Global court takes up arbitration process

In a blow to Australia, an international arbitration court yesterday agreed to take up a decade-long maritime border dispute between East Timor and Canberra which cuts through lucrative oil and gas fields in the Timor Sea.

The Permanent Court of Arbitration (PCA) "held that it was competent to continue with the conciliation process" initiated by East Timor against Australia in April, the court based in The Hague said.

East Timor last month urged the body -- the world's oldest arbitration tribunal -- to help end the dispute that has soured relations between the two countries, saying negotiations had so far failed.

Australia in return had argued the PCA had no jurisdiction in the battle as Canberra had already signed a treaty with Dili ruling out any recourse to the court.

Dili yesterday welcomed the PCA's decision.

"Just as we fought so hard and suffered so much for our independence, Timor-Leste will not rest until we have our sovereign rights over both land and sea," the country's independence resistance hero and former prime minister Xanana Gusmao said.

Australian Foreign Affairs Minister Julie Bishop said Canberra "accepts the commission's decision and will continue to engage in good faith as we move to the next phase of the conciliation process."

"We are committed to working together to strengthen our relationship and overcome our differences in the Timor sea," she added.

Canberra's lawyers had also sought to argue that it had initiated talks with Dili through an exchange of letters in 2003 to try to solve the dispute.

But the panel said the exchange of letters between Canberra and Dili "did not constitute an agreement... because the exchange was not... legally binding."

And the PCA's five-member Conciliation Commission ruled the dispute should be settled under the UN Convention of the Law of the Sea, rather than the 2006 treaty -- called Certain Maritime Arrangements in the Timor Sea (CMATS) -- which covers the vast Greater Sunrise gas field lying between the two nations.

East Timor has also called for CMATS to be torn up after accusing Australia of spying to gain commercial advantage during the 2004 negotiations.