Forwarded article by eminent lawyer.
Brendan

Professor Gillian Triggs
Director, Institute for Comparative and International Law
University of Melbourne.

On the 19 April Australia and East Timor will begin four days of negotiations upon a permanent boundary between them in the so called "Timor Gap". This new round of negotiations follows the conclusion by the Howard and Alkatiri governments of two agreements in late 2002 and early 2003 for resource exploitation of the Timor Sea. Why, so soon after these apparently successful negotiations, are Australia and East Timor back at the negotiating table?

An obvious answer lies in the imbalance in resource sharing arrangements. Under the first agreement, the Timor Sea Treaty, the oil and gas resources of the Joint Petroleum Development Area (JPDA) in the disputed area are to be exploited jointly, with 90% of the revenue going to East Timor and 10% to Australia. The second agreement, the International Unitisation Agreement (IUA), regulates exploitation of the Greater Sunrise oil and gas field, 20% of which straddles the eastern limit of the JPDA. As approximately 80% of the Greater Sunrise deposits lie outside the JPDA in the seabed under Australian sovereignty, 80% of the revenue is to go to Australia. Consistently with the Timor Sea Treaty, 90% of the revenues from the 20% of Greater Sunrise that lies within the JPDA belong to East Timor.

In addition to the revenue sharing provisions of the two agreements there are other critical differences between them. While the Timor Sea Treaty is legally binding, coming into force on 2 April 2004, the IUA is not yet in force for Australia and East Timor. More to the point, the revenue dollars to be earned from the JPDA are minor in comparison to the billions thought likely to be gained from the huge reserves of the Greater Sunrise field. The arithmetic exposes the problem: East Timor's 90% of the expected $3.2-3.8 billions in revenue from the JPDA is significantly less than Australia's 80% of the expected $8.5 billions in revenue from Greater Sunrise.

It is the disparity in prospective revenues from the JPDA and Greater Sunrise that appears to have prompted East Timor both to deny Australian sovereignty over the continental shelf of the Timor Gap and to claim 100% of the resources of Greater Sunrise. An important provision of both the Timor Sea Treaty and the IUA is that the agreements are interim only, pending the final delimitation of a boundary between the Parties. East Timor is therefore free to insist that negotiations should commence to settle a permanent boundary. In lead up to these negotiations, East Timor has made it clear that it rejects the boundaries of the JPDA, claiming a far larger area of the seabed encompassing Greater Sunrise to the East and Laminaria to the West and challenging the validity of boundaries agreed in 1971and 2 between Australia and Indonesia.

Complicating these legal differences are the undeniable facts that East Timor is an impoverished nation emerging from civil war and illegal annexation. The UN peacekeeping force is due to leave East Timor in June 2005 and civil governance and legal institutions are yet to be fully developed. Revenues from both the Bayu-Undan and Greater Sunrise fields would be of immense value to East Timor as it faces the problems of independence for a population of fewer than a million almost totally dependent upon foreign aid.

These ethical and legal issues have now combined to create a fog of myths within which negotiations upon a permanent seabed boundary in the Timor Sea are to begin.

One of the most persuasive, but misleading, myths lies in the apparently rational argument that the seabed between Australia and East Timor should be based on a median or equidistant line. State practice- a powerful indicator of customary international law- supports East Timor's view that overwhelmingly, opposite States sharing a continental shelf, delimit their seabeds using a median line, albeit adjusted to take account of other factors such as islands. By contrast, international law does not require a median line where states do not have a continental shelf in common. As a matter of geology, Australia is on a continental shelf; East Timor is not. Australia has consistently maintained its sovereignty over the continental shelf up to the Timor Trough a major geological feature 3,000 meters deep and about 40 nautical miles from East Timor. Troughs are common in the Pacific Basin and the Okinawa Trough between China and Japan similarly impedes negotiations for a final boundary. So too does the Aruba Gap between Venezuela and Columbia and the Dominican Republic. State practice in such disputed areas has been both to ignore the geological feature and to agree jointly to manage exploitation and share the revenues.

Of mythical proportions is the idea that, were Australia to agree to a median line delimitation, East Timor would gain the greater part of the oil and gas resources. In fact, the richest of the known resources lie to the East and West of the present JPDA and lie within Australian sovereignty under the 1971 and 1972 Seabed Agreements with Indonesia.

Another myth is that the 1972 Seabed Agreement settling the boundary between Indonesia and Australia is invalid at international law. Not only was this boundary negotiated in good faith but also it was entirely consistent with a decision of the International Court of Justice just 3 years earlier in 1969. In the North Sea Continental Shelf Cases the Court found that states have sovereign rights over their continental shelf as the "natural prolongation of the land territory" and that "equidistance' was not a principle of international law. Rather, a continental shelf was to be delineated on the basis of "equitable" principles. These ideas are echoed by the 1982 UN Convention on the Law of the Sea which provides that delimitation of the continental shelf is to be based on international law to achieve an equitable solution.

It is also a myth that East Timor can claim exclusive exploitation rights to all of Greater Sunrise without affecting Indonesia's interests. Indonesian seabed rights are necessarily prejudiced because of the proximity of the Greater Sunrise reserve to the 1972 Seabed Boundary. In the improbable event that Australia were to accede to East Timor's demands by moving the eastern and western limits of the JPDA to include Greater Sunrise and Laminaria, full sovereignty over these resources would also undermine the 1972 boundaries. To do so requires the inclusion and consent of Indonesia; consent that is unlikely to be forthcoming.

Yet another misleading argument is that the coordinates upon which the 1972 Seabed Boundary was agreed, and upon which the JPDA was subsequently negotiated, are invalid. To the contrary, the equidistant lines are consistent with international law, having been drawn to take account of Indonesia's archipelagic status. A challenge to these lines is without legal foundation.

It is argued that East Timor is not bound by treaties made prior to its full statehood, whether by Portugal as the Administering Authority, by Indonesia or by the United Nations peacekeeping authority. Like many myths this is a half truth. International practice on decolonisation has been to adopt a "clean slate' approach under which a new state may decide in its national interests whether to be bound by prior treaties. The concept of a "clean slate" does not apply to boundary treaties establishing frontiers or maritime limits. The 1972 Seabed Boundary and the coordinates established by it are of over 30 years standing, were agreed in good faith and adopt recognised principles of international law.

It is also a myth that disputes over seabed boundaries should be resolved by an international judicial tribunal. Australia amended the terms of its acceptance of the compulsory jurisdiction of the International Court of Justice and the International Tribunal on the Law of the Sea to exclude disputes concerning delimitation of maritime zones. While the timing of the amendment 8 weeks before the independence of East Timor is questionable on ethical grounds, international law permits a state to decide for itself whether it will submit its disputes to compulsory resolution by a court. Australian policy is that boundaries with neighbouring states should be negotiated rather than imposed by a court. Indeed, Australia has an enviable record of negotiating creative boundary agreements with Papua New Guinea, New Caledonia and Indonesia. It is also legally relevant that the 1982 UN Convention on the Law of the Sea specifically encourages states to seek negotiated resolutions to boundary issues. The Timor Sea Treaty and the IUA are entirely within the spirit and letter of recognised international law in enabling the joint development of resources that are subject to conflicting claims.

A final myth concerns the nature of a seabed boundary. Sovereign rights over the continental shelf do not convey territorial sovereignty; only the right of exclusive development of seabed resources. It is possible for neighbouring states to agree upon a different regime to govern the superjacent waters of the Exclusive Economic Zone or territorial sea. This has been achieved in a 1997 Treaty between Indonesia and Australia and could well be employed in discussions with East Timor.

With the Senate's approval under the IUA Enablement Act (Cth) 2004, Australia is now able to ratify the IUA. Prime Minister Alkatiri has by contrast repeatedly stated that East Timor's Parliament will not do so. It was strategically unwise of Australia to have ratified the Timor Sea Treaty without first ensuring that the IUA was also in force. The two agreements should have been more effectively linked. As matters stand, East Timor has the right to a 90% share in revenues from the JPDA but can, at the same time, block investment in the development of the Greater Sunrise deposits, to the significant disadvantage of both states. In short, East Timor and Australia will benefit from ratification of the IUA financially and through the opportunities to work fruitfully together on joint resource management.

While Australia has abundant natural resources, international tribunals have found that it is not the job of international law to "refashion nature". Nor does equity necessarily require equality. From the point of view of East Timor these are hard laws. It is will be for Australia and East Timor to resolve their differences on a permanent seabed boundary both in good faith and upon a clear understanding of the international rule of law.