Bills Digest No. 133  1999-2000Timor Gap Treaty (Transitional Arrangements) Bill 2000

Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details

Passage History

Timor Gap Treaty (Transitional Arrangements) Bill 2000

Date Introduced: 17 February 2000

House: House of Representatives

Portfolio: Industry, Science and Resources

Commencement: Sections 1 and 2 will commence on Royal Assent. The remainder, except for amendments to the proposed Crimes at Sea Act 2000, will be taken to have commenced at the 'transition time'.⁽¹⁾ The amendments to the proposed Crimes at Sea Act 2000 will commence immediately prior to the Commencement of Schedule 1 of that Act.⁽²⁾

Purpose

To amend the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990 retrospectively to reflect the fact that on 26 October 1999 the United Nations Transitional Administration in East Timor replaced Indonesia as Australia's partner in the Timor Gap Treaty. The Bill also makes consequential amendments to 10 other Acts and the proposed Crimes at Sea Act 2000.⁽³⁾

Background

The Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990 gave legal effect to 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' 1989 (the 'Timor Gap Treaty').⁽⁴⁾ The treaty reflected a long standing interest of the Commonwealth Government in securing rights to petroleum exploration and exploitation over the continental shelf under international law.

International Law

The rights of nations to explore and exploit natural resources on the continental shelf are defined generally in the United Nations Convention on the Law of the Sea (UNCLOS).⁽⁵⁾

Under UNCLOS, the 'continental shelf' of a coastal State is defined as the 'seabed and subsoil of the submarine areas that extend beyond its territorial sea...to the outer edge of the continental margin'.⁽⁶⁾ It extends at least to 200 nautical miles⁽⁷⁾ from the 'territorial baseline'⁽⁸⁾ and it may follow the continental margin up to a limit of 350 nautical miles from the 'territorial baseline' or up to 100 nautical miles from the 2,500 metre isobath.⁽⁹⁾ The limit of the 'continental shelf' may also be determined by agreement between two State Parties to UNCLOS with 'opposite or adjacent coasts'.⁽¹⁰⁾

Under UNCLOS, a coastal State may exercise sovereign rights over its 'continental shelf' 'for the purpose of exploring it and exploiting its [non-living] natural resources'.⁽¹¹⁾ These rights are inherent, in the sense that they do not depend on any occupation or proclamation⁽¹²⁾ and they are exclusive, in the sense that no other State may explore or exploit the natural resources without the consent of the relevant coastal State.⁽¹³⁾ In a situation where an agreement is pending (discussed above), adjacent coastal States are required 'in a spirit of understanding and cooperation' to make 'every effort to enter into provisional arrangements of a practical nature and, during this transitional period, not to jeopardize or hamper the reaching of the final agreement'.⁽¹⁴⁾ Such arrangements are 'without prejudice to the final delimitation' of the 'continental shelf'.⁽¹⁵⁾

Petroleum Exploration and the Continental Shelf

Claims to the Continental Shelf

Initially, Australia's interest in the 'continental shelf' was to protect pearl shell fisheries off Western Australia and Queensland. The interest resulted in Australia's first formal claims to the 'continental shelf' made by proclamation in 1953.⁽¹⁶⁾ However, interest soon turned to petroleum exploration and exploitation. A larger claim to the 'continental shelf' was made in the Petroleum Submerged Lands Act 1967 pursuant to the United Nations Convention on the Continental Shelf⁽¹⁷⁾ and the North Sea Continental Shelf Case.⁽¹⁸⁾ The next focus of attention was on establishing the boundary of the 'continental shelf' between Indonesia and Australia and it eventually resulted in the 'International Sea-bed Agreement'.⁽¹⁹⁾ The next focus of attention was on exploring the Timor Trough and sealing a 'gap' left in the agreed boundary of the 'continental shelf' by the 'International Sea-bed Agreement'.⁽²⁰⁾ It eventually resulted in the 'Timor Gap Treaty'.⁽²¹⁾ Attention subsequently turned to the boundary of the 'continental shelf' beyond the westernmost point settled in the 'International Sea-bed Agreement'. This resulted in a treaty that will establish certain seabed boundaries and an exclusive economic zone boundary⁽²²⁾ between Indonesia and Australia (for present purposes the 'Exclusive Economic Zone Treaty').⁽²³⁾

The 'Timor Gap Treaty'

The 'International Sea-bed Agreement' essentially contained a compromise between competing claims of Indonesia and Australia. During negotiations, there was uncertainty as to whether the boundary line should follow a notional line midway between Australia and East Timor or whether it should follow the physical features of the Timor Trough with the result that it might draw closer to East Timor.⁽²⁴⁾ A largely arbitrary line was drawn.

In 'sealing the gap' the 'Timor Gap Treaty' provided a more complicated compromise. The Treaty established a Zone of Cooperation comprising three areas:

• Area A: the area of joint control and development between Indonesia and Australia;
• Area B: the area where Australia would make certain notifications and profit sharing arrangements with Indonesia; and
• Area C: the area where Indonesia would make certain notifications and profit sharing arrangements with Australia.

These areas are illustrated in the map below.

Figure 1: The Timor Gap Zone of Cooperation⁽²⁵⁾

The Timor Gap Treaty is a temporary arrangement and is declared to be without prejudice to the final position of either government with respect to the conclusion of a 'final agreement on the delimitation of the continental shelf'.⁽²⁶⁾ It is expressed to span 40 years and there is an option for an additional 20 years (subject to the conclusion of a final delimitation agreement).⁽²⁷⁾ The profit sharing arrangements are as follows:

Area A is perhaps the most significant area within the Zone of Cooperation. It stretches across an area which encompasses all of the various proposed maritime boundaries between East Timor and Australia. It is not closely regulated by the Treaty but is subject to flexible arrangements to be negotiated by Indonesia and Australia as the need arises. It also contains a geological formation which is known to contain significant oil reserves.⁽²⁹⁾

As indicated, the 'Timor Gap Treaty' was given legal effect in Australia by the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990. This Act formally recognised the existence and powers of the Ministerial Council and the Joint Authority. It also gave domestic legal effect to the 'Taxation Code',⁽³⁰⁾ an annex to the Treaty regulating the coordination of Australian and Indonesian taxation laws.⁽³¹⁾

Objections to the Timor Gap Treaty

There is a long standing history of objections to the Timor Gap Treaty.

Portuguese Challenge to the Timor Gap Treaty

On 22 February 1991, Portugal instituted proceedings in the International Court of Justice challenging the Agreement on the basis that Australia had failed to 'respect the duties and powers of [Portugal as] the administering Power [of East Timor]' and 'the right of the people of East Timor to self-determination'.⁽³²⁾ The majority of the court dismissed the action on the basis that in order to invalidate the agreement it was necessary to consider the validity of the Indonesian annexation of East Timor. This could not be done because Indonesia was not a party to the case and jurisdiction cannot be exercised over a State without its consent.⁽³³⁾ By contrast, the minority judges were prepared to consider the validity of the agreement solely on the basis of Australia's conduct in negotiating with Indonesia and without passing judgement on validity of the Indonesian annexation of East Timor.⁽³⁴⁾ One of these judges was clearly prepared to entertain the Portuguese claim.⁽³⁵⁾

Portuguese Objection to the Exclusive Economic Zone Treaty

On 28 August 1997 the Portuguese Embassy issued a note verbale to the Department of Foreign Affairs and Trade regarding the 'Exclusive Economic Zone Treaty'.⁽³⁶⁾ The note expressed Portugal's 'most vehement protest' against the Treaty on the basis that its creation of an exclusive economic zone boundary was an 'aggravating circumstance' on top of the assertion of sovereignty over the 'continental shelf' in the Timor Gap Treaty.⁽³⁷⁾

Exploration in the Timor Gap

To date, the focus of attention in the Timor Sea has been on a project in the Elang Kakatua oil fields, which commenced production in June 1999, and a project in the Undan Bayu reservoir, which is expected to commence production in November 2002. Elang Kakatua is a relatively small oil field, apparently containing some 20 million barrels of oil, but Undan Bayu is expected to be much larger containing up to 400 million barrels of light crude and LPG.⁽³⁸⁾ The stakeholders in Undan Bayu are various companies registered in the United States,⁽³⁹⁾ Australia,⁽⁴⁰⁾ Britain⁽⁴¹⁾ and Indonesia.⁽⁴²⁾ The United States companies are the major stakeholders and the Indonesian company has a minor share.⁽⁴³⁾ Undan Bayu is located within 'Area A' but falls on the East Timorese side of the notional median line.

Figure 2: Timor Sea Field Locations⁽⁴⁴⁾

Independence of East Timor

As the reader will be aware, on 30 August 1999, pursuant to the 5 May 1999 Agreements between the United Nations Secretary General and the Governments of Indonesia and Portugal,⁽⁴⁵⁾ the people of East Timor voted on the issue of autonomy from Indonesia. In these agreements the Governments of Indonesia and Portugal undertook that, should a vote for independence be carried, they would 'agree on arrangements on a peaceful and orderly transfer of authority in East Timor to the United Nations'.⁽⁴⁶⁾ The Secretary-General would then, 'subject to the appropriate legislative mandate', initiate the procedure to promote the process of transition of East Timor towards formal independence.⁽⁴⁷⁾ These undertakings were reaffirmed during a tripartite meeting among the Secretary-General and the Foreign Affairs Ministers of Indonesia and Portugal on 28 September 1999.⁽⁴⁸⁾

Involvement of United Nations

On 15 September 1999, the United Nations Security Council passed a resolution (Resolution 1264) inviting the Secretary-General to plan and prepare for a UN transitional administration in East Timor.⁽⁴⁹⁾ The Secretary-General issued a report on 4 October 1999 recommending the establishment of a transitional administration in East Timor.⁽⁵⁰⁾ The Security Council decided on 25 October 1999 (Resolution 1272) to establish the United Nations Transitional Administration in East Timor (UNTAET).⁽⁵¹⁾

Resolution 1272 gave UNTAET 'overall responsibility for the administration of East Timor' and empowered it to exercise 'all legislative and executive authority, including the administration of justice'.⁽⁵²⁾ It was authorised to take 'all necessary measures to fulfil its mandate'⁽⁵³⁾ which were expressed to extend to:

• the provision of security and the maintenance of law and order throughout East Timor
• the establishment of an 'effective administration'
• assistance in the development of civil and social services
• ensuring the 'coordination and delivery of humanitarian assistance, rehabilitation and development assistance'
• supporting 'capacity-building for self-government', and
• assisting in the 'establishment of conditions for sustainable development'.⁽⁵⁴⁾

The resolution established UNTAET for an initial period of 16 months until 31 January 2001.⁽⁵⁵⁾

It also provided for the appointment of a Transitional Administrator who would be 'responsible for all aspects of the United Nations work in East Timor' and would have the power to 'enact new laws and regulations and to amend, suspend or repeal existing ones'.⁽⁵⁶⁾ Sergio Vieira De Mello was appointed and commenced on 17 November 1999.

Agreement with UNTAET regarding the Timor Gap Treaty

Exchange of Notes

On 10 February 2000, following a period of consultation in Dili regarding the Timor Gap Treaty,⁽⁵⁷⁾ a memorandum of understanding was signed by the Transitional Administrator and the Australian Consul in East Timor (the 'Exchange of Notes').⁽⁵⁸⁾ The agreement effectively substituted references to Indonesia with references to UNTAET and continued the terms of the Timor Gap Treaty during the life of UNTAET (ie at least until 31 January 2001). In agreeing to continue the Treaty the United Nations expressly stated that it did not 'thereby recognise the validity of the integration of East Timor into Indonesia'. The agreement was expressed to be 'without prejudice to the position of the future government of an independent East Timor with regard to the Treaty'.

The text of UNTAET's note to Australia indicates that the authority for the Exchange of Notes is based partly on Resolution 1272 and partly on the Secretary-General's Report. In his report of 4 October 1999 the Secretary-General expressed the intention that the United Nations would 'conclude such international agreements as necessary with States and international organisations as may be necessary for the carrying out of the functions of UNTAET in East Timor'.⁽⁵⁹⁾ The corollary is that UNTAET is empowered to take 'all necessary measures to fulfil its mandate', one aspect of which is the 'establishment of conditions for sustainable development' in East Timor. As indicated, the Transitional Administrator is responsible for 'all aspects of the United Nations work in East Timor'. Therefore, on the assumption that the continuation of the Timor Gap Treaty will 'benefit the people of East Timor',⁽⁶⁰⁾ the Exchange of Notes may be considered to fall within the powers and responsibilities of the Transitional Administrator.

Validity of Actions during the Transitional Period

Effectively, there is a gap in the legal foundations underlying the Timor Gap Treaty in the period between the transfer of responsibility to UNTAET⁽⁶¹⁾ and the Exchange of Notes.⁽⁶²⁾ This is because the transfer of responsibility effectively ensured that Indonesia ceased to be a party to the Timor Gap Treaty. Any actions by the Ministerial Council or the Joint Authority during this period would therefore have been invalid (this issue is addressed in the discussion of Clause 5 below under the heading 'Main Provisions').

Agreement over Bayu Undan

On 23 February 2000, an agreement was signed by the Transitional Administrator and the Minister for Industry, Science and Resources regarding a Bayu Undan Gas Recycling Development Plan.⁽⁶³⁾ The plan is estimated to involve investment of $A2.29 billion.⁽⁶⁴⁾

The East Timorese View of the Timor Gap Treaty

While there may be other concerns,⁽⁶⁵⁾ the primary issue raised by the National Council for Timorese Resistance (CNRT) in respect of the Timor Gap Treaty has been the capacity for East Timor to share in the profits of petroleum extraction. Press releases surrounding the Exchange of Notes suggest that the CNRT supports the continuation of the terms of the Timor Gap Treaty and will honour the existing contracts under the Treaty.

However, prior to the Exchange of Notes, there were indications that the East Timorese resistance would attempt to renegotiate the terms of the Treaty⁽⁶⁶⁾ and perhaps even review the terms of agreements concluded under the Treaty.⁽⁶⁷⁾ For example, in November 1999, Mari Alkatiri, a spokesman for the CNRT, declared: 'we are not going to be a successor to an illegal treaty'.⁽⁶⁸⁾ Specifically, he suggested that East Timor may seek to finalise a boundary agreement with Australia that would give East Timor complete control over Area A.⁽⁶⁹⁾ Even as late as February 2000 Jose Ramos Horta reiterated these concerns. He stated: 'we honour the terms of the [Timor Gap Treaty] temporarily until independence and then we will have to look into ways to adjust the treaty to East Timor's interest'.⁽⁷⁰⁾ Xanana Gusmao has indicated that he would not be seeking any review of the Treaty, but in equivocal terms: 'In principle, we will respect the terms of the agreement even though only an independent East Timor can be...the interlocutor'.⁽⁷¹⁾

Crimes at Sea

One aspect of the growing interest in the 'continental shelf' in the 1960s was the position of the Commonwealth vis-à-vis the States. While international law recognised sovereignty and sovereign rights,⁽⁷²⁾ and certain powers over offshore waters, there was uncertainty as to how the powers could be exercised in Australia, as the issue of sovereignty had not been resolved as between the Commonwealth and the States.⁽⁷³⁾

The issue was tested⁽⁷⁴⁾ in the Seas and Submerged Lands Act 1973⁽⁷⁵⁾ and the Petroleum (Submerged Lands) Act 1973.⁽⁷⁶⁾ The assertions in the former Act were upheld for the purposes of domestic law in the Seas and Submerged Lands Case.⁽⁷⁷⁾ This case effectively confirmed Commonwealth sovereignty over the 'continental shelf' and raised some doubts as to the validity of State legislative powers beyond the 'territorial sea'.⁽⁷⁸⁾ The Commonwealth's claim vis-à-vis the States was formalised in amendments to the Seas and Submerged Lands Act 1973 and the Petroleum (Submerged Lands) Act 1973.⁽⁷⁹⁾

Crimes at Sea Act 1979

One consequence of the Seas and Submerged Lands Case was the establishment of an Offshore Constitutional Settlement between the Commonwealth and the States. The first legislative outcome from this agreement was the Crimes at Sea Act 1979 which attempted to repair a number of defects in Australia's maritime criminal jurisdiction. This Act applied State criminal law to Australian ships, Australian citizens and foreign ships in respect of crimes at sea. It was amended, following the signing of the 'Timor Gap Treaty', to deal with criminal offences within 'Area A' of the Zone of Cooperation. The criminal jurisdiction of the Northern Territory was applied to offences connected with petroleum exploration or exploitation committed in 'Area A' by persons other than those over which Indonesia had sole personal jurisdiction.⁽⁸⁰⁾ A more detailed background to the Crimes at Sea Act 1979 is contained in Bills Digest No. 79 of 1999-2000.⁽⁸¹⁾

Crimes at Sea Bill 1999

A decade of experience with the Crimes at Sea Act 1979 suggested that the legislative regime was flawed in a number of respects.⁽⁸²⁾ It was the target of a report by the Australian Law Reform Commission nearly a decade ago.⁽⁸³⁾ Since then there has been steady work to reform the regime which resulted in the introduction of the Crimes at Sea Bill 1999 in September 1999 which is intended to eventually replace the Crimes at Sea Act 1979.

Part 4 of the Crimes at Sea Bill 1999 seeks to apply the substantive criminal law of the Northern Territory to 'Area A' in respect of criminal acts on oil rigs, etc. that are connected with petroleum exploration and extraction. These provisions do not apply to acts committed by permanent residents or nationals of Indonesia who are not also Australian nationals. Nor do they apply if the acts have already been dealt with under Indonesian law. Prosecution under these provisions requires the consent of the Attorney-General although arrests, charges, extradition and remands in custody or on bail may proceed, pending this consent. Arrangements exist for the flexible application of procedural laws depending on the jurisdiction in which the proceedings are taken. Part 4 of the Crimes at Sea Bill 1999 is discussed in Bills Digest No. 79 under the heading 'The Regime within "Area A"'.⁽⁸⁴⁾

Main Provisions

General Provisions

Clause 5 deals with actions by the Joint Authority and the Ministerial Council. It effectively validates actions during the period between the 'transition time' and the Exchange of Notes.

Clause 6 deals with retrospective criminal liability. A number of amendments in the Bill will have the effect of criminalising certain acts committed within Area A.⁽⁸⁵⁾ When the Bill is enacted and given Royal Assent, these amendments will be taken to have commenced at the 'transition time'.⁽⁸⁶⁾ To avoid the potential for 'retrospective criminal liability' between the 'transition time' and the date of Royal Assent, Clause 6 ensures that criminal liability only arises from the date of Royal Assent.

Clause 7 deals with immunity from prosecution. Under section 9A of the Crimes at Sea Act 1979⁽⁸⁷⁾ the criminal laws of the Northern Territory apply to acts within 'Area A', except where the acts are committed by permanent residents or nationals of Indonesia who are not also Australian nationals (section 9A(2)). The Northern Territory laws also do not apply if the acts have already been dealt with under Indonesian law (section 9A(3)). Clause 7 ensures that those 'immunities' survive the transfer of responsibility to UNTAET.

Amendments to the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990

Schedule 1 amends the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990 to reflect the Notes exchanged between Australia and UNTAET. Items 1 and 2 effectively update the title of the Act to the Petroleum (Timor Gap Zone of Cooperation) Act 1990.

Item 3 amends the definition of 'Treaty' (section 5(1)) to take account of the Exchange of Notes. Rather than being amended specifically, the treaty is to be 'read with' the Notes.

Item 4 tailors certain tax provisions in respect of their application to East Timor. It amends section 13 which implements provisions of the Treaty and the Taxation Code⁽⁸⁸⁾ affecting Australian laws relating to fringe benefits, income tax or sales tax on imported goods. These amendments formally recognise the existence of UNTAET,⁽⁸⁹⁾ the Transitional Administrator⁽⁹⁰⁾ and East Timorese residents⁽⁹¹⁾ for these purposes during the period that East Timor is administered by UNTAET. Following that period, the amendments provide for these definitional issues to be resolved by regulation.

Item 5 renumbers the existing Schedule as Schedule 1.

Item 6 inserts a new Schedule 2 which contains:

• 'Australia's Note to UNTAET' (Part 1); and
• 'UNTAET's Note to Australia' (Part 2).

Substituting 'East Timor' for 'Indonesia' in other Legislation

Various items in Schedule 2 amend other Commonwealth Acts to reflect the formal recognition of East Timor as an independent territory and to take account of the changes to the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990.

Items 1, 24-25 and 26-42 amend Commonwealth Acts which contain references to 'Area A of the Zone of Cooperation'⁽⁹²⁾ and/or the 'Timor Gap Treaty'.⁽⁹³⁾ The amendments update references in the definitions sections of these Acts to reflect the amended title of the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990.

Items 18 and 21 amend the proposed Crimes at Sea Act 2000 to address the same issue.

Items 2, 19 and 27 amend the Crimes at Sea Act 1979, proposed Crimes at Sea Act 2000 and Customs Act 1901. These amendments update references in the definitions sections of these Acts to reflect the formal recognition of East Timor as an independent territory.

Items 3 - 16 amend the Crimes at Sea Act 1979. These amendments omit the definition of 'Indonesia' and essentially substitute 'East Timor' for 'Indonesia' in the provisions dealing with criminal laws applicable in Area A of the Zone of Cooperation and the transit through Australia of persons accused of offences against laws in force in East Timor.

The Regime within 'Area A'

Other items in Schedule 2 have a more substantive operation. They deal with the criminal laws relating to petroleum exploration and extraction applicable within Area A.

Crimes at Sea Act 1979

Item 17 amends the Crimes at Sea Act 1979. This amendment preserves the operation of section 9A (which, as discussed above, deals with the application of the criminal laws of the Northern Territory within 'Area A') in relation to acts committed prior to the 'transition time'. Thus, for acts done before the 'transition time', nationals and permanent residents of Indonesia are subject to the same liabilities and immunities as currently exist. Item 17 is to be distinguished from Clause 7. Whereas item 17 deals with immunity for acts before the transition time, Clause 7 deals with immunity for acts committed between the transition time and the commencement of amendments to the Crimes at Sea Act 1979.

Proposed Crimes at Sea Act 2000

Item 23 inserts a new Part 3A into the proposed Crimes at Sea Act 2000. It seeks to establish a complete regime for cooperation between Australia and East Timor in relation to the enforcement of criminal law within 'Area A' (in relation to acts committed after the commencement of the Crimes at Sea Act 2000). The regime deals with:

• the application of the criminal laws of the Northern Territory within 'Area A';
• the transit through Australia of persons accused under East Timorese law; and
• the establishment by regulation of cooperative arrangements between Australian and East Timorese law enforcement agencies.

The regime is essentially a duplicate of the regime proposed between Australia and Indonesia in Part 4 of the Crimes at Sea Bill 1999 (discussed above). (Part 4 was omitted from the Crimes at Sea Bill 1999 in the House of Representatives.⁽⁹⁴⁾)

Concluding Comments

There appear to be a number of concerns arising from the UNTAET mandate, the Exchange of Notes, the Bayu Undan Agreement and the terms of the Bill. Ultimately, these concerns may present no objection to the validity of the agreement or the legislation in international law or domestic law. However, there is at least a suggestion that the arrangements might ultimately be challenged by an independent East Timor.

This should not come as any surprise. The Timor Gap Treaty was never intended to be a final resolution of the 'continental shelf' boundary and profit sharing arrangements between Australia and Indonesia. It was a temporary compromise concluded 'without prejudice' to the ultimate resolution of the maritime boundary dispute and, in all likelihood, 'without prejudice' to the final profit sharing arrangements.⁽⁹⁵⁾ It is possible, even under the original arrangements, that the final delimitation agreement could have resulted in the redrawing of the 'continental shelf' boundary to incorporate various oil fields, including Bayu Undan, within the area under Indonesian control.

Ultimately, this will be an issue to be resolved by the Commonwealth Government and the government of an independent East Timor. Its resolution may not affect the viability of the joint venture projects approved under the present arrangements. However, it may have an impact upon the future validity of the arrangements that will be extended by this Bill.

Endnotes

2. 1.23 am 26 October 1999 which corresponds to the time in New York when the United Nations Security Council adopted a resolution transferring responsibility for East Timor to the United Nations Transitional Administration in East Timor: S/RES/1272 (1999) at http://www.un.org/Docs/scres/1999/99sc1272.htm [03/03/00].

3. That is, on a day to be fixed by Proclamation or within 12 months and a day: Crimes at Sea Bill 1999, Bills Digest No. 79, 1999-2000 at http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD079.htm [03/03/00].

4. Senate Tabling Office, Bills List, 23 February 2000, p 23.

5. Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990, Schedule.

6. 10 December 1982, UN Doc A/Conf 62/122; 21 ILM 1261 (1982). The convention came into force on 16 November 1994.

7. Ibid, Article 76(1).

8. A nautical mile is equal to 1,852 metres: Schedule 1.(1) of the Seas and Submerged Lands Act 1973 and see Australian Surveying and Land Information Group, 'Maritime Boundaries', at http://www.auslig.gov.au/marbound/mile.htm [25/1/00].

9. Article 3.

10. Article 76(5). The 2,500 metre isobath is a line connecting the depth of 2,500 metres. For a historical account of these definitions see D. O'Connell, The International Law of the Sea Vol. I, Clarendon Press, Oxford, 1984, pp 495-496.

11. Article 83.

12. Article 77(1).

13. Article 77(3).

14. Article 77(3).

15. Article 83(3).

16. Article 83(3).

17. Commonwealth of Australia Gazette, 11 September 1953.

18. Convention on the Continental Shelf, 29 April 1958, U.N.T.S. No. 7302, vol. 499, pp. 312-321. The Convention came into force on 10 September 1964.

19. I.C.J Rep., 1969, 1. This case confirmed a shift in the treatment of the 'continental shelf' in international law. Originally, the limit of the 'continental shelf' was determined under international law with reference to a fixed depth below the surface of the sea. This case used the notion of 'natural prolongation' to reflect the fact that the limit of the 'continental shelf' could be measured with reference to the geological features of the seabed: see generally D. O'Connell, The International Law of the Sea Vol. I, Clarendon Press, Oxford, 1984, Chapter 13.

20. Petroleum (Submerged Lands) Act 1967-73, s 156A.

21. Two key components of the 'International Sea-bed Agreement' were agreements regarding the boundaries surrounding East Timor in 1971 (Agreement between Australia and Indonesia establishing certain sea-bed boundaries signed at Canberra on 18th May, 1971) and 1973 (Agreement between Australia and Indonesia establishing certain sea-bed boundaries in the area of the Timor and Arafura Seas signed at Jakarta on 9th October, 1972). When these agreements were negotiated, East Timor was still a Portuguese colony, which 'resulted in a gap in the Australia-Indonesia seabed boundary south of East Timor': Senate Foreign Affairs, Defence and Trade References Committee, East Timor: Interim Report, September 1999, p 21. The 'Timor Gap Treaty' ostensibly 'sealed the gap' in the seabed boundary.

22. Apparently, '[f]our rounds of 'technical' talks on how to solve the problem of the 'Timor Gap' ended in October 1981 without success'. The question subsequently became acute again with the discovery in 1983 of the Jabiru oil field (in the Bonaparte Basin, off north-western Australia), which led to speculation about the existence of oil in a Jurassic rock structure known as Kelp in the Timor Gap: Edgar Gold (Ed.), Maritime Affairs: A World Handbook, 2^nd Edition, Longman, Essex, 1991, p 358.

23. This boundary was addressed by a 'memorandum of understanding' between Australia and Indonesia in 1981 that established a 'Provisional Fisheries Surveillance and Enforcement Line'.

24. 'Treaty between the Government of Australia and The Government of the Republic of Indonesia establishing an exclusive economic zone boundary and certain seabed boundaries' 1997, Division for Ocean Affairs and the Law of the Sea, Office of Legal Affairs, Law of the Sea Bulletin, No. 35, New York, 1997, p 107. See also Oceans and the Law of the Sea: Law of the Sea, Report of the Secretary-General, Fifty-second session, UN Doc. A/52/487, 20 October 1997 http://www.spc.org.nc/coastfish/asides/conventions/los/losreport.htm [03/03/00] and the National Interests Analysis by the Department of Foreign Affairs and Trade at http://www.austlii.edu.au/au/other/dfat/nia/1997/1997018n.html [03/03/00]. The Treaty has not yet been ratified.

25. While there is a fairly shallow, uniform continental shelf boundary between Indonesia and Australia East of East Timor, the physical features are less clear, from the point of view of UNCLOS, closer to East Timor: 'there is no longer a shallow, continuous, uniform continental margin between the two countries, instead there is a broad shallow shelf adjacent to Australia and it is separated from the narrow shelf adjacent to Timor by the Timor Trough which has a maximum depth of just over 3000 metres': Victor Prescott, Australia's Maritime Boundaries, Canberra Studies in World Affairs, Vol. 16, Australian National University, Canberra, 1985, p 104.

26. Map courtesy Australian Surveying and Land Information Group, Department of Industry, Science and Resources, Canberra, Australia. Crown Copyright © www.auslig.gov.au.

27. Timor Gap Treaty, Preamble.

28. Timor Gap Treaty, Article 33(2).

29. Gold, op cit, 358.

30. Ibid.

31. '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 - Annex D' 1989, Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990, Schedule.

32. Section 13.

33. Case Concerning East Timor (Portugal v. Australia), 30 June 1995, paras 23-37 (see the summary at http://www.icj-cij.org/icjwww/idecisions/isummaries/ipasummary950630.htm).

34. Ibid. The authority for the principle that jurisdiction cannot be exercised over a State without its consent is Monetary Gold Removed from Rome in 1943, I.C.J. Reports 1954, p 32. A separate majority judgement focused on the issue of standing: Portugal, an administering power, had not established itself as the 'coastal state' for the purposes of UNCLOS vis-à-vis East Timor by prosecuting a dispute with Indonesia before the ICJ. Accordingly, it did not have standing to raise the issue with Australia: Ibid, Separate Opinion of Judge Oda.

35. Ibid, Dissenting Opinions of Judges Weeramantry and Skubiszewski.

36. 'The rights of self-determination and permanent sovereignty over natural resources are rights...belonging to the people of East Timor, and therefore generate a corresponding duty upon all States, including the Respondent, to recognize and respect those rights. The act of being party to a treaty recognizing that East Timor, (admittedly a non-self governing territory and recognized as such by the United Nations), has been incorporated in another State, which treaty deals with a valuable non-renewable resource of the people of East Timor for an initial period of forty years, without reference to them or their authorized representative, raises substantial doubts regarding the compatibility of these acts with the rights of the people of East Timor and the obligations of Australia. The Court could have proceeded to determine whether a course of action had been made out against Australia on such actions, without the need for any adjudication concerning Indonesia': ibid, Dissenting Opinion of Judge Weeramantry.

37. A/52/323-S/1997/691, annex, reproduced in Law of the Sea Bulletin, No. 35, op cit, p 97.

38. The Agreement was described as 'one violation more to the status of East Timor as a Non-Self-Governing Territory...and to the rights of the people of East Timor as well as to the status of the administering Power of the Territory': Ibid, p 98.

39. Senator The Hon. Nick Minchin, 'World Scale Petroleum Project for Timor Sea', Media Release, 28/02/00 at http://www.isr.gov.au/media/2000/february/cmr85%2D00.doc [03/03/00].

40. Phillips Petroleum Co and Kerr-McGee Corp.

41. Petroz NL and Santos Ltd.

42. British-Borneo Oil and Gas Plc.

43. Inpex Sahul Ltd.

44. Apparently, Petroz has an 8.25 percent stake in the project, while Phillips Petroleum Co has the majority 50.29 percent stake. Other stakeholders in Bayu Undan are Santos Ltd 11.83 percent, Indonesian Inpex Sahul Ltd 11.71 percent, Oryx 11.2 percent and British-Borneo Oil & Gas Plc 6.72 percent: http://etan.org/et99b/september/5-11/9petroz.htm [03/03/00]. See also 'Bay-Undan Gas Recycle Project Development Plan Approved by Timor Gap Joint Authority', Business Wire, 28/02/00.

45. Map reproduced from Senator The Hon. Nick Minchin, Media Release, op cit, with permission from the Department of Industry, Science and Resources.
46. One of these agreements was the Agreement between the Republic of Indonesia and the Portuguese Republic on the question of East Timor http://www.prica.org/news/Timtim/agreement-5may99.htm [03/03/00].

47. Ibid, Article 6.

48. Ibid, Article 6.

49. Report of the Secretary General, op cit, para 25.

50. S/RES/1264 (1999), para 11: http://www.un.org/Docs/scfres/1999/99sc1264.htm [03/03/00].

51. Report of the Secretary General, op cit.

52. S/RES/1272 (1999), op cit.

53. S/RES/1272 (1999), op cit, para 1.

54. Ibid, para 4.

55. Ibid, para 2.

56. Ibid, para 17.

57. Ibid, para 6.

58. 'Dili conference on Timor Gap oil', Agence France Presse Newswire, Sunday January 16, 2000: http://etan.org/et2000a/january/15-21/16dili.htm [03/03/00].
59. UNTAET, 'Australia and UN mission in East Timor sign agreement on oil exploration in Timor Gap', Media Release, 11 February 2000: http://www.un.org/peace/etimor/news/News11.html [03/03/00].

60. Report of the Secretary General, op cit, para 35.

61. This point is explicit in UNTAET's Note to Australia.

62. 1.23 am Australian Central Standard Time on 26 October 1999: see endnote 1 above.

63. 5.55 pm Australian Central Standard Time on 10 February 2000.

64. UNTAET, 'Australia, UN mission in East Timor sign $1.4 billion gas exploration accord', Media Release, 23 February 2000: http://www.un.org/peace/etimor/news/n230200b.html [03/03/00].

65. Senator The Hon. Nick Minchin, 'World Scale Petroleum Project for Timor Sea', Media Release, 28/02/00 at http://www.isr.gov.au/media/2000/february/cmr85%2D00.doc [03/03/00]. See also descriptions of the project specifications at http://www.offshore-technology.com/projects/bayu-undan/ [03/03/00].

66. Other concerns conceivably would include East Timorese representation on the Ministerial Council and Joint Authority: see The Hon. Laurie Brereton, MP, 'Timor Gap Oil', Media Release, Wednesday, 13 Jan 1999.

67. 'East Timor: Renegotiating the Timor Gap Treaty', Reuters Newswire, 07/02/00.

68. Andrew Nette, 'Leaders Keep Eye on Timor Gap Revenue', IPS Newswire, Friday, 12 March 1999 http://etan.org/et99/march/8-14/11leader.htm [03/03/00] cf an undertaking to the contrary by Jose Ramos Horta reported in 'East Timor: Renegotiating the Timor Gap Treaty', Reuters Newswire, 07/02/00.

69. Karen Polglaze, 'Timor Gap Treaty in doubt', The Canberra Times, 30/11/99, p 2.

70. Bernard Lane, 'Stepping into the Gap', The Australian, 20/11/99, p 27.

71. 'East Timor: Timorese to push for pay rise in Gap treaty', Reuters Newswire, 04/02/00.
72. Paul Cleary, 'Timor Gap oil treaty will stand unaltered: Gusmao', Australian Financial Review (1^st Edition), 15/10/99. See also Richard Sproull, 'Gusmao's nod keeps Timor Gap gas deal cooking', The Australian, 27/10/99: http://www.news.com.au/news_content/aus/4337840.htm [03/03/00].

73. At the time, international law recognised Australian sovereignty over 'internal waters' and 'territorial seas' (Convention on the Territorial Sea and the Contiguous Zone, 29 April 1958, U.N.T.S. No. 7477, vol. 516, pp. 205-225. The Convention came into force on 10 September 1964) and sovereign rights over the 'continental shelf' (Convention on the Continental Shelf, 29 April 1958, U.N.T.S. No. 7302, vol. 499, pp. 312-321. The Convention came into force on 10 September 1964).

74. D. O'Connell, 'The Australian Maritime Domain', Australian Law Journal, Vol. 44, 1970, pp 192-208.

75. In fact, the issue was first tested in 1970 with the Territorial Sea and Continental Shelf Bill 1970, but the Bill never proceeded. The Seas and Submerged Lands Bill 1973 followed a report by the Senate Select Committee on Offshore Petroleum Resources that recommended the issue be resolved by Commonwealth legislation.

76. The Seas and Submerged Lands Act 1973 asserted for the Commonwealth territorial sovereignty over the 'territorial sea' and sovereign rights over the 'continental shelf'. These terms reflected the terminology in the United Nations Convention on the Territorial Sea and the Contiguous Zone and United Nations Convention on the Continental Shelf.

77. The Petroleum (Submerged Lands) Act 1973 specifically extended Commonwealth control over offshore petroleum exploration and extraction by extending the limits of the 'adjacent areas' (generally, areas of sea adjacent to each State between 3 nm and the limit of the 'continental shelf') under the Petroleum (Submerged Lands) Act 1967-68.

78. New South Wales v The Commonwealth (1975) 135 CLR 337.

79. The 'territorial sea' covers waters within 12 nautical miles of the 'territorial baseline': UNCLOS, Article 3.

80. In 1980 the Commonwealth and the States enacted a regime for joint management arrangements over petroleum exploration and extraction: Petroleum (Submerged Lands) Amendment Act 1980. This involved the establishment of joint authorities and the extension of civil jurisdiction of State Supreme Courts in respect of petroleum exploration and extraction.

81. That is, nationals or permanent residents of Indonesia who were not also nationals of Australia: Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990, s 9A(2).

82. http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD079.htm [06/03/00].

83. The flaws related to the drafting of the Crimes at Sea Act 1979 and the fact that the complementary State legislation potentially exceeded State legislative power. These issues are discussed in Bills Digest No. 79.

84. Law Reform Commission of Australia, Criminal Admiralty Jurisdiction and Prize, Report No. 48, 1990.

85. http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD079.htm [06/03/00].

86. For example acts by Indonesian nationals or residents relating to petroleum exploration or exploitation (Crimes at Sea Act 1979, s 9A) or a direct journey between Indonesia and a resource installation within 'Area A' (Customs Act 1901, s 58B).

87. That is, 1.23 am 26 October 1999: see endnote 1 above.

88. This clause is the predecessor to Part 4 of the Crimes at Sea Bill 1999.

89. Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990, Schedule, Annex D.

90. As the body politic in East Timor: proposed paragraph 13(2)(a)(i).

91. As the 'competent authority' for the purposes of the Taxation Code: proposed paragraph 13(2)(a)(ii).

92. As 'residents of a Contracting State': proposed paragraph 13(2)(a)(iii).

93. Fringe Benefits Tax Assessment Act 1986, Income Tax Assessment Act 1936, Migration Act 1958, Passenger Movement Charge Act 1978, Passenger Movement Charge Collection Act 1978, Petroleum (Submerged Lands) Act 1967, Quarantine Act 1908, Workplace Relations Act 1996.

94. Passenger Movement Charge Collection Act 1978.

95. See House of Representatives, Debates, 6 December 1999, p 12888 at http://aph.gov.au/hansard/reps/dailys/dr061299.pdf [03/03/00]. See proposed amendments at http://search.aph.gov.au/search/ParlInfo.ASP?action=browse&Path=Legislation/Current+Bills+by+Title/Timor+Gap+Treaty+(Transitional+Arrangements)+Bill+2000/Proposed+Amendments&Start=3&bt0#top [03/03/00].

96. See the preamble to the Timor Gap Treaty in Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990, Schedule which cites Article 83 which is discussed above under the heading 'International Law'.

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