Post-Kiobel, the Lower Courts Are Only Pretending to Apply the Presumption Against Extraterritoriality in Alien Tort Statute Cases

In its recently released decision in Al Shimari v. CACI International (4th Cir. 2014), the Fourth Circuit followed a recent trend that has emerged in alien tort statute (“ATS”) cases, post-Kiobel. Like other courts grappling with questions of subject matter jurisdiction under the ATS, the Fourth Circuit purported to apply the presumption against extraterritoriality (“PAE”) in assessing whether it had jurisdiction over the plaintiff’s ATS claims. Also like other courts, however, the Fourth Circuit’s invocation of the PAE was pretense; it instead applied an entirely different doctrine which has, at best, only a passing connection to the PAE, or at least the PAE as it existed pre-Kiobel.

The plaintiffs in Al Shimari are four Iraqi citizens who allege that CACI, a U.S. government contractor providing “interrogation services” to the Department of the Interior, violated international law by torturing and mistreating prisoners at Abu Ghraib. Following the Supreme Court’s decision in Kiobel, however, the district court dismissed their claims under the alien tort statute (“ATS”), concluding that, under Kiobel’s newly issued guidance, there was no subject matter jurisdiction to hear the case, as the alleged torts all took place extraterritorially in Iraq. The plaintiffs appealed.

Constrained by Kiobel’s dictates, the Fourth Circuit analyzed its jurisdiction to hear the suit by applying what it described it called the PAE. After reviewing CACI’s “ties to the territory of the United States,” the court concluded that the plaintiffs’ ATS claims “touch[ed] and concern[ed] the territory of the United States . . . with sufficient force to displace the presumption against extraterritorial application.”

But the judicial doctrine that the Fourth Circuit applied was the PAE in name only. The analysis it performed was a lengthy balancing test, and, absent a single, perfunctory reference to congressional intent in enacting the TVPA, contains nothing that could be described as statutory construction (slip op., at 31).

This is hard to reconcile with the court’s claim that it was applying the PAE. The PAE is a longstanding canon of construction, with a well-developed pedigree, in which courts presume that a stature regulates domestic conduct unless otherwise specified. In Kiobel, however, the Supreme Court announced that, in interpreting the jurisdictional scope of the ATS, the PAE required the Court to construe the statute in a manner that precluded jurisdiction over a foreign plaintiff’s claim against a foreign defendant for foreign conduct. The First Congress had not intended for the ATS to regulate non-domestic conduct (or so SCOTUS claimed – I’ve noted my objections to this conclusion in prior posts), and, as a result, when a plaintiff brings a case in which “all the relevant conduct took place outside of the United States,” the ATS does not provide the federal courts with jurisdiction to hear it.

The true crux of Kiobel, however, is not its specific holding, but rather the Court’s deliberately ambiguous bit of dicta, in which it noted that “even where [a plaintiff’s] claims touch and concern the territory of the United States,” in order for there to be jurisdiction under the ATS the claims “must do so with sufficient force to displace the presumption against extraterritorial application.”

What “touch and concern” actually means is anyone’s guess. This includes the Court itself – Kiobel was a unanimous opinion, but of the nine justices who adopted Roberts’ majority, there appear to have been four different (and contradictory) opinions on what the phrase is intended to signify.fn1

Left with the unenviable task of trying to apply this cipher, the lower courts have largely done so by simply discarding Kiobel’s purported concern with territory, and replacing it with a concern for state responsibility for internationally wrongful acts. In effect, recent ATS cases are reading Kiobel to say, “[E]ven where [an ATS claim] touch[es] and concern[s] the [international responsibility] of the United States, [it] must do so with sufficient force” to render the case justiciable in a U.S. court.

This re-written version of Kiobel was applied by the Fourth Circuit in Al Shimari to conclude that ATS jurisdiction extends to a foreign plaintiff’s claim against a U.S. government contractor for conduct in foreign territory arising from a U.S. military operation. To explain this incongruous result, the Fourth Circuit concluded the PAE contains a previously unrecognized caveat that should only be applied when doing so serves the policies that the PAE was intended to promote:

[W]e observe that mechanically applying the presumption to bar these ATS claims would not advance the purposes of the presumption. A basic premise of the presumption against extraterritorial application is that United States courts must be wary of ‘international discord’ resulting from ‘unintended clashes between our laws and those of other nations.’

But that’s not how the PAE works. The PAE does not say “a U.S. statute can apply extraterritoriality so long as it doesn’t cause the discord with other states.” It is not a case-by-case balancing test.

Or at least it wasn’t prior to Kiobel. The PAE, as it was understood for the bulk of the 20th century, is used in interpreting how a statute applies to all cases, without consideration for the particularized facts of any individual suit. Although the PAE exists, in part, as a prophylaxis against international discord, its underlying policy considerations are not incorporated into its operation: a statute reaches extraterritorial conduct based on whether congress affirmatively indicated an intent for it to do so, without regard to whether the statute does or does not pose a risk of international discord. As the Supreme Court held in Morrison v. National Australia Bank, Ltd. (2009) http://www.supremecourt.gov/opinions/09pdf/08-1191.pdf, the PAE “applies regardless of whether there is a risk of conflict between the American statute and a foreign law.”

The PAE is used to establish a statute’s geographical area of effect. Once this determination is made, the statute’s territorial boundaries are fixed; they do not flex and bend to accommodate the unique policy interests raised by an individual lawsuit. If a person commits in an act within that territorial boundary, the statute applies. If that same person commits an identical act in a different location, outside that territorial boundary, then the statute does not.

But this isn’t what the recent ATS cases have done. Post-Kiobel, the ATS’s geographical scope could not be drawn on a map, because it is given a new delimitation for every case. Just look at Al Shimari – there, the Fourth Circuit concluded that the ATS’s jurisdiction extends to torture committed in Iraq because of the following factors:

[P]laintiffs’ ATS claims “touch and concern” the territory of the United States with sufficient force to displace the presumption against extraterritorial application based on: (1) CACI’s status as a United States corporation; (2) the United States citizenship of CACI’s employees, upon whose conduct the ATS claims are based; (3) the facts in the record showing that CACI’s contract to perform interrogation services in Iraq was issued in the United States by the United States Department of the Interior, and that the contract required CACI’s employees to obtain security clearances from the United States Department of Defense; (4) the allegations that CACI’s managers in the United States gave tacit approval to the acts of torture committed by CACI employees at the Abu Ghraib prison, attempted to “cover up” the misconduct, and “implicitly, if not expressly, encouraged” it; and (5) the expressed intent of Congress, through enactment of the TVPA and 18 U.S.C. § 2340A, to provide aliens access to United States courts and to hold citizens of the United States accountable for acts of torture committed abroad.

But only one of these factors – the allegation that CACI’s U.S.-based management tacitly approved of the conduct – is concerned with territorial location in any meaningful way. And that factor provides exceedingly weak support to the Fourth Circuit’s conclusion that ATS jurisdiction does extend to the plaintiffs’ claims in Al Shimari. Under the traditional PAE, as it was understood pre-Kiobel, extraterritorial conduct is not transformed into territorial conduct on the basis of corporate activity in the United States that supported or planned the foreign acts. For instance, in EEOC v. Aramco (1991), the Supreme Court invoked the PAE to conclude that Title VII does not extend to a U.S. corporation that recruited a U.S. citizen through recruitment efforts that occurred in the U.S., when the U.S. citizen is employed to work abroad and is fired abroad. And in Morrison, the plaintiffs “contended that they seek no more than domestic appli­cation [of the securities statute], since Florida is where [the defendant] and its senior executives engaged in the deceptive conduct of manipulating [its] financial models.” But the fact that U.S.-based corporate management planned the foreign conduct was not sufficient to escape the Court’s application of the PAE to the security statute, because the critical factor “is not upon the place where the [planning of the tortious conduct] originated, but upon [where the tortious conduct occurred].”

So if the courts aren’t applying the PAE, what are they applying?

This new doctrine, the PAE-for-ATS, is a PAE in name only. Its closest doctrinal kin are not canons of construction, which are concerned with statutory interpretation, but avoidance doctrines, which are concerned with justiciability. And as used by the lower courts so far, the PAE-for-ATS has had nothing to do with interpreting the text of the ATS, and everything to do with allowing the federal court system to avoid cases which are not appropriate for it to decide. The PAE-for-ATS therefore bears a much closer relationship with the political question doctrine (“PQD”) than it does to the PAE as it was known prior to Kiobel.

The PQD, like the PAE-for-ATS, is a case-specific balancing test which categorizes cases as justiciable or non-justiciable based on the existence of another governmental body’s competing and superior interest in the case’s subject matter. In applying the PQD to cases involving military operations (such as in Al Shimari, which, in addition to finding jurisdiction under the ATS, also remanded the case to the district court to further develop the PQD issue), the courts do so by “gaug[ing] the degree to which national defense interests may be implicated in a judicial assessment” of a claim, and then decline to adjudicate those cases which are fundamentally political, not legal. Taylor v. Kellogg Brown & Root Services (4th Cir. 2011). Through use of the PQD, would-be plaintiffs in cases concerning national defense are thereby deprived of the ability to “reshape the national response to threats of hostile [ ] attack through the mechanism of tort law.” Tiffany v. United States (4th Cir. 1991). The PQD recognizes that “some questions beyond judicial competence. Where the performance of a ‘duty’ is left to the discretion and good judgment of an executive officer [or the legislative branch], the judiciary will not compel the exercise of his discretion one way or the other, for to do so would be to take over the office.” Baker v. Carr (1962).

The PAE-for-ATS operates in the same way, except that where the PQD’s concern is with decisions that have been exclusively committed to a separate branch of the federal government, the PAE-for-ATS’s concern is with decisions that have been exclusively committed under international law to a non-domestic entity. And since the U.S. has no business in adjudicating a foreign sovereign’s responsibility to an alien arising from a breach of the foreign sovereign’s international obligations, the PAE-for-ATS quite appropriately excluded the federal courts from deciding the plaintiffs’ claims in Kiobel. U.S. courts should not be deciding questions which, under international law, they lack the adjudicative jurisdiction to consider.

But a state has every right (and often, in fact, an obligation) to evaluate its responsibility for a breach of its own international obligations. And that dovetails perfectly with the reason the ATS was enacted in the first place: to ensure that the federal government had the ability to redress injuries of foreign nationals that were caused by a breach of the U.S.’s responsibilities under international law. And a state also has every right to evaluate a foreign actor’s violations of its international obligations to the adjudicating state – such as in the case of pirates, who violate the rights of all nations.

Thus, lower courts have been implicitly concluding that, under the PAE-for-ATS, cases are sorted as justiciable or nonjusticiable based on whether they “touch and concern” the international rights or responsibilities of the United States with “sufficient force” to support U.S. adjudicative jurisdiction. The court have found, for instance, that they can properly hear an ATS claim brought against a U.S. citizen who assisted, managed, and advised a foreign nation’s violations of international law (Sexual Minorities Uganda v. Lively (D. Mass. 2013)); a claim brought against U.S. citizens and a U.S. organization who organized and funded terrorist bombings in Sri Lanka (Krishanti v. Rajaratnam (D.N.J. 2014)); a claim brought by foreign nationals injured in a foreign terrorist attack against a U.S. embassy in a foreign state (Mwani v. Laden (D.D.C. 2013)); or a claim against a U.S. company and citizen that created technology used by China “to identify and torture dissidents” (Daobin v. Cisco (D. Md. 2014) (assumied without deciding)).fn1

On the other hand, the courts have found that a case involving a U.S. corporation whose foreign subsidiaries aid-and-abet a foreign state’s breaches of international law, by doing business in that state, is not a case which should be heard in a U.S. court, or at least not in the absence of some additional set of facts that might create a compelling link implicating U.S. responsibility (Balintulo v. Daimler (2d Cir. 2013)). Nor should federal courts be adjudicating a claim brought by a Bangladeshi plaintiff against a Bangladeshi business and citizen for torture occurring in Bangladesh also does not implicate U.S. responsibility (Chowdhury v. Worldtel (2d Cit. 2014)); a claim brought by Chinese citizens and residents against a Chinese media executive who promoted the torture of Falun Gong practioners in China (Gang v. Zhizhen (D. Conn. 2013)); a claim brought by Indian citizens against an Indian political party for organizing acts of genocide, rape, torture, summary execution, and extrajudicial killing, all of which took place in India (Sikhs For Justice Inc. V. Indian National Congress Party (S.D.N.Y. 2014)); a claim of extrajudicial killing and torture brought by relatives of an Iranian citizen against the Islamic Republic of Iran and the Revolutionary Guard (Mohammadi v. Islamic Republic of Iran (D.D.C. 2013)); or a claim brought by a former Ukrainian prime minister against a Swiss corporation that allegedly bribed Ukrainian officials to have her “prosecuted on unfounded, politically-motivated criminal charges,” as revenge against the prime minister for enactment of a policy that caused the corporation commercial harm (Tymoshenko v. Firtash (11th Cir. 2014)).

Two things stand out from these cases. First, it is simply not possible to predict whether a court will find jurisdiction in an ATS case by looking at the GPS coordinate of the jail cell where alleged acts of torture occurred. But it does appear to be possible to predict whether a court will find jurisdiction based on whether or not the claim is based on a breach of the United States’ obligations or rights under international law.

Second, although there are only a limited number of post-Kiobel cases so far, they are already difficult to reconcile with one another, if understood as in the context of the PAE. For instance, when applying the PAE, it is very hard to square’s Balintulo finding that ATS jurisdiction did not extend to conduct by a U.S. corporation’s foreign act with Al Shimari’s finding that foreign torts are not extraterritorial where, inter alia, managers at the U.S.-based corporate headquarters “attempted to ‘cover up’ the misconduct”, or with Krishanti’s conclusion that jurisdiction exists against a corporation that raised funds in the U.S. to support a terrorist bombing in Sri Lanka.

These cases are consistent with one another, however, when considered under the newly created PAE-for-ATS, as the defendants in Krishanti and Al Shimari took actions which could implicate U.S. responsibility on the international plane, while the Balintulo defendants did not.

For now, the federal courts are bound by Kiobel’s pretense that it applied the PAE, and must continue to awkwardly retrofit a PAE analysis onto a decision based on international responsibility rather than territory. But if the Court were to announce that the ATS’s version of the PAE is not the same as the traditional version, what should the standards of this new doctrine look like?

The standards applied in PQD cases would be a good place to start. Under the PQD, there are six primary factors which courts consider in determining whether a case is nonjusticiable:

Prominent on the surface of any case held to involve a political question is found [1] a textually demonstrable constitutional commitment of the issue to a coordinate political department; or [2] a lack of judicially discoverable and manageable standards for resolving it; or [3] the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or [4] the impossibility of a court’s undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or [5] an unusual need for unquestioning adherence to a political decision already made; or [6] the potentiality of embarrassment from multifarious pronouncements by various departments on one question.

Because the PQD and PAE-for-ATS serve the same principles (but differ in that first doctrine addresses only an intra-governmental division of power, while the latter addresses both intra-governmental and inter-governmental divisions), these factors would work well for evaluating ATS cases. Under the PAE-for-ATS, courts would find that:

Prominent on the surface of any case held to involve a question of foreign international responsibility not involving U.S. interests, and therefore not appropriate for a U.S. court to adjudicate, are [1] an international norm committing the issue to a foreign sovereign or IGO; or [2] a lack of judicially discoverable and manageable standards for resolving it; or [3] the impossibility of deciding without a foreign policy determination of a kind clearly for nonjudicial discretion; or [4] the impossibility of a court’s undertaking independent resolution without expressing lack of the respect to a foreign sovereign; or [5] a need for adherence to an international obligation of the United States which would prohibit the U.S. from adjudicating and enforcing a particular case; or [6] the potentiality of embarrassment from multifarious pronouncements by various branches of the U.S. government on one question.

Finally, in addition to an adapted version of the Baker factors, courts applying the PAE-for-ATS should also look at factors that support the case’s adjudication in a U.S. court. These factors are: (1) the need for adherence to an international obligation of the United States which would require (or strongly urge) the U.S. to adjudicate and enforce a particular case; (2) whether the plaintiff’s claims allege conduct by the defendants for which the U.S. could bear international responsibility; (3) whether the foreign sovereign(s) whose rights(s) are implicated by the suit have indicated their support for the adjudication of the suit by a U.S. court; (4) whether the executive branch has indicated that adjudicating the suit is consistent with the U.S.’s international obligations; or (5) the existence of an internationally wrongful act that violates the U.S.’s rights under international law, for which the U.S. is entitled to seek redress (such as in the case of pirates or terrorist acts against the U.S.).

-Susan

fn1. Also left unanswered is why, in describing this new test, SCOTUS chose to adopt a phrase which was originally used as a test to evaluate covenants on the use of real property. I’m just waiting for a creative ATS defendant to argue that, by using the phrase “touch and concern,” the Court was subtly implying that ATS cases, like real covenants, can only be upheld if they are “so related to the [United States'] land as to enhance its value and confer a benefit upon it.”

fn2. Although the issue has yet to be decided, post-Kiobel, I suspect that the courts would find that “harboring” cases — cases in which, like Filartiga and Samantar, a foreign official has moved to the U.S. after committing violations of international law in his home state – are also within the reach of the PAE-for-ATS. Offering sanctuary and immunity to a violator of international law could implicate the U.S.’s responsibility under international law, depending on the specific facts of a case. For instance, whether or not the deposed dictator’s home state opposed or supported the U.S.’s adjudication of the dispute would be very much relevant to the determination. And, if the PAE-for-ATS were officially recognized for what it is, the courts could easily take this factor into account, either through letters from the executive branch, or from the foreign state itself.

Google Earth Map for the Timor Sea Maritime Boundary Dispute

Google Earth is an amazing thing, and it’s hard to understand what’s truly going on in the Timor Sea simply by looking at pictures, so I’ve created a Google Earth collection that shows the coordinates provided in the major treaties affecting the region: the 1972 Indonesian-Australian Seabed Boundary Agreement [PDF], the 1981 Provisional Fisheries Surveillance and Enforcement Arrangement [PDF], the 1989 Timor Gap Treaty, the 1997 Water Column Boundary Agreement, the 2002 Timor Sea Treaty, and the 2006 Sunrise IUA/CMATS.

The Google Earth collection for the Maritime Boundaries in the Timor Sea can be downloaded here.

Map Explosion

if you display all of the treaties at once, it kind of looks like a rainbow threw up in the Timor Sea

If you’re interested in figuring out how all these treaties work together, it is probably more useful to just go ahead and play around with it on Google Earth, but I’ve provided a visual summary below using screencaps from the collection.

I. The Indonesian-Australian Seabed Boundary Agreement (1972)

In the beginning, there was the gap:

1972 Seabed Boundary, with coordinates

1972 Seabed Boundary, with coordinates

Australia and Indonesia entered into the 1972 seabed boundary treaty, which established a maritime boundary that was significantly north of the median line between Indonesia and Australia. The boundary in front of Portuguese-controlled Timor remains unfixed.

In 1975, Portuguese exited the scene, and Indonesia promptly invaded. Indonesia and Australia try, and fail, to enter into an agreement establishing the maritime boundary between Australia and Indonesian Timor.

II. The PFSEL (1981)

In 1981, Indonesia and Australia still had not entered into any permanent treaty arrangements over their maritime boundaries, but they did succeed in reaching a Memorandum of Understanding concerning the Provisional Fisheries Surveillance and Enforcement Arrangement. This MOU did not establish any agreement as to the seabed resources, but provided a working arrangement for other maritime concerns in the region by establishing the Provisional Fisheries Surveillance and Enforcement Line (PFSEL). The PFSEL was drawn roughly along the median between the coasts of Timor and Australia, and this line would later be largely replicated as the water column boundary in the 1997 Treaty between the Australia and Indonesia, establishing an Exclusive Economic Zone Boundary and Certain Seabed Boundaries

1972 seabed boundary (red) and 1981 PFSEL (white)

1972 seabed boundary (red) and 1981 PFSEL (white)

III. The Timor Gap Treaty (1989)

In 1989, Australia and Indonesia entered into the Timor Gap Treaty, which came into effect in 1991. The TGT, if taken in a generous light, could be described as a “creative compromise.” It was ultimately reached by simply setting aside the question of maritime boundaries, and instead establishing three ‘zones of cooperation’ in which Australia and Indonesia could jointly produce the petroleum found in the disputed Timor Sea region. Tax revenues from Zone A were split between Australia and Indonesia 50%/50%; in Zone B, Australia paid Indonesia 10% of the tax revenues it collected; and in Zone C, Indonesia paid Australia 10% of the tax revenues it collected.

The three 'Zones of Cooperation' established by the Timor Gap Treaty (1989)

The three ‘Zones of Cooperation’ established by the Timor Gap Treaty (1989)

The coffin-shaped design of the Zone of Cooperation Whole (“Zone”) was a deliberate choice made by Indonesia and Australia, and it does not directly reflect maritime boundaries that would be suggested by international law. Essentially, the parties agreed that the widest part of the Zone would be placed where the “Timor gap” lay, in between the opening left by the 1972 seabed boundary line, and the Zone would then become narrower both to the north and south of the Timor gap.

Northern and Southern Boundaries of the Zone

The northern and southern boundaries of the Zone have a relatively objective basis for their placement. The northern boundary of the Zone is drawn along the deepest point of the Timor Trough, and represents the full extent of Australia’s claim to the Timor Sea under its “natural prolongation” principle. Australia’s maritime claims are based on its belief that it has sovereign rights to the entirety of its continental shelf — which in its view, extends to the lowest point along the seafloor between two adjacent states:

Eastern boundary of the Zone of cooperation, with elevation profile showing Timor Trough/Northern boundary of Zone

Eastern boundary of the Zone of cooperation, with elevation profile showing Timor Trough/Northern boundary of Zone

In contrast to the northern boundary, the southern boundary of the Zone is drawn along a line 200 nautical miles off the coast of the island of Timor. This represents the fullest possible extent of a state’s claim to an EEZ under UNCLOS. When the sea between two adjacent states is less than 400nm (as is the case in the Timor Sea), both states are unable to have a full 200-mile EEZ, and instead the EEZ is typically drawn along a median line. However, when negotiating the Timor Gap Treaty, the parties’ compromise in setting the Zones of Cooperation is that it would reflect both Indonesia and Australia’s maximum possible maritime territorial claims.

Southern boundary of the Zone is 200 nautical miles off from Timor's coast

Southern boundary of the Zone is 200 nautical miles off from Timor’s coast

Internal Zone Boundaries

The division between Zone A and Zone B is drawn along the median between Australia and Timor. This boundary is close — but not identical — to the median line established in the Provisional Fisheries Surveillance and Enforcement Arrangement, along the PFSEL. (Side note: the 1997 water column agreement between Australia and Indonesia establishes a median line that is identical to the PFSEL for every point outside of the Timor Gap. Inside the Timor Gap, the points of the 1997 boundary correlate to the points of the Timor Gap Treaty, but with coordinates that run slightly to the north of the TGT’s points.)

TS6

Close-up of the western leg of the boundary between Zone B (south, green) and Zone A (north, blue), showing the coordinates from PFSEL (black dot, purple text) and the 1997 Water Column treaty establishing the median boundary (white),  as well as the identical coordinates of the Timor Gap Treaty (1989) and Timor Sea Treaty (2002)  (overlapping, depicted  in green in screen cap).

The division between Zone C and Zone A lies somewhat close to the original 1972 seabed boundary, but the angle of the division does not all match the angle of the 1972 division. Instead, it appears as if Zone C was demarcated on the basis of seabed features, as it appears to track a ridge on the southern side of the Timor Trough, where the “canyon” levels off somewhat (marked with red arrow on map, elevation data shown on bottom), which leads to the northern and southern boundaries of Zone C being somewhat parallel:

Southern plateau of Timor Trough, marking southern boundary of Zone C

Southern plateau of Timor Trough, marking southern boundary of Zone C

Western Lateral Boundaries of Zones A and B

The lateral boundaries of the Zone (marking the width of the Zone as it runs east-west) are more arbitrarily drawn than the longitudinal boundaries. The western lateral boundary of the Zone is particularly odd, as it is in fact two different boundaries. Unlike the eastern boundaries for Zones A and B (which are roughly identical) the western boundaries for Zones A and B show a marked and unexplained divergence. It appears that the western boundary of Zone A (in royal Blue) was established by a line drawn from the mouth of the Kamanasa River through the point of A17, which then terminates where it meets the median boundary between Australia and Indonesia (in white), to intersect at the point marked by point B(e). The western boundary of Zone B (in cyan), although roughly similar, runs at a different angle from Zone A’s boundary. Zone B’s boundary appears to have been established by drawing a line from the mouth of the Tafara River through point B(e), which then terminates where it meets the 200 nautical mile line of Timor’s EEZ (the southern border of Zone A), to intersect at the point marked by B(d):

Eastern and Western lateral boundaries of Zone of Cooperation, extended to shore of Timor

Eastern and Western lateral boundaries of Zone of Cooperation, extended to shore of Timor
(The points marking A(c) and A(n) are not pictured, because their coordinates are the same as points A16 and A17 from the 1972 Seabed Treaty. Note that A16 and A17 are the bookends to the “Timor gap”.)

The logic behind the placement of the Zone’s western boundary is not immediately apparent. It is often said that the western boundary is a “simplified” equidistant line that divides the territorial seas between Portuguese Timor and Indonesia, but there is reason to question this assumption. First, the western lines simply don’t appear to be an equidistant boundary, as it is claimed; it may perhaps be a “simplified” line of equidistance, but if so, it’s an unintuitive approximation of that. Second, the boundaries of the Zones are unerringly straight; they draw direct line into the coasts, and not angled in a manner that would suggest they are following an organic boundary division. And, third, based on the historical context, it makes little sense for the lateral boundaries of the Zone to have been drawn along a line of equidistance. In 1989, there was only a single sovereign on the island of Timor, and that was Indonesia. The purpose of the Timor Gap Treaty was to resolve the division of an undelimited maritime boundary between a sovereign that held the entirety of the north and a sovereign that held the entirety of the south; there was absolutely no need to calculate the boundary of two adjacent sovereigns on the northern side, or to have the division of the Zone reflect that. The Zone was plainly a compromise, as shown by its Trough-marked northern border and 200nm southern border, and there is no reason to assume that the western and eastern border were not also based on pragmatic considerations — as opposed to reflecting the sovereign territory of the state of Timor-Leste, which no longer existed.

And from the maps, it does very much appear that the western boundaries had been drawn in reference to geographic features on Timor. Both the Zone A and Zone B western boundaries line up directly with river mouths on Timor’s shore:

Extension of western boundary of Zone B (green) and Zone A (blue) to Timor shore

Extension of western boundary of Zone B (green) and Zone A (blue) to Timor shore

If the Zone established by the Timor Gap Treaty were the result of compromise and pragmatically drawn boundaries (which, from all the evidence, appears to have been the case) then it makes more sense that the western boundary was not intended to represent the then-nonexistent Timor-Leste’s territorial waters, but instead was chosen on the basis of other concerns. Yes, using the Tafara and Kamanasa Rivers to establish the western boundaries for the Timor Gap Treaty would be somewhat arbitrary, as these two rivers are not themselves significant boundary markers, but that further suggests that the boundary had little or nothing to do with Timor-Leste. The mouth of the Massin river, called the Mota Talas, is a far more significant geographical marker. The Massin River, which is the river immediately to the west of Tafara and Kamanasa, is the is the boundary between Timor-Leste and Indonesia today. If the Zones of Cooperation had truly been drawn to delineate the territorial sea of what was Portuguese Timor, then you would expect the western boundary of the Zone to lead directly to Mota Talas.

But it doesn’t. Below, Mota Talas has been marked with a black pushpin, and the boundary line from Mota Talas to point B(e) has been marked in black, showing what a boundary from Mota Talas would look like, compared to a boundary from either Kamanasa or Tafara:

Angle of hypothetical boundary drawn from the Timor-Leste/Indonesian border through the point marked B(e) from Timor Gap Treaty (in black)

Angle of hypothetical boundary drawn from the Timor-Leste/Indonesian border through the point marked B(e) from Timor Gap Treaty (in black)

Close-up of the theee rivers where western lateral boundaries converge on shore of  Timor

Close-up of the theee rivers where western lateral boundaries converge on shore of Timor

So why draw the western boundary from Tafara or Kamanasa instead of Mota Talas? Admittedly, this distinction doesn’t make a huge difference in terms of total sea area — using the boundary drawn from Tafara, marked by the cyan line, instead of the boundary drawn from Mota Talas, marked by the black line, would exclude approximately 131 square nautical miles from the shared territory of Zone A, leaving it exclusively in Australia’s possession.

Given this marginal difference in total area, even if the lateral boundary should have been drawn from Mota Talas, is Timor-Leste truly prejudiced today by having a territorial sea that is drawn from the Tafara or Kamanasa, instead of from Mota Talas?

Well, yes. One reason why Australia may have chosen not to use Mota Talas becomes immediately apparent once you turn on the markers for the Laminaria-Corallina gas fields:

TS12

Close-up of western boundary of Zone A, showing boundary line of Zone A (blue), boundary line of Zone B (green), and a hypothetical boundary line drawn from Mota Talas line (black). Note the convenient placement of Laminaria-Corallina wells, which would all have bee enclosed in the JPDA/Zone a had the boundary been drawn from the actual border of Timor-Leste and Indonesia. By drawing the line instead from two rivers farther along Timor-Leste’s coast, Australia can claim 100% of the tax revenues from  the Laminaria-Corallina fields.

It could be a coincidence. But you can understand my skepticism.

In any event, if the western lateral boundary of Timor’s EEZ and territorial sea were to be re-drawn today (and, if I were in charge of the world, the one that I would I draw),a more appropriate division might be provided by the proposed boundary depicted below, in yellow:

Alternative western lateral boundary between Australia, Indonesia, and Timor-Leste (yellow)

Alternative western lateral boundary between Australia, Indonesia, and Timor-Leste (yellow)

This boundary preserves the angle established by the Timor Gap Treaty (and the Timor Sea Treaty), which is not terribly far off from the angle of an equidistant line, but it shifts the maritime boundary’s starting point to its appropriate beginning at Mota Talas.

This proposed division also reflects the equidistant-influenced 1972 Seabed Boundary. Although the 1972 line was drawn to reflect Australia’s “natural prolongation” claim, the ultimate boundary was a compromise between a continental shelf division (which lies along the Timor Trough) and an equitable division based upon the shape of the Timorese and Australian coast line. The boundary line that runs between points A18 and A17 of the 1972 treaty partially reflect the straightening of Timor’s coast, as it turns to run more directly east — and this straightening in the coast begins just before the border of Indonesia and Timor-Leste. This would also suggest that a more appropriate maritime boundary between Timor-Leste and Indonesia would fall somewhere west of A17 and east of A18, instead of on A17 itself.

Eastern Lateral Boundaries of Zones A and B

The eastern lateral boundaries of Zones A and B are nearly aligned, with angles that have only the barest degree of difference. The boundary has been established along a line that starts in the middle of the island of Leti (at mile 4 of an 8-mile island), and then moves southwest until it meets the 200nm boundary south of Zone B. Its angle is somewhat arbitrary, though; instead of drawing the eastern boundary through A16, as might be expected, the line intersects the 1972 boundary between A16 and A15. In some respects, it could have been drawn to represent a “simplified” line of equidistance. But, once again, as with the western boundary, there is only an approximate resemblance to the hypothetical equidistant line, and it has a more pronounced convergence away from Timor than would be expected, if the boundary were based on a territorial division between Indonesia and Timor-Leste. And, also like the western boundary, there is no reason to expect that, in 1989, Indonesia and Australia would have established the eastern boundary of their Zone of Cooperation so as to reflect the appropriate territorial division between Australia, Indonesia, and a nonexistent third state.

The eastern boundary may also have been established simply to mirror the angle of the western boundary, and provide for a more symmetrical Zone. Whatever the reason, the eastern boundary goes from Leti Island on a westerly angle to where it intersects the median line, at the point marked by A(m) (which is now point M from the Timor Sea Treaty), before finally terminating at the 200nm line, at the point marked by B(b).

But the angle created by starting the boundary at Leti is unequitable and arbitrary when applied to a territorial division between three sovereigns. When the eastern boundary was created, that wasn’t an issue, since all of the islands were Indonesian; Leti served as a convenient geographical base to use as a reference point in plugging up the Timor Gap, and the boundary did not need to take into account the competing claims of a sovereign state across the channel from Leti. A more equitable line might be something approximately along the boundary line shown below, in yellow. This boundary represents an equidistant division beginning at the median of Leti and Jaco, but which angles back towards the west to represent the effect of Indonesia’s straight baselines. The territory covered by the Sunrise IUA has also been shaded in, in orange, for reference:

TS14

Alternative eastern lateral boundary between Australia, Indonesia, and Timor-Leste (yellow)

Once again, the result of this change is small, but significant. Timor-Leste’s territory would encompass an approximately 70% of the Sunrise-Troubadour field region, as opposed to the 20% that falls within the JPDA today.

Eastern and Western Lateral Boundaries of Zone C

The lateral boundaries for Zone C (which converge closer towards Timor) are almost entirely arbitrary: they were established by taking the northern-most point on the Australian coast that lies to the east of the Timor gap (Melville Island) and the northern-most point that lies to the west of the gap (Long Reef) and then drawing a line from those geographical features through points A16 and A17, respectively. Those lines then terminate where they intersects with the Timor Trough (northern boundary of Zone C).

The western and eastern lateral boundaries of Zone C are shown below, with extensions drawn to the northernmost points of Long Reef and Melville, for reference:

Lateral boundaries of Zone C, drawn from Melville Island through A16 to the Timor Trough (eastern), and from Long Reef through A17 to the Timor Trough (western)

Lateral boundaries of Zone C, drawn from Melville Island through A16 to the Timor Trough (eastern), and from Long Reef through A17 to the Timor Trough (western)

Timor Gap, All Lateral Lines

Finally, by extending the lateral boundaries of Zone B south, to where they meet the Australian coast, and north, to where they meet the coast of Timor, you can see the truly inequitable shape created by the Zones of Cooperation (and, subsequently, by the JPDA):

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IV. Timor Sea Treaty (2002) and the Joint Petroleum Development Area 

Following Timor-Leste’s independence, Timor-Leste and Australia negotiated the Timor Sea Treaty. The TST essentially preserved Zone A of the TGT, shown below in royal blue, and provided for a division of control and tax revenue from petroleum production in that area. Following the TST, the status of the areas to the east and west of the JPDA that lie between the red and white lines remained uncertain.

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V. The Sunrise IUA and CMATS (2006)

Following the boundary lines established by the TST, approximately 80% of the resource-rich gas fields known as Greater Sunrise remained in no-man’s land. Although the 20% of Greater Sunrise that lies within the JPDA would be governed by the TST (with revenues split 90%/10% in Timor-Leste’s favor) the other 80% of Greater Sunrise was unaccounted for by the TST. Under the Certain Maritime Arrangements in the Timor Sea treaty, which put it into place the earlier (but unratified) Sunrise IUA, a Greater Sunrise area was established, shaded in orange below, which provided for Timor-Leste and Australia to split the revenues from production within the area 50%/50%.

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VI. The Lowe Opinion

The Lowe Opinion (2002) is a paper that was prepared at the behest of an energy company that had previously been divested from any opportunity of developing the oil and gas fields in the Timor Sea. Following Timor-Leste’s independence, corporations who were not among the select consortium that had an enshrined right in the Australian-issued leases (i.e., everyone other than Woodside and its JV buddies) had a financial stake in encouraging Timor-Leste to take a more aggressive stance in negotiations with Australia regarding the delimitation of the seabed boundary.

The Lowe Opinion was intended to encourage Timor-Leste to do just that, and, in order to show Timor-Leste the full extent of what was potentially on the bargaining table, it proposed an alternate plan for establishing the maritime boundaries between Timor-Leste and Australia that was tilted in Timor-Leste’s favor. It did so primarily by drawing the southern/northern boundary along the median boundary (in white), and then re-drawing the lateral boundaries in an, err, aggressively equitable fashion, so that Timor-Leste had more maritime territory to the east and west of the JPDA. The proposed lines from the Opinion are shown below in neon pink:

The proposed maritime boundaries of the Lowe Opinion

The proposed maritime boundaries of the Lowe Opinion

The eastern lateral boundary shows two hypothetical lines — one is a median line drawn equidistant between Timor and Leti’s coasts, while the line farther east is drawn so as to give only a partial effect to the Leti Islands, owing to their smaller size.

The Lowe Opinion does correctly point out that points A17 and A16 from the 1972 Indonesian-Australian Seabed Boundary are arbitrary points that reflect what was convenient to the drafters of the Timor Gap Treaty, rather than reflecting what international law would provide for. Although the Opinion’s western lateral boundary is overly generous, and just as arbitrary as the JPDA’s current western boundary, it does represent a good faith claim Timor-Leste could have asserted when going into negotiations with Australia. (And it is certainly far more reasonable, and far more in good faith, than Australia’s own starting position was.) The eastern lateral boundaries proposed in the Lowe Opinion range from fairly reasonable to, at the most extreme, a fairly unreasonable discounting of Indonesia’s own territorial seas. The effect the Lowe Opinion’s proposed eastern lateral boundaries would have, if adopted, would be to place all, or substantially all, of Greater Sunrise within the EEZ of Timor-Leste.

-Susan

How Australia Overplayed Its Hand in the Timor Sea

In 1976, the Australian ambassador to Indonesia wrote that, in deciding whether to support the right of the Timorese people to self-determination or to instead accede to Indonesia’s annexation, Australia faced a choice between “Wilsonian idealism” and “Kissengerian realism.” For reasons having a lot to do with petroleum, Australia decided to go with what it saw as the latter option.

Today, the Timor Sea dispute remains unresolved, and it is clear that Australia still has not decided to go with the “Wilsonian idealism” option. But if Australia thinks that its strategy has instead been one of “Kissengerian realism,” then it is sadly flattering itself. Australia’s strategy isn’t “realist” – it’s petty bullying motivated by a very narrow political economy concern.

The short-term results for Australia have been somewhat favorable, if mixed, but there is reason to doubt that this strategy will ultimately be in Australia’s long-term interests. Thus far, Australia has now spent over forty years pursuing a sovereignty claim that was long ago discarded by international law, and, so far, its reach has continually exceeded its grasp.

I. Australia Overplays its Hand with Indonesia

In the early 1970s, Australia was fighting a losing battle under international law. The law of the sea had begun to coalesce around the concept of the Exclusive Economic Zone (EEZ), which would grant states a right to exploit the natural resources that were within 200 nautical miles of its shores. Australia — which happens to enjoy extremely long, sloping continental shelves off of its coasts — was attempting to also obtain recognition for its claim to the resources within the “natural prolongation” of its continental shelf, even where this prolongation extended beyond its 200 mile EEZ.

But the rest of the world wasn’t buying it. Australia did its best to advocate for its continental shelf claims, but itwas well aware that international law was trending against it.

In 1971 and 1972 however, Australia was able to enter into seabed boundary treaties with Indonesia that largely reflected Australia’s “natural prolongation” position. By general consensus, Australia succeeding in taking “Indonesia to the cleaners” in reaching these agreements, as the resulting treaties were drawn much closer to Indonesia’s shores than to Australia’s, and adhered to a dying position under international law. Indonesia’s acceptance of these borders can be explained by political factors, more so than legal ones, as it was clear even in 1972 that the natural prolongation principle was becoming rapidly becoming disfavored under international law.

The treaties with Indonesia did not establish the maritime boundary between Australia and Portuguese Timor, however, which resulted in the infamous “Timor gap.” Portugal insisted that any maritime boundary between Timor and Australia be drawn along a more equitable division, on a median line that was equidistant between the shores, as provided by not-yet customary international law. The dispute became even more acute in 1974, Portuguese Timor leased out mining rights in the Timor Sea to a U.S. corporation, for a portion of the seabed expanse lying on Timor’s side of the equidistant line. Australia protested, as it had already leased out that territory itself, to what was then Woodside-Burmah Oil. Although Australia knew its claims to the seabed were disputed, Australia had made assurances to Woodside-Burmah, and to other corporations with leases in the Timor Sea, that the Australian government would defend its claims to that territory should there ever be any international conflict as to Australia’s title. 

So Australia made the deliberate choice not to enter into any conclusive agreements with Portugal concerning its maritime boundaries with what is now Timor-Leste. Rather than accept an equitable seabed division, Australia gambled on a chance to acquire a much more extensive portion of the Timor Sea, by standing by and awaiting a more amenable government to come into power in Timor-Leste.

Describing what Australia did as “standing by” is something of an understatement, in truth. Australia’s involvement in the annexation was not entirely passive acceptance. In the months prior to the invasion, Indonesia had not made East Timor a priority, and, if anything, Indonesia indicated a great deal of ambivalence towards its role in the island’s future. Afterwards, once the invasion had taken place, Indonesia repeatedly expressed its belief that Australia “green lighted” the takeover of Timor —  a claim which Australia would describe as simply a unfortunate misunderstanding on Indonesia’s part. It’s not difficult to see where Indonesia got the impression from. There was an undeniable “nudge nudge, wink wink” quality to the Australian Prime Minister’s pre-invasion statements to Indonesia, such as his announcement that “an independent Timor would be an unviable state and a potential threat to the area.” (Two years later, the Indonesian Foreign Minister would deny that Australia told Indonesia to go ahead with the invasion – instead, Australia merely told Indonesia that it accepted the invasion was inevitable, so Indonesia “should do it as quickly as possible.”)

Australia had imagined that, once Indonesia was in control, Australia would be able to easily secure a boundary agreement that drew a straight boundary line across the East Timor maritime area, between the very favorable Indonesian-Australian maritime boundaries to the east and west of East Timor:

The blue line shows the Indo-Australian maritime boundary, as established in the parties’ 1971 and 1972 treaties. The green line shows the median boundary line between Australia and the island of Timor.

But in the end, the Indonesian annexation of East Timor did not work out as Australia had anticipated. As it turned out,  although Indonesia had previously so accommodating with its seabed boundaries, by 1977 it was no longer quite so keen on accepting maritime treaties that disproportionately favored Australia’s interests over its own. Indonesia resisted Australia’s attempts to secure an inequitable seabed delimitation, and it was not until 1991, a full fifteen years after Indonesia’s invasion of East Timor, that the Timor Gap Treaty came into effect between Indonesia and Australia.

And then, a mere eight years later, Timor-Leste gained independence after all, and all of Australia’s hard work in securing the Timor Gap Treaty was wiped away. The treaty was so blatantly indefensible that Timor-Leste had little difficulty in convincing the world that Timor-Leste, as the successor state, would not be bound by its terms.

II. Australia Overplays Its Hand with Timor-Leste

After Timor-Leste came into existence, Australia was forced to renegotiate the division of the Timor Sea, in order to secure its access to the seabed resources on Timor-Leste’s side of the median line. Going into treaty negotiations, Australia had every advantage over Timor-Leste in terms of size, power, infrastructure, capital, and statecraft experience, but Timor-Leste had at least one thing in its favor. While Timor-Leste was weaker than Australia on every other conceivable measure, Timor-Leste had the stronger claim under international law.

Australia responded the same way every powerful nation does, when it finds itself on the wrong side of international law in a dispute with a weaker nation: it did everything it could to remove international law from the equation. After years of negotiations – during which Australia’s negotiation strategies included economic blackmail and espionage, and likely bribery as well – Australia eventually succeeded in inducing Timor-Leste to enter into to a series of treaties that eliminated any possible recourse to international law to resolve the parties’ conflicting territorial claims. (*1)

And this strategy made sense. States are encouraged to negotiate with one another to resolve disputes regarding the delimitation of their respective EEZs or continental shelves, and there’s nothing wrong with Australia’s hardline position in negotiating over the Timor Sea’s petroleum. (Well, nothing wrong with it aside from the whole espionage part, anyway.) UNCLOS provides that the agreements over the division of the seabed boundaries should be reached “on the basis of international law,” but that doesn’t mean that any resulting treaty has to divide the territory in the manner that international law would dictate. States are free to reach treaty terms that, while based on international law, deviate extensively from how the ICJ might have accomplished the territorial division, had the task been given to the ICJ instead.

But in the case of the Timor Sea Treaty, and the International Unitisation Agreement for Greater Sunrise, and the Certain Maritime Arrangements in the Timor Sea Treaty, it looks as if Australia may have grossly overplayed its hand. These treaties were not simply the result of Australia driving a hard bargain over a disputed point of international law – they were the result of a decades-long strategy of coercive bargaining aimed at securing sovereignty over territory to which it had no defensible legal claim.

And the end result? Australia’s great prize has been an expensive, unproductive, and uncertain stalemate. It has been fifteen years since Australia first began to negotiate with Timor-Leste’s emergent government over the division of the Timor Sea, and the Greater Sunrise gas fields are no closer to completion today than they were on the day that Timor-Leste voted for independence. The corporations that hold mining rights in the disputed seabed territories do not have any more legal certainty today than they had forty years ago, before Indonesia’s annexation of East Timor.

Australia is also now facing proceedings in both the International Court of Justice and the Permanent Court of Arbitration, as a result of its dubious activities in pursuing these strategies. There is also a non-zero risk that Australia’s treaties with Timor-Leste will ultimately be annulled for its bad faith negotiations, and Timor-Leste may eventually even succeed in kicking out the existing consortiums and attracting investment from other corners of the world.

But even if Australia ultimately succeeds in keeping control of the seabed territory and manages to siphon off its percentage of the petroleum revenues, it will have come at the cost of decades of uncertainty and wasted expense. If Australia wins now, will its Timor Sea strategy still have provided a net financial benefit to Australia, as compared with what Australia might have obtained under a less extreme strategy? Possibly – only Australia has the numbers to evaluate that. But if nothing else, its profit margin is getting smaller with every year that passes.

III. The Long-Term Interests Served by Australia’s Timor Sea Policy

The Timor Sea maritime delimitation remains unresolved today because Australia has insisted, at every opportunity, that any division of the Timor Sea must be based too much on the relative strength of its political and economic power, and too little on the relative weakness of its legal position.

But the potential benefits to Australia in taking this position just aren’t grand enough to justify the headache it has caused. This was never a situation where Australia risked walking away empty-handed, and any deal that Australia struck with Timor-Leste was always going to wind up with Australia getting a bigger piece of the pie than it was strictly entitled to under international law. But, by attempting to achieve a treaty arrangement that so disproportionately favors Australia over Timor-Leste, and which goes so far beyond what might have been expected based on the parties’ initial bargaining positions, Australia ensured that any victory it did obtain would necessarily be inconclusive.

International law obviously presents a big disadvantage to Australia in its claims to the seabed on Timor-Leste’s side of the median line. But Australia has given insufficient credit to the benefits that come with complying with an international legal regime. Even when international law does not favor a state’s interests in a particular dispute, it still provides one very significant advantage to all parties: the stability and relative legal certainty that comes from an agreement backed by international law. Legal resolutions have their weaknesses, true, but they are much less subject to future challenges on the basis of changes in political or economic circumstances. This is in direct contrast to agreements and concessions that are based on comparative force and economic machinations, which are not likely to outlive any changes to the underlying conditions that gave rise to those agreements or concessions in the first place. Australia’s policy in Timor has always been based on the political conditions du jour, and so, despite its far stronger political position, Australia has never been able to enjoy any certainty in its position in the Timor Sea.

In 1974, if instead Australia had accepted Portugal’s offer to establish a seabed boundary along the median line, then there is every reason to believe that the dispute could well have been conclusively resolved then and there, never to be revisited again. But that didn’t happen. Australia decided to take its chances with Indonesia instead, and Australia lost that gamble.

And then in 1999, if Australia had realized that claiming the lion’s share of the petroleum in the Timor Sea was no longer a viable strategy, and had, for example, been more willing to give up tax revenues in exchange for control of the commercial infrastructure, then it is likely we’d already have production from Greater Sunrise. But instead of trying something different when Timor-Leste gained independence, Australia decided to try the exact same strategy once again, and once again, it’s not working. Sure, this time around Australia did give a slightly larger cut of the profits to Timor-Leste than it had been willing to give to Indonesia, but that’s hardly a concession when the legal field has completely turned against you in the intervening period.

Hindsight suggests that Australia’s better course might have been to secure a treaty that, while still disproportionately favorable to Australia, was not quite as grossly disproportionate as the ones it ultimately obtained. If Australia had taken a more moderate path, and if the Timor Sea Treaty had been slightly more equitable the first time around, then perhaps it would have become a settled part of the legal landscape, avoiding any need to later negotiate the IUA or CMATS, or to engage in the present Hague arbitration and ICJ case brought by Timor-Leste.

But as it stands, the resulting treaties are so peculiarly at odds with customary international law that Timor-Leste doesn’t have much to lose by continuing its collateral attacks to the treaties’ validity. And whether or not Timor-Leste ultimately succeeds, Australia can’t wind the clock back – Australia has already caused the Greater Sunrise fields to remain untapped for 40 years since their discovery.

This is not to say that Australia’s Timor Sea strategy has been wholly self-defeating. There have been some significant advantages that Australia has been able to secure for itself, and which it would have lost had it acquiesced to international law at an earlier date. One major upshot for Australia has been the chance to deplete the Laminaria-Corallina gas fields while the legal dispute was unsettled, allowing Australia to retain 100% of the bureaucratic control and tax revenues, while Timor-Leste got 0%. Australia also succeeded in maintaining the lion’s share of the bureaucratic control over Bayu-Undan, along with the rest of the petroleum in the JPDA. And, as a bonus, Australia even gets to keep 10% of the profits from the JPDA, too — when international law would have given it 0%.

But Laminaria-Corallina was always a sideshow in terms of total energy resources in the Timor Sea, and, while the JPDA arrangement is exceedingly favorable to Australia, in comparison to its actual legal position, Australia still viewed even that as a concession to Timor-Leste. But this deal was only a ‘concession’ if viewed in reference to the prior sovereignty claims that Australia championed (but international law ultimately rejected) in 1975, and which are no longer supportable under international law.

Perhaps the most important prize for Australia, however, has been preserving Australian corporations’ favored status as leaseholders for mining rights in the Timor Sea. If Portugal’s median delimitation had prevailed in 1974, then the Bayu-Undan gas fields (and all the rest of the resources in the JPDA) would have gone to Oceanic, and other corporations that were granted leases to those mining rights while Timor was still under Portuguese control. Through Indonesia’s annexation of East Timor in 1975, however, all the leases issued by Portugal were effectively annulled. Since then, those same core consortium of companies have been able to maintain their rights to the seabed that Australia originally granted in the 1960s and 1970s. Australia’s treaties with Timor-Leste have all contained special provisions ensuring the continuity of Woodside’s and ConocoPhillips’ existing leases, and, before that, Australia’s treaties during the time of Indonesian Timor all came with sweetheart deals for corporations that held pre-1975 mining rights

So Australia has gained some important outcomes through its Timor Sea strategy. But, has all of that been worth the costs?

Billions of dollars in petroleum is a lot of petroleum, and the oil and gas fields in the Timor Sea are a significant prize. But Timor-Leste is still only one very small country, and the Timor Sea is only one very small sea. (And besides – if it is truly is the tax revenues that Australia is most concerned about losing, then surely it could try and make some of that up by shaving off some of the tax concessions that it has granted to the petroleum consortiums?)

No matter what Australia wins in the Timor Sea, Australia has another foreign policy concern that is much bigger than Timor-Leste could ever be: China.

Because China, too, has made expansive claims to maritime territories, despite the lack of a plausible basis for these claims under international law. And China, like Australia, is also able to assert these territorial claims due to its vastly greater strength and power, relative to its maritime neighbors. And China, like Australia, has pursued a strategy of eliminating any opportunity for its territorial claims to be challenged before an international tribunal.

But Australia’s claims in the Timor Sea are chump change, compared to China’s claims in the Nine-Dashed Line. That is a true example of a realist strategy; Australia’s pandering to energy companies doesn’t hold a candle to China, when it comes to “Kissengerian realism.”

And while Australia’s dispute with Timor-Leste carries no risk of escalation, China’s claims in the South and East China Seas pose a serious security threat to everyone in the Pacific. Whatever financial benefit Australia ends up obtaining from its claims in Timor-Leste’s half of the Timor Sea, would it be enough to offset the cost of any disruption, should China decides to back its own maritime claims up with force?

Australia, by itself, can’t stop China’s expansionism, of course. But by maintaining its current policy toward Timor-Leste, Australia has forfeited its ability advocate for the legal resolution of China’s unlawful territorial claims. And, more generally, Australia also undermines whatever institutional force that international law might have to help peacefully resolve disputes over maritime territories.

Given those potential costs, is Australia correct in believing its Timor Sea strategy to be a shrewdly realist foreign policy, which serves Australia’s long-term national interests by providing a possible opportunity to increase its annual tax revenue by .3%? (*2) Or is it a short-sighted economic policy that provides a minimal financial benefit at the cost of harming Australia’s broader foreign policy interests?

-Susan

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The Historical Context of Australia’s Political and Legal Strategy in the Timor Sea

In 1974, with the prospect of an Indonesian annexation of Timor on the horizon, Australia faced an important question: would Australia receive more favorable access to the gas and oil fields in the Timor Sea if Timor had an (a) Portuguese government, (b) Indonesian government, or (c) independent government?

At the time, Australia believed the answer was (b): an Indonesian Timor would give Australia the best outcome when it came to negotiating a seabed boundary in the Timor Sea. In a 1974 Policy Planning Paper, the Australian government reasoned that, since Indonesia had already given Australia such a favorable result in a similar seabed boundary negotiation, Indonesia would likely give Australia a similarly favorable deal for the seabed territory offshore from Timor. As a result, Australia was cautious about entering into any final seabed boundary delineations with Portugal. The political situation was likely to change, and there would be advantages in waiting for a more favorable government to gain control of the island territory:

We should press ahead with negotiations with Portugal on the Portuguese Timor seabed boundary, but bear in mind that the Indonesians would probably be prepared to accept the same compromise as they did in the negotiations already completed on the seabed boundary between our two countries. Such a compromise would be more acceptable to us than the present Portuguese position. For precisely this reason however, we should be careful not to be seen as pushing for self-government or independence for Portuguese Timor or for it to become part of Indonesia, as this would probably be interpreted as evidence of our self-interest in the seabed boundary dispute rather than a genuine concern for the future of Portuguese Timor. We should continue to keep a careful check on the activities of Australian commercial firms in Portuguese Timor.

(Policy Planning Paper, Canberra, May 3, 1974).

In other words, Australia should continue to engage in negotiations with Portugal to avoid the appearance of any impropriety, but it should take care that the negotiations did not actually culminate in an agreement.

Although Australia’s economic and foreign interests were best served by an Indonesian Timor, it was for precisely that reason that Australia wanted to avoid any appearance that it had any stake in Timor’s outcome. If seen to support Indonesia’s annexation of Timor, it would likely be viewed as doing so for self-serving commercial reasons. At the same time, neither did Australia wish to be seen as supporting a Portuguese Timor or an independent Timor, because doing so might have the effect of promoting either of those outcomes. Taking such a position (or appearing to take such a position) would also pose a risk of complicating its relationship with Indonesia.

There was also the risk that, at some future date, Timor would eventually achieve independence. Such an event would undermine the durability of any seabed boundary agreement that Australia had entered into, whether it was with Portugal or Indonesia. If Australia succeeded in negotiating a favorable seabed boundary in the Timor Sea, only to have Timor later gain independence after all, Australia would face significant pushback from the world community for having plundered a tiny nation’s “only major asset” before that nation had the ability to protect itself:

if Portuguese Timor achieved independence and believed such a prior [seabed boundary] agreement was not in its interests, there might be strong criticism of Australia for making an agreement with Portugal over Timor’s head to deprive Timor of what may be its only major asset–oil. If Australia thus became a focus of antagonism, we would almost certainly lose much of our capability to influence or assist newly independent government. On the other hand, if a boundary line negotiated now gained wide acceptance this would in turn allow petroleum exploration to proceed with more confidence than at present. Moreover, a newly independent government in Timor might not wish to upset relations with Australia by seeking to renegotiate an established boundary line albeit one negotiated by its former colonial rulers. (However, it could be unwise to rest too heavily on this assumption.)

(Cablegram, September 26, 1974).

Australia was well aware that an Indonesian annexation of Timor would create the potential for future upheaval and revolution in East Timor. If and when that eventuality finally came to pass, Australia would have a much stronger position if it did not have any culpability for the original Indonesian take-over. So, although Australia “favoured association of Portuguese Timor with Indonesia,” Australia had a significant long-term interest in avoiding any perception that it was “hand[ing] over” Timor to Indonesia. Instead, Australia wanted to maintain a public perception of being committed to “self-determination,” and to avoid any appearance that Australia was assigning Timor to Indonesia without the consent of Timor and against Timor’s own self-interest:

The second part of our policy flows from our commitment to self-determination. This stems from the Government’s general philosophy-in the United Nations and elsewhere-but also from an assessment that to decide the future of Portuguese Timor against the will of its inhabitants might well lead to instability and trouble later on. Moreover, some Australians, with the example of Irian Jaya in mind, would be very sensitive to any appearance that decisions on Portuguese Timor’s future were being taken without proper consultations with the people there.

(Draft Submission, December 5, 1975).

Aside from more general (although still very significant) concerns about how Timor would affect Australia’s relationship with Indonesia, the delineation of the seabed boundary — and consequently the division of control over the Timor Sea’s petroleum — was Australia’s sole policy interest in Timor itself. An example of this is shown in a 1974 memo concerning how to word a policy statement on the Timor situation. Australian officials wanted to minimize any perceived interest in Timor, but felt that they could not credibly deny having any interest in Timor. The following proposal was suggested:

Australia naturally has important particular interests in Portuguese Timor (for example, in oil exploration in the delineation of the continental shelf) but we have no ambition to achieve a special position there.

The euphemistic amendment of the “in oil exploration” to “in the delineation of the continental shelf” was accompanied by a note making it clear that the Timor Sea gas and oil fields — which Australia’s access to would be determined by any seabed delineation — was in fact Australia’s predominant concern in the island:

Timor was of little intrinsic interest to Australia. Our commercial and trade interests are minor. Our only substantial interest in bilateral relations is in delineation of the continental shelf. Our special interests stern from the problem of P[ortuguese] Timor as a factor in our relations with Indonesia.

(Minute, September 20, 1974).

The May 3, 1974 planning paper, supra, further discussed Australia’s interests in the Timor Sea oil resources, but that portion has been redacted and is not available for public review. The note concerning the redaction acknowledges, however, that Australia’s concern was with the sovereignty over gas and oil fields in the Timor Sea, and how Australia’s commercial activities in Timor were in conflict with UN resolutions on self-determination by Portuguese colonies:

Sections omitted [with the May 3, 1974 Paper] deal with Australia’s limited commercial and aviation interests in Portuguese Timor and possible oil concessions in as yet undelineated areas of the Timor Sea. In 1973 UN resolutions called on governments to discourage participation in commercial enterprises contributing to Portugal’s domination of its colonial territories or detrimental to the interests of their inhabitants. While it could be argued that Australian commercial activities were incompatible with support for those resolutions, the lack of ‘significant political agitation’ or Indonesian interest in the territory meant that its status was unlikely to become an issue at the UN in the short term.

In the end, Australia tacitly acquiesced to the Indonesian annexation, believing that the Timor Sea could be delineated in a way most favorable to Australia if Timor were under Indonesian control:

We are all aware of the Australian defence interest in the Portuguese Timor situation but I wonder whether the Department has ascertained the interest of the Minister or the Department of Minerals and Energy in the Timor situation. It would seem to me that this Department might well have an interest in closing the present gap in the agreed sea border and that this could be much more readily negotiated with Indonesia by closing the present gap than with Portugal or independent Portuguese Timor.

I know I am recommending a pragmatic rather than a principled stand but this is what national interest and foreign policy is all about, as even those countries with ideological bases for their foreign policies, like China and the Soviet Union, have acknowledged.

(Letter from Richard Woolcott, Australian ambassador to Indonesia, August 17, 1975).

It’s not that Australia was unmoved by the humanitarian concerns caused by Indonesia’s invasion; Australian officials acknowledged that the Timorese people had been deprived of their right to self-determination, and expressed concern about that result. Ultimately, however, Australia decided on a path of acquiescence to the Indonesian annexation, and in January 1976, shortly after Indonesia had moved into Timor, Australia’s Indonesian ambassador acknowledged that Australian’s long-term national interest was best served by a “Kissingerian” approach to the Timor situation:

On the Timor issue…we face one of those broad foreign-policy decisions which face most countries at one time or another. The Government is confronted by a choice between a moral stance, based on condemnation of Indonesia for the invasion of East Timor and on the assertion of the inalienable right of the people of East Timor to the right of self-determination, on the one hand, and a pragmatic and realistic acceptance of the longer-term inevitabilities of the situation on the other hand.

It is a choice between what might be described as Wilsonian idealism or Kissingerian realism. The former is more proper and principled but the longer-term national interest may well be served by the latter. We do not think we can have it both ways.

(Letter from Woolcott, January 5, 1976).

Although Australia chose to take what it saw as the path of realism, rather than idealism, it is unclear if Australia’s long-term national interests were ultimately served by that decision. It’s possible that Woolcott got it backwards; the ‘realist’ response may have instead served Australia’s short-term interests, at the expense of longer-term advantages. With the benefit of hindsight, it is abundantly clear, at least, that an Indonesian Timor did not result in political stability. While it saved Australia from bearing the expenses and entanglements of supporting a newly independent neighbor in 1975, that outcome was only delayed, not avoided.

And the choices Australia made prior to the Indonesian annexation have resulted in significant prejudice to Australia’s current position in the Timor Sea. Over the next 22 years, between 1976 and 2002, there would be three very important developments that would radically change the legal and political landscape (seascape…?) of Timorese maritime boundary delineation:

  • First, international law of the sea would go through a period of extensive development and codification. One very significant change in this body of law would be the entry into force of the UN Convention on the Law of the Sea, in 1994. In general, these legal developments were not favorable to Australia’s claims to sovereignty over much of the Timor Sea. Although the precise boundary between Australia and Timor-Leste remains undelineated to this day, if determined according to the provisions of UNCLOS and modern international practices of apportionment along median lines, Australia’s jurisdiction would not include much of the petroleum in the Timor Sea that Australia had intended to develop.
  • Second, Timor-Leste would eventually obtain independence after all, following a 1999 referendum. Because Timor-Leste did not consider itself bound by the unfavorable territorial treaties that had been negotiated by Indonesia on its behalf, Australia and the newly formed nation of Timor-Leste would need to re-negotiate how governmental control over the Timor Sea would be divided between them.
  • And, third, Australian companies would go on to invest approximately $250 million in the Greater Sunrise gas fields, in anticipation of being able to exploit the natural gas reserves found there, the total amount of which is valued in the billions. As a result of this significant outlay, the corporations that made up the Greater Sunrise joint venture agreement would have an intense interest in preserving Australia’s bureaucratic control over the gas fields, as well as in preserving favorable tax rates and ensuring the existence of a stable legal regime that would create a more favorable climate for further investment.

From Australia’s perspective, these developments have not been in harmony with one another. Australia now faces significant (and well-funded) internal pressures from domestic corporations who have a strong interest in Australia maintaining control over the Timor Sea, and yet Australia’s claims to sovereignty over this territory have grown increasingly inapposite to international law.

And, once again, Australia’s response to this conflict has been to pursue a strategy that, while nominally “realist,” runs a real risk of coming at the expense of its longer-term political, economic, and legal interests.

-Susan

A Timeline of Events Leading up to Timor-Leste’s ICJ Claim Against Australia

Last week, the International Court of Justice heard three days of argument concerning Timor-Leste’s pending request for provisional measures in Questions relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia). The case was brought by Timor-Leste following Australia’s execution of a search warrant at the office of Timor-Leste’s Canberra-based attorney. Australia claimed that the warrant was appropriately issued for national security purposes, and used it to obtain extensive electronic and paper files concerning Timor-Leste’s pending arbitration against Australia before a Hague tribunal. In that arbitration, Timor-Leste is seeking to overturn a 2007 treaty between Australia and Timor-Leste, as a result of Australia’s espionage on Timor-Leste’s internal communications during the course of negotiations.

Australia claims that it was justified in seizing Timor-Leste’s legal files because Timor-Leste’s evidence of Australia’s espionage was provided by a retired Australian spy. That spy, dubbed “Officer X,” informed Timor-Leste of the 2004 bugging operation as a result of his belief that the surveillance had been conducted for improper commercial purposes, rather than national security interests.

It is a complicated and messy situation, both legally and politically, but the significance of Australia’s seizure of Timor-Leste’s legal files, as well as Australia’s prior espionage against Timor-Leste’s government, can only be understood in the context of the history of the past treaty negotiations between the two countries. To give some background for future posts concerning the legal claims being raised by Timor-Leste and Australia, provided here is a timeline of events leading up to the recent case before the ICJ.

The International Legal Context

The dispute ultimately concerns Australia and Timor-Leste’s competing claims to an expansive section of the Timor Sea between Australia and Timor-Leste. If you drew a line in the middle of the ocean that was equidistant from both Timor-Leste and Australia’s shores, the maritime area stretches north from that median line to within approximately 40 nautical miles of Timor-Leste’s shore. There is a lot of oil and gas in this area of the ocean, and both Australia and Timor-Leste claims to have the sovereign right to exploit those resources.

Australia claims that this area belong to Australia on the basis of historical precedence and on the basis of somewhat dubious allegations concerning the underwater geographical features of the Timor Sea. Timor-Leste claims that it belongs to Timor-Leste on the basis of the UN Convention on the Law of the Sea and the widely prevalent state practice of delimiting maritime boundaries of states with opposite coasts along a median line. Timor-Leste’s claims are generally considered more robust than Australia’s.

Although the strength of Australia’s legal claims to the territory may be questionable, it turns out that inconvenient little problem becomes entirely irrelevant if a legal challenge is never actually brought. Australia almost certainly recognizes that it will not be able to prevail in acquiring the territory for itself, and so rather than pursuing its own claims, it has instead strategically eliminated any opportunity for a legal challenge to be brought by Timor-Leste.

Two months before Timor-Leste became an independent nation that was capable of pursuing a claim before an international adjudicative body, Australia withdrew any dispute over maritime boundaries from the jurisdiction of the ICJ and ITLOS, preventing Timor-Leste from ever having had an opportunity to establish its legal claim to the Timor Sea. In the absence of a decision from the ICJ or ITLOS recognizing the likely legal reality of Timor-Leste’s claims to the disputed oil and gas fields, the territory will remain perpetually “disputed.” So long as there is legal limbo over the territory, Timor-Leste is unable to obtain the foreign investment necessary to develop the resources. Australia, in turn, can continue to demand that in exchange for allowing foreign investment into the maritime areas, Australia gets a substantial portion of any resulting revenues.

The Disputed Territories

Image from dollarsandsense.org, “Minding The Timor Gap: Billions of dollars in oil and gas revenues are at stake as Australia continues to bully East Timor out of its undersea energy resources.”

Joint Petroleum Development Area (“JPDA”): Area marked in yellow on map. Revenues derived from oil and gas fields in this area are split 90/10 between Timor-Leste and Australia, pursuant to 2002 treaty. Although the JPDA is the largest delineated area within the disputed maritime areas, its gas and oil fields are not as valuable as that of the non-JPDA areas.

Laminaria-Corallina Fields: Located in the western (left) horn of the light blue area. (Light blue area marks maritime territory that is disputed by Australia and Timor-Leste.) These fields have never been a part of any treaty between Timor-Leste and Australia, and Australia has at all times obtained 100% of government proceeds from them. The Laminaria-Corallina fields have now been 95% depleted of their resources, and, as a result, no longer plays a significant role in the dispute between Australia and Timor-Leste.

Greater Sunrise Fields: Located in the eastern (right) horn of the light blue area. (Light blue area marks maritime territory that is disputed by Australia and Timor-Leste.) The Greater Sunrise fields are estimate to contain twice as much LNG as the JPDA fields. A small portion of the Greater Sunrise fields (20%) is located in the JPDA, but most of the fields’ area (80%) lays outside of it, in the disputed territory over which both Australia and Timor-Leste. Under the 2002 treaty between Timor-Leste and Australia, Timor-Leste received 90% of the revenue from the sliver of the Greater Sunrise fields in the JPDA, and 0% of the revenue from the Greater Sunrise fields outside of it. (Or, 18% of the revenue from the Greater Sunrise fields as a whole.) Under the 2007 treaty, Timor-Leste and Australia each receive 50% of future revenues from the entirety of the Greater Sunrise Fields. As of 2014, the Greater Sunrise fields have yet to be commercially developed.

Timeline of Events

August 1974: Woodside Australian Energy (later Woodside Petroleum), an Australian energy company, discovers gas in the Greater Sunrise fields.

1975: Indonesia invades and annexes East Timor, making further development of the Timor Sea resources impossible.

1989 – 1991: Indonesia and Australia sign and ratify the Timor Gap Treaty (“TGT”), opening the possibility once again of exploration and development of the Timor Sea gas and oil fields. The Timor Gap Treaty does not establish maritime boundaries between the countries but instead equally splits proceeds derived from development of the oil and gas fields in a delineated portion of the Timor Sea between the countries, with each country receiving 50% of the total tax revenues. Many observers believe that this 50%/50% division is not supported by international law, but was instead agreed to by Indonesia as a concession in exchange for Australia’s recognition of its annexation of Timor-Leste.

1995: Australia, pursuant to the Petroleum (Submerged Lands) Act of 1967, its sovereign claim to the resources of its continental shelf, and the TGT, issues licenses to a joint venture between Woodside and Shell for exploration and drilling of the portions of the Greater Sunrise fields that lie outside of what will later become the JPDA. The largest portion is within permit area NT/RL2, with an additional small portion in NT/P55.

1997: The Woodside and Shell JV announce proposals to set up a liquefied natural gas (LNG) plant in Darwin, Northern Territory, with production scheduled to commence in 2005.

August 1999: East Timor votes for independence, potentially throwing long-term development plans in the Timor Sea into doubt, due to uncertainty over future treaties and boundary determinations.

1999: Three multinational corporations, headed by Woodside, begin oil production in the Laminaria-Corallina fields. Between 1999 and 2012, approximately 201 million barrels of oil are produced, with resulting tax revenues to Australia of approximately $2 billion USD.

February 2001: Woodside, Shell, and Phillips Petroleum Company sign a cooperative agreement, establishing a joint venture for development of both the Bayu-Undan fields (within the JPDA) and the Greater Sunrise fields (in both JPDA and outside of it). The consortium companies base their agreement on a belief that the majority of the Greater Sunrise fields are “located in Australian waters.”

July 2001: Timor-Leste, in advance of its independence from Indonesia, had made it clear that Timor-Leste would not be bound by treaties previously entered into by Indonesia, including the Timor Gap Treaty, which concerned the soon-to-be new nation’s claimed territories. As a result of historical factors, both Australia and East Territory lay claim to large, resource-rich maritime area in the Timor Sea, and the nations are unable to reach an agreement as to their respective maritime territorial boundaries. Australia and Timor-Leste instead reach a Memorandum of Understanding of Timor Sea Arrangement (MOU) (which will later be adapted into the Timor Sea Treaty) under which proceeds from development in the JPDA, will no longer be split 50/50, but will instead be split 90/10, with 90% going to Timor and 10% going to Australia. This agreement does not, however, address the proceeds from resources obtained in disputed territories outside of the JPDA area, and Australia continues to receive 100% of government revenues from the resources in these areas. The MOU also specifies that the Greater Sunrise fields are to be divided with 80% going to Australia and 20% going to East Timor, based upon Australia’s claim to the waters outside the JPDA.

The MOU also specifically preserves the Woodside/Shell/Phillips joint venture’s contracts to the portion of the Greater Sunrise fields located in the JPDA.

Early March 2002: Oceanic Exploration Company, an oil and gas exploration company interested in developing the Timor Sea oil and gas fields, “offer[s] to finance a claim by East Timor in the International Court of Justice to support East Timor’s expanded seabed boundary claims in its dispute with Australia and to establish expanded boundaries for East Timor. Such expanded seabed boundaries, under applicable international law, would have tripled East Timor’s seabed hydrocarbon reserves.”

March 21 and 25, 2002: Australia files reservations with both the International Court of Justice (ICJ) and International Tribunal for the Law of the Sea (ITLOS), revoking Australia’s consent to jurisdiction before those tribunals for any disputes involving maritime boundaries. The apparent purpose is to prevent any claims arising from the Timor Sea dispute from being heard by either the ICJ or ITLOS, in anticipation of Timor-Leste’s rapidly approaching independence.

May 20, 2002: Timor-Leste gains independence from Indonesia. On the same day, Australia and Timor-Leste enter into the Timor Sea Treaty (“TST”) as an interim agreement to replace the Timor Gap Treaty (which went out of force with Timor-Leste’s independence). The TST continues the 90/10 split agreed to in the 2001 provisional agreement, and provides for a stopgap treaty concerning the division of the resources in the Timor Sea.

2002 – 2004: Timor-Leste and Australia engage in negotiations over the disputed territories outside of the JDPA area, but negotiations are unsuccessful. This is due in large part because Timor-Leste wants to establish its maritime territorial boundaries over this area, but under the provisions for maritime delineation in UNCLOS, Australia’s claims to the resources in the Timor Sea could be largely be extinguished. The two major oil and gas fields outside the JDPA are each subject to different pressures:

  • Laminaria-Corallina Fields: Australia is at this time obtaining revenues from the Laminaria-Corallina fields in the amount of approximately $1 million per a day, and every day that passed without a treaty meant more revenues that Australia can claim entirely for itself. In contrast, every day that passed for Timor-Leste was another day in which it got no share of the revenues from the rapidly depleting fields, and would forever lose that source of revenue.
  • Greater Sunrise Fields: In 2003, a multinational consortium, in which Woodside was once again the majority partner, obtained a license to development the resources contained in the Greater Sunrise Field. Due to the legal uncertainty caused by Timor-Leste and Australia’s disputing claims to the territory in which it was located, however, Woodside refused to fully invest in the fields until a firm agreement was established. For Australia, developing the Greater Sunrise fields would have been a good revenue source, but not if it came at the cost of its claims to the rest of the Timor Sea – which made Australia reluctant to open negotiations at all. For Timor-Leste, the revenues from the Greater Sunrise fields were urgently needed, but it lacked the resources to develop these fields on its own. Unless Australia would agree to resolve the territorial dispute, Timor-Leste could not obtain the outside investment required to obtain the resources.

As a result of the investors’ demands and Timor-Leste’s inability to proceed alone, Australia could effectively hold the Timor Sea territories hostage. By preventing any adjudication over Timor-Leste’s claims, Australia could prevent Timor-Leste from benefiting from the resources it was likely entitled to under international law, as well as continue to receive all revenues from the existing gas and oil production. Although Timor-Leste wanted to develop the remaining gas and oil fields (as well as lay claim to the existing revenue sources that Australia continued to receive), Timor-Leste lacked the infrastructure or financing to do so without foreign investment – and foreign investors refused to invest while Timor-Leste and Australia had disputing claims to the territory.

Australia could afford to be patient. As long as no action was taken, Australia would to continue obtaining 100% of the revenue from the existing fields, which had been developed prior to Timor-Leste’s independence and therefore before any legal dispute arose. Australia had no urgent need for the potential revenue that could be obtained from the other oil fields, especially when it was unclear that Australia would be entitled to any of that revenue at all – and when Timor-Leste was so desperate for that revenue that Australia could simply wait Timor-Leste out, and force it to voluntarily agree to give up is territorial rights in exchange for Australia allowing development to occur at all.

Consequently, during the 2002 to 2004 time period, negotiations are slow. Australia announces that it would wait 20 years to resolve the question if it had to, while Timor-Leste continued to petition Australia for a final agreement as to the boundaries. But this stalemate is eventually broken, thanks to the third party involved in the Timor-Leste/Australia treaty negotiations: the Woodside-led consortium, which was tired of delays, and waiting impatiently to develop the Greater Sunrise fields.

In 2003, Australia and Timor-Leste sign the Sunrise International Unitization Agreement (Sunrise IUA), but Timor-Leste’s parliament, believing it to be a bad deal, refuses to ratify it.

July 29, 2004: Woodside’s executive director personally flies to Timor-Leste to inform Timor-Leste’s prime minister that, if a treaty could not be reached by the end of the year, Woodside would terminate its operations in the Greater Sunrise fields and pull out its investment all together. At the same time, Woodside informed Australia of its strong interest in a quick resolution to the dispute over the Greater Sunrise fields. Following this political pressure, Australia and Timor-Leste begin considering a ‘creative solution’ to the problem, under which the question of territorial boundaries would be pushed off, and an agreement concerning resources would be reached.

September 20, 2004: Timor-Leste and Australia meet in Dili, Timor-Leste’s capital, to start a new round of negotiations concerning a treaty for the development of the Greater Sunrise fields.

October 2004: During the course of negotiations in Dili,

  • Australian Foreign Minister Alexander Downer allegedly orders the eavesdropping of the Timor-Leste’s parliament’s discussions concerning treaty negotiations. The listening devices are to be planted by the Australian Secret Intelligence Service (“ASIS”), then headed by David Irvine.
  • ASIS agents, posing as contractors for an Australian construction company, install recording devices in the offices of Timor-Leste’s cabinet and prime minister, allowing Australia to eavesdrop on Timor-Leste’s internal discussions concerning treaty negotiations. Australia is likely able to obtain detailed information on Timor-Leste’s planned negotiation strategies and the vulnerabilities it would face if talks fell through. Possible (and very hypothetical) scenarios that could provide particularly strong support for Timor-Leste’s current claim to overturn CMATS might include Australia learning through surveillance (1) that Timor-Leste did not believe Woodside’s bluff that it would pull out, but that if Woodside went through with it, it would have to capitulate; (2) that East Timor had other possible avenues to development it could use as an alternative, which Australia took steps to remove once it learned of it; or (3) information concerning the pending bribery claims in a U.S. federal court, accusing ConocoPhillips (the company with the second largest share, after Woodside, in the Greater Sunrise Joint Venture) of bribing Timor-Leste’s Prime Minister to obtain development contracts for oil fields located in the JPDA.
  • The negotiations begin to break down when Australia makes it clear it will not agree to any discussions about the disputed maritime boundaries, and that the only concession Australia was willing to negotiate about was a monetary one. Australia would provide financial compensation to Timor-Leste, and would allow Woodside to proceed with development of the Greater Sunrise fields, if Timor-Leste would agree to forfeit any ability to attempt to establish the maritime boundary through any other mechanism.  Timor-Leste was willing to agree to defer on claims to its territorial boundaries, but wanted to participate in the development of the gas and oil fields – a request Australia refused to consider. Australia would agree to give Timor-Leste a portion of the revenues as a pay out, but it would not have any role in the actual development and production of the gas and oil extracted.

November 17, 2004: Woodside’s deadline passes, with Australia and Timor-Leste having failed to come to an agreement to a permanent treaty. Woodside pulls out of its operations in the Greater Sunrise fields, stating that the uncertainty caused by the lack of an established legal framework for the area makes long-term investment untenable.

March-April 2005: Timor-Leste and Australia resume negotiations, this time in Canberra.

April 29, 2005: After three days of talks in Dili, Australia and Timor-Leste reach a draft agreement on development of the Greater Sunrise fields, the terms of which are finalized in the Treaty on Certain Maritime Arrangements in the Timor Sea (“CMATS”). The CMATS is a great deal for Australia; it makes no concessions to Timor-Leste beyond a strictly monetary 50/50 division of revenues between Australia and Timor-Leste from the Greater Sunrise fields.

It is not a particularly good deal for Timor-Leste. The deal concerns only the Greater Sunrise fields, and not any of the other maritime areas which are in dispute. All areas not within the Greater Sunrise fields or the JDPA remain unaddressed. Financially, Timor-Leste now secures a right to 50% of the Greater Sunrise revenues, when previously Australia had only agreed not to contest Timor-Leste’s right to 18%. But obtaining 50% of revenues is not necessarily an achievement, when there is a good chance a court would have awarded you 100%.

And, perhaps worst of all, CMATS contains a severe ‘moratorium,’ pursuant to which Timor-Leste effectively agrees not to try and establish its territorial boundaries. Article 4 provides that:

1. Neither Australia nor Timor-Leste shall assert, pursue or further by any means in relation to the other Party its claims to sovereign rights and jurisdiction and maritime boundaries for the period of this Treaty.

2. Paragraph 1 of this Article does not prevent a Party from continuing activities (including the regulation and authorisation of existing and new activities) in areas in which its domestic legislation on 19 May 2002 authorised the granting of permission for conducting activities in relation to petroleum or other resources of the seabed and subsoil.

3. Notwithstanding paragraph 2 of this Article, the JPDA will continue to be governed by the terms of the Timor Sea Treaty and associated instruments.

4. Notwithstanding any other bilateral or multilateral agreement binding on the Parties, or any declaration made by either Party pursuant to any such agreement, neither Party shall commence or pursue any proceedings against the other Party before any court, tribunal or other dispute settlement mechanism that would raise or result in, either directly or indirectly, issues or findings of relevance to maritime boundaries or delimitation in the Timor Sea.

5. Any court, tribunal or other dispute settlement body hearing proceedings involving the Parties shall not consider, make comment on, nor make findings that would raise or result in, either directly or indirectly, issues or findings of relevance to maritime boundaries or delimitation in the Timor Sea. Any such comment or finding shall be of no effect, and shall not be relied upon, or cited, by the Parties at any time.

6. Neither Party shall raise or pursue in any international organisation matters that are, directly or indirectly, relevant to maritime boundaries or delimitation in the Timor Sea.

7. The Parties shall not be under an obligation to negotiate permanent maritime boundaries for the period of this Treaty.

Essentially, through CMATS, Australia has solidified its ability to hold the disputed territory hostage for 50 years – because under CMATS, Timor-Leste cannot pursue any legal claim which could, even “indirectly,” legally establish its claims to the Timor Sea. Moreover, if a court does go ahead and make a ruling on Timor-Leste’s territorial boundaries anyway, Timor-Leste is prohibited from even mentioning the court ruling. And by the time those 50 years expire, there won’t be much oil left for the parties to argue over.

Australia, for its part, did very well in obtaining such an expansive prohibition. The fact that Australia’s claims in the Timor Sea are likely wrongful and in violation of international law was effectively rendered irrelevant as a result of the treaty, and Australia’s ability to develop any areas outside of the JDPA or Greater Sunrise fields was left unaffected.

January 12, 2006: Australia and Timor formally sign CMATS, which comes into force in 2007.

January 2008: Alexander Downer retires from politics and establishes a boutique lobbying firm, Bespoke Approach. Woodside becomes a client of Bespoke Approach, and through his lobbying firm, Downer ends up on the payroll of Woodside.

2008 – 2012: Development on the Greater Sunrise fields does not proceed, in large part due to disputes between Woodside, Australia, and Timor-Leste as to how and where the extracted oil will be diverted for processing. At an unknown date in this time period, a retired ASIS Agent, dubbed “Officer X,” who had been in charge of carrying out the 2004 surveillance operation against the Timor-Leste cabinet, contacts Timor-Leste’s government to inform them of the surveillance. Officer X  stated that he “decided to blow the whistle when he learned that in his life after politics, Alexander Downer had become an advisor to Woodside Petroleum through his lobbying firm, Bespoke Approach.” He provides Timor-Leste with an affidavit “refer[ring] to the 2004 bugging operation as ‘immoral’ and ‘wrong’ because it served not the national interest, but the commercial interest of big oil and gas.”

December 2012: Timor-Leste sends a diplomatic note to then-PM Julia Gillard, informing her of the espionage that was conducted during the 2004 negotiations, requesting that Australia reopen discussions with Timor-Leste about CMATS. Australia ignores the request.

April 2013: Timor-Leste initiates arbitration proceedings against Australia under the 2002 TST, seeking a declaration that the CMATS agreement is voided due to Australia’s failure to negotiate in good faith by conducting espionage on Timor-Leste’s internal treaty discussions.

May 3, 2013: Australian Minister for Foreign Affairs Bob Carr announces in a press release that Timor-Leste has initiated arbitration concerning the validity of CMATS, and that “Timor-Leste argues that CMATS is invalid because it alleges Australia did not conduct the CMATS negotiations in 2004 in good faith by engaging in espionage.”

Late November 2013: As part of pre-hearing arbitration procedures, Timor-Leste and Australia meet to discuss preliminary procedural issues and to exchange information. Timor-Leste provides Australia with a list of witnesses that it intends to call at the upcoming arbitration hearing, including the name of Officer X, as well as tree other “whistleblowers” who are prepared to testify to Australia’s espionage.

December 2, 2013: David Irvine, the former head of ASIS and the current Director-General of the Australian Security Intelligence Organisation (“ASIO”), Australia’s internal intelligence agency, requests the issuance of a warrant to search to conduct a search of Timor-Leste’s Australian attorney, whose office is located in Canberra. The Australian Attorney General, George Brandis, approves the request, and a warrant is issued under  section 25  of  the  ASIO Act,  “for  the  purpose  of  collecting  intelligence  on  a  matter  affecting  the security of Australia, concerning possible espionage.”

December 3, 2013: The ASIO carries out the search warrant, seizing materials and documents from the office of Timor-Leste’s attorney. Although Timor-Leste’s attorney has already left for the Hague in preparation for the upcoming arbitration hearing, “[o]ne of Mr. Collaery’s legal assistants, Ms Preston, was alone in the office at the time. The officers presented the warrant authorizing the entry and seizure of documents, but never told Ms Preston what exactly they were seeking, or why. In the pressure of the moment Ms Preston sought to read the warrant but felt so intimidated by the presence of over a dozen ASIO personnel that she could not finish it. Moreover, many of the words in it were blacked out. Her request for a copy was refused on the grounds that it was a matter of national security.”

Additionally, ASIO officers also go to the house of Officer X, where he is interrogated for several hours, and has his passport cancelled. All of this occurs a mere two days before a scheduled hearing before the Hague tribunal, on December 5, 2013, at which the parties were to determine how the whistleblower witnesses would be handled. Australia has denied that preventing Officer X’s appearance at the Hague played a role in the timing of its actions, but has conceded it does intend to prevent his testimony from being introduced.

December 18, 2013: Timor-Leste institutes proceedings against Australia before the ICJ, in Questions relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia). Timor-Leste also files a request for a provisional (and expedited) order from the Court instructing Australia to return the seized materials while a final decision on the merits is pending.

-Susan

How Corporate Law Invented the Doctrine of Specific Jurisdiction, or Why Sovereignty Plays No Role in Specific Jurisdiction

This week, the Supreme Court issued its decision in Daimler AG v. Bauman, holding that a U.S. District Court in California does not have personal jurisdiction over a German corporation to hear a foreign tort claim brought by Argentinian plaintiffs, even when that corporation has U.S. subsidiaries that do frequent business in California and can be said to be “at home” in California. Actually, the Court went much further than that: not only does the U.S. District Court in the Northern District of California not have jurisdiction to hear the claim against Daimler, the Court’s decision leaves the strong implication that neither would any other court in the U.S., whether state or federal. In Bauman, the Court was forced to assume that Daimler’s U.S. subsidiaries – who are incorporated in or have a principal place of business in New Jersey and Delaware –  were “at home” in California. Even then, the Court concluded that no jurisdiction over Daimler existed. Since bringing suit in a state where Daimler’s subsidiaries were “at home” was not sufficient to confer jurisdiction, the Bauman plaintiffs’ claims would apparently fail no matter where in the U.S. it had been brought.

What is also of particular interest in Bauman, though, is the majority opinion’s relatively detailed recap of the history of general jurisdiction and specific jurisdiction. In doing so, the Court portrays Bauman as the natural and predictable progeny of the Court’s 1945 decision in International Shoe Co. v. Washington, as well as an extension of its recent decisions in J. McIntyre Machinery, Ltd. v. Nicastro (2011) and Goodyear Dunlop Tires Operations, S.A. v. Brown (2011). The Court’s decision reaffirms that, post-International Shoe, general jurisdiction has become the red-headed stepchild of the Supreme Court’s personal jurisdiction jurisprudence: yes, it does exist, but it’s not particularly significant, and whenever possible we’re going to try to focus on specific jurisdiction instead.

But the history of personal jurisdiction provided in Bauman neglects one very significant part of the story of how specific jurisdiction came to be. Specific jurisdiction has not “been cut loose from Pennoyer’s sway,” as the Supreme Court attempts to portray it, because specific jurisdiction was never an offspring of Pennoyer in the first place. Specific jurisdiction was instead a creature of corporate law, invented by states to regulate the interstate activities of corporate entities, and then later transformed into a constitutional due process doctrine that imposed federal limits on state attempts to regulate such commerce.  See, e.g., International Harvester Co. of America v. Kentucky, 234 US 579 (1914); and Whitaker v. Macfadden Publications, Inc., 70 App.D.C. 165 (1939).

Without corporations, specific jurisdiction would not exist. The doctrine initially came into existence as a statutory scheme enacted by state legislatures to ensure that corporations could be sued even when they were acting outside of their state of incorporation. Only later was it transformed, by the Supreme Court’s decision in International Shoe, into a constitutional basis for regulating the reach of state courts via the Due Process clause of the Fourteenth Amendment. But the resulting legal concept was not seamless, and specific jurisdiction’s doctrinally impure origins made it difficult to shoehorn into our previously-existing jurisprudence of personal jurisdiction, which was instead on limitations in a state’s inherent sovereign authority. As result, nearly 70 years after International Shoe, the Supreme Court is still grappling today with how to resolve this basic conflict between the competing sovereignty-based and due process-based regimes of personal jurisdiction.

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Armor for the Zombie Apocalypse

As some of you may have noticed, The View From LL2 has been on hiatus for the past few months as a result of some conflicts with its contributors’ other commitments. Although Michael must unfortunately retain his status as blogger emeritus, I am now able to resume blogging, and look forward to catching up on all the exciting recent developments on obscure jurisdictional provisions of international law.

I am hoping to kick things back up this weekend with some updates on the Supreme Court’s recent decision in Daimler AG v. Bauman, but in lieu of legal blogging at the moment, here’s a follow up to my armor for lawyers and armor for cats: a suit of armor for survivors of the zombie apocalypse, made out of bottle caps and pop tabs. Sure, maybe it wouldn’t stand up against a sword or arrow, but it’s more than good enough to repel a zombie bite. And it’s a heck of a lot lighter than steel.

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