing as the stronger player at the table, Australia’s position is not immovable; clearly there are real consequences for Australia if it chooses not to engage in negotiations.

First and foremost, there would be damage to Australia and Timor-Leste’s bilateral relations which have been so far amicable since Timor’s independence in 1999.

Second, is the prospect of having an impoverished nation on Australia’s doorstep creating economic and political instability (95% of Timor-Leste’s state revenue is derived from resource extraction).

Third is international legitimacy and credibility. It has been argued that Australia’s condemnation of Chinese territorial expansion in the South China Sea carries less weight, because the ongoing dispute with Timor-Leste reveals that Australia has failed to resolve its own territorial maritime disputes.

Martin Slattery, Partner
Self Rumbewas, Solicitor


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