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The New Timor Sea Treaty (TST)


Regarding Australia's Declarations of 21 March 2002 pursuant to:

(i) Article 36(2) of the Statute of the International Court of Justice;


(ii) Article 298(1)(a) of the 1982 United Nations Convention on the Law of the Sea.

Dean Bialek 
Lecturer Law School 
University of Melbourne 
Ph: + 61 3 8344 1119 
E-mail: d.bialek@law.unimelb.edu.au


1. Introduction

This opinion concerns the recent withdrawal by Australia of consent to the compulsory International Court of Justice (ICJ) and UNCLOS dispute settlement mechanisms with respect to disputes pertaining to the delimitation of maritime boundaries. On the face of it, this appears to prevent East Timor, upon becoming a signatory and acceding to the UN Charter, the Statute of the ICJ and UNCLOS, from forcing Australia to become party to a binding arbitration declaring the boundaries between them.

The dispute under consideration is, of course, that arising out of the maritime boundaries in the Timor Gap. The Gap refers to the maritime area left undelimited by the 1971 and 1972 seabed agreements between Australia and Indonesia due to the refusal of Portugal - the then colonial power in East Timor - to participate in negotiations. After the Indonesian invasion of East Timor in 1975 and the lengthy negotiations which followed, the exploration and production of hydrocarbon resources in the Timor Gap eventually fell under the arrangements agreed between Australia and Indonesia in the 1989 Timor Gap Treaty. This was despite protestations in the international community that Indonesian annexation of East Timor in 1975 was illegal and contrary to East Timor's right to self-determination. On 30 August 1999, a UN-sponsored referendum1 found the East Timorese population massively in favour of independence, and following harrowing scenes of violence and the installation of an international peace-keeping force led by Australia (INTERFET), Indonesia succumbed to international pressure and renounced its claims to East Timorese territory.2 Pursuant to United Nations Security Council Resolution 1272, Indonesian jurisdiction over East Timor ended on 25 October 1999, whereupon UNTAET (the United Nations Transitional Administration in East Timor) became the administering authority in preparation for full independence.3

Since this time, UNTAET has negotiated on behalf of the East Timorese people to continue with the arrangements of the 1989 Timor Gap Treaty by temporarily assuming all rights and obligations previously exercised by Indonesia.4 On 5 July 2001, the Transitional Administration, including representatives of both UNTAET and the East Timor Constituent Assembly, agreed upon a proposed 'Timor Sea Arrangement' (TSA) in a Memorandum of Understanding (MoU) with the Australian Government.5

The proposed Timor Sea Arrangement (TSA), signed on 5 July 2001, was merely an agreement "suitable for adoption" and was therefore ineffective in international law until signed as a treaty between Australia and the new government of East Timor after its formal independence. When the new Timor Sea Treaty (TST)6 enters into force,7 the Timor Gap Treaty will no longer have any effect, because under the international law of succession to treaties, the new East Timor government is entitled to a "clean slate" with respect to its international relations.8

The TST establishes a Joint Petroleum Development Area (JPDA) that is, in geographical terms, a carbon copy of Area A of the previous Zone of Cooperation under the 1989 Timor Gap Treaty between Australia and Indonesia.9 The TST does, however, significantly alter the distribution of the proceeds of production in the JPDA as compared with the previous arrangements. Under the TST, production will be split on a 90-10 basis in favour of East Timor10 as compared with the 50-50 split under the previous Zone of Co-operation Area A arrangements.

The new TST is still "without prejudice" to the future and final delimitation of the continental shelf between Australia and East Timor. This is consistent with international law, which requires that provisional arrangements of a practical nature, pending a final delimitation, are to be "without prejudice".11 Hence, even if this treaty enters into force, the parties are still able to redesign the delimitation of the seabed between them. Article 22 of the TST provides that the treaty will only remain in force "until there is a permanent delimitation", or "for 30 years from the date of its entry into force, whichever is sooner". This therefore leaves open the possibility for a permanent delimitation either by mutual agreement or by consensual reference to an independent process of arbitration.

Australia's declarations for the exclusion of the compulsory jurisdiction of the ICJ and UNCLOS procedures with respect to maritime boundary disputes have the effect, prima facie, of removing the opportunity for an independent East Timor to unilaterally initiate dispute settlement processes with which Australia is forced to engage. This reflects 'Australia's strong view…that any maritime boundary dispute is best settled by negotiation rather than litigation'.12 Conversely, East Timor's Chief Minister, Mari Alkatiri, has indicated that his Government will probably seek international mediation over the seabed boundary.13

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2. From the TSA to independence day

Since signing the Memorandum of Understanding with Australia in July 2001, there have been a number of political maneuverings that have put in doubt the adoption of the TST as a treaty between Australia and East Timor upon the formalisation of East Timor's independence. The importance of these developments should not have been underestimated - upon independence on May 20, the agreement or 'Exchange of Notes' between Australia and UNTAET to continue with the terms of the Timor Gap Treaty expired, potentially leaving a legal vacuum that would have placed in doubt the legal position of project developers.

At a seminar in Dili on March 23-24 (co-sponsored by PetroTimor14  and the Office of soon-to-be East Timorese President, Xanana Gusmao), international legal advice was presented concerning the potential for an enlarged East Timorese claim to the resources of the Timor Sea. The advice suggests that East Timor's potential claims under international law are significantly beyond those implied by the JPDA boundaries.15 In fact, the advice suggests that a current claim to an East Timorese EEZ under UNCLOS and relevant principles of international law might include not only the Bayu-Undan gas deposits (currently within the designated JPDA), but also the Laminaria/Corallina oil fields (currently in operation to the west of the proposed JPDA) and the whole of the Greater Sunrise gas deposit (straddling the eastern lateral boundary of the JPDA).

Of central importance to negotiations was the Greater Sunrise deposit which straddles the eastern lateral boundary of the JPDA. This huge deposit is estimated to yield in excess of $A35 billion over the project's life and more than A$8 billion in taxes for the Australian and East Timorese government.16 What is at issue is the division of these proceeds.

Article 9 of the TST provides for the unitisation of straddling deposits, and Annex E to the TST was specifically negotiated for the division of production from a unitized Greater Sunrise. Under the TST,

East Timor and Australia agree to unitise the Sunrise and Troubadour deposits (collectively known as 'Greater Sunrise') on the basis that 20.1% of Greater Sunrise lies within the JPDA. Production from the Greater Sunrise shall be distributed on the basis that 20% is attributed to the JPDA and 79.9% is attributed to Australia.17

On this basis, East Timor would only be entitled to 18% of the production to flow from the Greater Sunrise deposits. An expanded East Timorese claim to Greater Sunrise would be based on a lateral extension of an East Timorese EEZ claim beyond the current eastern boundary of the JPDA and largely depends on a reconsideration of the validity of what was the eastern boundary of the Timor Gap Treaty Zone of Cooperation, Area A (ZOCA). In essence, East Timor would argue that the 1989 Timor Gap Treaty failed to adequately take into account the claims that an independent East Timor might have had over this region. In doing so, East Timor could turn to principles associated with the rights and interests of a third party or State whose interests are affected by the terms of a bilateral agreement. East Timor might argue that in a small sea area surrounded by a number of coastal states, 'bilateral arrangements may encroach upon the rights and interests of third states, probably due to technical deficiencies in the delimitation or demarcation'. Such deficiencies might include the fact that the eastern boundary of the JPDA (or Zone of Cooperation A under the Timor Gap Treaty) was drawn giving "full effect" to the small Indonesian island of Leti that lies to the east of the Timorese mainland, an approach which may have a disproportionate and inequitable effect upon the delimitation of maritime boundaries. According to Lowe et al

[m]odern international law…does not permit small islands to have a disproportionate effect on maritime boundaries. The law requires that small islands that would disproportionately affect a maritime delimitation be given only a proportional effect - perhaps one-half or three-quarters effect, depending on the size of the island and its relationship to the coastline. ….

42. If half of three-quarters effect were given to the island of Leti, the eastern lateral line dividing East Timor's EEZ from the EEZs of Australia and Indonesia would move significantly to the east. This would have the practical effect of placing most of all of the Greater Sunrise field within East Timorese jurisdiction…19

The danger for East Timor in accepting the TST as a treaty is that, while the agreement is "without prejudice" to the parties' positions on a permanent delimitation,20 it is improbable that a tribunal adjudicating upon the Australia-East Timor boundary would seek to alter in East Timor's favour an arrangement that has been negotiated and signed between the parties. According to Lowe et al, it is much more likely that a tribunal would regard the [TST] and its "without prejudice" clause as limiting the area in need of delimitation to that enclosed by the JPDA.21

It appears that temporarily, at least, these considerations had a destabilising effect on negotiations. While Senior Foreign Minister for the East Timorese Transitional Administration, Jose Ramos-Horta, had earlier stated that in accordance with good faith it was 'incumbent upon the two sides to formalize [the TSA] into a treaty soon after independence' ,22 a statement by Chief Minister Mari Alkatiri on 12 April 2002 suggested that East Timor would not ratify Annex E of the proposed TSA.23 Australian Foreign Minister, Alexander Downer, also confirmed that towards the end of negotiations, the unitisation of the Greater Sunrise gas field was the major outstanding issue between the parties.24 At the conclusion of negotiations, however, East Timor succumbed to Australian pressure by signing a Treaty which reproduced the TSA's proposed terms of unitisation. It appears of little consequence that a further Memorandum of Understanding between the parties requires them to "work expeditiously and in good faith to conclude an international unitisation agreement for…Greater Sunrise by 31 December 2002".25 While East Timorese Foreign Minister, Jose Ramos Horta, expects Australia to 'eventually concede a bigger share of Greater Sunrise revenue', it is extremely unlikely that Australia will back down from a position now entrenched in a treaty signed between the parties.

One viable option for readjustment of the JPDA boundaries, and therefore the unitisation formula, is reference of the dispute as to maritime boundaries to an international dispute settlement procedure. Undermining such an approach was the decision of the Australian government, in late March 2002, to withdraw its consent to the ICJ and UNCLOS compulsory dispute settlement mechanisms with respect to maritime delimitation disputes. On this issue, Alkatiri was quoted as saying that "the withdrawal of Australia from the international court in The Hague is in our opinion a sign of a lack of confidence in us and an unfriendly act".26 The implications of the Australian declarations are considered below.

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3. The Problem of East Timor's Legal Status in International Law

As noted above, East Timor has been administered by the United Nations (through UNTAET) since September 1999 when the province voted in favour of independence in a U.N.-sponsored referendum. The mandate of the administration included the authority to make laws, as well as the authority to sign treaties on behalf of the East Timorese people.27 However, the exercise and application of this authority extended only for the period of UNTAET's mandate, which ended at the inauguration of East Timor's first president on 20 May 2002.28

Any attempt by East Timor to rely on rights and duties it might assume under conventional international law depends on the ratification by East Timor of the relevant international instruments. More specifically, the resort by East Timor to the dispute settlement provisions of the ICJ requires that it has signed and ratified the UN Charter.29 The Court is open to States which are party to the Statute of the International Court of Justice,30 and all members of the United Nations are ipso facto parties to the Statute.31 Under Article 4 of the Charter, membership of the United Nations is open to all 'peace-loving' States willing to accept the obligations of the Charter, and is effected by a decision of the General Assembly upon the recommendation of the Security Council.

Similarly, while many of the principles of UNCLOS are now regarded as reflecting customary international law, and therefore binding on all states, the compulsory dispute settlement system is of a procedural nature and is therefore only applicable amongst those states that are parties to the Convention. Until such time as East Timor has completed the executive act of ratifying the UNCLOS, it cannot exercise rights under its provisions, including the initiation of proceedings under the UNCLOS dispute settlement mechanisms. Thereafter, East Timor would also need to nominate ITLOS and/or the ICJ as its choices of compulsory dispute settlement under the Convention pursuant to Article 287 UNCLOS, as discussed in Part 4 below.

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3. The Jurisdiction of the International Court of Justice

The ICJ's powers to decide disputes are defined in its Statute, known as its "contentious jurisdiction", and extends only to disputes between states.32

The Statute of the ICJ makes provision for the voluntary acceptance by a State of the compulsory jurisdiction of the ICJ in all matters relating to international law.33 Such declarations may be made 'unconditionally or on condition of reciprocity on the part of several or certain states, or for a certain time'.34 Australia made such a declaration on the basis of reciprocity in 1975.35

On 25 March 2002, Australia announced its revocation of the earlier declaration, and replaced it with a declaration that excluded from the realm of its general consent "any dispute concerning or relating to the delimitation of maritime zones, including the territorial sea, the EEZ and the continental shelf, or arising out of, concerning or relating to the exploitation of any disputed area of or adjacent to any such maritime zone pending its delimitation..."36 This declaration was stated to be "effective immediately".

East Timor could only seek to initiate proceedings against Australia in the ICJ once it had signed the UN Charter, and as noted earlier, made a declaration under Article 36(2) of the Court's Statute accepting its compulsory jurisdiction. This would, in effect, create a reciprocal bilateral agreement between Australia and East Timor recognizing the ICJ's jurisdiction to hear disputes that arise between the two States. This would, in turn, call into question the validity and legal status of Australia's declaration of 21 March 2002.

Prima facie, Australia's declaration prevents the unilateral initiation of proceedings by East Timor against Australia since the Timor Gap dispute is one "relating to the delimitation of maritime zones", and hence falls within the scope of reservations applicable to Australia's acceptance of the ICJ's compulsory jurisdiction. Despite this, it would still be open for East Timor to challenge the validity of Australia's revocation of its 1975 declaration. According to Article 36(6) of the ICJ Statute, any dispute as to the competence of the Court is to be settled by a decision of the court itself.

3.1 Reasonable notice

Withdrawals of consent to the Court's compulsory jurisdiction have been interpreted broadly in the past by the ICJ.37 However, obiter in the Nicaragua Case appears to suggest that prior declarations which contain no termination clause are not terminable instantly but only on 'reasonable notice".38 On this issue, the Court said:

The right of immediate termination of declarations of indefinite duration is far from established. It appears from the requirements of good faith that they should be treated, by analogy, according to the law of treaties, which requires a reasonable time for withdrawal from or termination of treaties that contain no provision regarding the duration of their validity.39

The court in Nicaragua did not specify what "a reasonable time for withdrawal" would be, but indicated that the three days which had elapsed between the attempt by the U.S. to terminate its declaration and Nicaragua's application to the Court would not be enough. In any event, the ICJ's reliance on the law of treaties in suggesting that "reasonable notice of termination" is required casts considerable doubt over the potential for East Timor to successfully challenge the validity of Australia's termination. A reciprocal agreement between Australia and East Timor regarding the mutual acceptance of the Court's jurisdiction arises only upon East Timor making a declaration under Article 36(2) of the Statute. Such declaration can only be made upon East Timor's ratification of the UN Charter. At this time, the Court would most likely uphold the validity of an Australian declaration made at least two months prior to an East Timorese declaration.

Of perhaps greater significance is the fact that Australia's 1975 declaration was expressed to apply "until such time as notice may be given to withdraw this declaration". While it is unclear whether the Court would interpret the expression "until such time as notice may be given" as tantamount to "silence" on the issue of notice of termination so that the 1975 declaration could be regarded as of "indefinite duration", Brownlie suggests that the power to terminate a declaration immediately upon notice appears to be compatible with the Statute of the Court, despite the fact that it considerably 'weakens the system of compulsory jurisdiction'.40 The validity of declarations that expressly include the right to terminate upon notice, with immediate effect, was confirmed by the ICJ in the 1957 Right of Passage (Preliminary Objections) case.41

3.2 Consideration of the doctrines of 'abuse of rights' and principles of 'good faith' and equity

East Timor might argue that Australia owes it duties independent of the international law relating to maritime disputes, so that Australia's reservation with respect to maritime delimitation amounted to: 

  • An abuse of rights 
  • a breach of "good faith", recognized as a principle in international law, to the extent that trust and confidence are inherent in international co-operation (per 1974 Nuclear Test cases and Art.2(2) UN Charter), and 
  • a breach of principles of equity to the extent that justice and fairness are required in international law to produce equitable results in international law (Continental Shelf cases)

As considered below, the doctrine of 'abuse of right' finds reflection in UNCLOS Art.300 so that Parties are obliged to exercise and fulfil UNCLOS rights and obligations in good faith and 'in a manner which would not constitute an abuse of right'. The general status of this doctrine in international law is far from clear and as yet, does not appear to have been directly applied by an international tribunal in the context of a dispute between States.42 Brownlie concludes that 'the doctrine is a useful agent in the progressive development of the law, but that, as a general principle, it does not exist in positive law'.43 Without such positive construction, East Timor would find it difficult to convince the court that Australia's exercise of a right under Article 36(2) of the Statute of the ICJ amounted to the exercise of a power for a reason 'contrary to the purpose for which international law contemplates the power will be used'.44

A further legal obstacle to such a claim is the fact that declarations made under Article 36(2) are only deemed to be in force as between parties to the Statute,45 and are voluntary in nature. Recent references to the 'abuse of rights' doctrine by international courts and tribunals appear to have contemplated its operation as between states party to a convention, based on the doctrine's close relationship with the general obligation of 'good faith', enshrined in the Vienna Convention on the Law of Treaties.46 Such a relationship between Australia and East Timor did not exist at the time of Australia's declaration.

Hence, any challenge by East Timor to the validity of Australia's reservation on the basis of 'abuse of rights' in a hearing on jurisdiction would need to be based on an argument that the abuse of rights doctrine and related notions of "good faith" reflects a principle of international law that prevents Australia from making reservations to its acceptance of the ICJ's compulsory jurisdiction at a time when a dispute with East Timor was on hand. Setting aside the difficult question of the status of such principles, East Timor would need to show that Australia's subjective intention in declaring its reservations was solely to undermine East Timor's legal position in Timor Sea maritime boundary negotiations ie. that Australia's rights were exercised only in order to cause damage to East Timor, without any associated benefit to Australia. Ilyomade explains this situation by reference to a useful analogy:

because no initial wrongful act is involved in a complaint of abuse of right, intention is a necessary element of the claim, distinguishing the situation of an unfortunate consequence of a legitimate exercise of right. By way of example, every state has the right to attach what value it thinks appropriate to its currency. The exercise of this particular power or right by a state to devalue its currency may cause some losses in other countries, but it does not amount to an abuse of right unless the devaluation has been with the intention of bringing about the loss to the other state.47 [emphasis added]

The question then arises as to proof of intent: can it be shown by East Timor that Australia's reservation was solely intended to damage East Timor's right to have its maritime boundaries considered by the International Court of Justice. East Timor might ask the court to draw negative inferences from the subject and timing of Australia's reservation, however, as noted by Triggs, 'an abuse of right is hard to demonstrate and is a politically risky strategy for one nation to adopt in its relations with another'.48 This is because such accusations of bad faith touch 'on the honour of a state',49 and 'the legal presumption would be in favour of the regularity and necessity of governmental acts'50. Hence, an intention of bad faith on behalf of a sovereign state 'should not be lightly imputed'.51 Moreover, Australia's declaration may be seen to have been motivated by various considerations, most notably a desire that all its outstanding maritime boundary disputes be settled by negotiation rather than by an unpredictable international court or tribunal. In such circumstances, the ascertainment of Australia's actual motive becomes a 'very delicate judicial exercise' indeed.52

3.3 Conclusions on ICJ Jurisdiction

The doctrine of 'abuse of rights' and the related principles of 'good faith' and 'equity' overlap considerably and can only be recognized, with any degree of certainty, as falling within the category of 'general principles of law recognized by civilized law' within the meaning of Art.38(1)(c) of the Statute of the ICJ. Despite this, 'the decisions of some international tribunals and the practice of a number of states reveal that the principle of abuse of right has become accepted as part of international law and that states may, and often do, invoke the principle as the basis of an international claim. According to counsel for Belgium in the Barcelona Traction case, what to look for is

the exercise by a state of a right in such a manner or in such circumstances as to make it appear that such exercise has been for that state an indirect means of failing to meet an international obligation incumbent upon it or has been effected for a purpose not corresponding to that for which the right is recognized.54

Unfortunately for East Timor, the voluntary nature of declarations made under Article 36(2) render them subject exclusively to the consent of the state concerned, and can be revoked at any time. Such revocations are an exercise of the discretion of the state. Australia's 1975 declaration contemplated and included a right of revocation, but the question does arise as to whether such discretion was exercised for a purpose that would amount to an 'abuse of right' or bad faith under international law. Upon making its declaration, the Australian government denied that its reservation was linked to the Timor Sea issue, and contended that it had been considering this course of action "for quite some time".55 Proving that Australia's sole motive was the removal of Timor Sea delimitation from the jurisdiction of the ICJ is a significant hurdle as 'the distinction between negligent or reckless conduct and acts done with improper motive very frequently becomes blurred'.56 Moreover, there does not appear to be any precedent to support a finding of international responsibility arising out of a claim expressly founded on an abuse of right.

Despite Australia's apparent success in alleviating a resort by East Timor to a delimitation of the Timor Gap by the ICJ, limitations on its acceptance of the court's jurisdiction may come back to haunt it. While such declarations 'provide a state with protection in the sense that they stop certain claims from being brought against it, they also have a disabling effect because they may prevent the reserving state from taking disputes to the Court in which it could appear as a plaintiff'.57 Australia still has a number of 'significant outstanding maritime boundary delimitations which remain to be resolved',58 including the continental shelf boundary with New Zealand in the Tasman Sea, and boundaries with France, New Zealand and Norway adjacent to its Antarctic territories. In the event of failed negotiations, Australia's recent declaration would prevent it from unilaterally initiating ICJ procedures against those countries for the delimitation of those international boundaries.59

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4. UNCLOS Dispute Settlement Procedures

When a dispute arises between parties to UNCLOS, the parties are under an obligation to 'proceed expeditiously to an exchange of views' as to the means of settlement to be adopted (Article 283(1)). Parties are first to resort to any means that are agreed between them, including the possibility of conciliation as provided for in Article 284, but where they cannot agree upon a means of settlement, or if they choose a means which proves unsuccessful, Section 2 of Part XV, entitled 'Compulsory Procedures Entailing Binding Decisions' comes into play.

Part XV, Section 2 of UNCLOS establishes a system of compulsory dispute settlement that applies to disputes concerning the interpretation or application of UNCLOS. This would appear to include the application of Articles 76, 83 and UNCLOS EEZ provisions, which underpin the current dispute between East Timor and Australia. Under UNCLOS Art.287(1), upon signing ratifying or acceding to UNCLOS, or at any time thereafter, a state is free to choose one or more of the following means for the settlement of disputes by written declaration:

(a) The International Tribunal for the Law Of the Sea (ITLOS); 
(b) The International Court of Justice (ICJ); 
(c) An arbitral tribunal constituted in accordance with Annex VII; 
(d) A special arbitral tribunal constituted in accordance with annex VIII for one or more of the categories of disputes specified therein.

To clarify, under Article 287(4), if the parties to a dispute have accepted the same procedure, it may be submitted only to that procedure unless the parties otherwise agree. Where the parties have not accepted the same procedure, or where one or more parties to the dispute has not selected a procedure at all, the dispute can only be submitted to arbitration in accordance with Annex VII (see Art.287(3) and (5)).60

4.1 Australia's Declaration

Australia's declaration of 21 March 2002 selects both the ITLOS and the ICJ, without declaring a preference for either. Presumably, East Timor might choose either ITLOS or the ICJ, or both under Article 287. In the context of the current dispute between Australia and East Timor, however, it would appear that ITLOS is the more favourable approach taking into account the fact that Australia has now withdrawn its consent to the compulsory jurisdiction of the ICJ with respect to maritime disputes. Furthermore, selection of ITLOS would activate ITLOS as the common selection between the parties: Article 287(4) would then require the dispute to be submitted only to ITLOS.

The second part of Australia's 21 March 2002 declaration with respect to UNCLOS procedures is made pursuant to Article 298(1)(a) UNCLOS, which provides that in the case of, inter alia, disputes relating to sea boundary delimitations, States may, by written declaration, exclude any or all of the procedures of UNCLOS Part XV, Section 2. Such declarations of exclusions are a very common facet of declarations made pursuant to UNCLOS dispute settlement provisions. The effect of such an exclusion is to prevent states from being subjected to the binding decision of a dispute settlement forum without its prior consent. The possible exclusions are limited, however, by subject matter, to disputes related to the traditionally sensitive issues of territorial sovereignty and military activities. This prevents the watering down of the compulsory nature of the UNCLOS system.

The effect of Part 2, section 3 is therefore to reduce the scope of the UNCLOS compulsory procedures, however, it is important to note that the Convention, to a certain extent, qualifies these limitations:

(i) the ability of a State to rely on a declaration under Art.298 is not a matter to be decided by the declarant state unilaterally ie. UNCLOS Art.298(4) makes it clear that this is a matter for the court or tribunal whose jurisdiction is in question. This would be either ITLOS or the ICJ, depending on East Timor's eventual choice of forum under Art. 287 (see above). According to J.G. Merrills, the purpose of this caveat is to discourage the abuse of Article 298 which would certainly follow if they were subject to self-serving interpretation.61 Australia's declaration makes it clear that it still respects, generally, the UNCLOS procedures by nominating ITLOS and the ICJ (without specifying a preference) as its choice of dispute settlement fora under Article 287(1) UNCLOS. Therefore, upon ratification of UNCLOS, it would still be open to East Timor to apply to ITLOS or the ICJ for a determination as to whether Australia's declarations are valid to exclude the jurisdiction of the respective fora.

(ii) Where Art. 298 applies, its effect is to prevent the unilateral reference of a dispute to UNCLOS procedures.62 But Article 299 permits the parties to use these procedures even where the category of dispute has been excluded by an earlier declaration. So, even in matters where dispute settlement is restricted, there is still the possibility, by agreement of the parties, to find a dispute settlement procedure which would enable the parties to resolve their dispute amicably and peacefully. This is obviously an unlikely scenario taking into account the political considerations that preceded the March 21 declarations.

4.2 Conciliation under UNCLOS

Presuming that the ICJ or ITLOS upholds the validity of Australia's declaration to exclude the application of the UNCLOS compulsory dispute settlement mechanism to the current dispute, or, on the other hand, if East Timor accepts the validity of Australia's declarations of exclusion, the final resort for East Timor is the compulsory reference of a dispute to which an exclusionary declaration applies to the Annex V Section 2 process of conciliation.

Under Art. 298, a State making a declaration to exclude maritime boundary disputes from compulsory UNCLOS procedures can only do so subject to the requirement that where no agreement is reached in negotiations between the parties, that declarant must accept submission of the dispute to conciliation under Annex V, section 2 at the request of any party to the dispute. Therefore, if Australia is to remain party to UNCLOS, it is not possible for it to exclude the resort by East Timor to this conciliation procedure. According to UNCLOS Annex V, Section 2, Art.11:

(1) Any party to a dispute which, in accordance with Part XV, section 3, may be submitted to conciliation under this section, may institute the proceedings by written notification addressed to the other party… 
(2) Any party to the dispute, notified under paragraph 1, shall be obliged to submit to such proceedings

Further, if Australia failed to reply or to submit to conciliation, this would not constitute a bar to the proceedings (Annex V, Art.12). Any disagreement as to the competence (or jurisdiction) of the commission shall be decided by the Commission itself (Annex V, Art.13).

A commission is established by each party appointing two members, who in turn selects the fifth member as the chairperson. To facilitate this process, each country is encouraged to nominate four conciliators to a list compiled by the United Nations Secretary-General. Under Annex V, Article 6, the functions of a conciliation commission are to:

  • hear the parties, 
  • examine their claims and objections, and 
  • make proposals to the parties with a view to reaching an amicable settlement.

Although conciliation is not arbitral in the sense that its outcomes or decisions are not binding on the parties, both legal and factual issues would be examined and would form part of the commission's report of conclusions (in the case that the dispute is not settled during the conciliation process). Annex V, Article 7 requires that the conclusions must also include 'such recommendations as the commission may deem appropriate for an amicable settlement'.

Art.298(1)(a)(ii) provides that after the conciliation commission has presented its report, stating the reasons upon which it is based, the parties are under an obligation to negotiate an agreement on the basis of that report. If such negotiations fail, the parties shall, by mutual consent, submit the question to one of the procedures provided for in section 2, Art.297. Nonetheless, Annex V, Art. 8 provides for the termination of conciliation proceedings upon the rejection of the commission's recommendations by one of the parties to the dispute; another potential "dead end" for East Timor.

There is also a question as to whether East Timor, upon ratification of UNCLOS, can rely on provisions of UNCLOS as against Australia, relating to issues that arose prior to East Timor becoming an UNCLOS Party. Presumably, however, this dispute would continue to exist post-East Timorese ratification, meaning that the requirements of Art.298 would apply to the dispute in existence at that time in the future. This is still the case despite East Timor's decision to sign the TST, since the agreement expressly recognizes that

[n]othing contained in this Treaty and no acts taking place while this Arrangement is in force shall be interpreted as prejudicing or affecting East Timor's or Australia's position on or rights relating to a seabed delimitation or their respective seabed entitlements.63

This provision, in effect, preserves an independent East Timor's right to initiate dispute settlement proceedings against Australia with respect to seabed delimitation of the Timor Sea.

4.3 The scope of Australia's declarations

Of course, Australia's declaration pursuant to Article 297 only applies to exclude compulsory dispute settlement where the dispute 'concerns the interpretation or application of articles 15, 74, and 83 relating to sea boundary delimitations…' It may, therefore, be possible for East Timor to initiate a dispute under UNCLOS by reference to the interpretation or application of non-delimitation UNCLOS provisions. For example, it may be possible for East Timor to argue that Australia's declarations with respect to UNCLOS dispute settlement procedures constituted an "abuse of rights" recognized under the Convention, contrary to Article 300 UNCLOS. This might be based on the assumption that consent to the compulsory mechanisms was withdrawn at a time when Australia was surely aware of the existence of a dispute between itself and East Timor arising directly out of delimitation concerns in the Timor Gap.

For example, when coastal states with overlapping continental shelf claims cannot reach an agreement within a reasonable period of time, Art.83(2) UNCLOS provides that the States concerned 'shall resort to the procedures provided for in Part XV'.[emphasis added] The Australian declaration prevents East Timor's potential resort to the compulsory arbitral procedures under Part XV, however, that part appears to contemplate this scenario by providing for compulsory referral to conciliation (as considered above).

One further obstacle to such a claim is the fact that East Timor was not a party to UNCLOS at the time of withdrawal, and therefore Australia might claim that it does not currently owe East Timor the "good faith" obligation contained in Article 300. There is considerable doubt as to whether East Timor's eventual ratification of UNCLOS would have retrospective effect so as to enable a court or tribunal to examine the nature of Australia's declaration and whether or not it constituted a breach of the obligation of "good faith" or an "abuse of rights" as against a State that was not yet a party to the Convention.

Conversely, Australia might argue in response that initiating dispute settlement procedures over the Timor Gap issue is similarly in "bad faith" in that the East Timorese have already signed a treaty for the joint development of the area under dispute. This argument, however, lacks any solid basis in treaty law, since nothing in the TST prevents East Timor from referring the maritime delimitation dispute under UNCLOS procedures.

4.4 Conclusions on UNCLOS

It would appear that generally, Australia's declaration is sound under the UNCLOS provisions and East Timor is hampered in establishing a claim for compulsory dispute settlement on the basis of non-delimitation UNCLOS provisions by virtue of its non-Party status as at the time when Australia's declaration was made.

Upon East Timorese ratification of UNCLOS, however, Australia could not escape reference by East Timor of the dispute to ITLOS for a determination of jurisdiction ie. a challenge to the validity of Australia's declaration. Failing this, Australia cannot escape the compulsory reference of the dispute to a Conciliation Commission under Part XV, Section 3. The outcome of such a commission, its report and recommendations could forseeably form the basis of a future agreement between the parties, including a final delimitation of the Timor Gap "on the basis of international law…in order to achieve an equitable solution", as required by Article 83(1) UNCLOS.

Australia's decision to withdraw its consent to the compulsory dispute settlement procedures of UNCLOS with respect to maritime disputes is an unfortunate development, and a considerable departure from the "good faith" that was apparently underpinning the negotiation process. Despite protestations to the contrary, it appears likely that the Australian declarations were in direct response to developments in Dili that perhaps increased the likelihood of a reference by the East Timorese to the ICJ or ITLOS or some other form of compulsory arbitration under UNCLOS.

It is important to note that the declaration of a withdrawal from the compulsory mechanism under UNCLOS operates on a reciprocal basis ie. 'a State which makes a declaration excluding disputes of a particular type from the procedures of Part XV, Section 2 secures an immunity to the extent permitted by this provision, but also loses the right to bring a claim arising out of such a dispute against other States (Article 298(3)). This opens up the possibility for East Timor to proceed - as unfortunate such a set of circumstances might be - on a unilateral basis by declaring an EEZ out to 200 n.m. as provided for in Article 56 UNCLOS, or alternatively, on a bilateral basis by initiating negotiations with Indonesia seeking the renegotiation of its east and west lateral maritime boundaries. While this could not result in the encroachment of East Timorese jurisdiction into currently held Australian waters and seabeds, and despite the apparent contravention of Article 83 and customary principles, this may be the type of pro-active behaviour that is necessary to secure Australia's re-engagement with UNCLOS dispute settlement procedures. As provided by Art.298(3), declarations can be made or withdrawn at any time.

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5. General Conclusions

Regardless of considerations as to the validity of Australia's declarations, acceptance by East Timor of the terms for joint development under the proposed Timor Sea Arrangement do not preclude the parallel pursuit of a final delimitation of the Timor Gap. Whilst providing for the ongoing development of untapped reserves at Bayu Undan and Greater Sunrise, the Timor Sea Arrangements are without prejudice to the respective positions of Australia and East Timor on delimitation and do not prevent an independent East Timor, after ratification of the UN Charter, the Statute of the ICJ and UNCLOS, from referring the dispute to the ICJ and/or ITLOS for a consideration of the validity of Australia's withdrawals. While the chances of success appear slim, taking the dispute to the international stage is a statement to the community of nations as to its dissatisfaction with Australia's course of action. The power of political pressure should not be underestimated.

Notes to Come

1 UN Security Council Resolution 1246 (1999), UN Doc. S/RES/1246 (1999) established the United Nations Mission in East Timor (UNAMET) 'to organize and conduct a popular consultation…on the basis of a direct, secret and universal ballot, in order to ascertain whether the East Timorese people accept the proposed constitutional framework providing for a special autonomy for East Timor within the unitary Republic of Indonesia or reject the proposed special autonomy for East Timor, leading to East Timor's separation from Indonesia'.

2 The Decision of the Indonesian People's Consultative Assembly on 19 October 1999 concerning East Timor.

3 UN Doc. S/RES/1272 (1999), 25 October 1999, 39 ILM 240.

4 Exchange of Notes Constituting an Agreement between the Government of Australia and the United Nations Transitional Administration in East Timor (UNTAET) concerning the Continued Operation of the Treaty between Australia and the Republic of Indonesia on the Zone of Cooperation in an Area between the Indonesian Province of East Timor and Northern Australia of 11 December 1989, 19 February 2000, [2000] ATS No.9 (with effect from 25 October 1999).

5 Memorandum of Understanding of Timor Sea Arrangement, Dili, 5 July 2001, available at www.austlii.edu.au/au/other/dfat/special/MOUTSA.html.

6 Timor Sea Treaty between the Government of East Timor and the Government of Australia, 20 May 2002, not yet in force, available for download at http://www.austlii.edu.au/au/other/dfat/special/etimor/index.html. ('Timor Sea Treaty')

7 Timor Sea Treaty, article 25. The treaty will enter into force when Australia and East Timor notify each other in writing that 'their respective requirements for entry into force" of the treaty have been complied with.

8 See generally M.C.R. Craven, 'The Problem of State Succession and the Identity of States under International Law' European Journal of International Law 9 (1998), 142, at 148-152.

9 Timor Sea Treaty, Annex A.

10 Timor Sea Treaty, Article 4(a).

11 UNCLOS, Article 83(3).

12 'Changes to International Dispute Resolution', Joint Media Release of the Attorney-General Daryl Williams and the Minister for Foreign Affairs Alexander Downer, 25 March, 2002.

13 Tom Hyland, 'Brace for fight over oil, Australia told', Sydney Morning Herald, 21 May 2002.

14 To complicate matters further, on 21 August 2001, Oceanic Exploration (Delaware) and PetroTimor Companhia de Petroleos (Portugal) filed a claim in the Federal Court of Australia for compensation for expropriation of a Concession Agreement granted by Portugal in January 1974. The claims are against Australia, the Joint Authority and companies established by Phillips Petroleum (Phillips Companies) to operate in the Zone of Cooperation (ZOC). The claim alleges that Australia's negotiation and signing of the Timor Gap Treaty amounts to an expropriation of alien property in breach of customary international law and an acquisition of a property right other than on just terms in breach of s.51(xxxi) of the Australian Constitution. See generally Gillian Triggs, 'Proposed Timor Sea Arrangements between Australia and the East Timor Transitional Administration', Journal of Energy & Natural Resources Law, Vol.20, No.1, 2002, 40 at 47-48.

15 The advice is available for download at <http://www.gat.com/Timor_Site/lglop.html>

16 Australian Associated Press (AAP), 'Shell maintains floating LNG the way to go', AAP Newsfeed, 1 May, 2002. (copy on file with author)

17 Timor Sea Treaty, Annex E, para (a).

18 Masahiro Miyoshi, 'International Maritime Boundaries and Joint Development: A Quest for a Multilateral Approach', Chapter 21 in G.H. Blake et al. (eds.), Boundaries and Energy: Problems and Prospects, (Kluwer Law International, 1998), p.455.

19 V. Lowe et al., Opinion in the Matter of East Timor's Maritime Boundaries, 11 April 2002, available for download at http://www.gat.com/Timor_Site/lglop.html, paras. 40-42.

20 Timor Sea Treaty, Article 2(b)

21 V. Lowe et al., Opinion in the Matter of East Timor's Maritime Boundaries, 11 April 2002, available for download at http://www.gat.com/Timor_Site/lglop.html, para. 47.

22 Interview with Jose Ramos Horta, ETTA Senior Minister for Foreign Affairs, Radio Australia, 28 March 2002. (on file with author)

23 See Australian Associated Press (AAP), 'Doubt on Timor Gap Treaty', The Sunday Times (Australia), 12 April 2002 (on file with author), and Hamish McDonald, 'Canberra's unfriendly act over gas field irks Timorese', Sydney Morning Herald, 13 April 2002. (copy on file with author)

24 Iain McDonald, 'Australia, East Timor to Meet on Unresolved Gap Treaty', Dow Jones Newswires, 7 May 2002 (copy on file with author).

25 Memorandum of Understanding between the Government of Australia and the Government of the Democratic Republic of East Timor concerning an International Unitisation Agreement for the Greater Sunrise field, 20 May 2002, paragraph 1.

26 Australian Associated Press (AAP), 'Doubt on Timor Gap Treaty', The Sunday Times (Australia), 12 April 2002. (on file with author)

27 See UN Doc. S/RES/1272 (1999), 25 October 1999, 39 ILM 240, para 1, which provides that UNTAET's mandate includes the 'exercise of all legislative and executive authority…' Also, paragraph 35 of the Report of the Secretary-General UN Doc. S/1999/1024 recommends that the United Nations conclude such international agreements with States and international organizations as may be necessary for the carrying out of the functions of UNTAET in East Timor.

28 SC Res. 1392 (2002), UN Doc. S/RES/1392 (2002), 31 January 2002, para.2.

29 The East Timorese parliament, holding its first sitting just hours after independence, ratified an application to join the United Nations. See 'Parliament ratifies East Timor's application for UN membership', Agence France Presse, 20 May 2002.

30 Statute of the International Court of Justice, Article 35, para.1.

31 UN Charter, Art. 92, para.1.

32 Statute of the International Court of Justice, Article 34(1).

33 Statute of the International Court of Justice, Article 36(2).

34 Statute of the International Court of Justice, Article 36(3).

35 Government of Australia, Declaration under paragraph 2 of Article 36 of the Statute of the International Court of Justice, 17 March 1975, available at <http://www.icj-cij.org/icjwww/ibasicdocuments/ibasictext/ibasicdeclarations.htm>.

36 Government of Australia, Declaration under paragraph 2 of Article 36 of the Statute of the International Court of Justice, 21 March 2002.(copy on file with author)

37 See, for example, Fisheries Jurisdiction (Spain v. Canada) [1998] ICJ Reports X, where the Court upheld the validity of a Canadian reservation made in a declaration 10 months prior to the filing of an application to the Court by Spain. The Canadian reservation was with respect to "disputes arising out of or concerning conservation or management measures taken by Canada with respect to vessels fishing in the NAFO Regulatory Area…and the enforcement of such measures". See International Court of Justice, Press Communiqué 98/41, 4 December 1998, available at http://www.icj-cij.org/icjwww/idocket/iec/iecframe.htm.

38 Nicaragua case (Jurisdiction phase), [1984] ICJ Reports 392.

39 [1984] ICJ Reports 392, at 420.

40 I. Brownlie, Principles of Public International Law, (4th edition, Oxford University Press, Oxford: 1990), 728.

41 Case Concerning Right of Passage Over Indian Territory (Portugal v India)(Preliminary Objections), [1957] ICJ Reports 125 at 143-144.

42 G. Triggs, 'Japanese Scientific Whaling: An Abuse of Right or Optimum Utilisation', Asia Pacific Journal of Environmental Law, Vol. 5, Issue 1, 33 at 39.

43 I. Brownlie, Principles of Public International Law, (4th edition, Oxford University Press, Oxford: 1990), 446.

44 G.D.S. Taylor, 'The Content of the Rule Against Abuse of Rights in International Law', (1972-73) 46 British Yearbook of International Law 322 at 352.

45 Statute of the International Court of Justice, Article 36(3).

46 (Vienna) (1969) 8 ILM 679, in force 27 January 1980, Article 26. See, for example, the Gabcikovo-Nagymaros Dam Case (Hungary v Slovakia) (1998) 37 ILM 162, where the International Court of Justice required of Slovakia and Hungary 'a mutual willingness to discuss in good faith actual and potential environmental risks' (at para. 142), and United States - Import Prohibition of Certain Shrimp and Shrimp Products, Report of the WTO Appellate Body, WT/DS58/AB/R, 12 October 1998, where the WTO Appellate Body regards the "abuse of right" as prohibiting 'the abusive exercise of a state's rights and enjoins that whenever the assertion of a right "impinges on the field covered by [a] treaty obligation, it must be exercised bona fide, that is to say, reasonably." An abusive exercise by a Member of its own treaty right thus results in a breach of the treaty rights of the other Members and, as well, a violation of the treaty obligation of the Member so acting'. (at para. 158).

47 B.O. Iluyomade, 'The Scope and Content of a Complaint of Abuse of Right in International Law', 16 Harvard Journal of International Law, 47 (1975), at 77-78.

48 G. Triggs, 'Japanese Scientific Whaling: An Abuse of Right or Optimum Utilisation', Asia Pacific Journal of Environmental Law, Vol. 5, Issue 1, 33 at 39.

49 B.O. Iluyomade, 'The Scope and Content of a Complaint of Abuse of Right in International Law', 16 Harvard Journal of International Law, 47 (1975), at 79.


51 Tacna-Arica Question (Chile v Peru), 2 U.N.R.I.A.A. 930 (1925) as cited in B.O. Iluyomade, 'The Scope and Content of a Complaint of Abuse of Right in International Law', 16 Harvard Journal of International Law, 47 (1975), at 79.

52 B.O. Iluyomade, 'The Scope and Content of a Complaint of Abuse of Right in International Law', 16 Harvard Journal of International Law, 47 (1975), at 91.

53 B.O. Iluyomade, 'The Scope and Content of a Complaint of Abuse of Right in International Law', 16 Harvard Journal of International Law, 47 (1975), at 72.

54 F.A. Mann, as Counsel for the Belgian Government in the Barcelona Traction Case [1970] ICJ Reports 1, Speech of 26 June 1969.

55 Hamish McDonald, 'Timor gas billions all at sea', Sydney Morning Herald, 27 March 2002.

56 B.O. Iluyomade, 'The Scope and Content of a Complaint of Abuse of Right in International Law', 16 Harvard Journal of International Law, 47 (1975), at 91.

57 J.G. Merrills, International Dispute Settlement (3rd edition)(Cambridge University Press, Cambridge: 1998), 126. See for example, the Norwegian Loans Case (France v Norway), Judgment, [1957] ICJ Reports, at 9, where Norway was entitled to invoke the reservation in the French declaration so as to remove the case from the Court's competence.

58 Sam Bateman and Donald Rothwell, 'Rethinking Australia's Legal and Policy Options', in Donald Rothwell and Martin Tsamenyi (eds.), The Maritime Dimensions of Independent East Timor, Wollongong Papers on Maritime Policy No.8, (Centre for Maritime Policy, University of Wollongong, Wollongong: 2000), 171 at 174.

59 By declaration of 22 September 1977, New Zealand recognized as compulsory the jurisdiction of the ICJ pursuant to Article 36(2) of the Statute, without reservation with respect to continental shelf delimitation. The declaration is available at <http://www.icj-cij.org/icjwww/ibasicdocuments/ibasictext/ibasicdeclarations.htm>.

60 J.G. Merrills, International Dispute Settlement (3rd edition)(Cambridge University Press, Cambridge: 1998), 173-174

61 J.G. Merrills, International Dispute Settlement (3rd edition)(Cambridge University Press: 1998), 178.

62 J.G. Merrills, International Dispute Settlement (3rd edition)(Cambridge University Press: 1998), 178.

63 Timor Sea Treaty, Article 2(b).

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