On 7 March, Australia and Timor-Leste signed a landmark agreement at the UN headquarters in New York, signaling an end to the long-running dispute over their shared maritime border in the Timor Sea. The deal followed a two-year conciliation process initiated by the smaller of the two nations, which sought to finally resolve the hotly-contested boundary issue under the provisions of the 1982 United Nations Convention on the Law of the Sea (UNCLOS). The mediation panel at the Permanent Court of Arbitration (PCA) in The Hague recommended that the boundary be set at the midway point of the sea, and although its ruling was non-binding, both countries accepted the proposed resolution.

The deal was warmly welcomed on both sides, with Australian Foreign Minister Julie Bishop hailing it as a “landmark event” which achieved a “just and equitable outcome,” while Timor-Leste’s minister for the delimitation of borders Augusto Cabral Pereira lauded a “momentous day” which would usher in a “new chapter in the friendship between our countries.” Yet while the deal included an agreement on sharing revenue derived from the sea’s lucrative oil and gas reserves, questions remain about which nation will secure the right to process resources extracted from the seabed.

Canberra and Dili are expected to negotiate this unresolved issue with energy firms, and it’s possible that these negotiations will give rise to new tensions between the two neighbors.

Despite this unresolved matter, the historic agreement reached between Australia and Timor-Leste serves as a rare example of successful mediation-based dispute resolution at the international level. It is particularly relevant in the context of the far more complex maritime boundary dispute taking place 1,500km further north in the South China Sea, where China, Taiwan, and four ASEAN states are similarly facing off over the closely-intertwined issues of sovereignty and natural resources. The Australian government may be hoping that its concessions to a smaller and less-powerful neighbor through voluntary compliance with international law in the Timor Sea will send a strong signal to those in Beijing’s corridors of power.