Referral and conduct of the inquiry
1.1
This inquiry was referred to the committee on 16 September 2019, through a motion presented by Senator Patrick in the following terms:
(1)
That the Senate notes that—
(a)
Australia ratified the United Nations Convention on the Law of the Sea 1982 (UNCLOS) and the Statute of the International Court of Justice 1945 (ICJ), accepting the compulsory jurisdiction of the ICJ and the International Tribunal for the Law of the Sea (ITLOS);
(b)
subsequently, on 22 March 2002, Australia made declarations under articles 287(1) and 298(1) of UNCLOS, and article 36 of the Statute of the ICJ, actions which:
(c)
limited Australia's acceptance of the compulsory jurisdiction of the ICJ and the ITLOS in maritime boundaries disputes, and;
(d)
prevented Timor-Leste from exercising its rights under international law;
(e)
the Joint Standing Committee on Treaties (JSCOT), responsible for scrutinising all treaty actions by Australia, was not given the opportunity to scrutinise the declarations before their making;
(f)
JSCOT reported, on 26 August 2002, that non-government committee members 'believe the ICJ declaration ... damages Australia's international reputation and may not be in Australia's long-term national interests' as it 'may be interpreted as an effort to intimidate and limit the options of neighbouring countries in relation to any future maritime border disputes'; and
(g)
Australia has since signed a maritime boundaries treaty with the Democratic Republic of Timor-Leste.
(2)
That the following matter be referred to the Foreign Affairs, Defence and Trade References Committee for inquiry and report by 28 November 2019:
(a)
Australia's declarations made under articles 287(1) and 298(1) of UNCLOS and article 36 of the Statute of the ICJ, including the question of whether those declarations should be revoked and new declarations made which submit maritime delimitation disputes to the jurisdiction of the ICJ or ITLOS; and
1.2
On 11 November 2019, the reporting date for the inquiry was extended to 27 February 2020.
Conduct of the inquiry
1.3
Details of the inquiry were placed on the committee's website at: http://www.aph.gov.au/senate_fadt. The committee also contacted a number of relevant individuals and organisations to notify them of the inquiry and invite submissions by 11 October 2019. The committee continued to receive submissions after the closing date. Submissions received and additional information are listed at Appendix 1.
1.4
The committee held one public hearing, on 2 December 2019 in Canberra. A list of witnesses who gave evidence is available at Appendix 2. Submissions and the Hansard transcripts of evidence may be accessed through the committee website.
1.5
The committee thanks the organisations and individuals who lodged submissions and participated in the committee's public hearing.
Structure of the report
1.6
This report consists of two chapters. The remainder of Chapter 1 provides background information on Australia's declarations that are the subject of this inquiry and Australia's maritime boundary negotiations with Timor-Leste. Chapter 2 summarises the key issues raised by submitters and witnesses, and presents the committee's views.
Background to Australia's 2002 declarations
1.7
The declarations relevant to this inquiry were made by Australia under international instruments on 22 March 2002:
Declarations under Articles 287(1) and 298(1) of the United Nations Convention on the Law of the Sea (UNCLOS); and
Declaration under Paragraph 2 of Article 36 of the Statute of the International Court of Justice (ICJ).
1.8
These declarations exclude Australia from the compulsory jurisdiction of UNCLOS and the ICJ in relation to matters of delimitation of maritime boundaries. However, Australia still remains subject to compulsory conciliation processes under Article 298 of the UNCLOS convention in relation to the resolution of maritime boundary disputes.
United Nations Convention on the Law of the Sea
1.9
UNCLOS is an international treaty that provides a legal framework for marine and maritime activities. It lays down a comprehensive regime of law and order in the world's oceans and seas, and establishes rules governing all uses of the oceans and their resources. UNCLOS was signed by Australia on 10 December 1982 and ratified on 5 October 1994.
Dispute settlement procedures
1.10
Part XV of the convention provides a compulsory and binding framework for the peaceful settlement of all ocean-related disputes between parties. Under Article 287(1), states may make a written declaration nominating one or more of the following means for the settlement of disputes concerning the interpretation or application of the convention:
(a)
the International Tribunal for the Law of the Sea (a body established under Annex VI of the treaty);
(b)
the International Court of Justice;
(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 specified categories of disputes (including disputes relating to fisheries, protection and preservation of the marine environment, and marine scientific research).
1.11
Under paragraph 287(3), if a state becomes party to a dispute and has not made a specific declaration in relation to dispute settlement methods, it is deemed to have accepted arbitration in accordance with Annex VII, making arbitration the default option for dispute settlement.
1.12
Under Article 298, there are three optional exceptions to the applicability of compulsory procedures in the forum(s) chosen by states under Article 287.
1.13
Paragraph 1 of Article 298 provides that a state may declare in writing that it does not accept one or more of the dispute settlement forums in Article 287, with respect to three categories of disputes, including 'disputes concerning the interpretation or application of Articles 15, 74 and 83 relating to sea boundary delimitations, or those involving historic bays or titles'. However, if such a dispute arises and no agreement within a reasonable period of time is reached in negotiations between the parties, the state must accept submission of the matter to a Conciliation process laid out in Annex V of the convention.
Australia's UNCLOS dispute settlement declaration
1.14
On 22 March 2002, Australia made declarations relating to dispute settlement under Articles 287 and 298 of UNCLOS.
1.15
Under paragraph 1 of Article 287, Australia chose the International Tribunal for the Law of the Sea (ITLOS) and the International Court of Justice (ICJ) as its two means for the settlement of disputes arising under the convention (without specifying that one has precedence over the other).
1.16
By the same instrument, Australia also lodged a declaration under Article 298(1)(a) that it does not accept any of the procedures provided for in Article 287 (including ITLOS and the ICJ), with respect to disputes concerning the interpretation or application of articles relating to sea boundary delimitations as well as those involving historic bay or titles.
1.17
The declarations were signed on 21 March 2002 and entered into force on 22 March 2002.
1.18
The National Interest Analysis (NIA) for this declaration, tabled on 18 June 2002, summarised Australia's obligations under this declaration:
The declaration lodged by Australia under Article 287(1) means that Australia as a matter of international obligation has accepted the ICJ and ITLOS as forums for dispute settlement in relation to the interpretation or application of UNCLOS.
The declaration under Article 298(1)(a) means that Australia is not obliged to submit to compulsory dispute settlement under UNCLOS disputes relating to sea boundary delimitations or historic bays or titles.
1.19
However, it was noted in the NIA that disputes concerning maritime boundaries could still be heard by a conciliation commission under UNCLOS; but that results of conciliation would not be binding.
Australia's declaration under the ICJ Statute
1.20
Also on 22 March 2002, Australia made a declaration adding reservations to Australia's acceptance of the compulsory jurisdiction of the ICJ.
1.21
This declaration, made under Article 36(2) of the ICJ Statute, replaced a prior declaration relating to ICJ jurisdiction Australia had made in 1975. Under the 1975 declaration, Australia's only reservation to the compulsory jurisdiction of the ICJ was for disputes 'in regard to which the parties thereto have agreed or shall agree to have recourse to some other method of peaceful settlement.'
1.22
The 2002 declaration contained two additional reservations to the compulsory jurisdiction of the ICJ, namely:
(b)
any dispute concerning or relating to the delimitation of maritime zones, including the territorial sea, the exclusive economic zone 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; and
(c)
any dispute in respect of which any other party to the dispute has accepted the compulsory jurisdiction of the Court only in relation to or for the purpose of the dispute; or where their acceptance of the Court's compulsory jurisdiction was deposited less than 12 months prior to the filing of the application bringing the dispute before the Court.
Government rationale for the UNCLOS and ICJ Statute declarations
1.23
The Australian Government's stated reasons for the UNCLOS declaration were set out in the NIA for that declaration, published in 2002:
Australia chose the ICJ and ITLOS as its preferred means of dispute resolution because there are advantages in taking disputes to existing, internationally recognised forums. Arbitral tribunals are not pre-existing bodies and have to be constituted before dispute resolution can be commenced. This can be a time consuming and difficult process. Also, the parties to the dispute have to pay the full cost of both the tribunal and the arbitration. Australia already contributes to the cost of the ICJ and ITLOS and no additional costs are incurred by taking a dispute to the Court or the Tribunal.
…
The Government's view is that maritime boundary disputes are best resolved through negotiation, not litigation. Negotiations allow the parties to work together to reach an outcome acceptable to both sides. The Government is, and remains, committed to the peaceful settlement of disputes. Compared to other countries, Australia, as an island continent, has some of the longest maritime boundaries in the world. It has maritime boundaries with many countries and the Government is concerned that every endeavour should be made to reach an agreed resolution of any maritime boundary disputes through peaceful negotiation.
1.24
In relation to the ICJ Statute declaration, the government's NIA reiterated the view that disputes involving maritime boundaries are best resolved through negotiation and not litigation, and noted that this declaration parallels the reservations made under the UNCLOS declaration.
1.25
The ministerial press release announcing the declarations noted Australia's unresolved maritime boundaries at that time:
Australia’s maritime zones abut the maritime zones of Indonesia, New Zealand, Papua New Guinea, the Solomon Islands, France (New Caledonia, Kerguelen Island and Antarctica), East Timor and Norway. Australia is yet to resolve boundaries with France, New Zealand and Norway in the maritime area adjacent to Antarctica. Australia has negotiated treaties on permanent maritime boundaries with Indonesia, Papua New Guinea, the Solomon Islands and France (New Caledonia and Kerguelen Island). Negotiations are ongoing with New Zealand.
Consultation processes and timing of the UNCLOS and ICJ declarations
1.26
The Australian Government undertook no public consultation on the 2002 declarations prior to them being made, and the declarations were not subject to the standard process of review by the Joint Standing Committee on Treaties (JSCOT) prior to them coming into effect. The NIAs for the 2002 UNCLOS and ICJ stated that each declaration fell within a 'sensitive treaty action' exception to the normal processes for tabling treaties prior to their entry into force, and the declarations were not made public prior to taking to ensure the effectiveness of the declaration was maintained.
1.27
The NIA for to the UNCLOS declaration stated:
Public knowledge of the proposed action could have led other countries to pre-empt the declaration by commencing an action against Australia in relation to sea boundary delimitation that could not be made once the declaration under article 298(1)(a) of UNCLOS was made.
History of negotiations over the delimitation of the Timor Sea maritime boundary
1.28
Submissions raised the maritime boundary between Australia and Timor-Leste which has been the subject of longstanding dispute, with the lucrative oil and gas deposits in the Timor Sea central to negotiations.
1.29
Since the 1970s Australia has negotiated with successive governments over the delimitation of the seabed boundary of the Timor Sea and the development of the gas and petroleum deposits; including Portugal, Indonesia, the United Nations Transitional Administration in East Timor (UNTAET), and finally the government of Timor-Leste after gaining its independence on 20 May 2002. Below is a brief summary of those negotiations.
1973 Agreements relating to certain seabed boundaries
1.30
On 18 May 1971 and 9 October 1972, Australia and Indonesia signed an Agreement establishing Certain Seabed Boundaries and a supplementary Agreement establishing Certain Seabed Boundaries in the area of the Timor and Arafura Seas, respectively. Both agreements came into force on 8 November 1973. Under these initial agreements, a gap was left in the maritime boundary agreed by Australia and Indonesia which became known as the 'Timor Gap'.
Timor Gap (Zone of Cooperation) Treaty
1.31
In talks between Australia and Indonesia in November 1984, Australia proposed an interim measure for a joint development zone in the disputed area, with commercial resources to be shared equally. On 11 December 1989 Australia and Indonesia announced the signing of the Timor Gap (Zone of Cooperation) Treaty, which came into effect in February 1991. The conclusion of the Treaty stated that:
…while establishing a long-term stable environment for petroleum exploration and exploitation, [the treaty] would not prejudice the claims of either country to sovereign rights over the continental shelf, nor would it preclude continuing efforts to reach final agreement on permanent seabed boundary delimitation.
Memorandum of Understanding of Timor Sea Arrangement
1.32
In a UN supervised referendum on 30 August 1999 the East Timorese people voted for independence. The UNTAET was established on 25 October 1999 to provide interim administration and a peacekeeping mission in East Timor until its independence, which was gained on 20 May 2002.
1.33
UNTAET had a wide treaty making power and Australia subsequently entered into negotiations with UNTAET and East Timorese representatives on rights for future exploration and exploitation for petroleum in the Timor Gap to replace the Timor Gap Treaty when independence was gained. On 5 July 2001 Australia and UNTAET signed the Memorandum of Understanding of Timor Sea Arrangement (MoU) in anticipation of a new treaty to be entered into once Timor-Leste gained independence.
1.34
The MoU formed the basis of the subsequent Timor Sea Treaty between Australia and Timor-Leste. It established the Joint Petroleum Development Area (JPDA) which had the same boundaries as Area A of the Zone of Cooperation under the Timor Gap Treaty; and sets out the terms for joint control, management and facilitation of exploration, development and exploitation of the petroleum resources. The MoU did not resolve the question of the seabed boundary between Australia and East Timor.
Timor Sea Treaty
1.35
On 20 May 2002 Timor-Leste gained independence, and Australian and Timorese representatives signed the Timor Sea Treaty. This treaty confirmed the 2001 interim arrangements of the Joint Petroleum Development Area under the MoU. Article 2(b) of the Treaty stated:
Nothing contained in this Treaty and no acts taking place while this Treaty is in force shall be interpreted as prejudicing or affecting Australia's or East Timor's position on or rights relating to a seabed delimitation or their respective seabed entitlements.
1.36
The Timor Sea Treaty was presented to the Australian Parliament for ratification on 5 March 2003 and the legislation to enact Australia's obligations under that treaty received Royal Assent on 2 April 2003.
International Unitisation Agreement
1.37
Article 9 of the Timor Sea Treaty deals with the unitisation arrangements under the treaty. Unitisation refers to the treatment of a field straddling a jurisdictional boundary as a single entity for management and development purposes. Article 9(a) states that any reservoir of petroleum that extends across the boundary of the JPDA shall be treated as a single entity for management and development purposes.
1.38
The Greater Sunrise Field in the Timor Sea (comprised of the Sunrise and Troubadour fields) is one such reservoir straddling the eastern boundary of the JPDA. Australia and Timor-Leste signed the Agreement relating to the Unitisation of the Sunrise and Troubadour Fields (Sunrise IUA) on 6 March 2003 providing a comprehensive framework for the joint development of the Sunrise and Troubadour Fields.
Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS)
1.39
Further negotiations between the two countries led to the signing of the Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS) on 12 January 2006 and it subsequently entered into force on 23 February 2007. The CMATS Treaty was intended to operate alongside the Timor Sea Treaty and the Sunrise IUA to provide stable legal and fiscal regimes for the exploration and exploitation of petroleum resources in the Timor Sea to the benefit of both countries. In its examination of the CMATS Treaty, the JSCOT committee summarised its purpose as allowing:
…for the exploitation of Greater Sunrise while ensuring that Australia and East Timor refrain from asserting or pursuing their claims to rights, jurisdiction and maritime boundaries, in relation to each other, for 50 years. Under the treaty, although the formal apportionment of Greater Sunrise under the Sunrise IUA remains the same, Australia has agreed to share equally (50:50) the upstream revenues from the resource.
1.40
At this time the following three treaties governed maritime arrangements between Timor-Leste and Australia in the Timor Sea without a resolution on a maritime boundary: the Timor Sea Treaty, the Sunrise IUA, and the CMATS Treaty.
2018 treaty establishing maritime boundaries in the Timor Sea
1.41
Events in the following years led Timor-Leste to consider the arrangements under the CMATS Treaty as unsatisfactory. On 3 May 2013 the Australian Government announced that Timor-Leste had initiated arbitration at the Permanent Court of Arbitration (PCA) in The Hague of a dispute related to the 2006 CMATS Treaty. Timor-Leste had advised that the arbitration related to the validity of the CMATS Treaty, which it argued was invalid because it alleged Australia did not conduct the CMATS negotiations in 2004 in good faith by engaging in espionage. The Australian Government responded to the spying allegations as follows:
These allegations are not new and it has been the position of successive Australian Governments not to confirm or deny such allegations.
However, Australia has always conducted itself in a professional manner in diplomatic negotiations and conducted the CMATS treaty negotiations in good faith.
Australia considers that the CMATS treaty is valid and remains in force.
1.42
On the eve of the first directions hearing at The Hague the Australian Secret Intelligence Service (ASIS) and the Australian Federal Police raided the home of a former ASIS operative, known as Witness K, and office of his lawyer, Bernard Collaery, who had also acted on behalf of Timor-Leste. When Australia refused to return the documents seized, Timor-Leste took action against Australia in the general division of the ICJ, and following an interim hearing in March 2014 Australia was ordered to seal the documents pending a full hearing at a later date.
1.43
On 11 April 2016 Timor-Leste commenced compulsory conciliation proceedings under Article 298 and Annex V of UNCLOS to resolve differences between the countries on a maritime boundary. A five member Conciliation Commission was constituted on 25 June 2016. With the agreement of the parties, the PCA acted as Registry in the proceedings.
1.44
Australia objected to the competence of the Conciliation Commission on a number of grounds and lost. This was the first time that the compulsory conciliation process under UNCLOS had been invoked.
1.45
As part of the conciliation process, on 9 January 2017, the then Foreign Ministers of Australia and Timor-Leste, together with the Conciliation Commission issued a joint statement announcing the termination of the CMATS Treaty.
1.46
Timor-Leste wrote to the PCA Arbitral Tribunal (in relation to the arbitration under the 2002 Timor Sea Treaty) on 20 January 2017, noting the Trilateral Joint Statement issued on 9 January 2017 by the Foreign Ministers of Timor-Leste and Australia and the Conciliation Commission, which advised Timor-Leste's decision to initiate the termination of the CMATS treaty pursuant to Article 12 (2) of the treaty. Accordingly, Timor-Leste further advised that the termination of the CMATS treaty would 'render the continuation of the arbitral proceedings unnecessary' and therefore Timor-Leste was withdrawing its claims and requesting the termination of proceedings of the Arbitral Tribunal pursuant to Article 30(2) of the PCA rules of procedure. On 23 January 2017 Australia agreed to the termination of the arbitration proceedings.
1.47
Over a period of 15 months the Conciliation Commission met regularly and held its last negotiating session in February 2018. The new Treaty between Australia and the Democratic Republic of Timor-Leste Establishing Their Maritime Boundaries in the Timor Sea (Maritime Boundaries Treaty) was signed in New York on 6 March 2018. The Department of Foreign Affairs and Trade advise that the treaty 'consists of a number of inextricably linked elements which are part of the overall agreement'. Among other things, the treaty:
established permanent maritime boundaries between Australia and Timor-Leste in the Timor Sea;
recognises both states' rights and creates the Greater Sunrise Special Regime for the joint development, exploitation and management of the Greater Sunrise gas field; and
includes transitional arrangements to provide regulatory certainty and continuity for affected investors in the oil and gas sector in the Timor Sea.
1.48
On the signing of the Maritime Boundaries Treaty, Australia's then Minister for Foreign Affairs, the Hon Julie Bishop MP, stated:
The outcome is a milestone for the parties and for UNCLOS and international law. It reinforces our respect for, and the importance of, the international rules-based order in resolving disputes.
1.49
Timor-Leste's Chief Negotiator, Kay Rala Xanana Gusmao, stated:
History is made today as Timor-Leste signs a treaty on permanent maritime boundaries that establishes, for the first time, a fair border between our two countries, based on international law. We thank the Commission for their patience, wisdom and trust, and the Australian representatives for their constructive engagement and spirit of cooperation.
1.50
After being ratified by both parliaments the new treaty entered into force on 30 August 2019 at the time of a visit by the Australian Prime Minister to Dili to commemorate the 20th anniversary of the referendum on the independence of Timor-Leste. Upon entry into force, the Maritime Boundaries Treaty terminated both the 2002 Timor Sea Treaty and the 2003 Sunrise IUA.